Monday, January 09, 2006
Sunday, January 08, 2006
Monday Watch
Weekend Headlines
Bloomberg:
- Wal-Mart Stores(WMT) said January same-store sales are rising within its forecast.
- President Bush urged the US Congress to slow the growth of spending on entitlement programs and suggested that Democrats who oppose extending tax cuts risk undermining the economy.
- Toyota Motor, Nissan Motor and Honda Motor are posed to sell at least 19 new and redesigned vehicle models in the US this year, their biggest-ever roll-out.
- US two-year Treasury yields will fall at a faster pace than those on 10-year notes as the Federal Reserve moves closer to ending its 18-month policy of raising interest rates, say some of the world’s biggest bond investors.
- Democratic Senators Edward Kennedy and Charles Schumer said they haven’t ruled out staging a filibuster to block confirmation of Judge Samuel A. Alito to the US Supreme Court.
- Boston Scientific(BSX), which waited to bid for Guidant(GDT) until Johnson & Johnson(JNJ) forced the price down, moved to seal its $25 billion purchase of the troubled cardiac device maker.
- The US doubled its supplies of food aid to survivors of the Oct. 8 earthquake that struck Pakistan’s northern Kashmir region as snow storms interrupted deliveries by air and road to mountain villages.
- Coal is likely to decline this year from a record because of increased exports from Indonesia, South Africa and Australia.
Barron’s:
- Vonage Holdings, Force10 Networks and Synarc are among technology and health-care companies backed by venture-capital firms that may sell shares to the pubic this year.
Wall Street Journal:
- Viacom’s(VIA) Paramount Pictures business is in exclusive talks to sell the DreamWorks(DWA) movie library to George Soros’ private equity fund.
NY Times:
- General Motors(GM) expects its billion-dollar losses at its North American business to begin to “moderate” this quarter as cost cuts take effect.
- The UN World Food Program ended all feeding programs in North Korea after the government told it to stop efforts that had helped a third of the 22 million people there.
- The Environmental Protection Agency will announce changes in how it calculates fuel-economy ratings for cars and trucks, the first revisions in 20 years.
- Companies in the S&P 500 spent $315 billion to buy back shares last year, a 60% increase from 2004.
- Eastman Kodak(EK) CEO Perez said the camera company is increasing its revenue and profit from digital photography.
- The US and several European allies sought to encourage China and Russia to join their efforts to put political pressure on Iran to end its suspected pursuit of nuclear weapons.
- The city of New Orleans’ official redevelopment plan to recover from Hurricane Katrina envisions allowing all areas of the city to be rebuilt no matter how bad the damage.
Crain’s Chicago Business:
- Google Inc.(GOOG) is paying to run ads for its advertisers in the Chicago Sun-Times.
Washington Post:
- An increasing number of Christian evangelicals are embracing “philo-Semitism,” the opposite of anti-Semitism, fueled by common beliefs shared by Jews and Christians.
LA Times:
- Shanghai’s hot housing market has fizzled after a run-up fed by speculators, threatening a significant part of China’s economy.
Time magazine:
- CIA Director Porter Goss is cracking down on information leaks from within the US intelligence agency by banning current officers from writing books and ordering stricter reviews of books by retired agents.
Interfax:
- Ukraine said its natural gas supply agreement with Russia is a good one even as it pays double for the fuel, citing Ukrainian President Viktor Yushchenko.
Weekend Recommendations
Barron's:
- Had positive comments on (BLK).
- Had negative comments on (RL).
Goldman Sachs:
- Reiterated Outperform on (BSX) and (MSFT).
- Reiterated Underperform on (JBLU) and (TFX).
Night Trading
Asian indices are +.25% to +1.0% on average.
S&P 500 indicated -.04%.
NASDAQ 100 indicated unch.
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
(AA).37
(SCHN).85
(TDS).29
Upcoming Splits
(PTC) 3-for-2
(CERN) 2-for-1
(E) 5-for-2
(PSYS) 2-for-1
Economic Releases
3:00 pm EST
- Consumer Credit for November is estimated to rise to $5.0 billion versus -$7.2 billion in October.
Bloomberg:
- Wal-Mart Stores(WMT) said January same-store sales are rising within its forecast.
- President Bush urged the US Congress to slow the growth of spending on entitlement programs and suggested that Democrats who oppose extending tax cuts risk undermining the economy.
- Toyota Motor, Nissan Motor and Honda Motor are posed to sell at least 19 new and redesigned vehicle models in the US this year, their biggest-ever roll-out.
- US two-year Treasury yields will fall at a faster pace than those on 10-year notes as the Federal Reserve moves closer to ending its 18-month policy of raising interest rates, say some of the world’s biggest bond investors.
- Democratic Senators Edward Kennedy and Charles Schumer said they haven’t ruled out staging a filibuster to block confirmation of Judge Samuel A. Alito to the US Supreme Court.
- Boston Scientific(BSX), which waited to bid for Guidant(GDT) until Johnson & Johnson(JNJ) forced the price down, moved to seal its $25 billion purchase of the troubled cardiac device maker.
- The US doubled its supplies of food aid to survivors of the Oct. 8 earthquake that struck Pakistan’s northern Kashmir region as snow storms interrupted deliveries by air and road to mountain villages.
- Coal is likely to decline this year from a record because of increased exports from Indonesia, South Africa and Australia.
Barron’s:
- Vonage Holdings, Force10 Networks and Synarc are among technology and health-care companies backed by venture-capital firms that may sell shares to the pubic this year.
Wall Street Journal:
- Viacom’s(VIA) Paramount Pictures business is in exclusive talks to sell the DreamWorks(DWA) movie library to George Soros’ private equity fund.
NY Times:
- General Motors(GM) expects its billion-dollar losses at its North American business to begin to “moderate” this quarter as cost cuts take effect.
- The UN World Food Program ended all feeding programs in North Korea after the government told it to stop efforts that had helped a third of the 22 million people there.
- The Environmental Protection Agency will announce changes in how it calculates fuel-economy ratings for cars and trucks, the first revisions in 20 years.
- Companies in the S&P 500 spent $315 billion to buy back shares last year, a 60% increase from 2004.
- Eastman Kodak(EK) CEO Perez said the camera company is increasing its revenue and profit from digital photography.
- The US and several European allies sought to encourage China and Russia to join their efforts to put political pressure on Iran to end its suspected pursuit of nuclear weapons.
- The city of New Orleans’ official redevelopment plan to recover from Hurricane Katrina envisions allowing all areas of the city to be rebuilt no matter how bad the damage.
Crain’s Chicago Business:
- Google Inc.(GOOG) is paying to run ads for its advertisers in the Chicago Sun-Times.
Washington Post:
- An increasing number of Christian evangelicals are embracing “philo-Semitism,” the opposite of anti-Semitism, fueled by common beliefs shared by Jews and Christians.
LA Times:
- Shanghai’s hot housing market has fizzled after a run-up fed by speculators, threatening a significant part of China’s economy.
Time magazine:
- CIA Director Porter Goss is cracking down on information leaks from within the US intelligence agency by banning current officers from writing books and ordering stricter reviews of books by retired agents.
Interfax:
- Ukraine said its natural gas supply agreement with Russia is a good one even as it pays double for the fuel, citing Ukrainian President Viktor Yushchenko.
Weekend Recommendations
Barron's:
- Had positive comments on (BLK).
- Had negative comments on (RL).
Goldman Sachs:
- Reiterated Outperform on (BSX) and (MSFT).
- Reiterated Underperform on (JBLU) and (TFX).
Night Trading
Asian indices are +.25% to +1.0% on average.
S&P 500 indicated -.04%.
NASDAQ 100 indicated unch.
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
(AA).37
(SCHN).85
(TDS).29
Upcoming Splits
(PTC) 3-for-2
(CERN) 2-for-1
(E) 5-for-2
(PSYS) 2-for-1
Economic Releases
3:00 pm EST
- Consumer Credit for November is estimated to rise to $5.0 billion versus -$7.2 billion in October.
BOTTOM LINE: Asian Indices are higher, boosted by commodity producing companies in the region. I expect US stocks to open mixed and to rise into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the week.
Weekly Outlook
Click here for The Week Ahead by Reuters
There are some important economic reports and a few significant corporate earnings reports scheduled for release this week.
Economic reports for the week include:
Mon. - Consumer Credit
Tues. - Wholesale Inventories
Wed. - None of note
Thur. - Trade Balance, Import Price Index, Initial Jobless Claims, Monthly Budget Statement
Fri. - Producer Price Index, Advance Retail Sales, Business Inventories
A few of the more noteworthy companies that release quarterly earnings this week are:
Mon. - Alcoa Inc.(AA)
Tues. - Genentech (DNA), Supervalu(SVU)
Wed. - None of note
Thur. - Freddie Mac(FRE), MGIC Investment(MTG), Navistar International(NAV)
Fri. - None of note
Other events that have market-moving potential this week include:
Mon. - Fed’s Guynn speaking, JP Morgan Healthcare Conference, Citigroup Global Entertainment/Media/Telecom Conference
Tue. - JP Morgan Healthcare Conference, Needham Growth Conference, SG Cowen Consumer Conference, Citigroup Global Entertainment/Media/Telecom Conference
Wed. - Needham Growth Conference, Citigroup Global Entertainment/Media/Telecom Conference, SG Cowen Consumer Conference, JP Morgan Healthcare Conference
Thur. - Needham Growth Conference, Deutsche Bank Real Estate Conference, JP Morgan Healthcare Conference
Fri. - Needham Growth Conference
There are some important economic reports and a few significant corporate earnings reports scheduled for release this week.
Economic reports for the week include:
Mon. - Consumer Credit
Tues. - Wholesale Inventories
Wed. - None of note
Thur. - Trade Balance, Import Price Index, Initial Jobless Claims, Monthly Budget Statement
Fri. - Producer Price Index, Advance Retail Sales, Business Inventories
A few of the more noteworthy companies that release quarterly earnings this week are:
Mon. - Alcoa Inc.(AA)
Tues. - Genentech (DNA), Supervalu(SVU)
Wed. - None of note
Thur. - Freddie Mac(FRE), MGIC Investment(MTG), Navistar International(NAV)
Fri. - None of note
Other events that have market-moving potential this week include:
Mon. - Fed’s Guynn speaking, JP Morgan Healthcare Conference, Citigroup Global Entertainment/Media/Telecom Conference
Tue. - JP Morgan Healthcare Conference, Needham Growth Conference, SG Cowen Consumer Conference, Citigroup Global Entertainment/Media/Telecom Conference
Wed. - Needham Growth Conference, Citigroup Global Entertainment/Media/Telecom Conference, SG Cowen Consumer Conference, JP Morgan Healthcare Conference
Thur. - Needham Growth Conference, Deutsche Bank Real Estate Conference, JP Morgan Healthcare Conference
Fri. - Needham Growth Conference
BOTTOM LINE: I expect US stocks to finish the week modestly higher as technical buying, bargain-hunting, short-covering and seasonal strength more than offsets higher inflation readings and profit-taking. I added to my (BBY)/(ANF)/(RACK) longs and existing shorts on Friday. My trading indicators are back to giving bullish signals and the Portfolio is 100% net long heading into the week.
Market Week in Review
S&P 500 1,285.45 +2.47%*
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 very positive. The advance/decline line rose, almost every sector gained and volume was above average on the week. Measures of investor anxiety were mostly lower. However, the AAII % Bulls fell again to 29.35%. This contrary indicator has declined 29.25 percentage points in eight weeks and is now approaching depressed levels, which is a huge positive considering most major averages are at 4 ½ year highs. The average 30-year mortgage rate fell to 6.21% which is only 100 basis points above all-time lows set in June 2003. Moreover, the benchmark 10-year T-note yield fell 2 basis points on the week after the Fed made less hawkish comments, economic data was mixed and measures of inflation decelerated.
Technology stocks outperformed on optimism over increased corporate spending, new consumer products and lower interest rates. Likewise, energy shares gained as oil rose on fund inflows and fears over Middle-east stability after the hospitalization of Ariel Sharon. Unleaded Gas futures bounced on the same catalysts, but are still almost 40% below September highs even as refinery utilization remains below normal as a result of the hurricanes. Natural gas supplies this week increased by the most during any week of January since record-keeping began in 1994 and are now 6.8% above the 5-year average for this time of year even as over 19% of daily Gulf of Mexico production remains shut-in. Natural gas prices have plunged almost 40% in 3 weeks. Gold rose on the week as the dollar declined and international diversification continued.
I still believe prices for many commodities are being driven by fear and record capital inflows into commodity funds, rather than fundamentals. I continue to expect global energy demand destruction, decelerating economic growth and a significant increase in supplies into 2006 to push energy prices substantially lower from current levels. US stocks have gotten off to one of the best starts to a new year in recent memory. I am expecting the S&P 500 to return around 15% for the year as long-term interest rates remain low, inflation decelerates, economic growth slows to averages rates, energy prices fall, the dollar remains stable, the job market remains healthy, housing slows to more sustainable levels, consumer/investor/corporate confidence improves, demand for US assets increases further and p/e multiples expand.
*5-day % Change
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