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BOTTOM LINE: Due to a scheduling conflict I am posting an abbreviated Evening Review. I finished the day 25% net long by paring existing longs and adding back QQQQ and IWM short. I will post the Thursday Watch later this evening.
Wednesday, August 10, 2005
Stocks Mixed Mid-day as Oil and Rates Rise Again
Indices
S&P 500 1,236.01 +.38%
DJIA 10,644.01 +.25%
NASDAQ 2,172.48 -.08%
Russell 2000 662.12 +.22%
DJ Wilshire 5000 12,298.22 +.34%
S&P Barra Growth 592.52 +.20%
S&P Barra Value 638.48 +.45%
Morgan Stanley Consumer 590.49 +.75%
Morgan Stanley Cyclical 759.58 +.76%
Morgan Stanley Technology 504.03 -.22%
Transports 3,757.19 +.47%
Utilities 395.67 +.80%
Put/Call 1.0 +7.53%
NYSE Arms .80 +30.32%
Volatility(VIX) 12.03 -2.98%
ISE Sentiment 202.00 +25.47%
US Dollar 87.77 -.14%
CRB 318.51 +1.22%
Futures Spot Prices
Crude Oil 64.25 +1.87%
Unleaded Gasoline 188.00 +3.16%
Natural Gas 9.00 +4.06%
Heating Oil 181.80 +2.33%
Gold 441.80 +.48%
Base Metals 127.38 +1.69%
Copper 163.00 +1.40%
10-year US Treasury Yield 4.40% +.37%
Leading Sectors
Steel +2.10%
Oil Service +2.04%
Broadcasting +1.90%
Lagging Sectors
Computer Hardware +.04%
Networking -1.21%
Internet -1.57%
S&P 500 1,236.01 +.38%
DJIA 10,644.01 +.25%
NASDAQ 2,172.48 -.08%
Russell 2000 662.12 +.22%
DJ Wilshire 5000 12,298.22 +.34%
S&P Barra Growth 592.52 +.20%
S&P Barra Value 638.48 +.45%
Morgan Stanley Consumer 590.49 +.75%
Morgan Stanley Cyclical 759.58 +.76%
Morgan Stanley Technology 504.03 -.22%
Transports 3,757.19 +.47%
Utilities 395.67 +.80%
Put/Call 1.0 +7.53%
NYSE Arms .80 +30.32%
Volatility(VIX) 12.03 -2.98%
ISE Sentiment 202.00 +25.47%
US Dollar 87.77 -.14%
CRB 318.51 +1.22%
Futures Spot Prices
Crude Oil 64.25 +1.87%
Unleaded Gasoline 188.00 +3.16%
Natural Gas 9.00 +4.06%
Heating Oil 181.80 +2.33%
Gold 441.80 +.48%
Base Metals 127.38 +1.69%
Copper 163.00 +1.40%
10-year US Treasury Yield 4.40% +.37%
Leading Sectors
Steel +2.10%
Oil Service +2.04%
Broadcasting +1.90%
Lagging Sectors
Computer Hardware +.04%
Networking -1.21%
Internet -1.57%
BOTTOM LINE: The Portfolio is unchanged mid-day as losses in my Internet longs offset gains in my Semiconductor longs. I have not traded today, thus leaving the Portfolio 75% net long. The tone of the market is modestly positive as the advance/decline line is higher, most sectors are higher and volume is about average. Measures of investor anxiety are mixed. Today’s overall market action is positive considering the rise in oil and long-term rates. Insider Buy of Note: The CFO of General Growth Properties (GGP), a regional mall REIT, recently added 20,000 shares at $41.93. I expect US stocks to trade modestly higher into the close on short-covering.
Today's Headlines
Bloomberg:
- Time Warner may be worth as much as 46% more if the company is broken up.
- Krispey Kreme Doughnuts, which is under a federal accounting probe, said former CEO Scott Livengood and other officers may have manipulated earnings to report profits above analysts’ estimates.
- The People’s Bank of China said it will allow the nation’s biggest companies to enter the foreign exchange market for the first time and that the dollar, euro and yen will be the major currencies used to value the yuan.
- President Bush signed a $286.5B highway and transit bill that will boost revenue for construction companies and set new auto-safety standards.
- US Treasuries maturing in 10 years or more are rising for a second day on speculation the Fed will be able to contain inflation.
Wall Street Journal:
- Older US workers are remaining at their jobs long after they were entitled to retire because many want to maintain higher incomes and don’t want to lose their social relationships.
- The US Department of Agriculture is encouraging low income farm laborers to build their own homes by providing loans with no down payment for people who work on the construction themselves.
- Gap Inc. is using a PG-rated strip tease show with animated characters to attract younger customers.
- IBM, Starbucks, Caterpillar and Verizon Communications are among 52 large employers who plan to press pharmacy-benefit managers to disclose costs and rebates.
- The US hotel business is enjoying a resurgence, after three years of minimal growth, depressed room rates and a low level of construction.
- Billionaire investor Carl Icahn plans to put pressure on Time Warner to sell part of its cable television assets and commit to a share buyback bigger than the $5 billion the media giant had agreed to.
NY Times:
- The US Border Patrol has arrested more than 19,000 illegal immigrants based on biometric data provided by the Homeland Security Department.
- Avery Dennison and 19 other companies agreed to pool patents to help foster increased adoption of RFID technology in favor of bar codes.
- Delta Air Lines pilots are considering more pay concessions that may help the third-largest US airline avert Chapter 11 bankruptcy-court protection.
- Time Warner may be worth as much as 46% more if the company is broken up.
- Krispey Kreme Doughnuts, which is under a federal accounting probe, said former CEO Scott Livengood and other officers may have manipulated earnings to report profits above analysts’ estimates.
- The People’s Bank of China said it will allow the nation’s biggest companies to enter the foreign exchange market for the first time and that the dollar, euro and yen will be the major currencies used to value the yuan.
- President Bush signed a $286.5B highway and transit bill that will boost revenue for construction companies and set new auto-safety standards.
- US Treasuries maturing in 10 years or more are rising for a second day on speculation the Fed will be able to contain inflation.
Wall Street Journal:
- Older US workers are remaining at their jobs long after they were entitled to retire because many want to maintain higher incomes and don’t want to lose their social relationships.
- The US Department of Agriculture is encouraging low income farm laborers to build their own homes by providing loans with no down payment for people who work on the construction themselves.
- Gap Inc. is using a PG-rated strip tease show with animated characters to attract younger customers.
- IBM, Starbucks, Caterpillar and Verizon Communications are among 52 large employers who plan to press pharmacy-benefit managers to disclose costs and rebates.
- The US hotel business is enjoying a resurgence, after three years of minimal growth, depressed room rates and a low level of construction.
- Billionaire investor Carl Icahn plans to put pressure on Time Warner to sell part of its cable television assets and commit to a share buyback bigger than the $5 billion the media giant had agreed to.
NY Times:
- The US Border Patrol has arrested more than 19,000 illegal immigrants based on biometric data provided by the Homeland Security Department.
- Avery Dennison and 19 other companies agreed to pool patents to help foster increased adoption of RFID technology in favor of bar codes.
- Delta Air Lines pilots are considering more pay concessions that may help the third-largest US airline avert Chapter 11 bankruptcy-court protection.
Distillate Inventories Rise More Than Estimates
- The EIA reported crude inventories rose 2.8M barrels vs. estimates of a 1.0M barrel decline. Gasoline inventories declined 2.09M barrels vs. estimates of a 2.0M barrel fall. Distillate inventories rose 2.6M barrels vs. estimates of a 1.75M barrel rise.
BOTTOM LINE: The energy inventory numbers were once again bearish for energy. So far there is little reaction in the trading pit. I continue to believe that oil pricing is in the grips of a mania and is not supported by the underlying fundamentals. The substantial second-half decline in oil prices I predicted at the beginning of the year will likely begin around the first half of September as terrorism and hurricane fears peak.
Wednesday Watch
Late-Night Headlines
Bloomberg:
- The US dollar, euro, yen and South Korean won are the main currencies in a basket referenced against the yuan in China’s new exchange rate regime, the central bank said.
- China will delay the purchase of crude oil for its stockpile after prices surged, a government official said.
- Asian contract prices for coal used in power generation may fall about 8% next year on slowing growth in demand and increased production, said Goldman Sachs.
Financial Times:
- China may have surplus generating capacity next year as new power stations start production.
Guardian:
- London’s popularity as a tourist destination has not been harmed by last month’s terrorist attacks.
United Daily News:
- Yahoo! may use shares in its China unit to pay for a 35% stake in Chinese online commerce company Alibaba.com.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on DDR, DISH, GILD, AIG, CBB and FDC.
- Reiterated Underperform on IHR and PPS.
Night Trading
Asian Indices are unch. to +1.0% on average.
S&P 500 indicated +.05%.
NASDAQ 100 indicated -.06%.
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
FD/.84
TOM/.29
RMK/.37
AVT/.36
Upcoming Splits
None of note
Economic Releases
10:30 am EST
- Platt's is estimating crude inventories to fall 1.3 million barrels, gasoline inventories to fall 1.95 million barrels and distillate inventories to rise 1.5 million barrels. They are also expecting refinery utilization to drop 1%.
2:00 pm EST
- The Monthly Budget Deficit for July is estimated to shrink to -$57.0B from -$69.2B in June.
Bloomberg:
- The US dollar, euro, yen and South Korean won are the main currencies in a basket referenced against the yuan in China’s new exchange rate regime, the central bank said.
- China will delay the purchase of crude oil for its stockpile after prices surged, a government official said.
- Asian contract prices for coal used in power generation may fall about 8% next year on slowing growth in demand and increased production, said Goldman Sachs.
Financial Times:
- China may have surplus generating capacity next year as new power stations start production.
Guardian:
- London’s popularity as a tourist destination has not been harmed by last month’s terrorist attacks.
United Daily News:
- Yahoo! may use shares in its China unit to pay for a 35% stake in Chinese online commerce company Alibaba.com.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on DDR, DISH, GILD, AIG, CBB and FDC.
- Reiterated Underperform on IHR and PPS.
Night Trading
Asian Indices are unch. to +1.0% on average.
S&P 500 indicated +.05%.
NASDAQ 100 indicated -.06%.
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
FD/.84
TOM/.29
RMK/.37
AVT/.36
Upcoming Splits
None of note
Economic Releases
10:30 am EST
- Platt's is estimating crude inventories to fall 1.3 million barrels, gasoline inventories to fall 1.95 million barrels and distillate inventories to rise 1.5 million barrels. They are also expecting refinery utilization to drop 1%.
2:00 pm EST
- The Monthly Budget Deficit for July is estimated to shrink to -$57.0B from -$69.2B in June.
BOTTOM LINE: Asian indices are mostly higher as exporters in the region gain after the US Fed did not increase hawkish rhetoric as expected. I expect US equities to open modestly higher and to strengthen throughout the day as oil and interest rates stabilize. The Portfolio is 75% net long heading into the day.
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