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BOTTOM LINE: I am unable to post a full evening review due to a scheduling conflict. I will post the Thursday Watch at its regular time tonight. The Portfolio finished higher today and I am positioned 75% net long.
Wednesday, August 17, 2005
Stocks Higher Mid-day on Lower Energy Prices
Indices
S&P 500 1,222.65 +.27%
DJIA 10,565.20 +.49%
NASDAQ 2,149.48 +.58%
Russell 2000 656.71 +.32%
DJ Wilshire 5000 12,177.42 +.21%
S&P Barra Growth 585.49 +.33%
S&P Barra Value 633.38 +.30%
Morgan Stanley Consumer 587.03 +.23%
Morgan Stanley Cyclical 744.27 +.43%
Morgan Stanley Technology 505.51 +1.13%
Transports 3,725.60 +.55%
Utilities 391.30 -.04%
Put/Call 1.06 +1.92%
NYSE Arms .96 -55.11%
Volatility(VIX) 13.16 -2.66%
ISE Sentiment 164.00 +19.71%
US Dollar 87.94 +.62%
CRB 314.41 -1.62%
Futures Spot Prices
Crude Oil 63.85 -3.37%
Unleaded Gasoline 191.75 -3.33%
Natural Gas 9.49 -2.69%
Heating Oil 181.00 -2.90%
Gold 445.20 -1.40%
Base Metals 128.16 -2.63%
Copper 165.70 -3.35%
10-year US Treasury Yield 4.25% +1.24%
Leading Sectors
Computer Hardware +2.24%
Airlines +2.26%
Semis +1.55%
Lagging Sectors
Energy -2.0%
Gold & Silver -2.23%
Oil Tankers -2.24%
S&P 500 1,222.65 +.27%
DJIA 10,565.20 +.49%
NASDAQ 2,149.48 +.58%
Russell 2000 656.71 +.32%
DJ Wilshire 5000 12,177.42 +.21%
S&P Barra Growth 585.49 +.33%
S&P Barra Value 633.38 +.30%
Morgan Stanley Consumer 587.03 +.23%
Morgan Stanley Cyclical 744.27 +.43%
Morgan Stanley Technology 505.51 +1.13%
Transports 3,725.60 +.55%
Utilities 391.30 -.04%
Put/Call 1.06 +1.92%
NYSE Arms .96 -55.11%
Volatility(VIX) 13.16 -2.66%
ISE Sentiment 164.00 +19.71%
US Dollar 87.94 +.62%
CRB 314.41 -1.62%
Futures Spot Prices
Crude Oil 63.85 -3.37%
Unleaded Gasoline 191.75 -3.33%
Natural Gas 9.49 -2.69%
Heating Oil 181.00 -2.90%
Gold 445.20 -1.40%
Base Metals 128.16 -2.63%
Copper 165.70 -3.35%
10-year US Treasury Yield 4.25% +1.24%
Leading Sectors
Computer Hardware +2.24%
Airlines +2.26%
Semis +1.55%
Lagging Sectors
Energy -2.0%
Gold & Silver -2.23%
Oil Tankers -2.24%
BOTTOM LINE: The Portfolio is higher mid-day on gains in my Computer, Medical and Retail longs. I exited my IWM and QQQQ shorts this morning, thus leaving the Portfolio 75% net long. The tone of the market is positive as the advance/decline line is higher, most sectors are rising and volume is below average. Measures of investor anxiety are mostly lower. Today’s overall market action is modestly positive, considering the decline in energy prices, above-expectations PPI report and rise in long-term rates. Insider Buy of Note: A director of Capital One Financial (COF) recently purchased 232,980 shares at an average price of $83.13, bringing his total holdings to 854,445 shares. This stock is near a 52-week high. I expect US stocks to trade mixed-to-higher from current levels into the close on lower energy prices.
Today's Headlines
Bloomberg:
- United Parcel Service said it ordered eight Boeing 747-400 aircraft as international deliveries grow.
- The US dollar reached a two-week high against the euro as a government report showed the biggest gain in producer prices since October.
- Crude oil is falling almost $2/bbl. in NY, the biggest decline in a month, after a government report showed that US refineries have sufficient supplies to make gasoline for the final weeks of summer.
NY Times:
- The US State Department warned the Clinton administration that Osama bin Laden’s move to Afghanistan from Sudan might harm US interests in the long run, citing a declassified memo.
- Attacks against US troops in Mosul, Iraq’s second-biggest city, fell in July to the lowest level in the year while Iraqi police in the city were attacked more often.
Wall Street Journal:
- Forecasts that Apple Computer will introduce a flash-memory-based iPod music player are boosting demand for NAND flash-memory chips.
- Mutual funds that copy hedge funds’ investment strategies are increasingly becoming a part of pension plans.
USA Today:
- More than 40% of Mexican adults say they would move to the US if they could, and one in five say they would break the law to do so, citing polls taken by the Pew Hispanic Center.
- United Parcel Service said it ordered eight Boeing 747-400 aircraft as international deliveries grow.
- The US dollar reached a two-week high against the euro as a government report showed the biggest gain in producer prices since October.
- Crude oil is falling almost $2/bbl. in NY, the biggest decline in a month, after a government report showed that US refineries have sufficient supplies to make gasoline for the final weeks of summer.
NY Times:
- The US State Department warned the Clinton administration that Osama bin Laden’s move to Afghanistan from Sudan might harm US interests in the long run, citing a declassified memo.
- Attacks against US troops in Mosul, Iraq’s second-biggest city, fell in July to the lowest level in the year while Iraqi police in the city were attacked more often.
Wall Street Journal:
- Forecasts that Apple Computer will introduce a flash-memory-based iPod music player are boosting demand for NAND flash-memory chips.
- Mutual funds that copy hedge funds’ investment strategies are increasingly becoming a part of pension plans.
USA Today:
- More than 40% of Mexican adults say they would move to the US if they could, and one in five say they would break the law to do so, citing polls taken by the Pew Hispanic Center.
Producer Prices Rise, Distillate Inventories Gain Less-than-expected
- The Producer Price Index for July rose 1.0% versus estimates of a .5% increase and an unchanged reading in June.
- The PPI Ex Food & Energy for July rose .4% versus estimates of a .1% increase and a .1% fall in June.
- The EIA reported that crude inventories rose 241K barrels vs. estimates of a 1.25M gain. Gas inventories fell 4.97M barrels vs. estimates of a 1.5M barrel fall. Distillate inventories rose 1.19M barrels vs. estimates of a 1.9M barrel rise.
- The PPI Ex Food & Energy for July rose .4% versus estimates of a .1% increase and a .1% fall in June.
- The EIA reported that crude inventories rose 241K barrels vs. estimates of a 1.25M gain. Gas inventories fell 4.97M barrels vs. estimates of a 1.5M barrel fall. Distillate inventories rose 1.19M barrels vs. estimates of a 1.9M barrel rise.
BOTTOM LINE: Prices paid to US producers rose in July by the most in nine months as energy costs surged, Bloomberg reported. As well, the core measure rose the most since January. Costs of intermediate goods rose 1.0% versus a .1% gain in June. Food prices fell .3% after a 1.1% decline in June and capital equipment prices rose .5% following a decline of .2%. The Producer Price Index has a high correlation with the Commodity Research Bureau Index. The last time we saw a run-up in the CRB and the PPI spiked, worries that increases would spill over into the CPI proved unfounded. I expect the same this time.
This is the first time in recent memory that oil has reacted negatively to bullish inventory data. Crude is down $1.20/bbl. This is bullish for stocks.
Tuesday, August 16, 2005
Wednesday Watch
Late-Night Headlines
Bloomberg:
- The US dollar is rising for a fourth day against the euro in Asia on speculation international investors are increasing purchases of US debt to boost returns.
- Qwest Communications International and a union representing its workers tentatively agreed on a new contract for 25,000 employees.
NY Times:
- Arizona and New Mexico are diverting federal and state money to strengthen local law enforcement near the border.
Newsweek:
- NYSE CEO Thain is willing to settle a lawsuit with the Big Board’s former CEO Grasso for $25 million.
ABC News:
- Police in California disrupted what they said was a plot to attack Jewish sites and military targets in the LA area on the anniversary of the Sept. 11 terror attacks.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on SYMC.
- Reiterated Underperform on DE and AMAT.
Night Trading
Asian Indices are -.50% to unch. on average.
S&P 500 indicated +.12%.
NASDAQ 100 indicated +.09%.
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
BEAS/.09
BLI/-.11
HOTT/.03
MDT/.49
MW/.46
NTAP/.15
ROST/.29
CRM/.04
SNPS/.08
TLB/.34
TOO/.11
Upcoming Splits
None of note
Economic Releases
8:30 am EST
- The Producer Price Index for July is estimated to rise .5% versus an unchanged reading in June.
- The PPI Ex Food & Energy for July is estimated to rise .1% versus a .1% decline in June.
Bloomberg:
- The US dollar is rising for a fourth day against the euro in Asia on speculation international investors are increasing purchases of US debt to boost returns.
- Qwest Communications International and a union representing its workers tentatively agreed on a new contract for 25,000 employees.
NY Times:
- Arizona and New Mexico are diverting federal and state money to strengthen local law enforcement near the border.
Newsweek:
- NYSE CEO Thain is willing to settle a lawsuit with the Big Board’s former CEO Grasso for $25 million.
ABC News:
- Police in California disrupted what they said was a plot to attack Jewish sites and military targets in the LA area on the anniversary of the Sept. 11 terror attacks.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on SYMC.
- Reiterated Underperform on DE and AMAT.
Night Trading
Asian Indices are -.50% to unch. on average.
S&P 500 indicated +.12%.
NASDAQ 100 indicated +.09%.
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
BEAS/.09
BLI/-.11
HOTT/.03
MDT/.49
MW/.46
NTAP/.15
ROST/.29
CRM/.04
SNPS/.08
TLB/.34
TOO/.11
Upcoming Splits
None of note
Economic Releases
8:30 am EST
- The Producer Price Index for July is estimated to rise .5% versus an unchanged reading in June.
- The PPI Ex Food & Energy for July is estimated to rise .1% versus a .1% decline in June.
BOTTOM LINE: Asian indices are mostly lower, led down by exporters in the region. I expect US equities to open mixed-to-higher as strength in the tech sector more than offsets inflation and energy worries. The Portfolio is 25% net long heading into the day.
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