Bloomberg:
- US corporate profits rose 14% in the second quarter, double the rate analysts predicted.
- The US budget deficit is estimated to be $331 billion this year as tax receipts from growth in income and corporate revenue soar, the Congressional Budget Office said.
- The US dollar gained the most in three weeks against the euro after a Treasury Department report showed international investors increased their holding of US financial assets by the most since February.
- Crude oil is falling for the first time in four sessions on speculation that increased production will help refineries meet demand for gas and other fuels.
Wall Street Journal:
- Foxhollow Technologies’ products for clearing clogged arteries is being tested by doctors who own shares and options in the company.
- US companies will increasingly be bought by companies in less advanced economies, including Israel, Singapore, Brazil, India and Mexico.
- Citigroup’s Smith Barney unit will stop producing research under that name at the end of this month, adopting instead the name Citigroup Investment Research.
- The unionized car-making factories in DaimlerChrysler AG’s Chrysler Group will have to compete on cost and efficiency with an increasing number of factories owned by rivals that are not unionized.
- US labor unions face increasing resistance from companies and the government, and now workers themselves are turning away from them.
- The failure of leading mosques in London to distance themselves from terrorism has called into question efforts by the British government to encourage political moderates in the Muslim community.
NY Times:
- Agilent Technologies, the world’s biggest maker of scientific-testing equipment, will announce today a reorganization of its business, including the sale of its semiconductor unit.
LA Timest:
- News Corp is in discussions to buy Blinkx, a closely held Internet video search company.
NY Post:
- Younger members of the family that founded Dow Jones are pressing Bancroft family elders to sell their shares in the company.
USA Today:
- People who eat spinach, strawberries and other produce containing the B vitamin folate may lower their risk of developing Alzheimer’s disease.
Financial Times:
- Carl Icahn told Time Warner Chairman and CEO Dick Parsons on Friday that he and three other hedge-fund investors, Franklin Mutual, Jana Partners and SAC Capital, have a $2.2 billion stake in the company.
Monday, August 15, 2005
NY Manufacturing Outlook Solid, International Investors' Demand for US Assets Accelerates
- Empire Manufacturing for August rose to 23.0 versus estimates of 18.5 and a reading of 23.9 in July.
- Net Foreign Security Purchases for June rose to $71.2B versus estimates of $64.5B and $55.8B in May.
- Net Foreign Security Purchases for June rose to $71.2B versus estimates of $64.5B and $55.8B in May.
BOTTOM LINE: Manufacturing in New York state expanded more than expected in August as new orders surged to a high for the year, Bloomberg reported. The new orders component of the index soared to 33.8 from 19.2 in July. Manufacturers’ optimism about the next six months rose to 53.3 from 47 in July. The current employment gauge within the index rose to 10.2 from 1.4 the prior month. Finally, the prices paid component of the index rose to 29 from 21.57 in July. Bloomberg is now forecasting the US economy will growth at a 4.1% rate this quarter, the most since the first quarter of 2004, according to a recent survey. I continue to believe that manufacturing will add to US GDP growth throughout the remainder of the year.
International investors increased their holdings of US assets in June by the most in four months, led by record purchases of corporate bonds, Bloomberg reported. The US economy grew 3.6% during the second quarter, more than twice the rate in Japan, Germany, the UK and France. Demand for US assets will likely remain strong as the US dollar firms, the budget deficit improves and the gap between US growth and other industrialized nations widens further.
Monday Watch
Weekend Headlines
Bloomberg:
- Wal-Mart Stores said August sales at its US stores open at least a year are rising within its forecast range as food sales outpaced general merchandise for the fifth straight week.
- Delta Air Lines is seeking financing from its lenders that will allow it to keep flying if it declares bankruptcy.
- The US dollar is rising against the euro and yen in Asia on expectations a Treasury Department report today will show international investors increased buying of US assets.
- The role of Islam and how much autonomy to grant various geographical regions remained at issue as Iraqis sought to meet tomorrow’s deadline for drafting a constitution.
Barron’s:
- The number of US residents with diabetes is forecast to rise to more than 30 million in about 20 years from 17 million now, and the cost of treating the disease annually may approach $200 billion by then.
- IPOs of US stocks raised $22 billion, with 113 companies going public through Aug. 9.
New York Times:
- The NHL approved Comcast’s offer to carry two regular-season games per week starting this season.
- The leaders of Iraq’s three main ethnic groups – the Kurds, Shiites and Sunnis – have agreed on a formula to share the country’s oil wealth between the central government and the 18 regional provinces.
- Americans have resorted to more creative ways to get around rising gas prices such as using Web sites that keep track of the cheapest prices or showing up for free gas giveaways.
- Increasing corruption among Russian government officials during Vladimir Putin’s presidency is now seen as part of the cost of doing business in the country.
LA Times:
- Tighter enforcement along the border with Mexico has caused a shortage of farm workers in California’s Central Valley.
Washington Post:
- Travelers will no longer have to pull their shoes off at airport security checkpoints under rule changes being considered by the Homeland Security Department.
- Iraqi Sunni Muslims battled insurgents to defend their Shiite neighbors yesterday in Ramadi, a development that may signal increasing resistance to foreign-born terrorists such as Abu Musab al-Zarqawi.
Time Magazine:
- Iran has forged ties with some militant and insurgent groups in Iraq and is funding Islamic fundamentalist politicians there as it seeks to build influence.
Financial Times:
- Lenovo Group Ltd. will use the Think brand on its high-end products.
The Mail on Sunday:
- Wal-Mart Stores has held talks with Carrefour SA that might lead to a takeover bid for the French supermarket owner.
Weekend Recommendations
Bulls and Bears:
- Had guests that were positive on SNY, INMD, DELL, mixed on MDT and negative on BIDU.
Forbes on Fox:
- Had guests that were positive on AMR, DIS, OKE and mixed on APA, XOM, SJM.
Cashin' In:
- Had guests that were positive on XMSR, SIRI, AKAM, MNT, TSRA, UTSI, mixed on DYN and negative on BIDU, SBSA.
Cavuto on Business:
- None of note
Barron's:
- Had positive comments on IMAX, VNO, JNJ, BXP, PXD and AVB.
Goldman Sachs:
- Reiterated Outperform on A.
- Reiterated Underperform on PFG.
Night Trading
Asian indices are -.50% to +.25% on average.
S&P 500 indicated -.01%.
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/Estimate
A/.26
LOW/1.02
SNIC/.14
Upcoming Splits
None of note
Economic Releases
8:30 am EST
- Empire Manufacturing for August is estimated to fall to 18.5 from 23.9 in July.
9:00 am EST
- Net Foreign Security Purchases for June are estimated to rise to $64.5B versus $60.0B in May.
1:00 pm EST
- The NAHB Housing Market Index for August is estimated at 70 versus a reading of 70 in July.
Bloomberg:
- Wal-Mart Stores said August sales at its US stores open at least a year are rising within its forecast range as food sales outpaced general merchandise for the fifth straight week.
- Delta Air Lines is seeking financing from its lenders that will allow it to keep flying if it declares bankruptcy.
- The US dollar is rising against the euro and yen in Asia on expectations a Treasury Department report today will show international investors increased buying of US assets.
- The role of Islam and how much autonomy to grant various geographical regions remained at issue as Iraqis sought to meet tomorrow’s deadline for drafting a constitution.
Barron’s:
- The number of US residents with diabetes is forecast to rise to more than 30 million in about 20 years from 17 million now, and the cost of treating the disease annually may approach $200 billion by then.
- IPOs of US stocks raised $22 billion, with 113 companies going public through Aug. 9.
New York Times:
- The NHL approved Comcast’s offer to carry two regular-season games per week starting this season.
- The leaders of Iraq’s three main ethnic groups – the Kurds, Shiites and Sunnis – have agreed on a formula to share the country’s oil wealth between the central government and the 18 regional provinces.
- Americans have resorted to more creative ways to get around rising gas prices such as using Web sites that keep track of the cheapest prices or showing up for free gas giveaways.
- Increasing corruption among Russian government officials during Vladimir Putin’s presidency is now seen as part of the cost of doing business in the country.
LA Times:
- Tighter enforcement along the border with Mexico has caused a shortage of farm workers in California’s Central Valley.
Washington Post:
- Travelers will no longer have to pull their shoes off at airport security checkpoints under rule changes being considered by the Homeland Security Department.
- Iraqi Sunni Muslims battled insurgents to defend their Shiite neighbors yesterday in Ramadi, a development that may signal increasing resistance to foreign-born terrorists such as Abu Musab al-Zarqawi.
Time Magazine:
- Iran has forged ties with some militant and insurgent groups in Iraq and is funding Islamic fundamentalist politicians there as it seeks to build influence.
Financial Times:
- Lenovo Group Ltd. will use the Think brand on its high-end products.
The Mail on Sunday:
- Wal-Mart Stores has held talks with Carrefour SA that might lead to a takeover bid for the French supermarket owner.
Weekend Recommendations
Bulls and Bears:
- Had guests that were positive on SNY, INMD, DELL, mixed on MDT and negative on BIDU.
Forbes on Fox:
- Had guests that were positive on AMR, DIS, OKE and mixed on APA, XOM, SJM.
Cashin' In:
- Had guests that were positive on XMSR, SIRI, AKAM, MNT, TSRA, UTSI, mixed on DYN and negative on BIDU, SBSA.
Cavuto on Business:
- None of note
Barron's:
- Had positive comments on IMAX, VNO, JNJ, BXP, PXD and AVB.
Goldman Sachs:
- Reiterated Outperform on A.
- Reiterated Underperform on PFG.
Night Trading
Asian indices are -.50% to +.25% on average.
S&P 500 indicated -.01%.
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/Estimate
A/.26
LOW/1.02
SNIC/.14
Upcoming Splits
None of note
Economic Releases
8:30 am EST
- Empire Manufacturing for August is estimated to fall to 18.5 from 23.9 in July.
9:00 am EST
- Net Foreign Security Purchases for June are estimated to rise to $64.5B versus $60.0B in May.
1:00 pm EST
- The NAHB Housing Market Index for August is estimated at 70 versus a reading of 70 in July.
BOTTOM LINE: Asian Indices are mostly lower as record energy prices pressure exporters in the region. I expect US stocks to open mixed as economic optimism offsets high energy prices. The Portfolio is 50% net long heading into the week.
Sunday, August 14, 2005
Weekly Outlook
There are several important economic reports and some significant corporate earnings reports scheduled for release this week.
Economic reports for the week include:
Mon. - Empire Manufacturing, Net Foreign Security Purchases, NAHB Housing Market Index
Tues. - CPI, Housing Starts, Industrial Production, Capacity Utilization
Wed. - PPI
Thur. - Initial Jobless Claims, Leading Indicators, Philly Fed.
Fri. - None of Note
A few of the more noteworthy companies that release quarterly earnings this week are:
Mon. - Agilent Technologies(A), Lowe’s(LOW)
Tues. - Abercrombie & Fitch(ANF), American Eagle Outfitters(AEOS), Applied Materials(AMAT), Deere & Co.(DE), Estee Lauder(EL), Hewlett Packard(HPQ), Home Depot(HD), JC Penney(JCP), Nordstrom(JWN), Staples(SPLS), TJX(TJX), Wal-Mart Stores(WMT)
Wed. - BEA Systems(BEAS), Medtronic(MDT), Network Appliance(NTAP)
Thur. - Aeropostale(ARO), Autodesk(ADSK), Barnes & Noble(BKS), GameStop(GME), Gap Inc.(GPS), Limited Brands(LTD), Marvell Technology(MRVL)
Fri. - AnnTaylor Stores(ANN)
Other events that have market-moving potential this week include:
Mon. - None of note
Tue. - None of note
Wed. - None of note
Thur. - Semi Book-to-Bill
Fri. - None of note
Economic reports for the week include:
Mon. - Empire Manufacturing, Net Foreign Security Purchases, NAHB Housing Market Index
Tues. - CPI, Housing Starts, Industrial Production, Capacity Utilization
Wed. - PPI
Thur. - Initial Jobless Claims, Leading Indicators, Philly Fed.
Fri. - None of Note
A few of the more noteworthy companies that release quarterly earnings this week are:
Mon. - Agilent Technologies(A), Lowe’s(LOW)
Tues. - Abercrombie & Fitch(ANF), American Eagle Outfitters(AEOS), Applied Materials(AMAT), Deere & Co.(DE), Estee Lauder(EL), Hewlett Packard(HPQ), Home Depot(HD), JC Penney(JCP), Nordstrom(JWN), Staples(SPLS), TJX(TJX), Wal-Mart Stores(WMT)
Wed. - BEA Systems(BEAS), Medtronic(MDT), Network Appliance(NTAP)
Thur. - Aeropostale(ARO), Autodesk(ADSK), Barnes & Noble(BKS), GameStop(GME), Gap Inc.(GPS), Limited Brands(LTD), Marvell Technology(MRVL)
Fri. - AnnTaylor Stores(ANN)
Other events that have market-moving potential this week include:
Mon. - None of note
Tue. - None of note
Wed. - None of note
Thur. - Semi Book-to-Bill
Fri. - None of note
BOTTOM LINE: I expect US stocks to finish the week mixed-to-lower on energy fears and Retail sector earnings worries. The Retail sector may come under pressure this week on disappointing earnings and high gas prices. However, record homes sales, soaring auto sales and very hot weather in many parts of the country were the main culprits behind any downturn in clothing sales in recent weeks. I would use any temporary weakness in retailers to accumulate select shares ahead of a strong fourth quarter. I continue to believe we are in a consolidation phase within a significant intermediate-term move higher in the major averages. My trading indicators are still giving bullish signals and the Portfolio is 50% net long heading into the week.
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