BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Computer longs, Medical longs and Biotech longs. I added to my (IWM)/(QQQQ) shorts this morning and to my (ISRG) long and (COP) short, thus leaving the Portfolio 50% net long. The tone of the market is mildly negative as the advance/decline line is slightly lower, sector performance is mixed and volume is average. Morgan Stanley rated U.S. stocks 'overweight' on its global focus list. It cut Japanese stocks to 'neutral' and cut the weighting of emerging markets in the list. I expect US stocks to trade mixed into the close from current levels as a reversal in energy prices and stable long-term rates offsets worries over Iran and the Fed.
Monday, February 06, 2006
Stocks Mixed into Final Hour as Reversal in Energy Prices Offsets Fed Worries
Today's Headlines
Bloomberg:
- US telephone stocks’ decade of decline may be over as acquisitions spur earnings growth at companies including AT&T(T) and Verizon Communications(VZ).
- Morgan Stanley(MWD), Wall Street’s top money-maker in asset management until last year, lost the gift that keeps on giving to Goldman Sachs Group(GS).
- Samsung Electronics and Hynix Semiconductor, the world’s two largest makers of computer memory chips, raised prices for their biggest customers because of a shortage of microchips.
- The US Treasury may pay the lowest yield ever to borrow for 30 years in the first sale of the government’s longest-maturity bonds since August 2001.
- Crude oil rose for a second day after Iran said it would pursue nuclear research, defying the UN.
Wall Street Journal:
- The US nuclear-power industry will start an ad campaign, run by WPP Group Plc’s Hill & Knowlton American unit, that will seek to build support for new power plants.
- Singapore is challenging Switzerland as a provider of “discreet” banking services for the world’s super-rich.
- Sweden’s Hennes & Mauritz AB, Europe’s biggest clothing retailer, will speed up its expansion in the US market, as it seeks annual sales growth of at least 10% in the country.
- Talbots Inc.(TLB) is close to a deal to buy another Massachusetts-based women’s clothing retailer, J. Jill Group, for a price that might top $450 million.
- Mazda Motor, partly owned by Ford Motor(F), will lead a project to develop the basic architecture for the US carmaker’s next generation subcompact vehicle for the American market.
- A US administration effort to improve the process for developing new treatments may help the US pharmaceutical industry bring out new drugs.
- The SEC is making it easier for investors to find information about specific mutual funds on its database, known as Edgar.
- FedEx’s(FDX) depiction of a caveman getting crushed by a dinosaur after he failed to use the company was the most popular television ad during yesterday’s Super Bowl, according to an online Wall Street Journal survey.
USA Today:
- New voting machines will be used in at least 647 of the US’s 3,114 counties this year, the highest number since records began in 1980 and probably the most ever.
NY Post:
- NY’s video slot machine revenue rose 53.1% in 2005, making the Las Vegas-style machines the fastest-growing lottery game in the state.
- Elevation Partners LP, a private equity firm whose partners include rock star Bono, may bid on Take-Two Interactive(TTWO) in a deal that may be worth more than $1 billion including debt.
Boston Globe:
- More than half of Harvard University’s top deans and administrators have departed or said they plan to leave since Lawrence Summers became president in 2001.
LA Times:
- Pacific Gas & Electric and San Diego Gas & Electric plan to spend about $2 billion to install millions of real-time electricity meters in homes and small businesses to help customers save power.
Financial Times Deutschland:
- Carl Zeiss AG is mulling the purchase of US semiconductor-supplier FEI Co.(FEIC) for $1 billion.
Gulf News:
- Abu Dhabi National Oil Co. plans to build a refinery with capacity to produce up to 400,000 barrels a day.
Middle East Economic Survey:
- Qatar plans to boost its oil output capacity by a third to 1.1 million barrels a day within four years, citing Qatari oil minister.
Construction Week:
-.A four-year construction boom in Dubai, United Arab Emirates, may end after the emirate’s ruler ordered a slowdown in building work because supply of real estate, shopping malls and hotels is outpacing demand.
- US telephone stocks’ decade of decline may be over as acquisitions spur earnings growth at companies including AT&T(T) and Verizon Communications(VZ).
- Morgan Stanley(MWD), Wall Street’s top money-maker in asset management until last year, lost the gift that keeps on giving to Goldman Sachs Group(GS).
- Samsung Electronics and Hynix Semiconductor, the world’s two largest makers of computer memory chips, raised prices for their biggest customers because of a shortage of microchips.
- The US Treasury may pay the lowest yield ever to borrow for 30 years in the first sale of the government’s longest-maturity bonds since August 2001.
- Crude oil rose for a second day after Iran said it would pursue nuclear research, defying the UN.
Wall Street Journal:
- The US nuclear-power industry will start an ad campaign, run by WPP Group Plc’s Hill & Knowlton American unit, that will seek to build support for new power plants.
- Singapore is challenging Switzerland as a provider of “discreet” banking services for the world’s super-rich.
- Sweden’s Hennes & Mauritz AB, Europe’s biggest clothing retailer, will speed up its expansion in the US market, as it seeks annual sales growth of at least 10% in the country.
- Talbots Inc.(TLB) is close to a deal to buy another Massachusetts-based women’s clothing retailer, J. Jill Group, for a price that might top $450 million.
- Mazda Motor, partly owned by Ford Motor(F), will lead a project to develop the basic architecture for the US carmaker’s next generation subcompact vehicle for the American market.
- A US administration effort to improve the process for developing new treatments may help the US pharmaceutical industry bring out new drugs.
- The SEC is making it easier for investors to find information about specific mutual funds on its database, known as Edgar.
- FedEx’s(FDX) depiction of a caveman getting crushed by a dinosaur after he failed to use the company was the most popular television ad during yesterday’s Super Bowl, according to an online Wall Street Journal survey.
USA Today:
- New voting machines will be used in at least 647 of the US’s 3,114 counties this year, the highest number since records began in 1980 and probably the most ever.
NY Post:
- NY’s video slot machine revenue rose 53.1% in 2005, making the Las Vegas-style machines the fastest-growing lottery game in the state.
- Elevation Partners LP, a private equity firm whose partners include rock star Bono, may bid on Take-Two Interactive(TTWO) in a deal that may be worth more than $1 billion including debt.
Boston Globe:
- More than half of Harvard University’s top deans and administrators have departed or said they plan to leave since Lawrence Summers became president in 2001.
LA Times:
- Pacific Gas & Electric and San Diego Gas & Electric plan to spend about $2 billion to install millions of real-time electricity meters in homes and small businesses to help customers save power.
Financial Times Deutschland:
- Carl Zeiss AG is mulling the purchase of US semiconductor-supplier FEI Co.(FEIC) for $1 billion.
Gulf News:
- Abu Dhabi National Oil Co. plans to build a refinery with capacity to produce up to 400,000 barrels a day.
Middle East Economic Survey:
- Qatar plans to boost its oil output capacity by a third to 1.1 million barrels a day within four years, citing Qatari oil minister.
Construction Week:
-.A four-year construction boom in Dubai, United Arab Emirates, may end after the emirate’s ruler ordered a slowdown in building work because supply of real estate, shopping malls and hotels is outpacing demand.
Sunday, February 05, 2006
Monday Watch
Weekend Headlines
Bloomberg:
- President Bush and first lady Laura Bush will attend the funeral of Coretta Scott King, the widow of civil rights leader Martin Luther King Jr., on Feb. 7 in Atlanta.
- Palestinian Authority officials may have stolen billions of dollars from public funds, Palestinian Attorney General Ahmed Al-Meghani said.
- The UN nuclear watchdog agency voted to refer Iran to the Security Council over a nuclear program other countries fear is a cover for making weapons.
- The US dollar rose for a fourth straight week against the euro and a third versus the yen as reports showing US economic growth remains robust bolstered expectations the Fed will lift rates again in March.
- President Bush said Congress should spend more money on grants for teachers and research-related tax breaks for companies as a way of helping the US compete economically with other countries.
- Venezuelan President Hugo Chavez threatened to jail diplomats and close refineries belonging to the US unit of the state oil company in an escalating war of words with the US.
- A majority of New York City voters would support Wal-Mart Stores(WMT) opening its first store in the city, according to a survey by Quinnipiac University Polling Institute.
- Crude oil is rising almost 2% in NY after Iran said it will pursue nuclear research, defying the UN.
- The Pittsburgh Steels beat the Seattle Seahawks 21-10 for their record-tying fifth Super Bowl title.
Wall Street Journal:
- The US may allow its FAA to issue bonds to fund improvement to the nation’s air-traffic-control system.
- Citadel Broadcasting(CDL) is near an agreement to buy most of Walt Disney’s(DIS) radio assets for $2.7 billion in cash and stock.
- American International Group(AIG) is near a settlement of at least $1.5 billion with US federal and state authorities to resolve charges including accounting fraud.
Business Week:
- The US economy is a lot stronger than most think. In a knowledge-based world, the traditional measures don’t tell the whole story. Intangibles like R&D are tracked poorly, if at all. Factor them in and everything changes.
Washington Post:
- Several US states are toughening rules against underage drinking by charging offenders with possession of alcohol even if the evidence already has been consumed.
- President Bush will recommend cutting the growth or eliminating 141 programs to save $14.5 billion in his proposed budget for the 2007 fiscal year.
NY Times:
- President Bush may propose cutting the growth of Medicare spending by as much as $35 billion during the next five years in his fiscal 2007 budget.
- The growing popularity of refilled computer printer ink cartridges is lowering the cost of printing and forcing manufacturers such as Hewlett-Packard(HPQ) to reduce the price of new cartridges.
- The lack of clarity about what information gleaned from the Internet can and can’t be used in civil court cases has forced most service providers to comply with legal requests for information.
- President Bush’s proposed fiscal 2007 budget will include about $250 million to continue technology research as part of a planned nuclear fuel partnership with Russia.
- Health-care courses are gaining popularity on US college campuses as students seek majors with good employment opportunities.
- President Bush is seeking $2.65 billion in spending to help protect the US against bird flu in the fiscal 2007 budget.
- Time Warner’s(TWX) AOL and Yahoo!(YHOO) plan to begin charging companies as much as 1 cent for each e-mail to bypass “spam” filters and go directly to users’ mailboxes.
- Investors have been buying up commodity stocks in a fashion likened to that of the internet bubble in the late 1990s, prompting concern from some analysts and investors that their value has risen too fast.
Newsweek:
- News Corp.(NWS) Chairman Rupert Murdoch will start a business-news cable channel in the US to rival GE’s CNBC by year-end.
- US Senator John McCain has signed up at least three of President Bush’s top fund-raisers for a potential White House run in 2008.
Financial Times:
- Google(GOOG) and Skype Technologies SA have joined other venture capitalists to invest in a Wi-Fi “Hotspot” network.
The Independent:
- Arcelor SA CEO Dolle, who is battling a hostile $28.2 billion takeover bid by Mittal Steel, said he saw no “white knight” coming to Arcelor’s rescue.
AFP:
- The Danish far left and far right are marching in Copenhagen today, protesting the international fall-out caused by a Danish newspaper publishing cartoons depicting the prophet Muhammad.
- Rioters in Lebanon attacked property and overturned cars in a Christian area of Beirut is protest to satirical cartoons portraying the Muslim prophet Mohammed that appeared in European newspapers.
Sunday Times:
- US buyout firms Kholberg Kravis Roberts and Hellman & Friedman LLC are putting together a bid worth $11 billion for credit checker Experian Information Solutions.
- GlaxoSmithKline Plc(GSK), the biggest drugmaker in the UK, may bid as much as $11 billion to acquires Serono SA, Europe’s largest biotechnology company.
Business Standard:
- Indian companies’ net profits grew 3.6% in the quarter ended Dec. 31, the slowest in 14 quarters, because of higher production costs.
Asharq al-Awsat:
- Twenty-three al-Qaeda prisoners, including those convicted of bombing the USS Cole, escaped jail in Yemen by digging a tunnel.
Weekend Recommendations
Barron's:
- Had positive comments on (ACP) and (GT).
- Had negative comments on (PSS).
Goldman Sachs:
- None of note
Night Trading
Asian indices are unch. to +.50% on average.
S&P 500 indicated +.03%.
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
(ATVI)/.36
(CNET)/.15
(FLS)/.26
(HAS)/.58
(HUM)/.45
(JP)/1.01
(LPX)/.65
(MNT)/.38
(NBR)/1.31
(PPS)/.07
(RCII)/.44
(TIN)/.27
(DIS)/.30
(YUM)/.78
Upcoming Splits
- (NOBL) 3-for-2
Economic Releases
- None of note
Bloomberg:
- President Bush and first lady Laura Bush will attend the funeral of Coretta Scott King, the widow of civil rights leader Martin Luther King Jr., on Feb. 7 in Atlanta.
- Palestinian Authority officials may have stolen billions of dollars from public funds, Palestinian Attorney General Ahmed Al-Meghani said.
- The UN nuclear watchdog agency voted to refer Iran to the Security Council over a nuclear program other countries fear is a cover for making weapons.
- The US dollar rose for a fourth straight week against the euro and a third versus the yen as reports showing US economic growth remains robust bolstered expectations the Fed will lift rates again in March.
- President Bush said Congress should spend more money on grants for teachers and research-related tax breaks for companies as a way of helping the US compete economically with other countries.
- Venezuelan President Hugo Chavez threatened to jail diplomats and close refineries belonging to the US unit of the state oil company in an escalating war of words with the US.
- A majority of New York City voters would support Wal-Mart Stores(WMT) opening its first store in the city, according to a survey by Quinnipiac University Polling Institute.
- Crude oil is rising almost 2% in NY after Iran said it will pursue nuclear research, defying the UN.
- The Pittsburgh Steels beat the Seattle Seahawks 21-10 for their record-tying fifth Super Bowl title.
Wall Street Journal:
- The US may allow its FAA to issue bonds to fund improvement to the nation’s air-traffic-control system.
- Citadel Broadcasting(CDL) is near an agreement to buy most of Walt Disney’s(DIS) radio assets for $2.7 billion in cash and stock.
- American International Group(AIG) is near a settlement of at least $1.5 billion with US federal and state authorities to resolve charges including accounting fraud.
Business Week:
- The US economy is a lot stronger than most think. In a knowledge-based world, the traditional measures don’t tell the whole story. Intangibles like R&D are tracked poorly, if at all. Factor them in and everything changes.
Washington Post:
- Several US states are toughening rules against underage drinking by charging offenders with possession of alcohol even if the evidence already has been consumed.
- President Bush will recommend cutting the growth or eliminating 141 programs to save $14.5 billion in his proposed budget for the 2007 fiscal year.
NY Times:
- President Bush may propose cutting the growth of Medicare spending by as much as $35 billion during the next five years in his fiscal 2007 budget.
- The growing popularity of refilled computer printer ink cartridges is lowering the cost of printing and forcing manufacturers such as Hewlett-Packard(HPQ) to reduce the price of new cartridges.
- The lack of clarity about what information gleaned from the Internet can and can’t be used in civil court cases has forced most service providers to comply with legal requests for information.
- President Bush’s proposed fiscal 2007 budget will include about $250 million to continue technology research as part of a planned nuclear fuel partnership with Russia.
- Health-care courses are gaining popularity on US college campuses as students seek majors with good employment opportunities.
- President Bush is seeking $2.65 billion in spending to help protect the US against bird flu in the fiscal 2007 budget.
- Time Warner’s(TWX) AOL and Yahoo!(YHOO) plan to begin charging companies as much as 1 cent for each e-mail to bypass “spam” filters and go directly to users’ mailboxes.
- Investors have been buying up commodity stocks in a fashion likened to that of the internet bubble in the late 1990s, prompting concern from some analysts and investors that their value has risen too fast.
Newsweek:
- News Corp.(NWS) Chairman Rupert Murdoch will start a business-news cable channel in the US to rival GE’s CNBC by year-end.
- US Senator John McCain has signed up at least three of President Bush’s top fund-raisers for a potential White House run in 2008.
Financial Times:
- Google(GOOG) and Skype Technologies SA have joined other venture capitalists to invest in a Wi-Fi “Hotspot” network.
The Independent:
- Arcelor SA CEO Dolle, who is battling a hostile $28.2 billion takeover bid by Mittal Steel, said he saw no “white knight” coming to Arcelor’s rescue.
AFP:
- The Danish far left and far right are marching in Copenhagen today, protesting the international fall-out caused by a Danish newspaper publishing cartoons depicting the prophet Muhammad.
- Rioters in Lebanon attacked property and overturned cars in a Christian area of Beirut is protest to satirical cartoons portraying the Muslim prophet Mohammed that appeared in European newspapers.
Sunday Times:
- US buyout firms Kholberg Kravis Roberts and Hellman & Friedman LLC are putting together a bid worth $11 billion for credit checker Experian Information Solutions.
- GlaxoSmithKline Plc(GSK), the biggest drugmaker in the UK, may bid as much as $11 billion to acquires Serono SA, Europe’s largest biotechnology company.
Business Standard:
- Indian companies’ net profits grew 3.6% in the quarter ended Dec. 31, the slowest in 14 quarters, because of higher production costs.
Asharq al-Awsat:
- Twenty-three al-Qaeda prisoners, including those convicted of bombing the USS Cole, escaped jail in Yemen by digging a tunnel.
Weekend Recommendations
Barron's:
- Had positive comments on (ACP) and (GT).
- Had negative comments on (PSS).
Goldman Sachs:
- None of note
Night Trading
Asian indices are unch. to +.50% on average.
S&P 500 indicated +.03%.
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
(ATVI)/.36
(CNET)/.15
(FLS)/.26
(HAS)/.58
(HUM)/.45
(JP)/1.01
(LPX)/.65
(MNT)/.38
(NBR)/1.31
(PPS)/.07
(RCII)/.44
(TIN)/.27
(DIS)/.30
(YUM)/.78
Upcoming Splits
- (NOBL) 3-for-2
Economic Releases
- None of note
BOTTOM LINE: Asian Indices are mostly higher, led by commodity shares in the region. I expect US stocks to open modestly higher and to decline into the afternoon, finishing modestly lower. The Portfolio is 75% net long heading into the week.
Weekly Outlook
Click here for The Week Ahead by Reuters
There are a few economic reports and a number of significant corporate earnings reports scheduled for release this week.
Economic reports for the week include:
Mon. - None of note
Tues. - Consumer Credit
Wed. - None of note
Thur. - Initial Jobless Claims, Wholesale Inventories
Fri. - Trade Balance, Monthly Budget Statement
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - Activision(ATVI), Flowserve(FLS), Hasbro(HAS), Humana(HUM), Jefferson-Pilot(JP), Louisiana-Pacific(LPX), Nabors Industries(NBR), Temple-Inland(TIN), Walt Disney(DIS), Yum! Brands(YUM)
Tues. - Alkermes(ALKS), Anadarko Petroleum(APC), BMC Software(BMC), Boston Scientific(BSX), Cendant(CD), Cisco Systems(CSCO), Computer Sciences(CSC), Emerson Electric(EMR), Fisher Scientific(FSH), Fortune Brands(FO), Occidental Petroleum(OXY), Overstock.com(OSTK), Polo Ralph Lauren(RL), Sohu.com(SOHU), Wm. Wrigley Jr.(WWY)
Wed. - Alcon Inc.(ACL), Applebees Intl.(APPB), Cigna(CI), Diamond Offshore(DO), Electronic Data Systems(EDS), Energy Conversion Devices(ENER), IAC Interactive Corp.(IACI), News Corp.(NWS/A), PepsiCo(PEP), Prudential Financial(PRU), St. Joe(JOE), Whole Foods Market(WFMI), XTO Energy(XTO)
Thur. - Aetna(AET), Allegheny Energy(AYE), Amylin Pharmaceuticals(AMLN), Analog Devices(ADI), Boyd Gaming(BYD), Global SantaFe(GSF), Marriott International(MAR), MBIA Inc.(MBI), Panera Bread(PNRA), Sirius Satellite(SIRI), Timberland(TBL)
Fri. - Bausch & Lomb(BOL), Arch Coal(ACI), CNA Financial(CAN), Loews Corp.(LTR), Office Depot(ODP), Pixar(PIXR), Reebok International(RBK), XM Satellite Radio(XMSR)
Other events that have market-moving potential this week include:
Mon. - JP Morgan High Yield Conference, Thomas Weisel Tech Conference
Tue. - Thomas Weisel Tech Conference, Merrill Lynch Global Pharma/Biotech/Medical Device Conference, CSFB Software Conference, SG Cowen Global Aerospace Conference
Wed. - Merrill Global Pharma/Biotech/Medical Device Conference, CSFB Financial Services Conference, SG Cowen Global Aerospace Conference, Thomas Weisel Tech Conference
Thur. - Merrill Global Pharma/Biotech/Medical Device Conference, CSFB Financial Services Conference
Fri. - CSFB Financial Services Conference
There are a few economic reports and a number of significant corporate earnings reports scheduled for release this week.
Economic reports for the week include:
Mon. - None of note
Tues. - Consumer Credit
Wed. - None of note
Thur. - Initial Jobless Claims, Wholesale Inventories
Fri. - Trade Balance, Monthly Budget Statement
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - Activision(ATVI), Flowserve(FLS), Hasbro(HAS), Humana(HUM), Jefferson-Pilot(JP), Louisiana-Pacific(LPX), Nabors Industries(NBR), Temple-Inland(TIN), Walt Disney(DIS), Yum! Brands(YUM)
Tues. - Alkermes(ALKS), Anadarko Petroleum(APC), BMC Software(BMC), Boston Scientific(BSX), Cendant(CD), Cisco Systems(CSCO), Computer Sciences(CSC), Emerson Electric(EMR), Fisher Scientific(FSH), Fortune Brands(FO), Occidental Petroleum(OXY), Overstock.com(OSTK), Polo Ralph Lauren(RL), Sohu.com(SOHU), Wm. Wrigley Jr.(WWY)
Wed. - Alcon Inc.(ACL), Applebees Intl.(APPB), Cigna(CI), Diamond Offshore(DO), Electronic Data Systems(EDS), Energy Conversion Devices(ENER), IAC Interactive Corp.(IACI), News Corp.(NWS/A), PepsiCo(PEP), Prudential Financial(PRU), St. Joe(JOE), Whole Foods Market(WFMI), XTO Energy(XTO)
Thur. - Aetna(AET), Allegheny Energy(AYE), Amylin Pharmaceuticals(AMLN), Analog Devices(ADI), Boyd Gaming(BYD), Global SantaFe(GSF), Marriott International(MAR), MBIA Inc.(MBI), Panera Bread(PNRA), Sirius Satellite(SIRI), Timberland(TBL)
Fri. - Bausch & Lomb(BOL), Arch Coal(ACI), CNA Financial(CAN), Loews Corp.(LTR), Office Depot(ODP), Pixar(PIXR), Reebok International(RBK), XM Satellite Radio(XMSR)
Other events that have market-moving potential this week include:
Mon. - JP Morgan High Yield Conference, Thomas Weisel Tech Conference
Tue. - Thomas Weisel Tech Conference, Merrill Lynch Global Pharma/Biotech/Medical Device Conference, CSFB Software Conference, SG Cowen Global Aerospace Conference
Wed. - Merrill Global Pharma/Biotech/Medical Device Conference, CSFB Financial Services Conference, SG Cowen Global Aerospace Conference, Thomas Weisel Tech Conference
Thur. - Merrill Global Pharma/Biotech/Medical Device Conference, CSFB Financial Services Conference
Fri. - CSFB Financial Services Conference
BOTTOM LINE: I expect US stocks to finish the week modestly lower on geopolitical concerns, increasing Fed rate hike worries, mixed forward earnings guidance and more profit-taking. My trading indicators are now giving mostly bearish signals and the Portfolio is 75% net long heading into the week.
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