BETWEEN THE HEDGES

Thursday, June 23, 2005

Friday Watch

Posted by Gary .....at 11:01 PM

Late-Night Headlines
Bloomberg:
- Unocal Corp. said it received permission from Chevron Corp. to negotiate with CNOOC Ltd., advancing the prospects of the Chinese oil company's rival $18.5 billion cash bid for Unocal.
- CNOOC Ltd. has enlisted Enron's former chief spokesman to counter public concerns about the company's $18.5 billion bid to buy US oil company Unocal Corp.
- The San Antonio Spurs defeated the Detroit Pistons 81-74 in the decisive seventh game of the National Basketball Association Finals.

Financial Times:
- The World Customs Organization's 165 member state may offer support to new global standards designed to ensure safer sea trade and make container transport more secure against terrorists.

China Securities Journal:
- China's fiscal revenue slowed in the first five months after the country cut import tariffs, citing Finance Minister Jin Renqing. Fiscal revenge rose 13.1% year-on-year in the five months ended May 31 to $163 billion, compared with the 32.4% growth of a year ago.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on GE, GILD, MCK and DNA.

Business Week:
- Access Integrated Technologies(AIX) is best positioned to profit from an expected switch by movie studios to digital film from analog, citing William Relyea of HC Wainwright.
- Jones Soda(JSDA) is a "solid long-term investment opportunity," citing ThinkEquity Partners analyst Nicole Miller.
- Energy Conversion Corp.(ENER), the No.1 US maker of nickel hydride batteries used in hybrid vehicles, may see its stock price more than double in a year as demand rises.

Night Trading
Asian Indices are -1.0% to -.50% on average.
S&P 500 indicated +.07%.
NASDAQ 100 indicated -.03%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
HR/.32
TONS/.85

Upcoming Splits
ESRX 2-for-1

Economic Releases
8:30 am:
- Durable Goods Orders for May are estimated to rise 1.5% versus a 1.9% increase in April.
- Durables Ex Transportation for May are estimated to rise .5% versus a .2% decline in April.

10:00 am:
- New Home Sales for May are estimated to rise to 1320K versus 1316K in April.

BOTTOM LINE: Asian indices are lower on worries that rising energy prices will dampen economic growth in the region. I expect US equities to open modestly lower. China's oil import data are released tomorrow.
The US dollar will also be of focus for traders. The Portfolio is 50% net long heading into the day.

Stocks Fall on Growth Concerns and Trade Relations with China

Posted by Gary .....at 7:11 PM

Indices
S&P 500 1,200.73 -1.08%
DJIA 10,421.44 -1.57%
NASDAQ 2,070.66 -1.02%
Russell 2000 634.12 -1.45%
DJ Wilshire 5000 11,917.06 -1.04%
S&P Barra Growth 573.14 -1.23%
S&P Barra Value 623.46 -.94%
Morgan Stanley Consumer 575.83 -1.18%
Morgan Stanley Cyclical 722.15 -1.99%
Morgan Stanley Technology 482.06 -.98%
Transports 3,457.46 -3.11%
Utilities 383.42 +.39%
Put/Call .75 -16.67%
NYSE Arms 1.14 +6.89%
Volatility(VIX) 12.13 +9.77%
ISE Sentiment 158.00 -9.20%
US Dollar 89.12 +.63%
CRB 311.45 +.14%

Futures Spot Prices
Crude Oil 59.62 +.34%
Unleaded Gasoline 165.55 -.07%
Natural Gas 7.50 +.36%
Heating Oil 167.50 -.04%
Gold 442.80 -.09%
Base Metals 123.13 -1.51%
Copper 152.00 -.49%
10-year US Treasury Yield 3.95% +.34%

Leading Sectors
Oil Service +.98%
Oil Tankers +.55%
Gold & Silver +.54%

Lagging Sectors
Tobacco -2.09%
Airlines -3.68%
Steel -4.90%

Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
Goldman Sachs:
- Reiterated Underperform on DRI and FGP.

Afternoon/Evening Headlines
Bloomberg:
- Billionaire investor Warren Buffett said state and federal probes into his Berkshire’s General Re unit is “costing money” and will weigh further on the company.
- Tata Steel, India’s second-largest steel producer, and Chinese cranemaker Shanghai Zhenhua Port Machinery were among this week’s Asian borrowers tapping the loan market for funds to boost production.
- Imposing trade sanctions of China would be misguided and put the future of the US economy at risk, Fed Chairman Greenspan told lawmakers who are considering such penalties.
- GM bonds are having their biggest monthly rally in at least eight years, fueled by high-yield and hedge funds attracted by the carmaker’s plan to cut costs and wring concessions out of its unions.
- US home prices set another record in May as previously owned homes continued to sell at a near-record rate, spurred by low borrowing costs and rising incomes.
- Chevron, close to winning regulatory approval for its agreement to buy Unocal, may be forced to increase its bid to counter an $18.5 billion offer from China’s CNOOC Ltd.
- Crude oil prices in NY rose to a record $60 a barrel on speculation supplies won’t be adequate to meet surging demand this fall.

CNBC:
- Bill Gross, who manages the world’s largest bond fund, said yields will likely fall through 2006 and 2007.

Financial Times:
- Rambus is being investigated by the European Commission in connection with patent abuses.

BOTTOM LINE: The Portfolio finished unchanged as gains in my Tech longs and Steel shorts offset losses in my Retail and Gaming longs. I added a few shorts in the afternoon, thus leaving the Portfolio 50% net long. One of my new shorts is PD and I am using a $95 stop-loss on this position. The tone of the market was negative today as the advance/decline finished substantially lower, most sectors fell and volume was above average. Measures of investor anxiety were mostly higher into the close. Overall, today’s market action was negative. Stocks declined on worries over slowing global growth and concerns over issues with China. Tomorrow should be a key day for oil and the markets.

Technical Difficulties

Posted by Gary .....at 2:26 PM

Due to technical problems I am unable to blog today. I will resume this evening. The Portfolio is currently 75% net long.

Thursday Watch

Posted by Gary .....at 1:12 AM

Late-Night Headlines
Bloomberg:
- The yen rose in Asia after government reports showed Japan's service industry expanded more than expected and the country's manufacturers were less pessimistic.

Wall Street Journal:
- The NYSE wants to expand into foreign markets, options and other derivatives to compete worldwide, said John Thain, the exchange's chief executive officer.

NY Times:
- John J. Mack, Morgan Stanley's former president, has been named as the best candidate to become the securities firm's new chief executive.

Beijing Morning Post:
- China should raise the value of the yuan by between 5% and 10% in a one-off move, citing a report in a journal published by the State Council, the country's highest governing body.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on IBM, DELL, AMR, ARO, FSH, ACN, BBBY, FDC and EMC.

Night Trading
Asian Indices are unch. to +.25% on average.
S&P 500 indicated +.06%.
NASDAQ 100 indicated +.13%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
AGE/.66
DLM/.31
FDO/.32
FDX/1.48
FINL/.26
MU/.02
OVTI/.31
SLR/.04
TIBX/.04
RAD/.02

Upcoming Splits
None of note

Economic Releases
8:30 am:
- Initial Jobless Claims for last week are estimated to fall to 330K versus 333K the prior week.
- Continuing Claims are estimated to fall to 2600K versus 2641K prior.

10:00 am:
- Existing Home Sales for May are estimated to fall to 7.15M versus 7.18M in April.

BOTTOM LINE: Asian indices are mostly higher on gains in technology shares in the region. I expect US equities to open modestly higher, led by technology. The Portfolio is 100% net long heading into the day.

Wednesday, June 22, 2005

Stocks Close Modestly Lower, Long-Term Rates Plunge

Posted by Gary .....at 7:09 PM

Indices
S&P 500 1,213.88 +.02%
DJIA 10,587.93 -.11%
NASDAQ 2,092.03 +.05%
Russell 2000 643.45 +.38%
DJ Wilshire 5000 12,042.44 +.06%
S&P Barra Growth 580.28 -.10%
S&P Barra Value 629.38 +.14%
Morgan Stanley Consumer 582.68 -.25%
Morgan Stanley Cyclical 736.81 -.48%
Morgan Stanley Technology 486.84 +.27%
Transports 3,568.40 unch.
Utilities 381.92 +.81%
Put/Call .90 -6.25%
NYSE Arms 1.07 -9.54%
Volatility(VIX) 11.05 -.27%
ISE Sentiment 174.00 +10.13%
US Dollar 88.56 +.50%
CRB 311.03 unch.

Futures Spot Prices
Crude Oil 58.33 +.41%
Unleaded Gasoline 161.85 +.45%
Natural Gas 7.50 +.85%
Heating Oil 162.65 +.24%
Gold 440.00 +.07%
Base Metals 125.02 -.75%
Copper 154.15 -.26%
10-year US Treasury Yield 3.94% -2.46%

Leading Sectors
Oil Tankers +3.29%
I-Banks +2.95%
Oil Service +1.06%

Lagging Sectors
Homebuilders -.48%
Gold & Silver -.52%
Steel -1.08%

Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on ROH, WAG and CVS.
- Reiterated Underperform on DJ and TRB.

Afternoon/Evening Headlines
Bloomberg:
- The US dollar gained against the euro, British pound and Swiss franc on signs that central banks in Europe are moving closer to reducing interest rates.
- US 10-year Treasuries had their biggest gain in almost seven months on speculation slower global economic growth will cause the Fed to end a series of interest-rate increases sooner than anticipated.
- Members of the Chicago Board of Trade, the second-biggest US futures market, approved a measure allowing the exchange to issue shares, paving the way for a $150 million IPO.
- Yahoo! shut some Internet chat rooms after companies including PepsiCo and Georgia-Pacific pulled advertising, citing the concerns the sites were being used by adults to lure young children.
- Crude oil fell almost $1/bbl. following an Energy Dept. report that showed US oil inventories fell less than expected as fuel demand declined.

Financial Times:
- US regulators are about to declare milk and meat from cloned animals safe for consumption.
- CNOOC Ltd., China’s third largest oil company, will bid about $20 billion for Unocal Corp., topping Chevron’s agreement to buy the company for $16 billion.

Wall Street Journal:
- GM hasn’t convinced United Auto Workers officials that union members’ health-care benefits must be reduced.

BOTTOM LINE: The Portfolio finished slightly higher on gains in my Retail/Internet longs and Steel shorts. I did not trade in the afternoon, thus leaving the Portfolio 100% net long. The tone of the market was slightly positive today as the advance/decline finished a bit higher, sector performance was mixed and volume was about average. Measures of investor anxiety were lower into the close. Overall, today’s market action was mildly negative. The Broker/Dealer Index(XBD) hit an all-time high today. I expect these stocks to continue to outperform through year-end.