Monday, December 19, 2005
Sunday, December 18, 2005
Monday Watch
Weekend Headlines
Bloomberg:
- Wal-Mart Stores said December same-store sales at its US stores are rising within its forecast.
- Vice President Dick Cheney made a surprise visit to Iraq, landing at Baghdad International Airport last night for meetings with local officials and hailing the “tremendous results” of last week’s elections there.
- Afghanistan will inaugurate its first parliament since 1969 at a ceremony today, following elections for the assembly held in September.
- Goldman Sachs, the world’s leading adviser on corporate mergers, reclaimed the top spot in a record year for takeovers in Asia outside Japan after arranging the biggest transactions in China.
Wall Street Journal:
- The US Patent and Trademark Office plans to accelerate its reexamination of five patents held by NTP that could be used to ban Research in Motion’s Blackberry device and e-mail service in the US.
- Vonage Holdings plans to raise another $250 million in a private sale of convertible debt, bringing the total raised by the Internet-based telephone carrier to $658 million.
NY Times:
- Chinese authorities have beaten, bribed and threatened residents of the southern village of Dongzhou to try to prevent them from disclosing details about a clash with security services on Dec. 6.
- The city of New Orleans will soon begin demolishing thousands of the homes most severely damaged by the flooding following Hurricane Katrina in the next several weeks.
- New Jersey awarded $5 million in grants for stem-cell research, becoming the first state to use public funds for that purpose.
- US Airways Group’s merger with America West Holdings may prompt further consolidation in the airline industry.
- eBay’s PayPal has grown to service more than 86.6 million accounts in 55 countries and it expects to process $25 billion in money transfers this year.
NY Post:
- Sirius Satellite Radio on average has spent more than $150 for each of the 1.06 million subscribers it’s gained as of Jan. 1.
San Francisco Chronicle:
- Google receives 150,000 resumes a month and uses perks including free food and annual ski trips to lure new hires.
San Jose Mercury News:
- Random security screening of passengers will return at airports Dec.22, two years after they were dropped.
Philadelphia Inquirer:
- United Parcel Service’s discount shipping offered on the Internet is undercutting the profit its UPS Store franchisees make on in-store fees.
LA Times:
- More victims of Hurricane Katrina came from middle-class neighborhoods than was previously thought, citing data from the state of Louisiana.
Financial Times:
- Music downloads are beginning to offset the decline in compact disc sales, citing unidentified record company executives.
- Lehman Brothers Holdings, Goldman Sachs Group and Bear Stearns will increase staff levels in 2006 after all three investment backs reported record profits.
AP:
- Most Americans favor leaving troops in Iraq until the country is stabilized, citing a Dec. 13-15 AP-Ipsos poll.
Nihon Keizai:
- Japan’s government expects the world’s second-largest economy to grow 1.9% in real terms next fiscal year.
Commercial Times:
- Acer Inc. forecasts its notebook computer sales will expand 50% in 2006 from this year, citing Chairman JT Wang.
Sunday Times:
- The value of acquisitions made by buyout firms this year will increase 12% to $41 billion, the most since 2000.
Iranian Republic News Agency:
- China and Iran may complete an agreement in January on the purchase of liquefied natural gas and investment in an Iranian oilfield, citing Iran’s deputy oil minister.
Weekend Recommendations
Barron's:
- Had positive comments on BA, NAPS, TRB, TIF, FDX, OSG, UTX, GE, ITT and AIG.
Goldman Sachs:
- Reiterated Outperform on PFE.
Night Trading
Asian indices are +.50% to +1.0% on average.
S&P 500 indicated +.20%.
NASDAQ 100 indicated +.12%.
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
CC/.04
Upcoming Splits
HYSL 3-for-2
Economic Releases
1:00 pm EST
- The NAHB Housing Market Index for December is estimates to rise to 61 versus a reading of 60 in November.
Bloomberg:
- Wal-Mart Stores said December same-store sales at its US stores are rising within its forecast.
- Vice President Dick Cheney made a surprise visit to Iraq, landing at Baghdad International Airport last night for meetings with local officials and hailing the “tremendous results” of last week’s elections there.
- Afghanistan will inaugurate its first parliament since 1969 at a ceremony today, following elections for the assembly held in September.
- Goldman Sachs, the world’s leading adviser on corporate mergers, reclaimed the top spot in a record year for takeovers in Asia outside Japan after arranging the biggest transactions in China.
Wall Street Journal:
- The US Patent and Trademark Office plans to accelerate its reexamination of five patents held by NTP that could be used to ban Research in Motion’s Blackberry device and e-mail service in the US.
- Vonage Holdings plans to raise another $250 million in a private sale of convertible debt, bringing the total raised by the Internet-based telephone carrier to $658 million.
NY Times:
- Chinese authorities have beaten, bribed and threatened residents of the southern village of Dongzhou to try to prevent them from disclosing details about a clash with security services on Dec. 6.
- The city of New Orleans will soon begin demolishing thousands of the homes most severely damaged by the flooding following Hurricane Katrina in the next several weeks.
- New Jersey awarded $5 million in grants for stem-cell research, becoming the first state to use public funds for that purpose.
- US Airways Group’s merger with America West Holdings may prompt further consolidation in the airline industry.
- eBay’s PayPal has grown to service more than 86.6 million accounts in 55 countries and it expects to process $25 billion in money transfers this year.
NY Post:
- Sirius Satellite Radio on average has spent more than $150 for each of the 1.06 million subscribers it’s gained as of Jan. 1.
San Francisco Chronicle:
- Google receives 150,000 resumes a month and uses perks including free food and annual ski trips to lure new hires.
San Jose Mercury News:
- Random security screening of passengers will return at airports Dec.22, two years after they were dropped.
Philadelphia Inquirer:
- United Parcel Service’s discount shipping offered on the Internet is undercutting the profit its UPS Store franchisees make on in-store fees.
LA Times:
- More victims of Hurricane Katrina came from middle-class neighborhoods than was previously thought, citing data from the state of Louisiana.
Financial Times:
- Music downloads are beginning to offset the decline in compact disc sales, citing unidentified record company executives.
- Lehman Brothers Holdings, Goldman Sachs Group and Bear Stearns will increase staff levels in 2006 after all three investment backs reported record profits.
AP:
- Most Americans favor leaving troops in Iraq until the country is stabilized, citing a Dec. 13-15 AP-Ipsos poll.
Nihon Keizai:
- Japan’s government expects the world’s second-largest economy to grow 1.9% in real terms next fiscal year.
Commercial Times:
- Acer Inc. forecasts its notebook computer sales will expand 50% in 2006 from this year, citing Chairman JT Wang.
Sunday Times:
- The value of acquisitions made by buyout firms this year will increase 12% to $41 billion, the most since 2000.
Iranian Republic News Agency:
- China and Iran may complete an agreement in January on the purchase of liquefied natural gas and investment in an Iranian oilfield, citing Iran’s deputy oil minister.
Weekend Recommendations
Barron's:
- Had positive comments on BA, NAPS, TRB, TIF, FDX, OSG, UTX, GE, ITT and AIG.
Goldman Sachs:
- Reiterated Outperform on PFE.
Night Trading
Asian indices are +.50% to +1.0% on average.
S&P 500 indicated +.20%.
NASDAQ 100 indicated +.12%.
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
CC/.04
Upcoming Splits
HYSL 3-for-2
Economic Releases
1:00 pm EST
- The NAHB Housing Market Index for December is estimates to rise to 61 versus a reading of 60 in November.
BOTTOM LINE: Asian Indices are higher, led by technology shares in the region after oil fell the most in three months last Fri. I expect US stocks to open modestly higher and build on gains throughout the day. The Portfolio is 75% net long heading into the week.
Weekly Outlook
There are a number of important economic reports and some significant corporate earnings reports scheduled for release this week.
Economic reports for the week include:
Mon. - NAHB Housing Market Index
Tues. - Producer Price Index, Housing Starts
Wed. - Final 3Q GDP, Final 3Q Personal Consumption
Thur. - Personal Income, Personal Spending, PCE Deflator, Initial Jobless Claims, Leading Indicators
Fri. - Durable Goods Orders, Univ. of Mich. Consumer Confidence, New Home Sales
A few of the more noteworthy companies that release quarterly earnings this week are:
Mon. - Circuit City Stores(CC)
Tues. - BISYS Group(BSG), Factset Research(FDS), Flowserve(FLS), Jabil Circuit(JBL), Morgan Stanley(MWD), Nike(NKE), Palm Inc.(PALM)
Wed. - Commercial Metals(CMC), Carmax(KMX), Biomet(BMET), Bed Bath & Beyond(BBBY), Family Dollar(FDO), FedEx(FDX), Micron Technology(MU), Paychex(PAYX), Red Hat(RHAT)
Thur. - AG Edwards(AGE), American Greetings(AM), Cintas Corp.(CTAS), ConAgra Foods(CAG), General Mills(GIS), Solectron(SLR)
Fri. - 99 Cents Only(NDN)
Other events that have market-moving potential this week include:
Mon. - None of note
Tue. - Semi Book-to-Bill
Wed. - None of note
Thur. - None of note
Fri. - None of note
Economic reports for the week include:
Mon. - NAHB Housing Market Index
Tues. - Producer Price Index, Housing Starts
Wed. - Final 3Q GDP, Final 3Q Personal Consumption
Thur. - Personal Income, Personal Spending, PCE Deflator, Initial Jobless Claims, Leading Indicators
Fri. - Durable Goods Orders, Univ. of Mich. Consumer Confidence, New Home Sales
A few of the more noteworthy companies that release quarterly earnings this week are:
Mon. - Circuit City Stores(CC)
Tues. - BISYS Group(BSG), Factset Research(FDS), Flowserve(FLS), Jabil Circuit(JBL), Morgan Stanley(MWD), Nike(NKE), Palm Inc.(PALM)
Wed. - Commercial Metals(CMC), Carmax(KMX), Biomet(BMET), Bed Bath & Beyond(BBBY), Family Dollar(FDO), FedEx(FDX), Micron Technology(MU), Paychex(PAYX), Red Hat(RHAT)
Thur. - AG Edwards(AGE), American Greetings(AM), Cintas Corp.(CTAS), ConAgra Foods(CAG), General Mills(GIS), Solectron(SLR)
Fri. - 99 Cents Only(NDN)
Other events that have market-moving potential this week include:
Mon. - None of note
Tue. - Semi Book-to-Bill
Wed. - None of note
Thur. - None of note
Fri. - None of note
BOTTOM LINE: I expect US stocks to finish the week higher on more positive economic/earnings data, declining energy prices, short-covering, seasonal strength, moderating inflation fears and increasing inflows. My trading indicators are still giving bullish signals and the Portfolio is 75% net long heading into the week.
Saturday, December 17, 2005
Chart of Interest
BOTTOM LINE: The Consumer Price Index fell at the greatest rate in over 50 years during November. This decline illustrates the extreme effect commodity prices have recently had on various measures of inflation. I continue to believe that the US has experienced a mild bout of cyclical inflation within a secular disinflationary environment. I expect the longer-term trend of disinflation to reassert itself in 2006.
Market Week in Review
S&P 500 1,267.32 +.63%*
Click here for the Weekly Wrap by Briefing.com.
*5-day % Change
Click here for the Weekly Wrap by Briefing.com.
BOTTOM LINE: Overall, last week's market performance was neutral considering less hawkish Fed comments, healthy retail sales data, decelerating inflation readings, lower long-term interest rates, increasing deal activity, falling energy prices and decent news from the homebuilders. The advance/decline line rose slightly, sector performance was mixed and volume was slightly above average on the week. Measures of investor anxiety were mixed. However, the AAII % Bulls fell again to 46.15%. This reading is now back near average levels, which is a big positive considering most major averages are at least above 4-year highs. The average 30-year mortgage rate fell to 6.30% which is 109 basis points above all-time lows set in June 2003. I continue to believe mortgage rates will head modestly lower over the intermediate-term as measures of inflation decelerate and economic growth slows to average rates. Moreover, the benchmark 10-year T-note yield fell 9 basis points on the week after the Fed made less hawkish comments in their policy statement, foreign demand for US assets hit another record and measures of inflation decelerated.
Small-cap and Nasdaq shares underperformed on profit-taking, option expiration and index rebalancing. Gold fell substantially on the week and appears to have made an intermediate-term top. Unleaded Gas futures were down again and are 46% below September highs even as refinery utilization still remains below normal as a result of the hurricanes. Natural gas supplies decreased more-than-expected this week, however they are still above the 5-year average for this time of year even as over 20% of daily Gulf of Mexico production remains shut-in. It now appears very likely that natural gas has joined oil and peaked for the intermediate-term. As I said last week, prices for many commodities have been driven by fear and record capital inflows into commodity funds, rather than fundamentals. I still expect global energy demand destruction and a significant increase in supplies into 2006 to push energy prices substantially lower from current levels. The S&P 500 is still within striking distance of my mid-year prediction of a double-digit annual gain. The index is currently up 6.44% for the year with 9 trading days remaining.
*5-day % Change
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