Tuesday, July 05, 2005

Tuesday Watch

Weekend Headlines
Bloomberg:
- The Iraqi government could begin taking over security efforts from the US-led troops within a year, UK Defense Secretary John Reid said.
- Wal-Mart Stores said sales rose about 4.5% in June, their biggest gain since March, as warmer weather spurred sales of general merchandise such as seasonal apparel.
- The dollar rose to the highest since May 2004 versus the euro in Asia on expectations a report tomorrow will show factory orders gained by the most in 14 months.
- US Treasuries, after underperforming benchmark European bond markets for three quarters, are drawing international investors seeking better returns.
- Growth in European service industries, which account for about a third of the economy of the dozen euro nations, slowed more than expected in June as concern about high unemployment and record oil prices tempered consumer spending.
- The US dollar traded near a 14-month high against the euro in Asia on expectations reports this week will show US economic growth outpacing that of Europe.
- Crude oil is rising in NY on speculation US refiners may increase purchases to meet higher gasoline demand during the summer holidays and stockpile heating oil for the winter.

New York Times:
- Las Vegas casinos are exploring the use of hand-held wireless devices to enable gamblers to play slot machines, video poker and blackjack from the swimming pool and restaurants.
- Bill Gross, manager of PIMCO's Total Return bond fund, said corporate debt may become less attractive as inflation declines.
- Eli Lilly is developing drugs with smaller projected patient numbers and sales to increase its marketable products and save on research costs.
- CNOOC's competing $18.5 billion bid to buy Unocal Corp. has created a dilemma for Chevron Corp. because CNOOC is Chevron's largest partner in China.

LA Times:
- An active ingredient in NitroMed's BilDil, a heart failure medication targeted to treat African-Americans, can trigger a painful immune system disease called lupus.

Washington Post:
- Rapid economic growth in the US is yielding higher tax revenue, which could push the 2005 budget deficit as much as $100 billion below government estimates.
- US and international agents are targeting terrorists from a new Paris-based center funded primarily by the CIA.
- A group of Sunni Muslim clerics are calling on Iraqis in the Sunni Arab religious minority to vote in elections later this year and help write a new constitution.

Financial Times:
- The maximum losses from a large-scale, single terrorist attack involving nuclear, chemical or biological incident could be between $50 billion and $250 billion, citing the OECD.

Sunday Telegraph:
- Electronic Arts is preparing a bid for the UK's Superscape Group Plc, a maker of three-dimensional games for mobile phones.

International Herald Tribune:
- The US and South Korea will jointly offer security and economic incentives to persuade North Korea to abandon its nuclear weapons program.

The Observer:
- Vodafone Group Plc may bid for the US arm of T-Mobile International AG.

AFP:
- Thousands of farmers in the southern Chinese province of Guangdong demonstrated against a government-backed eviction, citing a rights group.

Xinhua News Agency:
- China and Russia agreed to strengthen military cooperation and accelerate efforts to fight terror after Chinese President Hu Jintao met Russian President Vladimir Putin in Moscow.
- China wants to accelerate implementation of measures aimed at reducing energy consumption to ease growth of the country's crude oil imports, citing Premier Wen Jiabao.

China Daily:
- China may soon make a major discovery of its energy and mineral resources after the country accelerated exploration and production to meet demand.

Oriental Morning Post:
- General Motors surpassed Volkswagen AG as the top car seller in China in the first half of the year.

Securities Times:
- China inflation probably slowed to 1.5% in June compare with 1.8% in May, citing a research report from Shenyin Wanguo Research & Consulting in Shanghai.
- China's urban fixed-asset investment growth may slow to about 15% in the second half from 25% in the first half, partly because rising costs and lower demand may prompt companies to spend less.

Weekend Recommendations
Goldman Sachs:
- Reiterated Outperform on D, BSX and EPD.

Night Trading
Asian indices are -.50% to unch. on average.
S&P 500 indicated -.13%.
NASDAQ 100 indicated -.10%.

Morning Preview
US AM Market Call
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Earnings of Note
Company/Estimate
ADEX/.39

Upcoming Splits
None of note

Economic Releases
10:00 EST
- Factory Orders for May are estimated to rise 3.0% versus a .9% increase in April.

BOTTOM LINE: Asian Indices are mostly lower on worries over slowing growth in the region. I expect US stocks to open mixed. The Portfolio is 75% net long heading into the week.

Monday, July 04, 2005

Weekly Outlook

There are a few important economic reports and several significant corporate earnings reports scheduled for release this week.

Economic reports for the week include:

Mon. - US Markets Closed
Tues. - Factory Orders
Wed. - ISM Non-Manufacturing, Pending Home Sales
Thur. - Initial Jobless Claims
Fri. - Unemployment Rate, Average Hourly Earnings, Change in Non-farm Payrolls, Wholesale Inventories, Consumer Credit

A few of the more noteworthy companies that release quarterly earnings this week are:

Mon. - US Markets Closed
Tues. - None of note
Wed. - Schnitzer Steel(SCHN)
Thur. - Accenture Ltd.(ACN), Alcoa Inc.(AA)
Fri. - None of note

Other events that have market-moving potential this week include:

Mon. - US Markets Closed
Tue. - None of note
Wed. - None of note
Thur. - None of note
Fri. - Fed's Hoenig speaks

BOTTOM LINE: I expect US stocks to finish the week mixed-to-higher. Friday's June employment report will likely show improvement from May's weaker number, but still probably miss expectations. This, combined with a strengthening US dollar, will likely prevent any substantial move higher in long-term rates from current levels. Oil prices, which spiked on Fri. ahead of a high-traffic holiday and potential terrorist activity, should recede this week as distillate inventories continue to rise. Stocks will likely tread water over the next few weeks as earnings pre-announcements come in and volume remains light. My trading indicators are still giving neutral signals and the Portfolio is 75% net long heading into the week.

Friday, July 01, 2005

Weekly Scoreboard*

Indices
S&P 500 1,194.44 +.24%
DJIA 10,303.44 +.05%
NASDAQ 2,057.37 +.20%
Russell 2000 643.04 +2.0%
DJ Wilshire 5000 11,896.27 +.56%
S&P Equity Long/Short Index 1,026.63 -.05%
S&P Barra Growth 569.10 +.20%
S&P Barra Value 621.28 +.28%
Morgan Stanley Consumer 570.39 -.02%
Morgan Stanley Cyclical 714.82 +.36%
Morgan Stanley Technology 472.64 -.79%
Transports 3,508.67 +2.86%
Utilities 390.36 +2.54%
S&P 500 Cum A/D Line 7,327.00 -3.21%
Bloomberg Crude Oil % Bulls 28.0% -41.67%
Put/Call .99 +11.24%
NYSE Arms 1.03 -25.90%
Volatility(VIX) 11.40 -6.40%
ISE Sentiment 211.00 -14.57%
AAII % Bulls 45.89 -1.50%
US Dollar 90.13 +1.61%
CRB 303.86 -2.68%

Futures Spot Prices
Crude Oil 58.75 -1.84%
Unleaded Gasoline 164.85 -1.11%
Natural Gas 7.17 -3.10%
Heating Oil 171.11 +2.28%
Gold 429.30 -2.90%
Base Metals 117.97 -5.09%
Copper 147.45 -4.69%
10-year US Treasury Yield 4.04% +3.37%
Average 30-year Mortgage Rate 5.53% -.72%

Leading Sectors
Oil Tankers +5.13%
Defense +3.31%
Insurance +3.05%

Lagging Sectors
Semis -1.79%
Internet -2.21%
Papers -2.25%

*5-Day % Change

Links of Interest

Market Snapshot
Detailed Market Summary
Market Internals
Economic Commentary
Movers & Shakers
IBD New America
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Real-time Intraday Chart/Quote

Thursday, June 30, 2005

Stocks Fall as Global Growth Concerns Intensify

I trimmed existing longs into the afternoon weakness, thus leaving the Portfolio 75% net long.

Today's Headlines

Bloomberg:
- Consumer Confidence in France fell to its lowest on record this month amid surging oil prices and the highest jobless rate since 1999.
- The US dollar is headed for the biggest quarterly advance against the euro since 2001 as the euro region’s political problems intensify and their economies stagnate.
- The Fed will raise interest rates at least three more times this year to keep inflation in check, according to a majority of Wall Street’s biggest bond dealers.
- Bank of America agreed to buy MBNA for about $35 billion, gaining the biggest non-bank credit card issuer.
- OPEC suspended talks to raise crude oil output quotas.
- Crude oil is falling to a two-week low after an Energy Dept. report showed that US imports surged as refineries increased production of gasoline and other fuels.

Wall Street Journal:
- Vodafone Group Plc will team up with Microsoft to let users of Microsoft’s MSN instant-message service exchange messages with people using Vodafone phones.
- Chevron has helped US congressmen to draft and circulate letters urging the Bush administration to examine and possibly block the Chinese bid to acquire Unocal.
- A decrease in May air-cargo traffic from a year earlier illustrates how high oil prices may be crimping economic growth worldwide, citing the International Air Transport Assoc.
- Financing for CNOOC’s bid for Unocal, which includes favorable terms from its government-owned parent, caused waves among rival bidder Chevron and some lawmakers who say CNOOC is getting unfair subsides.
- China’s state-controlled telephone companies may build fewer third-generation wireless networks as the government cuts back construction over cost concerns.
- Shares of AIG have dropped 15% since it emerged in February that the company’s accounting was under investigation, though delayed first-quarter results indicate that the stock might now be a good bet.
- Sling Media’s Slingbox enables users to watch television shows they receive at home in other locations and other devices besides a TV, Walter Mossberg wrote.
- US and Canadian municipalities are turning to wireless technologies to monitor parking spaces, as the old-fashioned, coin-operated mechanical parking meters are being replaced.

NY Times:
- Microsoft has been in talks for two weeks to buy closely held Claria Corp., which makes pop-up ads and software that tracks Web site visitors, for $500 milllion.
- Midwestern cities made up seven of the 10 US cities with the largest population drops between 2000 and 2004.

LA Times:
- Los Angeles, whose rainy season ends at midnight, will have had the second-wettest period since officials began keeping records.

Reuters:
- CNOOC expects Chevron to improve its $16.3 billion cash and stock bid for Unocal before shareholders vote on the matter in August.