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BOTTOM LINE: The Portfolio finished lower today on losses in my Networking, Semiconductor and Medical longs. I took profits in a long in the afternoon and added SPY short, thus leaving the Portfolio 75% net long. Today's action wasn't too bad considering recent gains, but the move higher in long-rates and earnings releases may cause some turbulence near-term. I am posting an abbreviated version of the closing report due to a scheduling conflict.
Monday, July 18, 2005
Stocks Modestly Lower Mid-day on Earnings Apprehension
Indices
S&P 500 1,222.69 -.41%
DJIA 10,609.78 -.29%
NASDAQ 2,146.20 -.49%
Russell 2000 659.30 -.67%
DJ Wilshire 5000 12,184.81 -.38%
S&P Barra Growth 585.86 -.26%
S&P Barra Value 633.24 -.48%
Morgan Stanley Consumer 585.12 -.10%
Morgan Stanley Cyclical 744.47 +.39%
Morgan Stanley Technology 497.86 -.49%
Transports 3,637.56 -.23%
Utilities 392.53 -.04%
Put/Call 1.03 +51.47%
NYSE Arms 1.11 +3.54%
Volatility(VIX) 10.89 +5.42%
ISE Sentiment 211.00 +24.85%
US Dollar 89.55 -.19%
CRB 306.14 -1.10%
Futures Spot Prices
Crude Oil 56.95 -1.96%
Unleaded Gasoline 163.30 -3.28%
Natural Gas 7.59 -3.24%
Heating Oil 162.70 -2.11%
Gold 422.10 +.19%
Base Metals 123.18 -.38%
Copper 156.70 +.32%
10-year US Treasury Yield 4.18% +.52%
Leading Sectors
Airlines +.98%
HMOs +.67%
Retail +.54%
Lagging Sectors
Banks -.93%
Disk Drives -.98%
Telecom -1.01%
S&P 500 1,222.69 -.41%
DJIA 10,609.78 -.29%
NASDAQ 2,146.20 -.49%
Russell 2000 659.30 -.67%
DJ Wilshire 5000 12,184.81 -.38%
S&P Barra Growth 585.86 -.26%
S&P Barra Value 633.24 -.48%
Morgan Stanley Consumer 585.12 -.10%
Morgan Stanley Cyclical 744.47 +.39%
Morgan Stanley Technology 497.86 -.49%
Transports 3,637.56 -.23%
Utilities 392.53 -.04%
Put/Call 1.03 +51.47%
NYSE Arms 1.11 +3.54%
Volatility(VIX) 10.89 +5.42%
ISE Sentiment 211.00 +24.85%
US Dollar 89.55 -.19%
CRB 306.14 -1.10%
Futures Spot Prices
Crude Oil 56.95 -1.96%
Unleaded Gasoline 163.30 -3.28%
Natural Gas 7.59 -3.24%
Heating Oil 162.70 -2.11%
Gold 422.10 +.19%
Base Metals 123.18 -.38%
Copper 156.70 +.32%
10-year US Treasury Yield 4.18% +.52%
Leading Sectors
Airlines +.98%
HMOs +.67%
Retail +.54%
Lagging Sectors
Banks -.93%
Disk Drives -.98%
Telecom -1.01%
BOTTOM LINE: The Portfolio is lower mid-day on losses in my Networking, Semiconductor and Medical longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is negative as the advance/decline line is lower, most sectors are declining and volume is very light. Measures of investor anxiety are mixed. Today’s overall market action is modestly negative considering recent gains and another decline in energy prices. During the week ended July 15, the Consumer Discretionary industry saw the greatest net insider selling in the S&P 500. Insiders sold $177,248,438 worth of stock and bought $49,490.I expect US stocks to trade mixed-to-higher into the close on short-covering ahead of a number of important earnings reports.
Today's Headlines
Bloomberg:
- Guidant, the heart-device maker Johnson & Johnson is buying, said cardiac pacemakers implanted in 28,000 people worldwide may need to be replaced because a faulty seal can cause them to fail.
- “Harry Potter and the Half-Blood Prince” shattered first-day sales records as merchants including Amazon.com and Barnes & Noble discounted the book to lure shoppers into stores to buy other merchandise.
- Maytag’s stock soared above Whirlpool’s $17 a share offer price, suggesting that investors expect a higher bid in the three way contest to buy the appliance maker.
- Citigroup and Bank of America said second-quarter profits were crimped by declines in fixed-income trading revenue.
- Rupert Murdoch’s News Corp. agreed to buy Intermix Media, an operator of more than 30 marketing and entertainment Web sites, for $580 million, a week after forming a new unit to capture a share of the surge in Internet advertising.
- Crude oil is falling again as OPEC cut demand growth for this year and next and Hurricane Emily lost steam.
Wall Street Journal:
- Apple Computer may sell music videos through a new version of its digital music player, the iPod.
- The prices of NYSE membership seats have changed little recently, after jumping immediately after the exchange announced on April 20 that it was to acquire Archipelago Holdings.
- US realtors have gained an edge fighting competition from discount brokers as state and local authorities approve laws requiring real-estate agents to provide a minimum level of service.
NY Times:
- Hollywood producers, directors and marketers are using religious references in mainstream films to attract more Christians to movie theaters.
- Martha Stewart Living Omnimedia investors are showing a zeal for its shares although the financial condition of the media and housewares company may make it tough to live up to the high expectations.
AP:
- Iraq drafted a tentative plan to start selling off government owned monopolies starting with the cement, brick and pharmaceutical industries.
- Unocal’s board may decide between rival takeover offers from Chevron and China’s CNOOC Ltd. in the next few days.
Corriere della Sera:
- The group that claimed responsibility for last year’s Madrid train bombings in the name of al-Qaeda threatened to attack Italy and other US allies if their troops don’t leave Iraq within a month.
- Guidant, the heart-device maker Johnson & Johnson is buying, said cardiac pacemakers implanted in 28,000 people worldwide may need to be replaced because a faulty seal can cause them to fail.
- “Harry Potter and the Half-Blood Prince” shattered first-day sales records as merchants including Amazon.com and Barnes & Noble discounted the book to lure shoppers into stores to buy other merchandise.
- Maytag’s stock soared above Whirlpool’s $17 a share offer price, suggesting that investors expect a higher bid in the three way contest to buy the appliance maker.
- Citigroup and Bank of America said second-quarter profits were crimped by declines in fixed-income trading revenue.
- Rupert Murdoch’s News Corp. agreed to buy Intermix Media, an operator of more than 30 marketing and entertainment Web sites, for $580 million, a week after forming a new unit to capture a share of the surge in Internet advertising.
- Crude oil is falling again as OPEC cut demand growth for this year and next and Hurricane Emily lost steam.
Wall Street Journal:
- Apple Computer may sell music videos through a new version of its digital music player, the iPod.
- The prices of NYSE membership seats have changed little recently, after jumping immediately after the exchange announced on April 20 that it was to acquire Archipelago Holdings.
- US realtors have gained an edge fighting competition from discount brokers as state and local authorities approve laws requiring real-estate agents to provide a minimum level of service.
NY Times:
- Hollywood producers, directors and marketers are using religious references in mainstream films to attract more Christians to movie theaters.
- Martha Stewart Living Omnimedia investors are showing a zeal for its shares although the financial condition of the media and housewares company may make it tough to live up to the high expectations.
AP:
- Iraq drafted a tentative plan to start selling off government owned monopolies starting with the cement, brick and pharmaceutical industries.
- Unocal’s board may decide between rival takeover offers from Chevron and China’s CNOOC Ltd. in the next few days.
Corriere della Sera:
- The group that claimed responsibility for last year’s Madrid train bombings in the name of al-Qaeda threatened to attack Italy and other US allies if their troops don’t leave Iraq within a month.
Foreign Demand for US Assets Increases
- Net Foreign Security Purchases for May rose to $60.0B versus estimates of $60.0B and $47.4B in April.
BOTTOM LINE: International investors increased their holdings of US assets in May by the most since February as the world’s largest economy outperformed rivals in Europe and Asia, Bloomberg reported. Caribbean holdings, which analysts link to hedge funds located in the region, only increased by $1.3 billion. I expect foreign demand for US assets to continue increasing as the dollar remains firm, US economic growth remains relatively healthy and global growth slows.
Monday Watch
Weekend Headlines
Bloomberg:
- UK Prime Minister Tony Blair warned of the need to confront the "evil ideology" behind the London bombs that killed 55 people, saying to appease Islamist terrorists would be a "misunderstanding of catastrophic proportions."
- Wal-Mart Stores said July sales at its US stores open at least a year are rising within its forecast as food sales outpaced general merchandise sales for a second straight week.
- The IMF cut its growth forecast for France this year and in 2006.
- Whirlpool said it is making a preliminary offer of $17 a share for Maytag, which has been the subject of a bidding war since May.
- The US dollar traded near a 13-month high against the yen in Asia on expectations a report will show international investors increased purchases of US assets.
- Hurricane Emily forced thousands of tourists and residents along Mexico's coastal regions to evacuate today as the storm moved in the direction of the Yucatan Peninsula and popular resorts such as Cancun.
Wall Street Journal:
- State Farm Group, MetLife and AIG are among US insurers with fast-growing banking divisions, as they find selling banking products such as certificates of deposits compatible with their own business.
New York Times:
- The SEC is investigating options trading at brokerage firms, making sure rules mandating that customers are getting the best price on option trades are being followed.
- Some Wall Street analysts say Costco Wholesale's pricing and employment polices benefit customers and employees more than shareholders.
- Many investors say growth stocks are more attractively valued than so-called value stocks, which have outperformed them in the past five years, and are set to move higher.
- Many personal-computer owners faced with virus- and spyware-ridden machines find it cheaper and easier to buy a new computer than to fix the old one.
Washington Post:
- The White House search for a successor to retiring Supreme Court Justice Sandra Day O'Connor is focusing on female and minority candidates, citing unnamed Republican strategists.
Time magazine:
- Time reporter Matthew Cooper told a grand jury that he was "certain" White House adviser Karl Rove "never used" the name of the CIA operative Valerie Plame in a 2003 phone conversation or indicated that she was a covert agent.
Financial Times:
- Cendant is close to selling its marketing services unit, which analysts estimate is worth more than $2 billion.
Reuters:
- Iraq made its first criminal charges against ousted dictator Saddam Hussein, for involvement in the murder of about 140 Shiite Muslims in 1982.
Sunday Telegraph:
- UK profit warnings jumped 52% in the second quarter to their highest level in 30 months.
Xinhua News Agency:
- China's vehicle imports dropped 34% to 64,000 units in the first half from a year earlier after the government introduced new tax policies and more customers bought models locally assembled.
South China Morning Post:
- Research in Motion aims this year to double the number of service providers in Asia.
Shanghai Securities News:
- Revenue at Chinese brokerages slumped 55% in the first half from a year ago.
Weekend Recommendations
Bulls and Bears:
- Had guests that were positive on SPN, HD, HAN, CSX and mixed on LOW, MSM, ATYT.
Forbes on Fox:
- Had guests that were positive on WLS, WM and mixed on HOV, BGC, MDC, LOW.
Cashin' In:
- Had guests that were positive on EBAY, LLY, mixed on TASR, SYMC and negative on AEOS.
Cavuto on Business:
- Had guests that were positive on LQI, TLAB, TRA and ANF.
Barron's:
- Had positive comments on BA and UVN.
- Had negative comments on GD and NOC.
Goldman Sachs:
- Reiterated Outperform on DNA and DIS.
Night Trading
Asian indices are -.25% to +.50% on average.
S&P 500 indicated -.06%.
NASDAQ 100 indicated -.19%.
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/Estimate
MMM/1.09
BAC/1.00
SCH/.128
C/1.02
IBM/1.03
KRB/.49
Upcoming Splits
None of note
Economic Releases
9:00 am EST
- Net Foreign Security Purchases for May are estimated to rise to $60.0B versus $47.4B in April.
1:00 pm EST
- The NAHB Housing Market Index for July is estimated at 71 versus a reading of 71 in June.
Bloomberg:
- UK Prime Minister Tony Blair warned of the need to confront the "evil ideology" behind the London bombs that killed 55 people, saying to appease Islamist terrorists would be a "misunderstanding of catastrophic proportions."
- Wal-Mart Stores said July sales at its US stores open at least a year are rising within its forecast as food sales outpaced general merchandise sales for a second straight week.
- The IMF cut its growth forecast for France this year and in 2006.
- Whirlpool said it is making a preliminary offer of $17 a share for Maytag, which has been the subject of a bidding war since May.
- The US dollar traded near a 13-month high against the yen in Asia on expectations a report will show international investors increased purchases of US assets.
- Hurricane Emily forced thousands of tourists and residents along Mexico's coastal regions to evacuate today as the storm moved in the direction of the Yucatan Peninsula and popular resorts such as Cancun.
Wall Street Journal:
- State Farm Group, MetLife and AIG are among US insurers with fast-growing banking divisions, as they find selling banking products such as certificates of deposits compatible with their own business.
New York Times:
- The SEC is investigating options trading at brokerage firms, making sure rules mandating that customers are getting the best price on option trades are being followed.
- Some Wall Street analysts say Costco Wholesale's pricing and employment polices benefit customers and employees more than shareholders.
- Many investors say growth stocks are more attractively valued than so-called value stocks, which have outperformed them in the past five years, and are set to move higher.
- Many personal-computer owners faced with virus- and spyware-ridden machines find it cheaper and easier to buy a new computer than to fix the old one.
Washington Post:
- The White House search for a successor to retiring Supreme Court Justice Sandra Day O'Connor is focusing on female and minority candidates, citing unnamed Republican strategists.
Time magazine:
- Time reporter Matthew Cooper told a grand jury that he was "certain" White House adviser Karl Rove "never used" the name of the CIA operative Valerie Plame in a 2003 phone conversation or indicated that she was a covert agent.
Financial Times:
- Cendant is close to selling its marketing services unit, which analysts estimate is worth more than $2 billion.
Reuters:
- Iraq made its first criminal charges against ousted dictator Saddam Hussein, for involvement in the murder of about 140 Shiite Muslims in 1982.
Sunday Telegraph:
- UK profit warnings jumped 52% in the second quarter to their highest level in 30 months.
Xinhua News Agency:
- China's vehicle imports dropped 34% to 64,000 units in the first half from a year earlier after the government introduced new tax policies and more customers bought models locally assembled.
South China Morning Post:
- Research in Motion aims this year to double the number of service providers in Asia.
Shanghai Securities News:
- Revenue at Chinese brokerages slumped 55% in the first half from a year ago.
Weekend Recommendations
Bulls and Bears:
- Had guests that were positive on SPN, HD, HAN, CSX and mixed on LOW, MSM, ATYT.
Forbes on Fox:
- Had guests that were positive on WLS, WM and mixed on HOV, BGC, MDC, LOW.
Cashin' In:
- Had guests that were positive on EBAY, LLY, mixed on TASR, SYMC and negative on AEOS.
Cavuto on Business:
- Had guests that were positive on LQI, TLAB, TRA and ANF.
Barron's:
- Had positive comments on BA and UVN.
- Had negative comments on GD and NOC.
Goldman Sachs:
- Reiterated Outperform on DNA and DIS.
Night Trading
Asian indices are -.25% to +.50% on average.
S&P 500 indicated -.06%.
NASDAQ 100 indicated -.19%.
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/Estimate
MMM/1.09
BAC/1.00
SCH/.128
C/1.02
IBM/1.03
KRB/.49
Upcoming Splits
None of note
Economic Releases
9:00 am EST
- Net Foreign Security Purchases for May are estimated to rise to $60.0B versus $47.4B in April.
1:00 pm EST
- The NAHB Housing Market Index for July is estimated at 71 versus a reading of 71 in June.
BOTTOM LINE: Asian Indices are mostly higher on optimism over recent US economic reports. I expect US stocks to open modestly lower and rebound later in the day. The Portfolio is 100% net long heading into the week.
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