Bloomberg:
- Time Warner’s(TWX) agreement to increase its share buyback to $20 billion as part of a settlement with billionaire Carl Icahn may help boost the shares of the world’s largest media company.
- The LAPD will become the first department in the US to adopt a GPS device to track fleeing drivers. The gadget, manufactured by StarChase LLC, will be fired onto a suspect car, then will transmit location information to officers who can stay a safe distance behind.
- Dubai’s royal family sent a delegation to the US today to meet officials to allay concerns about the emirate’s control of US ports as part of its $6.8 billion buyout of the UK’s Peninsula & Oriental Steam Navigation Co.
- Blackstone Group LP, which is raising the world’s biggest buyout fund, agreed to acquire hotel owner MeriStar Hospitality Corp. for about $2.6 billion.
- Citigroup Global Markets, which a month ago predicted the Fed would be done raising rates at this point, and Bear Stearns increased their forecasts for how high the central bank will lift interest rates.
- Harvard Univ. President and former Treasury Secretary during the Clinton administration Lawrence Summers resigned as head of the oldest higher-education institution in the US after a five-year tenure marked by clashes with professors.
- Crude oil is rising in NY after rebel attacks on Nigeria’s oil facilities halted almost 20% of the output from the country.
Wall Street Journal:
- Overall revenue from US digital video recorder sales will rise to $5.5 billion in the next few years from $1.01 billion in 1999.
- A startup company backed by Time Warner’s(TWX) AOL and Barry Diller, chairman and CEO of IAC/InteractiveCorp.(IACI), is trying to become a middleman in distributing Web videos.
- Julius Baer Holding AG’s GAM, Allianz Global Investors and Alliance Capital Management’s AllianceBerstein are among mutual funds that are asking shareholders for permission to use tactics often found in hedge funds.
- CEOs are increasingly having strings attached to their remuneration packages amid rising complaints about excessive pay.
- Warnaco Group’s(WRNC) Speedo body-length swimsuits are being worn by US Olympic bobsled and skeleton competitors.
CNBC:
- Triarc Cos.(TRY) CEO Peltz may be considering a takeover of HJ Heinz(HNZ).
Advertising Age:
- Wal-Mart Stores(WMT) will expand its marketing department by as much as 30% as it seeks to compete more effectively with Target Corp.(TGT) and other retailers.
NY Daily News:
- Ron Insana, who anchors financial news network CNBC’s “Street Signs” program, plans to leave the network after almost 15 years to start a monthly financial newsletter and his own business.
NY Times:
- The American Medical Association agreed with US Congress to develop about 140 specific performance measures by the end of the year to help the US create pay standards for Medicare.
- US college e-mail, designed to make professors more accessible, is erasing healthy boundaries between students and their lecturers, breaking down the prudent conventions of student/professor communication, citing professors from across the US.
- US hedge funds are getting into the business of small loans, attracted by the prospect of being able to charge sky-high interest rates.
- The Port Authority of NY and New Jersey is spending $73 million on turnstile scanners and vending machines that will allow Path train riders to use fare cards with embedded computer chips.
USA Today:
- Some affluent US communities, including Aspen, Colorado, and Arlington County, Virginia, are passing laws limiting the size of new houses.
Iran Daily:
- Ayatollah Ali Khamenei, Iran’s Supreme Leader, encouraged Palestinian group Hamas to continue not to recognize the state of Israel and refuse negotiations with its government.
Tuesday, February 21, 2006
Leading Indicators Forecast Strong US Economic Growth
- Leading Indicators for January rose 1.1% versus estimates of a .6% increase and a .3% rise in December.
BOTTOM LINE: An index of US leading indicators rose for a fourth straight month as the labor market improved further and manufacturing strengthened, pointing to faster economic growth, Bloomberg reported. The fall in jobless claims contributed the most to the increase in the index. Morgan Stanley raised its estimate for 1Q US growth to 5.9% from a prior estimate of 5.5% growth. I expect very strong US economic growth in the first quarter of around 4.5-5.0%. However, growth should decelerate back to average levels of around 3.0% for the remainder of the year.
Monday, February 20, 2006
Tuesday Watch
Weekend Headlines
Bloomberg:
- The United Arab Emirates reassured US senators that Dubai’s takeover of the US port assets of Peninsula & Oriental Steam Navigation Co. is not a threat to national security.
- NBC Universal, the no. 3 US network, may be forced to give advertisers free or discounted air time to make up for low viewership after its Olympic coverage twice failed to gain top ratings this week.
- Abu Dhabi’s Mubadala Development Co. will partner with Dubai Aluminum Co. Ltd. to build the world’s largest aluminum plan for $6 billion.
- Pakistani cleric Mohammed Yousaf Qureshi offered a $1 million bounty to 1,000 people for killing the Denmark cartoonist who drew caricatures of the prophet Mohammad.
- Harvard University President Lawrence Summers may be on the way out, as the governing board considers calls for his resignation.
- The virus that causes bird flu hasn’t become more easily transmissible to humans as the disease spreads in birds across Europe, the World Health Organization said.
- President Bush said the US needs to reduce crude oil imports and diversify its energy consumption so the world’s largest economy isn’t “held hostage” by oil-rich countries that may not be allies.
- Oil rose the most in 4 weeks in NY as Nigerian rebels threatened more attacks after cutting output from Africa’s largest producer by about 20%.
Wall Street Journal:
- McDonald’s(MCD) more expensive items such as the $4.50 California Cobb salad have been helping the company’s earnings by increasing customers’ average bill.
- McDonald’s(MCD) had at least three lawsuits filed against it after it disclosed last week its French fires contain wheat and milk ingredients that may cause problems for people sensitive to these substances.
- Coca-Cola(KO) is headed for a legal battle with 54 of its bottlers over a new distribution system at Wal-Mart(WMT).
- Fidelity Investments and a hedge fund group last week offered to buy any shares in USG’s(USG) proposed $1.8 billion stock offering not purchased by current shareholders, underbidding Warren Buffett’s Berkshire Hathaway.
Barron’s:
- Retail investor assets rose 18% to $678 billion last year in separately managed accounts, customized investment vehicles that permit direct ownership of a bundle of securities.
Institutional Investor.com:
- Here is a list of America’s most shareholder-friendly companies for 2006.
NY Times:
- Temporary diabetes among pregnant women, known as gestational diabetes, has increased almost 50% in the past decade in New York.
- The newfound wealth coming to the African nation of Chad from a $2.4 billion oil pipeline, backed by the World Bank to fight poverty, is being diverted by the government in part to the army.
- American Indians are becoming increasingly involved in trafficking high-potency marijuana, Ecstasy, cocaine and methamphetamine on US reservations, citing court records, federal and local prosecutors and tribal members.
- Day-trading, the fad that contributed to the bubble in the 1990s, is becoming popular in Japan, embraced by students, and housewives.
- US suburban homeowners doubled their expenditure on garage organizing products to $800 million last year compared with 2000.
LA Times:
- The FDIC’s boost in insurance coverage may help make bank accounts an attractive choice for retirement funds.
AP:
- Nigerian protests over caricatures of the prophet Mohammad erupted into violence that killed 15 people and resulted in at least 15 Christian churches being burned.
- Louisiana Governor Kathleen Blanco laid out a $7.5 billion plan to fund rebuilding, moving or buying out residents whose homes were destroyed or remain damaged by hurricanes Katrina or Rita.
Seattle Times:
- Microsoft’s executive in charge of its MSN online division is taking a leave of absence and may or may not return to the company.
Financial Times:
- Sony Corp.(SNE) may have to delay the introduction of its new PlayStation 3 video game console by six to 12 months, citing Merrill Lynch analysts.
- The European Union will introduce anti-dumping tax duties of around 20% on shoe imports from China and Vietnam.
- US companies have so far borrowed $98.5 billion with investment grade bonds this year to fund an increase in mergers and acquisitions.
- National Grid Plc, manager of the UK power grid, may buy KeySpan Corp.(KSE), the biggest natural-gas seller in the US north east.
Sunday Telegraph:
- The UK should introduce Sharia law in some parts of the country, according to 40% of British Muslims surveyed.
Business:
- Microsoft(MSFT) has developed a Skype-style free Internet voice service that challenges operators such as Vodafone Group Plc(VOD), citing CEO Ballmer.
Xinhua News Agency:
- Coca-Cola’s(KO) sales in China expanded 22% last year as the company focused on non-carbonated drinks.
China Daily:
- China’s sales conducted over the Internet rose 58% last year to $69 billion.
Times of India:
- An official in the northern Indian state of Uttar Pradesh offered $11.4 million to anyone who beheads the Denmark cartoonist who drew caricatures of the prophet Muhammad.
El Moudjahid:
- OPEC may leave its quotas for crude-oil production unchanged because prices are high, citing Algeria’s oil minister.
Middle East Economic Digest:
- Saudi Arabia will invite international companies to bid for a contract in the second quarter to build production facilities to pump 100,000 barrels a day of oil from the Nuayyim oilfield.
Weekend Recommendations
Barron's:
- Had positive comments on (TOL), (ALSK) and (TXRH).
Goldman Sachs:
- Reiterated Outperform on (K) and (EBAY).
- Reiterated Underperform on (SIRI) and (MCCC).
Night Trading
Asian indices are -.25% to +.75% on average.
S&P 500 indicated -.08%.
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
(ABGX)/-.44
(BIDU)/.08
(CBRL)/.59
(CEC)/.35
(CCU)/.35
(DPZ)/.42
(FD)/2.62
(FLS)/.26
(FOSL)/.39
(GPC)/.62
(HD)/.56
(LAMR)/.06
(MDT)/.55
(OII)/.68
(RRI)/-.32
(WMT)/.83
Upcoming Splits
(AET) 2-for-1
(BRCM) 3-for-2
(FCFS) 2-for-1
(IMGC) 3-for-2
(ITT) 2-for-1
Economic Releases
10:00 am EST
- Leading Indicators for January are estimated to rise .6% versus a .1% increase in December.
2:00 pm EST
- Minutes of Jan. 31 FOMC Meeting
Bloomberg:
- The United Arab Emirates reassured US senators that Dubai’s takeover of the US port assets of Peninsula & Oriental Steam Navigation Co. is not a threat to national security.
- NBC Universal, the no. 3 US network, may be forced to give advertisers free or discounted air time to make up for low viewership after its Olympic coverage twice failed to gain top ratings this week.
- Abu Dhabi’s Mubadala Development Co. will partner with Dubai Aluminum Co. Ltd. to build the world’s largest aluminum plan for $6 billion.
- Pakistani cleric Mohammed Yousaf Qureshi offered a $1 million bounty to 1,000 people for killing the Denmark cartoonist who drew caricatures of the prophet Mohammad.
- Harvard University President Lawrence Summers may be on the way out, as the governing board considers calls for his resignation.
- The virus that causes bird flu hasn’t become more easily transmissible to humans as the disease spreads in birds across Europe, the World Health Organization said.
- President Bush said the US needs to reduce crude oil imports and diversify its energy consumption so the world’s largest economy isn’t “held hostage” by oil-rich countries that may not be allies.
- Oil rose the most in 4 weeks in NY as Nigerian rebels threatened more attacks after cutting output from Africa’s largest producer by about 20%.
Wall Street Journal:
- McDonald’s(MCD) more expensive items such as the $4.50 California Cobb salad have been helping the company’s earnings by increasing customers’ average bill.
- McDonald’s(MCD) had at least three lawsuits filed against it after it disclosed last week its French fires contain wheat and milk ingredients that may cause problems for people sensitive to these substances.
- Coca-Cola(KO) is headed for a legal battle with 54 of its bottlers over a new distribution system at Wal-Mart(WMT).
- Fidelity Investments and a hedge fund group last week offered to buy any shares in USG’s(USG) proposed $1.8 billion stock offering not purchased by current shareholders, underbidding Warren Buffett’s Berkshire Hathaway.
Barron’s:
- Retail investor assets rose 18% to $678 billion last year in separately managed accounts, customized investment vehicles that permit direct ownership of a bundle of securities.
Institutional Investor.com:
- Here is a list of America’s most shareholder-friendly companies for 2006.
NY Times:
- Temporary diabetes among pregnant women, known as gestational diabetes, has increased almost 50% in the past decade in New York.
- The newfound wealth coming to the African nation of Chad from a $2.4 billion oil pipeline, backed by the World Bank to fight poverty, is being diverted by the government in part to the army.
- American Indians are becoming increasingly involved in trafficking high-potency marijuana, Ecstasy, cocaine and methamphetamine on US reservations, citing court records, federal and local prosecutors and tribal members.
- Day-trading, the fad that contributed to the bubble in the 1990s, is becoming popular in Japan, embraced by students, and housewives.
- US suburban homeowners doubled their expenditure on garage organizing products to $800 million last year compared with 2000.
LA Times:
- The FDIC’s boost in insurance coverage may help make bank accounts an attractive choice for retirement funds.
AP:
- Nigerian protests over caricatures of the prophet Mohammad erupted into violence that killed 15 people and resulted in at least 15 Christian churches being burned.
- Louisiana Governor Kathleen Blanco laid out a $7.5 billion plan to fund rebuilding, moving or buying out residents whose homes were destroyed or remain damaged by hurricanes Katrina or Rita.
Seattle Times:
- Microsoft’s executive in charge of its MSN online division is taking a leave of absence and may or may not return to the company.
Financial Times:
- Sony Corp.(SNE) may have to delay the introduction of its new PlayStation 3 video game console by six to 12 months, citing Merrill Lynch analysts.
- The European Union will introduce anti-dumping tax duties of around 20% on shoe imports from China and Vietnam.
- US companies have so far borrowed $98.5 billion with investment grade bonds this year to fund an increase in mergers and acquisitions.
- National Grid Plc, manager of the UK power grid, may buy KeySpan Corp.(KSE), the biggest natural-gas seller in the US north east.
Sunday Telegraph:
- The UK should introduce Sharia law in some parts of the country, according to 40% of British Muslims surveyed.
Business:
- Microsoft(MSFT) has developed a Skype-style free Internet voice service that challenges operators such as Vodafone Group Plc(VOD), citing CEO Ballmer.
Xinhua News Agency:
- Coca-Cola’s(KO) sales in China expanded 22% last year as the company focused on non-carbonated drinks.
China Daily:
- China’s sales conducted over the Internet rose 58% last year to $69 billion.
Times of India:
- An official in the northern Indian state of Uttar Pradesh offered $11.4 million to anyone who beheads the Denmark cartoonist who drew caricatures of the prophet Muhammad.
El Moudjahid:
- OPEC may leave its quotas for crude-oil production unchanged because prices are high, citing Algeria’s oil minister.
Middle East Economic Digest:
- Saudi Arabia will invite international companies to bid for a contract in the second quarter to build production facilities to pump 100,000 barrels a day of oil from the Nuayyim oilfield.
Weekend Recommendations
Barron's:
- Had positive comments on (TOL), (ALSK) and (TXRH).
Goldman Sachs:
- Reiterated Outperform on (K) and (EBAY).
- Reiterated Underperform on (SIRI) and (MCCC).
Night Trading
Asian indices are -.25% to +.75% on average.
S&P 500 indicated -.08%.
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
(ABGX)/-.44
(BIDU)/.08
(CBRL)/.59
(CEC)/.35
(CCU)/.35
(DPZ)/.42
(FD)/2.62
(FLS)/.26
(FOSL)/.39
(GPC)/.62
(HD)/.56
(LAMR)/.06
(MDT)/.55
(OII)/.68
(RRI)/-.32
(WMT)/.83
Upcoming Splits
(AET) 2-for-1
(BRCM) 3-for-2
(FCFS) 2-for-1
(IMGC) 3-for-2
(ITT) 2-for-1
Economic Releases
10:00 am EST
- Leading Indicators for January are estimated to rise .6% versus a .1% increase in December.
2:00 pm EST
- Minutes of Jan. 31 FOMC Meeting
BOTTOM LINE: Asian Indices are mostly higher, boosted by gains in financial shares in the region. I expect US stocks to open modestly lower and to rise later in 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 a few economic reports of note and some significant corporate earnings reports scheduled for release this week.
Economic reports for the week include:
Mon. - US Markets Closed
Tues. - Leading Indicators, FOMC Minutes
Wed. - Consumer Price Index
Thur. - Initial Jobless Claims
Fri. - Durable Goods Orders
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - US Markets Closed
Tues. - Abgenix(ABGX), Baidu.com(BIDU), CBRL Group(CBRL), Clear Channel(CCU), Domino’s Pizza(DPZ), Federated Department Store(FD), Home Depot(HD), Lamar Advertising(LAMR), Medtronic(MDT), Reliant Energy(RRI), Wal-Mart Stores(WMT)
Wed. - Express Scripts(ESRX), Garmin Ltd.(GRMN), Harrah’s Entertainment(HET), Henry Schein(HSIC), Martha Stewart(MSO), Novell Inc.(NOVL), OfficeMax(OMX), Salesforce.com(CRM), Sprint Nextel(S), Teekay Shipping(TK), TJX Cos.(TJX), Viacom(VIA)
Thur. - BEA Systems(BEAS), Checkpoint Systems(CKP), ENSCO Intl.(ESV), Gap Inc.(GPS), GlobalSanteFe Co.(GSF), H&R Block(HRB), Kohl’s Corp.(KSS), Limited Brands(LTD), Marvel Entertainment(MVL), Marvell Technology(MRVL), MGM Mirage(MGM), Mohawk Industries(MHK), Netease.com(NTES), Nordstrom(JWN), Toll Brothers(TOL), Wynn Resorts(WYNN)
Fri. - American International Group(AIG), American Tower Corp.(AMT), Autozone Inc.(AZO), Pixar Corp.(PIXR)
Other events that have market-moving potential this week include:
Mon. - US Markets Closed
Tue. - Wachovia Consumer Growth Conference, Morgan Stanley Basic Materials Conference
Wed. - Morgan Stanley Basic Materials Conference, JPMorgan Airline Conference, Wachovia Consumer Growth Conference
Thur. - JPMorgan Airline Conference, Wachovia Consumer Growth Conference, Morgan Stanley Basic Materials Conference
Fri. - Wachovia Consumer Growth Conference
There are a few economic reports of note and some significant corporate earnings reports scheduled for release this week.
Economic reports for the week include:
Mon. - US Markets Closed
Tues. - Leading Indicators, FOMC Minutes
Wed. - Consumer Price Index
Thur. - Initial Jobless Claims
Fri. - Durable Goods Orders
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - US Markets Closed
Tues. - Abgenix(ABGX), Baidu.com(BIDU), CBRL Group(CBRL), Clear Channel(CCU), Domino’s Pizza(DPZ), Federated Department Store(FD), Home Depot(HD), Lamar Advertising(LAMR), Medtronic(MDT), Reliant Energy(RRI), Wal-Mart Stores(WMT)
Wed. - Express Scripts(ESRX), Garmin Ltd.(GRMN), Harrah’s Entertainment(HET), Henry Schein(HSIC), Martha Stewart(MSO), Novell Inc.(NOVL), OfficeMax(OMX), Salesforce.com(CRM), Sprint Nextel(S), Teekay Shipping(TK), TJX Cos.(TJX), Viacom(VIA)
Thur. - BEA Systems(BEAS), Checkpoint Systems(CKP), ENSCO Intl.(ESV), Gap Inc.(GPS), GlobalSanteFe Co.(GSF), H&R Block(HRB), Kohl’s Corp.(KSS), Limited Brands(LTD), Marvel Entertainment(MVL), Marvell Technology(MRVL), MGM Mirage(MGM), Mohawk Industries(MHK), Netease.com(NTES), Nordstrom(JWN), Toll Brothers(TOL), Wynn Resorts(WYNN)
Fri. - American International Group(AIG), American Tower Corp.(AMT), Autozone Inc.(AZO), Pixar Corp.(PIXR)
Other events that have market-moving potential this week include:
Mon. - US Markets Closed
Tue. - Wachovia Consumer Growth Conference, Morgan Stanley Basic Materials Conference
Wed. - Morgan Stanley Basic Materials Conference, JPMorgan Airline Conference, Wachovia Consumer Growth Conference
Thur. - JPMorgan Airline Conference, Wachovia Consumer Growth Conference, Morgan Stanley Basic Materials Conference
Fri. - Wachovia Consumer Growth Conference
BOTTOM LINE: I expect US stocks to finish the week modestly higher on positive economic data, good earnings reports and short-covering. My trading indicators are now giving mixed signals and the Portfolio is 100% net long heading into the week.
Sunday, February 19, 2006
Market Week in Review
S&P 500 1,287.24 +1.60%*
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 considering the mixed economic data, mostly hawkish statement’s from the Fed’s Bernanke and subdued investor sentiment. The advance/decline line was higher, most sectors gained and volume was about average on the week. Measures of investor anxiety were mostly higher. Moreover, the AAII % Bulls fell slightly to 40.18% and is still below average levels, which is a positive. The average 30-year mortgage rate rose to 6.28% which is still only 107 basis points above all-time lows set in June 2003. The benchmark 10-year T-note yield fell 5 basis points on the week as investors cheered Bernanke’s comments.
Unleaded Gasoline futures bounced slightly for the week, but have collapsed 48.2% from September highs even as refinery utilization remains below normal as a result of the hurricanes last year, 24% of Gulf of Mexico oil production remains shut-in and fears over Iranian/Nigerian production disruptions persist. Natural gas inventories fell less than expected this week. Moreover, supplies are now 44.0% above the 5-year average, approaching an all-time record high for this time of year, even as 16% of daily Gulf of Mexico production remains shut-in. Natural gas prices have plunged 55% in 9 weeks. Gold was mostly unchanged on the week as a firm US dollar offset inflation data that exceeded estimates.
The mania for many commodities waned further this week. It still appears to me that the CRB Index has made a significant intermediate-term top. I still believe prices for many commodities have been driven higher by fear and record capital inflows into commodity funds, rather than fundamentals. I continue to expect global energy demand destruction, decelerating economic growth, a firm dollar and a significant increase in supplies later in the year to push oil prices substantially lower from current levels. If in fact commodity prices have peaked, international emerging growth economies will slow, thus leading to a substantial slowdown in the demand for emerging market stocks. While this may cause some more turbulence in US markets in the short-run, it is a huge positive for US stocks longer-term.
The Telecom sector(ITH) outperformed substantially and is close to breaking out of the trading range that has contained it since 2002. An upside breakout in this sector would be a big positive for tech stocks and help further boost the broad market. S&P 500 earnings growth for the fourth quarter is now on pace to rise 15.0% year-over-year, more than double the long-term average. This would be the 15th consecutive quarter of double-digit profit growth, the best streak since record-keeping began in 1936. Moreover, companies have sufficiently lowered the bar as to allow for better-than-expected 1Q results. As of now, analysts are projecting 9.8% earnings growth for the first quarter, still very good by historic standards. I continue to believe the S&P 500’s forward p/e multiple, which is currently 15.4, will expand back to around 19 by year-end, thus helping to push the index about 15% higher for the year. The ECRI Weekly Leading Index fell and is forecasting healthy, but decelerating, US economic activity.
*5-day % Change
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