Bloomberg:
- The Fed is “finished” raising its interest-rate target because Hurricane Katrina will have a “profound effect” on the economy, said Paul McCulley, a managing director at PIMCO.
- President Bush urged “zero tolerance” on looters and other lawbreakers as rescuers stepped up efforts to evacuate more than 40,000 people from New Orleans.
- Gasoline futures rose more than 9% on expectations that refineries shut by Hurricane Katrina will take weeks to recover.
- President Bush will take a ground and another air tour tomorrow of the Gulf region.
- Billionaire investor Kirk Kerkorian will increase his stake in GM to 9.53% from about 7.2%.
- Sales at US retailers including Wal-Mart and Federated rose a healthy 3.6% in August on demand for fall clothing and school supplies.
- The US dollar is headed for its biggest two-day decline versus the euro since mid-July on worries over slower US growth.
Wall Street Journal:
- Hurricane Katrina, which has closed New Orleans port and stranded thousands of loaded barges on the Mississippi River, has depressed prices for corn, wheat and soybeans.
- US government emergency funding for victims of Katrina may add as much as $20 billion to the US deficit.
- Katrina may have left as many as two million people without food or shelter.
- US and foreign carmakers may become indirect victims of Katrina as soaring gas prices prompt consumers to shun gas-guzzling large vehicles that have provided the highest profit in recent years.
- A San Francisco-based startup company, Zoom Systems, hopes Americans will buy costly items such as Bose’s headphones and Apple’s iPod sound systems at vending machines.
NY Times:
- Utilities companies, including New York’s Consolidated Edison, have sent utility crews and trucks to help Entergy, Southern Co. and Cleco restore power in hurricane-damaged areas.
Thursday, September 01, 2005
Incomes/Spending Remain Strong, Jobless Claims Still Healthy, Housing and Manufacturing Slowing
- Personal Income for July rose .3% versus estimates of a .5% gain and a .5% increase in June.
- Personal Spending for July rose 1.0% versus estimates of a 1.0% gain and a 1.0% increase in June.
- PCE Core(MoM) for July rose .1% versus estimates of a .1% gain and an unchanged reading in June.
- Initial Jobless Claims for last week rose to 320K versus estimates of 315K and 317K the prior week
- Continuing Claims rose to 2607K versus estimates of 2575K and 2571K prior.
- Construction Spending for July was unchanged versus estimates of a .5% increase and a .6% decline in June.
- Pending Home Sales for July fell 1.0% versus estimates of an unchanged reading and a .6% fall in June.
- ISM Manufacturing for August fell to 53.6 versus estimates of 57.0 and a reading of 56.6 in July.
- ISM Prices Paid for August rose to 62.5 versus estimates of 52.0 and a reading of 48.5 in July.
- Personal Spending for July rose 1.0% versus estimates of a 1.0% gain and a 1.0% increase in June.
- PCE Core(MoM) for July rose .1% versus estimates of a .1% gain and an unchanged reading in June.
- Initial Jobless Claims for last week rose to 320K versus estimates of 315K and 317K the prior week
- Continuing Claims rose to 2607K versus estimates of 2575K and 2571K prior.
- Construction Spending for July was unchanged versus estimates of a .5% increase and a .6% decline in June.
- Pending Home Sales for July fell 1.0% versus estimates of an unchanged reading and a .6% fall in June.
- ISM Manufacturing for August fell to 53.6 versus estimates of 57.0 and a reading of 56.6 in July.
- ISM Prices Paid for August rose to 62.5 versus estimates of 52.0 and a reading of 48.5 in July.
BOTTOM LINE: US personal spending rose 1.0% for a second month in July, outstripping income gains. The spending increase matched June’s rise as the biggest since May 2004 as consumers jammed automobile showrooms, Bloomberg said. American incomes have now risen 6.3% over the past year, over 2 times the rate of inflation.
The Fed’s favorite inflation gauge, the PCE Core, rose .1%(MoM). So far there is very little evidence that soaring commodity prices are resulting in an inflation issue.
The number of Americans filing first-time claims for jobless benefits edged higher to 320,000 last week, as soaring home sales and strong consumer demand sustained job creation, Bloomberg reported. Jobless claims have now remained at or below 320,000 for seven straight weeks, the best stretch since before the stock market bubble burst in 2000. The four-week average of claims rose to 316,750. The insured employment rate which tracks unemployment rate held steady at 2.0%. I expect jobless claims to rise over the coming weeks due to the effects of Katrina.
US Construction Spending was unchanged in July from a month earlier as a rise in homebuilding was offset by a decline in the value of government-funded projects such as roadwork, Bloomberg said. Continued strength in homebuilding, rebuilding from Katrina and the passage of the highway bill will boost construction substantially over the remainder of the year.
US Manufacturing unexpectedly slowed in August as energy prices surged, Bloomberg said. The Prices Paid component of the index rose by the most in 15 years as commodity prices soared. The component of the index that measures order backlogs rose to 50.5 from 49, which is a positive. I expect manufacturing to continue to slow in the near-term, before rebounding several months from now.
Thursday Watch
Late-Night Headlines
Bloomberg:
- The US Defense Department ordered 10,000 more National Guard troops to states hit by Hurricane Katrina.
- New Orleans water levels have stabilized as nearby Lake Pontchartrain stopped rising, though the city’s flood waters will take as long as a month to return to the lake.
- Buses from Houston will arrive at New Orleans’ Superdome to pick up refugees from the flooded city and take them to the Houston Astrodome, citing Texas Governor Rick Perry.
Financial Times:
- The “petrol crisis” in the US caused by the effects of Hurricane Katrina will be felt globally.
AFP:
- At least 20 oil rigs and platforms are missing and a ruptured pipeline is on fire in the Gulf of Mexico because of Hurricane Katrina.
Late Buy/Sell Recommendations
Goldman Sachs:
- None of note
Night Trading
Asian Indices are +.75% to +1.25% on average.
S&P 500 indicated +.02%.
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
DLM/.05
HRB/-.07
JDSU/-.02
COCO/.13
MRX/.41
SKS/-.20
Upcoming Splits
BJS 2-for-1
EQT 2-for-1
IR 2-for-1
PHM 2-for-1
THQI 3-for-2
WIT 2-for-1
Economic Releases
8:30 am EST
- Personal Income for July is estimated to rise .5% versus a .5% increase in June.
- Personal Spending for July is estimated to increase 1.0% versus a .8% gain in June.
- The PCE Core(MoM) for July is estimated to rise .1% versus a 0.0% change in June.
- Initial Jobless Claims for last week are estimated at 315K versus 315K the prior week.
- Continuing Claims are estimated to fall to 2575K versus 2578K prior.
10:00 pm EST
- Construction Spending for July is estimated to rise .5% versus a .3% decline in June.
- Pending Home Sales for July are estimated to remain unchanged versus a .6% increase in June.
- ISM Manufacturing for August is estimated to rise to 57.0 versus a reading of 56.6 in July.
- ISM Prices Paid for August is estimated to rise to 52.0 versus a reading of 48.5 in July.
Afternoon
- Total Vehicle Sales for August are estimated to fall to 17.2M versus 20.9M in July.
- Domestic Vehicle Sales for August are estimated to fall to 14.1M versus 17.2M in July.
Bloomberg:
- The US Defense Department ordered 10,000 more National Guard troops to states hit by Hurricane Katrina.
- New Orleans water levels have stabilized as nearby Lake Pontchartrain stopped rising, though the city’s flood waters will take as long as a month to return to the lake.
- Buses from Houston will arrive at New Orleans’ Superdome to pick up refugees from the flooded city and take them to the Houston Astrodome, citing Texas Governor Rick Perry.
Financial Times:
- The “petrol crisis” in the US caused by the effects of Hurricane Katrina will be felt globally.
AFP:
- At least 20 oil rigs and platforms are missing and a ruptured pipeline is on fire in the Gulf of Mexico because of Hurricane Katrina.
Late Buy/Sell Recommendations
Goldman Sachs:
- None of note
Night Trading
Asian Indices are +.75% to +1.25% on average.
S&P 500 indicated +.02%.
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
DLM/.05
HRB/-.07
JDSU/-.02
COCO/.13
MRX/.41
SKS/-.20
Upcoming Splits
BJS 2-for-1
EQT 2-for-1
IR 2-for-1
PHM 2-for-1
THQI 3-for-2
WIT 2-for-1
Economic Releases
8:30 am EST
- Personal Income for July is estimated to rise .5% versus a .5% increase in June.
- Personal Spending for July is estimated to increase 1.0% versus a .8% gain in June.
- The PCE Core(MoM) for July is estimated to rise .1% versus a 0.0% change in June.
- Initial Jobless Claims for last week are estimated at 315K versus 315K the prior week.
- Continuing Claims are estimated to fall to 2575K versus 2578K prior.
10:00 pm EST
- Construction Spending for July is estimated to rise .5% versus a .3% decline in June.
- Pending Home Sales for July are estimated to remain unchanged versus a .6% increase in June.
- ISM Manufacturing for August is estimated to rise to 57.0 versus a reading of 56.6 in July.
- ISM Prices Paid for August is estimated to rise to 52.0 versus a reading of 48.5 in July.
Afternoon
- Total Vehicle Sales for August are estimated to fall to 17.2M versus 20.9M in July.
- Domestic Vehicle Sales for August are estimated to fall to 14.1M versus 17.2M in July.
BOTTOM LINE: Asian indices are higher as falling energy prices boosted exporters in the region. I expect US equities to open higher on gains in Asia. The Portfolio is 50% net long heading into the day.
Wednesday, August 31, 2005
Stocks Finish Higher as Energy Prices Fall Sharply from Highs and Fed "pause" Talk Increases
Indices
S&P 500 1,220.33 +.99%
DJIA 10,481.60 +.66%
NASDAQ 2,152.09 +1.05%
Russell 2000 666.51 +1.95%
DJ Wilshire 5000 12,199.09 +1.13%
S&P Barra Growth 584.38 +.95%
S&P Barra Value 631.65 +1.03%
Morgan Stanley Consumer 581.96 +.70%
Morgan Stanley Cyclical 736.16 +.84%
Morgan Stanley Technology 496.38 +.82%
Transports 3,680.86 +.89%
Utilities 407.46 +1.06%
Put/Call .80 -22.33%
NYSE Arms .79 -28.84%
Volatility(VIX) 12.60 -7.69%
ISE Sentiment 134.00 -6.94%
US Dollar 87.58 -.87%
CRB 329.42 -.53%
Futures Spot Prices
Crude Oil 68.90 -.06%
Unleaded Gasoline 261.45 +5.64%
Natural Gas 11.60 +1.31%
Heating Oil 205.30 -1.10%
Gold 439.20 +.25%
Base Metals 129.38 -.74%
Copper 162.30 +.19%
10-year US Treasury Yield 4.01 -1.86%
Leading Sectors
Oil Tankers +4.38%
Homebuilders +3.96%
Oil Service +3.57%
Lagging Sectors
Insurance +.12%
Hospitals -.04%
Gaming -.25%
Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play
Afternoon Recommendations
Goldman Sachs:
- None of note
Afternoon/Evening Headlines
Bloomberg:
- IAC/InterativeCorp, the tv and Internet services company owned by Barry Diller, plans to enter the US real-estate brokerage business next year to expand beyond offering property and mortgage listings on Web sites.
- Hurricane Katrina may harm the US economy more than initially estimated, economists said.
- President Bush said it “will take years” for the US Gulf Coast to recover from Hurricane Katrina and pledged the full resources of the federal government to aiding the storm-ravaged region.
- US Treasuries surged after an index showed Chicago-area manufacturing contracted in August for the first time since 2003 and economists increased worries over the effects of the hurricane.
Cnet News.com:
- Google is buying ad pages in technology publications including PC Magazine and Maximum PC and reselling the space to its online ad clients.
AP:
- New Orleans Mayor Ray Nagins said Hurricane Katrina may have killed hundreds, and possibly thousands, of people in the city.
S&P 500 1,220.33 +.99%
DJIA 10,481.60 +.66%
NASDAQ 2,152.09 +1.05%
Russell 2000 666.51 +1.95%
DJ Wilshire 5000 12,199.09 +1.13%
S&P Barra Growth 584.38 +.95%
S&P Barra Value 631.65 +1.03%
Morgan Stanley Consumer 581.96 +.70%
Morgan Stanley Cyclical 736.16 +.84%
Morgan Stanley Technology 496.38 +.82%
Transports 3,680.86 +.89%
Utilities 407.46 +1.06%
Put/Call .80 -22.33%
NYSE Arms .79 -28.84%
Volatility(VIX) 12.60 -7.69%
ISE Sentiment 134.00 -6.94%
US Dollar 87.58 -.87%
CRB 329.42 -.53%
Futures Spot Prices
Crude Oil 68.90 -.06%
Unleaded Gasoline 261.45 +5.64%
Natural Gas 11.60 +1.31%
Heating Oil 205.30 -1.10%
Gold 439.20 +.25%
Base Metals 129.38 -.74%
Copper 162.30 +.19%
10-year US Treasury Yield 4.01 -1.86%
Leading Sectors
Oil Tankers +4.38%
Homebuilders +3.96%
Oil Service +3.57%
Lagging Sectors
Insurance +.12%
Hospitals -.04%
Gaming -.25%
Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play
Afternoon Recommendations
Goldman Sachs:
- None of note
Afternoon/Evening Headlines
Bloomberg:
- IAC/InterativeCorp, the tv and Internet services company owned by Barry Diller, plans to enter the US real-estate brokerage business next year to expand beyond offering property and mortgage listings on Web sites.
- Hurricane Katrina may harm the US economy more than initially estimated, economists said.
- President Bush said it “will take years” for the US Gulf Coast to recover from Hurricane Katrina and pledged the full resources of the federal government to aiding the storm-ravaged region.
- US Treasuries surged after an index showed Chicago-area manufacturing contracted in August for the first time since 2003 and economists increased worries over the effects of the hurricane.
Cnet News.com:
- Google is buying ad pages in technology publications including PC Magazine and Maximum PC and reselling the space to its online ad clients.
AP:
- New Orleans Mayor Ray Nagins said Hurricane Katrina may have killed hundreds, and possibly thousands, of people in the city.
BOTTOM LINE: The Portfolio finished slightly lower today on losses in my Oil Tanker shorts and Internet longs. I covered a few shorts and added RUTH long in the afternoon, thus leaving the Portfolio 50% net long. I am using an $18 stop-loss on this position. The tone of the market was positive today as the advance/decline line finished substantially higher, almost every sector rose and volume was about average. Measures of investor anxiety were mostly lower into the close. Overall, today’s market action was very positive. Today’s rally was mainly a function of investors’ belief that the Fed may pause for awhile as a result of the spike in gas prices and devastation in the Gulf. While near-term stocks may move higher, another test of the recent lows is likely as more economic data disappoints over the coming weeks. I believe oil has finally seen its highs for the year and will begin an accelerated move downwards over the next few weeks. From now on, any gains in gasoline prices will likely be viewed as a negative for crude prices.
Stocks Modestly Higher Mid-day on Decline in Long-term Rates and Reversal in Energy Prices
Indices
S&P 500 1,211.27 +.24%
DJIA 10,424.76 +.12%
NASDAQ 2,137.25 +.35%
Russell 2000 661.67 +1.21%
DJ Wilshire 5000 12,112.46 +.41%
S&P Barra Growth 580.37 +.26%
S&P Barra Value 626.82 +.25%
Morgan Stanley Consumer 578.04 +.02%
Morgan Stanley Cyclical 730.23 +.02%
Morgan Stanley Technology 493.74 +.30%
Transports 3,655.37 +.20%
Utilities 404.88 +.42%
Put/Call .77 -25.24%
NYSE Arms 1.13 +2.29%
Volatility(VIX) 13.32 -2.34%
ISE Sentiment 134.00 -6.94%
US Dollar 87.60 -.85%
CRB 328.27 -.88%
Futures Spot Prices
Crude Oil 67.80 -2.74%
Unleaded Gasoline 260.00 +5.05%
Natural Gas 11.25 -3.51%
Heating Oil 203.25 -2.09%
Gold 438.50 +.69%
Base Metals 129.38 -.74%
Copper 162.00 -1.64%
10-year US Treasury Yield 4.02% -1.59%
Leading Sectors
Oil Tankers +4.24%
Homebuilders +2.75%
Oil Service +2.34%
Lagging Sectors
Airlines -.64%
Insurance -1.06%
Gaming -1.33%
S&P 500 1,211.27 +.24%
DJIA 10,424.76 +.12%
NASDAQ 2,137.25 +.35%
Russell 2000 661.67 +1.21%
DJ Wilshire 5000 12,112.46 +.41%
S&P Barra Growth 580.37 +.26%
S&P Barra Value 626.82 +.25%
Morgan Stanley Consumer 578.04 +.02%
Morgan Stanley Cyclical 730.23 +.02%
Morgan Stanley Technology 493.74 +.30%
Transports 3,655.37 +.20%
Utilities 404.88 +.42%
Put/Call .77 -25.24%
NYSE Arms 1.13 +2.29%
Volatility(VIX) 13.32 -2.34%
ISE Sentiment 134.00 -6.94%
US Dollar 87.60 -.85%
CRB 328.27 -.88%
Futures Spot Prices
Crude Oil 67.80 -2.74%
Unleaded Gasoline 260.00 +5.05%
Natural Gas 11.25 -3.51%
Heating Oil 203.25 -2.09%
Gold 438.50 +.69%
Base Metals 129.38 -.74%
Copper 162.00 -1.64%
10-year US Treasury Yield 4.02% -1.59%
Leading Sectors
Oil Tankers +4.24%
Homebuilders +2.75%
Oil Service +2.34%
Lagging Sectors
Airlines -.64%
Insurance -1.06%
Gaming -1.33%
BOTTOM LINE: The Portfolio is lower mid-day on losses in my Internet longs and Oil Tanker shorts. I added to my IWM and QQQQ shorts this morning, thus leaving the Portfolio 25% net long. The tone of the market is positive as the advance/decline line is higher, sector performance is mixed and volume is below average. Measures of investor anxiety are mixed. Today’s overall market action is very positive given the disappointing Chicago PMI and rise in gas prices. I expect US stocks to trade mixed from current levels into the close as short-covering offsets worries over economic growth.
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