BOTTOM LINE: Growth at US service companies unexpectedly accelerated in August, suggesting the economy was strong even as energy prices rose before Hurricane Katrina struck, Bloomberg said. The new orders component of the index rose to 65.8, the highest in two years. Export orders soared from 53.5 in July to 63.5. The prices paid component of the index fell to 67.1 from 70.3 in July. Finally, the employment gauge rose to 59.6 from 56.2 in July. This was a very positive report. However, the effects of Katrina will hurt future Non-ISM readings for several months.
Tuesday, September 06, 2005
ISM Non-Manufacturing New Orders Highest in Two Years
- ISM Non-Manufacturing for August rose to 65.0 versus estimates of 60.0 and a reading of 60.5 in July.
Monday, September 05, 2005
Monday Watch
Weekend Headlines
Bloomberg:
- Traders are the most bearish toward the dollar since March on speculation the Fed may pause after 10 consecutive quarter-point interest-rate increases, a Bloomberg News survey shows.
- President Bush will nominate federal appeal court Judge John G. Roberts to replace William H. Rehnquist as chief justice of the US Supreme Court.
- The US dollar is rising against the euro for the first day in five in Asia on speculation its biggest two-week decline since December was excessive.
- Crude oil is falling for a second day in NY after producers including BP Plc resumed output in the US Gulf of Mexico and refineries in coastal states restarted after Hurricane Katrina.
- Chiron, a US vaccine maker recovering from a manufacturing shutdown, rejected Novartis AG’s $4.5 billion cash offer as “inadequate” as Chiron’s flu treatment moves closer to returning to the US market.
Barron’s:
- Sell-side strategists surveyed by Barron’s say the US stock market can rise 5 percent to 10 percent in the last four months of the year.
New York Times:
- Security of personal information and a perceived loss of control are two of the biggest reasons people don’t bank online, according to a Synergistics Research market poll.
- Manhattan’s gap between the rich and poor, on the basis of earnings, is greater than in any other county in the country.
- Harley-Davidson is among companies that have kept manufacturing jobs in the US by improving products and increasing efficiency.
- Hedge funds may be headed for another collapse because they are buying assets that are hard to sell quickly and borrowing more to increase returns, citing Andrew Lo, a fund manager.
- Iran yesterday rejected a European request to stop its nuclear program or face possible sanctions.
- Sales may be cut by the effects of Hurricane Katrina at online travel companies including Travelocity.com, Expedia and Orbitz, as well as at some specialty retailers.
USA Today:
- BellSouth Corp. may lose as much as $1 billion in sales as a result of damage from Hurricane Katrina, citing Jeff Bray, an analyst at Babson Capital Management LLC.
AFP:
- Former Iraqi Dictator Saddam Hussein will go on trial for murder from Oct. 19, four days after the referendum on the nation’s new constitution is scheduled to occur.
Observer:
- UK and US insurers will face more than $40 billion in claims for damage caused by Hurricane Katrina, citing a leaked document from forecasters within the Lloyds of London insurance market.
Oriental Morning Post:
- Prices of China’s commercial properties will fall in the second half because of oversupply, citing a report by the Ministry of Commerce.
Nihon Keizai:
- Japanese refiners including Nippon Oil Corp. and Idemitsu Kosan are preparing to draw down stockpiles of oil products and may export supplies to the US.
Weekend Recommendations
Barron's:
- Had positive comments on AVID, NUE, TXI, CAT, QNTA and ASTE.
Goldman Sachs:
- Reiterated Outperform on MDT, WAG and EBAY.
- Reiterated Underperform on STX.
Night Trading
Asian indices are +.25% to +.75% on average.
S&P 500 indicated +.37%.
NASDAQ 100 indicated +.38%.
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
SHFL/.21
Upcoming Splits
TIE 2-for-1
Economic Releases
10:00 am EST
- ISM Non-Manufacturing for August is estimated to fall to 60.0 from 60.5 in July.
Bloomberg:
- Traders are the most bearish toward the dollar since March on speculation the Fed may pause after 10 consecutive quarter-point interest-rate increases, a Bloomberg News survey shows.
- President Bush will nominate federal appeal court Judge John G. Roberts to replace William H. Rehnquist as chief justice of the US Supreme Court.
- The US dollar is rising against the euro for the first day in five in Asia on speculation its biggest two-week decline since December was excessive.
- Crude oil is falling for a second day in NY after producers including BP Plc resumed output in the US Gulf of Mexico and refineries in coastal states restarted after Hurricane Katrina.
- Chiron, a US vaccine maker recovering from a manufacturing shutdown, rejected Novartis AG’s $4.5 billion cash offer as “inadequate” as Chiron’s flu treatment moves closer to returning to the US market.
Barron’s:
- Sell-side strategists surveyed by Barron’s say the US stock market can rise 5 percent to 10 percent in the last four months of the year.
New York Times:
- Security of personal information and a perceived loss of control are two of the biggest reasons people don’t bank online, according to a Synergistics Research market poll.
- Manhattan’s gap between the rich and poor, on the basis of earnings, is greater than in any other county in the country.
- Harley-Davidson is among companies that have kept manufacturing jobs in the US by improving products and increasing efficiency.
- Hedge funds may be headed for another collapse because they are buying assets that are hard to sell quickly and borrowing more to increase returns, citing Andrew Lo, a fund manager.
- Iran yesterday rejected a European request to stop its nuclear program or face possible sanctions.
- Sales may be cut by the effects of Hurricane Katrina at online travel companies including Travelocity.com, Expedia and Orbitz, as well as at some specialty retailers.
USA Today:
- BellSouth Corp. may lose as much as $1 billion in sales as a result of damage from Hurricane Katrina, citing Jeff Bray, an analyst at Babson Capital Management LLC.
AFP:
- Former Iraqi Dictator Saddam Hussein will go on trial for murder from Oct. 19, four days after the referendum on the nation’s new constitution is scheduled to occur.
Observer:
- UK and US insurers will face more than $40 billion in claims for damage caused by Hurricane Katrina, citing a leaked document from forecasters within the Lloyds of London insurance market.
Oriental Morning Post:
- Prices of China’s commercial properties will fall in the second half because of oversupply, citing a report by the Ministry of Commerce.
Nihon Keizai:
- Japanese refiners including Nippon Oil Corp. and Idemitsu Kosan are preparing to draw down stockpiles of oil products and may export supplies to the US.
Weekend Recommendations
Barron's:
- Had positive comments on AVID, NUE, TXI, CAT, QNTA and ASTE.
Goldman Sachs:
- Reiterated Outperform on MDT, WAG and EBAY.
- Reiterated Underperform on STX.
Night Trading
Asian indices are +.25% to +.75% on average.
S&P 500 indicated +.37%.
NASDAQ 100 indicated +.38%.
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
SHFL/.21
Upcoming Splits
TIE 2-for-1
Economic Releases
10:00 am EST
- ISM Non-Manufacturing for August is estimated to fall to 60.0 from 60.5 in July.
BOTTOM LINE: Asian Indices are higher, spurred by gains in exporters in the region as energy prices fall. I expect US stocks to open modestly higher on gains in Asia and lower energy prices. The Portfolio is Market Neutral heading into the week.
Sunday, September 04, 2005
***Alert***
Due to a scheduling conflict I will be unable to blog this holiday weekend. I will post the Tuesday Watch late Monday night.
Saturday, September 03, 2005
Weekly Scoreboard*
Indices
S&P 500 1,218.02 +1.07%
DJIA 10,447.37 +.48%
NASDAQ 2,141.07 +.96%
Russell 2000 663.33 +2.26%
DJ Wilshire 5000 12,173.54 +1.27%
S&P Equity Long/Short Index 1,059.05 +.47%
S&P Barra Growth 582.29 +.86%
S&P Barra Value 631.49 +1.28%
Morgan Stanley Consumer 582.69 +.82%
Morgan Stanley Cyclical 737.68 +1.03%
Morgan Stanley Technology 494.46 +.69%
Transports 3,652.55 -.40%
Utilities 414.23 +3.58%
S&P 500 Cum A/D Line 7,781.00 +.97%
Bloomberg Crude Oil % Bulls 51.0 +.29%
Put/Call 1.13 -4.24%
NYSE Arms 1.18 -29.76%
Volatility(VIX) 13.57 -1.09%
ISE Sentiment 190.00 +10.47%
AAII % Bulls 31.76 -12.12%
US Dollar 86.30 -1.79%
CRB 331.35 +4.49%
Futures Spot Prices
Crude Oil 67.57 +1.99%
Unleaded Gasoline 218.37 +17.97%
Natural Gas 11.69 +19.05%
Heating Oil 209.11 +11.52%
Gold 447.80 +1.29%
Base Metals 131.91 +1.48%
Copper 167.15 +1.73%
10-year US Treasury Yield 4.03% -3.58%
Average 30-year Mortgage Rate 5.71% -1.04%
Leading Sectors
Alternative Energy +8.24%
Steel +7.69%
Energy +6.24%
Lagging Sectors
Retail -2.25%
Restaurants -4.18%
Airlines -8.54%
One-Week High-Volume Gainers
One-Week High-Volume Losers
*5-Day % Change
S&P 500 1,218.02 +1.07%
DJIA 10,447.37 +.48%
NASDAQ 2,141.07 +.96%
Russell 2000 663.33 +2.26%
DJ Wilshire 5000 12,173.54 +1.27%
S&P Equity Long/Short Index 1,059.05 +.47%
S&P Barra Growth 582.29 +.86%
S&P Barra Value 631.49 +1.28%
Morgan Stanley Consumer 582.69 +.82%
Morgan Stanley Cyclical 737.68 +1.03%
Morgan Stanley Technology 494.46 +.69%
Transports 3,652.55 -.40%
Utilities 414.23 +3.58%
S&P 500 Cum A/D Line 7,781.00 +.97%
Bloomberg Crude Oil % Bulls 51.0 +.29%
Put/Call 1.13 -4.24%
NYSE Arms 1.18 -29.76%
Volatility(VIX) 13.57 -1.09%
ISE Sentiment 190.00 +10.47%
AAII % Bulls 31.76 -12.12%
US Dollar 86.30 -1.79%
CRB 331.35 +4.49%
Futures Spot Prices
Crude Oil 67.57 +1.99%
Unleaded Gasoline 218.37 +17.97%
Natural Gas 11.69 +19.05%
Heating Oil 209.11 +11.52%
Gold 447.80 +1.29%
Base Metals 131.91 +1.48%
Copper 167.15 +1.73%
10-year US Treasury Yield 4.03% -3.58%
Average 30-year Mortgage Rate 5.71% -1.04%
Leading Sectors
Alternative Energy +8.24%
Steel +7.69%
Energy +6.24%
Lagging Sectors
Retail -2.25%
Restaurants -4.18%
Airlines -8.54%
One-Week High-Volume Gainers
One-Week High-Volume Losers
*5-Day % Change
Friday, September 02, 2005
Stocks Mixed Mid-day on Economic Concerns Related to the Hurricane
Indices
S&P 500 1,220.30 -.10%
DJIA 10,471.03 +.11%
NASDAQ 2,145.21 -.13%
Russell 2000 664.48 -.59%
DJ Wilshire 5000 12,193.27 -.19%
S&P Barra Growth 583.35 -.10%
S&P Barra Value 632.71 -.11%
Morgan Stanley Consumer 583.81 +.60%
Morgan Stanley Cyclical 739.65 +.32%
Morgan Stanley Technology 495.44 +.01%
Transports 3,670.94 -.01%
Utilities 414.45 -.43%
Put/Call 1.13 +29.88%
NYSE Arms 1.07 -12.64%
Volatility(VIX) 13.30 +1.14%
ISE Sentiment 192.00 +25.49%
US Dollar 86.24 -.35%
CRB 331.33 -1.45%
Futures Spot Prices
Crude Oil 67.57 -2.74%
Unleaded Gasoline 218.37 -9.35%
Natural Gas 11.69 -.56%
Heating Oil 209.11 -4.89%
Gold 447.50 +.22%
Base Metals 131.91 +1.20%
Copper 167.30 +1.52%
10-year US Treasury Yield 4.03% +.09%
Leading Sectors %
Foods +.60%
Drugs +.56%
Steel
+.53%
Lagging Sectors
Computer Hardware -1.57%
Energy -1.94%
Oil Service -2.05%
S&P 500 1,220.30 -.10%
DJIA 10,471.03 +.11%
NASDAQ 2,145.21 -.13%
Russell 2000 664.48 -.59%
DJ Wilshire 5000 12,193.27 -.19%
S&P Barra Growth 583.35 -.10%
S&P Barra Value 632.71 -.11%
Morgan Stanley Consumer 583.81 +.60%
Morgan Stanley Cyclical 739.65 +.32%
Morgan Stanley Technology 495.44 +.01%
Transports 3,670.94 -.01%
Utilities 414.45 -.43%
Put/Call 1.13 +29.88%
NYSE Arms 1.07 -12.64%
Volatility(VIX) 13.30 +1.14%
ISE Sentiment 192.00 +25.49%
US Dollar 86.24 -.35%
CRB 331.33 -1.45%
Futures Spot Prices
Crude Oil 67.57 -2.74%
Unleaded Gasoline 218.37 -9.35%
Natural Gas 11.69 -.56%
Heating Oil 209.11 -4.89%
Gold 447.50 +.22%
Base Metals 131.91 +1.20%
Copper 167.30 +1.52%
10-year US Treasury Yield 4.03% +.09%
Leading Sectors %
Foods +.60%
Drugs +.56%
Steel
+.53%
Lagging Sectors
Computer Hardware -1.57%
Energy -1.94%
Oil Service -2.05%
BOTTOM LINE: The Portfolio is unchanged mid-day as gains in my Oil Tanker shorts and Internet longs offset losses in my Financial longs. I added to some existing shorts this morning and added a few new energy-related shorts, thus leaving the Portfolio market neutral(%long -%short=0). One of my new shorts is VLO and I am using a $115 stop-loss on this position. The tone of the market is modestly negative as the advance/decline line is lower, sector performance is mixed and volume is very light. Measures of investor anxiety are mixed. Today’s overall market action is negative given the decline in energy prices. The ECRI Weekly Leading Index fell slightly to 135.20 this week from 135.30 the prior week. This is up from 132.00 during the last week of May and still very near the cycle highs of 135.90 set in mid-March. It is forecasting stabilizing healthy economic growth, however I expect it to begin heading lower next week. I expect US stocks to trade mixed-to-lower from current levels into the close as worries over economic growth offset short-covering ahead of the three-day weekend.
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