BOTTOM LINE: The CPI should realign itself with the Core CPI as commodity prices fall from current elevated levels. I expect the secular trend of disinflation to reassert itself over the intermediate-term.
Saturday, February 25, 2006
Chart of Interest
Friday, February 24, 2006
Weekly Scoreboard*
Indices
S&P 500 1,289.43 unch.
DJIA 11,061.85 -.53%
NASDAQ 2,287.04 -.33%
Russell 2000 736.60 +.64%
Wilshire 5000 12,990.60 +.17%
S&P Equity Long/Short Index 1,157.04 +.72%
S&P Barra Growth 609.82 -.21%
S&P Barra Value 676.08 +.22%
Morgan Stanley Consumer 604.78 +.09%
Morgan Stanley Cyclical 792.81 -.98%
Morgan Stanley Technology 532.03 -1.74%
Transports 4,435.59 +.48%
Utilities 411.98 +1.38%
S&P 500 Cum A/D Line 8,526 unch.
Bloomberg Crude Oil % Bulls 32.65 +14.28%
Put/Call .89 +25.35%
NYSE Arms 1.06 +76.66%
Volatility(VIX) 11.46 -.17%
ISE Sentiment 179.00 -10.50%
AAII % Bulls 43.21 +7.54%
AAII % Bears 28.40 -20.47%
US Dollar 90.61 -.01%
CRB 328.90 +1.95%
ECRI Weekly Leading Index 137.40 +.44%
Futures Spot Prices
Crude Oil 62.91 +3.98%
Unleaded Gasoline 155.06 +9.58%
Natural Gas 7.31 -.50%
Heating Oil 172.67 +5.61%
Gold 561.00 +1.06%
Base Metals 166.11 +3.06%
Copper 221.20 +1.42%
10-year US Treasury Yield 4.57 +.66%
Average 30-year Mortgage Rate 6.26 % -.32%
Leading Sectors
Gold & Silver +2.28%
Steel +2.28%
Defense +2.09%
Oil Service +2.06%
I-Banks +1.71%
Lagging Sectors
Telecom -1.32%
Retail -1.35%
Computer Hardware -2.29%
Disk Drives -2.56%
Semis -3.92%
One-Week High-Volume Gainers
One-Week High-Volume Losers
*5-Day % Change
S&P 500 1,289.43 unch.
DJIA 11,061.85 -.53%
NASDAQ 2,287.04 -.33%
Russell 2000 736.60 +.64%
Wilshire 5000 12,990.60 +.17%
S&P Equity Long/Short Index 1,157.04 +.72%
S&P Barra Growth 609.82 -.21%
S&P Barra Value 676.08 +.22%
Morgan Stanley Consumer 604.78 +.09%
Morgan Stanley Cyclical 792.81 -.98%
Morgan Stanley Technology 532.03 -1.74%
Transports 4,435.59 +.48%
Utilities 411.98 +1.38%
S&P 500 Cum A/D Line 8,526 unch.
Bloomberg Crude Oil % Bulls 32.65 +14.28%
Put/Call .89 +25.35%
NYSE Arms 1.06 +76.66%
Volatility(VIX) 11.46 -.17%
ISE Sentiment 179.00 -10.50%
AAII % Bulls 43.21 +7.54%
AAII % Bears 28.40 -20.47%
US Dollar 90.61 -.01%
CRB 328.90 +1.95%
ECRI Weekly Leading Index 137.40 +.44%
Futures Spot Prices
Crude Oil 62.91 +3.98%
Unleaded Gasoline 155.06 +9.58%
Natural Gas 7.31 -.50%
Heating Oil 172.67 +5.61%
Gold 561.00 +1.06%
Base Metals 166.11 +3.06%
Copper 221.20 +1.42%
10-year US Treasury Yield 4.57 +.66%
Average 30-year Mortgage Rate 6.26 % -.32%
Leading Sectors
Gold & Silver +2.28%
Steel +2.28%
Defense +2.09%
Oil Service +2.06%
I-Banks +1.71%
Lagging Sectors
Telecom -1.32%
Retail -1.35%
Computer Hardware -2.29%
Disk Drives -2.56%
Semis -3.92%
One-Week High-Volume Gainers
One-Week High-Volume Losers
*5-Day % Change
Stocks at Session Highs into Final Hour as Bears Fail Again to Capitalize on Morning Weakness
BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Biotech longs, Semi longs and Networking longs. I exited my IWM and QQQQ shorts, thus leaving the Portfolio 100% net long. The tone of the market is slightly positive as the advance/decline line is modestly higher, most sectors are higher and volume is below average. Natural gas closed floor trading at session lows, down about 5% to $7.05. Recently, oil bulls have been saying to ignore supply/demand fundamentals and focus on potential production disruptions. Natural gas bulls said the same thing before last year's hurricanes. Not only did we get disruptions, they were historic in magnitude. Meanwhile, natural gas supplies are 48% above the five-year average with 16% of production still shut-in. Natural gas has collapsed 55% from highs. Deteriorating oil fundamentals will trump fear over the intermediate-term. I expect US stocks to trade modestly higher into the close from current levels on short-covering.
Today's Headlines
Bloomberg:
- NBC Universal’s Olympics television coverage isn’t only losing out to “American Idol” and “Desperate Housewives.” The No. 3 US network, owned by GE(GE), is getting beaten by its own Web site.
- The UK has placed a $58 million order with Baxter International(BAX) and Chiron Corp.(CHIR) for 3.5 million doses of avian influenza vaccine.
- New Jersey may become the second US state to allow gay marriage, and the first to allow homosexuals living outside the state to wed, because of a case heard this month by the state’s highest court.
- Time Warner(TWX) said Ted Turner and Carla Hills will step down from the board of directors after the company’s annual shareholders meeting.
- The IRS found a “disturbing” amount of political activity before the 2004 elections among non-profit organizations in violation of rules on tax-exempt entities.
- Chicago had the biggest surge in hotel acquisitions among US cities last year, pushing it ahead of Washington and Miami as investors headed for a market where demand outpaced construction.
- Crude oil is jumping more than $2/bbl. after Saudi Arabian forces repelled a suicide attack on the Abqaiq processing center, which handles about 7% of world supply.
- A judge considering a halt in US BlackBerry e-mail service criticized both sides in the case for not settling their patent dispute and said he will rule later on a shutdown.
Wall Street Journal:
- National Grid Plc has offered to acquire NY utility and natural-gas distributor KeySpan Corp.(KSE) for about $7.3 billion in an effort to increase business in the northeastern part of the US.
- Hard Rock Hotel’s $1.2 billion plan to add condominiums and hotel rooms to its Las Vegas property has been postponed because of offers to buy the site.
- Chicago Mercantile Holdings is seeking to start trading of products in the credit derivatives field.
- Goldman Sachs(GS), Bank of America(BAC) and Bear Stearns(BSC) may buy a minority stake in the Chicago Stock Exchange.
- More and more mutual funds classified as US stocks funds are investing in companies abroad, which complicates portfolio planning for investors.
Business Week:
- Advance Publications’ GQ magazine plans to encourage readers of the mean’s monthly to subscribe to a text messaging service that may transmit notes about events, private sales and giveaways to cell phones.
LA Times:
- The Univ. of Southern California announced yesterday it received a $25 million donation from billionaire Eli Broad’s Broad Foundation to construct a stem cell research facility.
NY Times:
- The US’s largest companies expect a $4 billion subsidy for their retiree health plans over the next four years under Medicare’s new prescription drug benefit, citing a study by Credit Suisse First Boston.
- NBC Universal’s Olympics television coverage isn’t only losing out to “American Idol” and “Desperate Housewives.” The No. 3 US network, owned by GE(GE), is getting beaten by its own Web site.
- The UK has placed a $58 million order with Baxter International(BAX) and Chiron Corp.(CHIR) for 3.5 million doses of avian influenza vaccine.
- New Jersey may become the second US state to allow gay marriage, and the first to allow homosexuals living outside the state to wed, because of a case heard this month by the state’s highest court.
- Time Warner(TWX) said Ted Turner and Carla Hills will step down from the board of directors after the company’s annual shareholders meeting.
- The IRS found a “disturbing” amount of political activity before the 2004 elections among non-profit organizations in violation of rules on tax-exempt entities.
- Chicago had the biggest surge in hotel acquisitions among US cities last year, pushing it ahead of Washington and Miami as investors headed for a market where demand outpaced construction.
- Crude oil is jumping more than $2/bbl. after Saudi Arabian forces repelled a suicide attack on the Abqaiq processing center, which handles about 7% of world supply.
- A judge considering a halt in US BlackBerry e-mail service criticized both sides in the case for not settling their patent dispute and said he will rule later on a shutdown.
Wall Street Journal:
- National Grid Plc has offered to acquire NY utility and natural-gas distributor KeySpan Corp.(KSE) for about $7.3 billion in an effort to increase business in the northeastern part of the US.
- Hard Rock Hotel’s $1.2 billion plan to add condominiums and hotel rooms to its Las Vegas property has been postponed because of offers to buy the site.
- Chicago Mercantile Holdings is seeking to start trading of products in the credit derivatives field.
- Goldman Sachs(GS), Bank of America(BAC) and Bear Stearns(BSC) may buy a minority stake in the Chicago Stock Exchange.
- More and more mutual funds classified as US stocks funds are investing in companies abroad, which complicates portfolio planning for investors.
Business Week:
- Advance Publications’ GQ magazine plans to encourage readers of the mean’s monthly to subscribe to a text messaging service that may transmit notes about events, private sales and giveaways to cell phones.
LA Times:
- The Univ. of Southern California announced yesterday it received a $25 million donation from billionaire Eli Broad’s Broad Foundation to construct a stem cell research facility.
NY Times:
- The US’s largest companies expect a $4 billion subsidy for their retiree health plans over the next four years under Medicare’s new prescription drug benefit, citing a study by Credit Suisse First Boston.
Durable Goods Orders Fall on Volatile Airplane Orders
- Durable Goods Orders for January fell 10.2% versus an upwardly revised 2.5% increase in December.
- Durables Ex Transportation for January rose .6% versus an upwardly revised 1.9% gain in December.
- Durables Ex Transportation for January rose .6% versus an upwardly revised 1.9% gain in December.
BOTTOM LINE: A decline in commercial aircraft demand last month caused a large drop in Durable Goods Orders, even as factories reported stronger sales of business equipment. The third straight gain in orders excluding autos and commercial planes was the best stretch since July through Sept. 2004. Orders for non-defense capital goods excluding aircraft, a gauge of future business spending, fell .4% versus a .5% increase the prior month. However, unfilled orders of business equipment rose .6% and communications equipment orders soared 16.7% in January. Orders for appliances and electrical equipment increased 2.7% in January. Economists expect the US economy to grow 4% this quarter versus a historical average of 3.1%. The headline Durable Goods number was due for a fall after airline production soared last quarter. I expect a nice rebound this month. Overall, it appears business spending is accelerating and should add meaningfully to US growth this year helping to offset a slowing housing market.
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