BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Internet longs, Retail longs and Networking longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is modestly positive as the advance/decline line is slightly higher, sector performance is mixed and volume is above average. NYSE short interest as a % of total shares is currently 2.2%, down slightly from all-time record levels of 2.4% reached three months ago. The current reading is also up from 1.0% in late 1999, the lowest since record-keeping began in 1995. I expect US stocks to trade mixed into the close from current levels as short-covering offsets higher long-term rates.
Friday, March 03, 2006
Stocks Modestly Higher into Final Hour on Economic Optimism
Today's Headlines
Bloomberg:
- The wave of sectarian violence in Iraq that was sparked by the bombing of a Shiite mosque last week has abated, the top US general in Iraq said.
- Google(GOOG), criticized going into a meeting with analysts yesterday for being too secretive, appeased Wall Street with a more open tone and upbeat predictions for the search engine’s efforts to dominate the ad industry.
- Intel(INTC) cut its first-quarter revenue forecast on market share loss.
- Warren Buffett has produced below-average returns since 2001 and lost money for his shareholders over the past year.
- General Electric(GE) CEO Immelt will take his 2005 bonus, worth as much as $5.99 million in shares instead of cash after the company’s stock trailed the market for the first time in three years.
- President Bush said America is entering a new phase of its partnership with India in a speech concluding his three-day trip to the country.
- Dana Corp.(DCN) filed for bankruptcy for its US operations, becoming the fourth major US auto-parts maker to seek protection in the past 13 months as Ford(F) and GM(GM) cut production.
Wall Street Journal:
- Leaders of Hamas, the governing party of the Palestinian Territory, will today visit Moscow in one of the clearest signs yet that Russia is trying to assert itself in the Middle East.
- The US Justice Department is investigating four of the largest music companies for possible collusion in settling online music prices.
- Morningstar Inc.(MORN), the US research firm known for its mutual-fund rankings, plans to introduce a service today that can be used to compare exchange-traded funds.
- Mexican shoppers are flocking to Federated Dept. Stores(FD) and JC Penney(JCP) outlets along the border in Texas, creating a retail boom in the region.
- Walt Disney’s ABC(DIS) refused to air KFC’s new television commercial which invites viewers to slowly replay the ad to find a secret message, because of a ban on subliminal advertising.
- The NYSE has asked the SEC for permission to introduce trading of new bonds, as it tries to capture more of the $5 trillion corporate bond market.
- IBM(IBM), Sun Microsystems(SUNW), Oracle Corp.(ORCL) and the American Library Assoc. have joined to promote a common format for storing and creating documents.
Business Week:
- Texas Instruments(TXN) is likely to benefit “significantly” over the next three years from a US mandate that requires televisions made from 2009 onward to be digital.
Pittsburgh Post-Gazette:
- US Steel(X) is in negotiations to buy AK Steel(AKS), which would create the world’s sixth-largest steel producer.
NY Times:
- Wal-Mart(WMT) is seeking to increase the dominance of its grocery business by playing a role in the creation of food and beverage products.
- The European Union is a union in name only, given the way France, Spain and Italy have reacted to possible cross-border company investments.
AP:
- Khaled Mashaal, the political leader of Hamas, said today in Moscow that the militant Palestinian group won’t change its position on refusing to recognize Israel.
Financial Times:
- Aviva Plc, the British insurer which announced a 29% rise in operating profit yesterday, might consider acquisitions, perhaps in the US, to keep profit growing.
- The wave of sectarian violence in Iraq that was sparked by the bombing of a Shiite mosque last week has abated, the top US general in Iraq said.
- Google(GOOG), criticized going into a meeting with analysts yesterday for being too secretive, appeased Wall Street with a more open tone and upbeat predictions for the search engine’s efforts to dominate the ad industry.
- Intel(INTC) cut its first-quarter revenue forecast on market share loss.
- Warren Buffett has produced below-average returns since 2001 and lost money for his shareholders over the past year.
- General Electric(GE) CEO Immelt will take his 2005 bonus, worth as much as $5.99 million in shares instead of cash after the company’s stock trailed the market for the first time in three years.
- President Bush said America is entering a new phase of its partnership with India in a speech concluding his three-day trip to the country.
- Dana Corp.(DCN) filed for bankruptcy for its US operations, becoming the fourth major US auto-parts maker to seek protection in the past 13 months as Ford(F) and GM(GM) cut production.
Wall Street Journal:
- Leaders of Hamas, the governing party of the Palestinian Territory, will today visit Moscow in one of the clearest signs yet that Russia is trying to assert itself in the Middle East.
- The US Justice Department is investigating four of the largest music companies for possible collusion in settling online music prices.
- Morningstar Inc.(MORN), the US research firm known for its mutual-fund rankings, plans to introduce a service today that can be used to compare exchange-traded funds.
- Mexican shoppers are flocking to Federated Dept. Stores(FD) and JC Penney(JCP) outlets along the border in Texas, creating a retail boom in the region.
- Walt Disney’s ABC(DIS) refused to air KFC’s new television commercial which invites viewers to slowly replay the ad to find a secret message, because of a ban on subliminal advertising.
- The NYSE has asked the SEC for permission to introduce trading of new bonds, as it tries to capture more of the $5 trillion corporate bond market.
- IBM(IBM), Sun Microsystems(SUNW), Oracle Corp.(ORCL) and the American Library Assoc. have joined to promote a common format for storing and creating documents.
Business Week:
- Texas Instruments(TXN) is likely to benefit “significantly” over the next three years from a US mandate that requires televisions made from 2009 onward to be digital.
Pittsburgh Post-Gazette:
- US Steel(X) is in negotiations to buy AK Steel(AKS), which would create the world’s sixth-largest steel producer.
NY Times:
- Wal-Mart(WMT) is seeking to increase the dominance of its grocery business by playing a role in the creation of food and beverage products.
- The European Union is a union in name only, given the way France, Spain and Italy have reacted to possible cross-border company investments.
AP:
- Khaled Mashaal, the political leader of Hamas, said today in Moscow that the militant Palestinian group won’t change its position on refusing to recognize Israel.
Financial Times:
- Aviva Plc, the British insurer which announced a 29% rise in operating profit yesterday, might consider acquisitions, perhaps in the US, to keep profit growing.
Confidence Remains Muted, Service Sector Strong, Measure of Inflation Decelerates Further
- Final Univ. of Mich. Consumer Confidence for February fell to 86.7 versus estimates of 87.5 and a prior estimate of 87.4.
- ISM Non-Manufacturing for February rose to 60.1 versus estimates of 58.0 and a reading of 56.8 in January.
- ISM Non-Manufacturing for February rose to 60.1 versus estimates of 58.0 and a reading of 56.8 in January.
BOTTOM LINE: Confidence among US consumers fell for a second month in February, Bloomberg reported. The expectations component of the index, a gauge of future spending, rose to 74.5 from a prior estimate of 74.4. I still expect consumer sentiment to reach cycle highs later this year as stock prices rise, housing stabilizes at more healthy sustainable levels, the job market remains firm, energy prices fall, irrational pessimism lifts further, long-term rates remain relatively low and inflation decelerates.
Growth in US services industries accelerated in February as consumer and corporate spending bolstered the largest part of the economy, Bloomberg said. Service companies are benefiting from strong economic growth as a result of the best consumer spending in six months in January and increasing equipment sales. The order backlog component of the index increased to 54 versus 52.5 the prior month. The employment component of the index surged to 58.2, the highest in 6 months. The prices paid component of the index fell to 64.8 and is now down 17.3% since September of last year. I expect the ISM Non-manufacturing index to fall modestly over the intermediate-term, but remain at healthy levls.
Thursday, March 02, 2006
Friday Watch
Late-Night Headlines
Bloomberg:
- Iran is ready to reach a compromise on its nuclear program when government officials meeting with European Union ministers in Vienna today, Iran’s Foreign Minister Manouchehr Mottaki said.
- NetEase.com Inc.(NTES) founder William Ding plans to use $420 million to develop online games and for acquisitions, as competition rises and rules are debated to curb violent content and addiction.
- Japan’s consumer prices rose at the fastest pace since 1998 in January, supporting the central bank’s case to end a deflation-fighting policy as soon as next week.
Business Week:
- Boeing(BA) CEO McNerney is awarding employees financial bonuses for ethics-related achievements such as displaying integrity and avoiding abusive behavior.
China Securities Journal:
- China’s economy is showing signs of slowing and the likelihood of inflation accelerating this year is “very small,” the nation’s top planning agency wrote.
Financial Times:
- The European Union may plan to introduce a European-wide tax to finance its budget and a common corporate tax, citing an interview with EU Tax Commissioner Laszlo Kovacs.
Daily News:
- Iran and the UAE have offered to help Sri Lanka tap potential oil and gas reserves.
CNBC:
- John J. “Jack” Byrne, chairman of Overstock.com Inc.(OSTK) may step down.
China Daily:
- Hewlett-Packard’s(HPQ) sales of computers in China surged 44% from a year earlier in the fiscal quarter ending Jan. 31.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on (CCU), (TAP) and (SBUX).
- Reiterated Underperform on (RAI) and (PSS).
Night Trading
Asian Indices are -1.0% to unch. on average.
S&P 500 indicated -.05%.
NASDAQ 100 indicated -.03%.
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/EPS Estimate
- (AGI)/.01
- (DDS)/.87
- (TEX)/.96
- (TKLC)/.19
- (SRA)/.92
Upcoming Splits
- (AAUK) 2-for-1
Economic Releases
9:45 am EST
- Final Univ. of Mich. Consumer Confidence for February is estimated to rise to 87.6 versus a prior estimate of 87.4.
10:00 am EST
- ISM Non-Manufacturing for February is estimated to rise to 58.0 versus a reading of 56.8 in January.
Bloomberg:
- Iran is ready to reach a compromise on its nuclear program when government officials meeting with European Union ministers in Vienna today, Iran’s Foreign Minister Manouchehr Mottaki said.
- NetEase.com Inc.(NTES) founder William Ding plans to use $420 million to develop online games and for acquisitions, as competition rises and rules are debated to curb violent content and addiction.
- Japan’s consumer prices rose at the fastest pace since 1998 in January, supporting the central bank’s case to end a deflation-fighting policy as soon as next week.
Business Week:
- Boeing(BA) CEO McNerney is awarding employees financial bonuses for ethics-related achievements such as displaying integrity and avoiding abusive behavior.
China Securities Journal:
- China’s economy is showing signs of slowing and the likelihood of inflation accelerating this year is “very small,” the nation’s top planning agency wrote.
Financial Times:
- The European Union may plan to introduce a European-wide tax to finance its budget and a common corporate tax, citing an interview with EU Tax Commissioner Laszlo Kovacs.
Daily News:
- Iran and the UAE have offered to help Sri Lanka tap potential oil and gas reserves.
CNBC:
- John J. “Jack” Byrne, chairman of Overstock.com Inc.(OSTK) may step down.
China Daily:
- Hewlett-Packard’s(HPQ) sales of computers in China surged 44% from a year earlier in the fiscal quarter ending Jan. 31.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on (CCU), (TAP) and (SBUX).
- Reiterated Underperform on (RAI) and (PSS).
Night Trading
Asian Indices are -1.0% to unch. on average.
S&P 500 indicated -.05%.
NASDAQ 100 indicated -.03%.
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/EPS Estimate
- (AGI)/.01
- (DDS)/.87
- (TEX)/.96
- (TKLC)/.19
- (SRA)/.92
Upcoming Splits
- (AAUK) 2-for-1
Economic Releases
9:45 am EST
- Final Univ. of Mich. Consumer Confidence for February is estimated to rise to 87.6 versus a prior estimate of 87.4.
10:00 am EST
- ISM Non-Manufacturing for February is estimated to rise to 58.0 versus a reading of 56.8 in January.
BOTTOM LINE: Asian indices are mostly lower, led down by consumer goods shares in the region. I expect US equities to open mixed and to rise modestly into the afternoon. The Portfolio is 100% net long heading into the day.
Stocks Finish Only Slightly Lower after Late-day Rally
Indices
S&P 500 1,289.14 -.16%
DJIA 11,025.51 -.25%
NASDAQ 2,311.11 -.15%
Russell 2000 740.16 -.30%
Wilshire 5000 13,002.67 -.13%
S&P Barra Growth 609.34 -.17%
S&P Barra Value 676.32 -.15%
Morgan Stanley Consumer 603.10 -.41%
Morgan Stanley Cyclical 792.26 -.72%
Morgan Stanley Technology 542.88 +.30%
Transports 4,482.05 -.71%
Utilities 411.66 -.04%
Put/Call .96 +35.21%
NYSE Arms .95 +31.54%
Volatility(VIX) 11.72 +1.56%
ISE Sentiment 171.00 +12.50%
US Dollar 89.55 -.74%
CRB 329.21 +1.35%
Futures Spot Prices
Crude Oil 63.51 +.24%
Unleaded Gasoline 169.90 +.38%
Natural Gas 6.76 +.04%
Heating Oil 181.50 +.56%
Gold 571.60 %
Base Metals 169.09 +2.35%
Copper 226.75 unch.
10-year US Treasury Yield 4.62% +.95%
Leading Sectors
Gold & Silver +2.67%
Oil Service +2.39%
Energy +1.49%
Lagging Sectors
Gaming -1.06%
Retail -1.20%
Airlines -1.33%
Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play
Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on (WCC).
Afternoon/Evening Headlines
Bloomberg:
- Chevron Corp.(CVX) said it acquired five oil sands leases, boosting its holdings in the Athabasca region of northern Alberta.
- Google Inc.(CEO) Schmidt said he sees no limit to the Internet search engine’s ability to increase advertising revenue, a bullish outlook that allayed investor concerns about slowing growth.
- Fidelity Investments, the world’s largest mutual fund company, said earnings rose 20% last year, helped by rising stock prices and its brokerage business.
- The US Senate voted 89-10 to renew the USA Patriot act, ending a 2 1/2 –month stalemate over the law that gave the FBI expanded powers to investigate terrorism suspects after the Sept. 11 attacks.
- Crude oil rose as speculation increased that OPEC would cut production after the President of the group warned of a potential “dramatic” price decline in oil.
S&P 500 1,289.14 -.16%
DJIA 11,025.51 -.25%
NASDAQ 2,311.11 -.15%
Russell 2000 740.16 -.30%
Wilshire 5000 13,002.67 -.13%
S&P Barra Growth 609.34 -.17%
S&P Barra Value 676.32 -.15%
Morgan Stanley Consumer 603.10 -.41%
Morgan Stanley Cyclical 792.26 -.72%
Morgan Stanley Technology 542.88 +.30%
Transports 4,482.05 -.71%
Utilities 411.66 -.04%
Put/Call .96 +35.21%
NYSE Arms .95 +31.54%
Volatility(VIX) 11.72 +1.56%
ISE Sentiment 171.00 +12.50%
US Dollar 89.55 -.74%
CRB 329.21 +1.35%
Futures Spot Prices
Crude Oil 63.51 +.24%
Unleaded Gasoline 169.90 +.38%
Natural Gas 6.76 +.04%
Heating Oil 181.50 +.56%
Gold 571.60 %
Base Metals 169.09 +2.35%
Copper 226.75 unch.
10-year US Treasury Yield 4.62% +.95%
Leading Sectors
Gold & Silver +2.67%
Oil Service +2.39%
Energy +1.49%
Lagging Sectors
Gaming -1.06%
Retail -1.20%
Airlines -1.33%
Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play
Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on (WCC).
Afternoon/Evening Headlines
Bloomberg:
- Chevron Corp.(CVX) said it acquired five oil sands leases, boosting its holdings in the Athabasca region of northern Alberta.
- Google Inc.(CEO) Schmidt said he sees no limit to the Internet search engine’s ability to increase advertising revenue, a bullish outlook that allayed investor concerns about slowing growth.
- Fidelity Investments, the world’s largest mutual fund company, said earnings rose 20% last year, helped by rising stock prices and its brokerage business.
- The US Senate voted 89-10 to renew the USA Patriot act, ending a 2 1/2 –month stalemate over the law that gave the FBI expanded powers to investigate terrorism suspects after the Sept. 11 attacks.
- Crude oil rose as speculation increased that OPEC would cut production after the President of the group warned of a potential “dramatic” price decline in oil.
BOTTOM LINE: The Portfolio finished higher today on gains in my Internet longs, Computer longs and Networking longs. I existed an existing long and added (CIEN) long in the final hour, thus leaving the Portfolio 100% net long. The tone of the market was slightly negative today as the advance/decline line finished modestly lower, sector performance was mixed and volume was above average. Measures of investor anxiety were mostly higher into the close. Overall, today's market performance was just slightly bearish. However, the bears failed to gain traction once again, even as oil and long-term rates rose. I expect stocks to make another push higher soon on another round of short-covering.
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