BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Internet longs, Computer longs and Networking longs. I covered some of my (IWM) and (QQQQ) shorts and added back to them, thus leaving the Portfolio 50% net long. The tone of the market is modestly positive as the advance/decline line is slightly higher, sector performance is mostly positive and volume is below average. Tech stocks are coming under pressure, led down by semis. The averages are not acting as though they are done with the recent correction. I expect US stocks to trade mixed into the close from current levels as weakness in the tech sector and higher energy prices offsets bargain hunting and short-covering.
Monday, March 13, 2006
Stocks Slightly Higher into Final Hour, Led by Energy Shares
Today's Headlines
Bloomberg:
- Federal Reserve Bank of San Francisco President Yellen said announcing an inflation goal would improve the central bank’s credibility, while doing the same for the jobless rate would cause more harm than good.
- Crude oil is rising in NY, led by natural gas, on short-covering and expectations of cold weather across the northern US later this month.
Wall Street Journal:
- Aozora Bank Ltd. is expected to contribute $1 billion to help Cerberus Capital Management finance a bid for General Motors’ financing arm.
- Medco Health Solutions(MHS) and some US insurers and government agencies are deploying their own sales reps to persuade doctors to prescribe alternatives to expensive brand-name drugs.
- Pinnacle Entertainment(PNK), the casino owner that had a property in Mississippi suffer extensive damage because of Hurricane Katrina, is in advanced talks about a takeover of rival Aztar Corp.(AZR) for more than $1 billion.
- Berkshire Hathaway(BRK/A) Chairman Warren Buffett says he’s buying foreign securities, betting that the dollar will decline, but there are risks for small investors who follow suit.
- IBM(IBM) will sell some consulting services to small- and medium-sized businesses, as it hopes to boost its income in those operations.
- The prices of emerging-market bonds are falling as investors switch to those in developed countries such as the US.
USA Today:
- Cendant Corp.(CD) plans to announce today that 117 of its Avis Budget rental car centers in NY and Houston will let customers pay tolls electronically.
NY Times:
- US media companies are seeking to acquire new content and technology companies, as they try to attract niche audiences on the Internet.
Washington Post:
- Discovery Communications produced a home version of its online video encyclopedia to help students in kindergarten through 12th grade with their homework.
Reuters:
- Royal Dutch Shell Plc is planning an increase in investment in Russia that may include a third major venture.
Interfax:
- Russia is “very disappointed” by Iran’s behavior over a Russian proposal aimed at breaking the international deadlock over the Islamic Republic’s nuclear program.
Financial Times:
- Sales of bonds backed by commercial mortgages may increase by about 40% this year.
Handelsblatt:
- IBM(IBM) aims to focus more on hardware and software technology after putting too much emphasis on growing its services business in recent years.
- Federal Reserve Bank of San Francisco President Yellen said announcing an inflation goal would improve the central bank’s credibility, while doing the same for the jobless rate would cause more harm than good.
- Crude oil is rising in NY, led by natural gas, on short-covering and expectations of cold weather across the northern US later this month.
Wall Street Journal:
- Aozora Bank Ltd. is expected to contribute $1 billion to help Cerberus Capital Management finance a bid for General Motors’ financing arm.
- Medco Health Solutions(MHS) and some US insurers and government agencies are deploying their own sales reps to persuade doctors to prescribe alternatives to expensive brand-name drugs.
- Pinnacle Entertainment(PNK), the casino owner that had a property in Mississippi suffer extensive damage because of Hurricane Katrina, is in advanced talks about a takeover of rival Aztar Corp.(AZR) for more than $1 billion.
- Berkshire Hathaway(BRK/A) Chairman Warren Buffett says he’s buying foreign securities, betting that the dollar will decline, but there are risks for small investors who follow suit.
- IBM(IBM) will sell some consulting services to small- and medium-sized businesses, as it hopes to boost its income in those operations.
- The prices of emerging-market bonds are falling as investors switch to those in developed countries such as the US.
USA Today:
- Cendant Corp.(CD) plans to announce today that 117 of its Avis Budget rental car centers in NY and Houston will let customers pay tolls electronically.
NY Times:
- US media companies are seeking to acquire new content and technology companies, as they try to attract niche audiences on the Internet.
Washington Post:
- Discovery Communications produced a home version of its online video encyclopedia to help students in kindergarten through 12th grade with their homework.
Reuters:
- Royal Dutch Shell Plc is planning an increase in investment in Russia that may include a third major venture.
Interfax:
- Russia is “very disappointed” by Iran’s behavior over a Russian proposal aimed at breaking the international deadlock over the Islamic Republic’s nuclear program.
Financial Times:
- Sales of bonds backed by commercial mortgages may increase by about 40% this year.
Handelsblatt:
- IBM(IBM) aims to focus more on hardware and software technology after putting too much emphasis on growing its services business in recent years.
Sunday, March 12, 2006
Monday Watch
Weekend Headlines
Bloomberg:
- The US dollar posted its broadest weekly rally since August as a jump in US job growth added to expectations that interest rates in the US will rise more than in other major economies such as Japan.
- US coffee consumption is at its highest in six years and “statistically equal” to soda drinks for the first time since 1990, the National Coffee Assoc. said.
- Bank of Japan Governor Toshihiko Fukui said that while his nation’s economy is “right on track,” the central bank hasn’t decided on the timing of interest rate increases.
- The leaders of Iraq’s religious factions today agreed to meet daily ahead of the nation’s first parliamentary session March 16 in an effort to choose a prime minister and create a national unity government.
- Billionaire investor Warren Buffett is losing his midas touch as retirement looms.
- China’s consumer prices rose in February by .9%, the slowest pace in five months, as gains in food prices eased.
- Kia Motors, South Korea’s second-largest automaker, will build a $1.2 billion factory in West Point, Georgia, choosing a site near its parent Hyundai Motor’s US plant to tap growing sales in North America.
Wall Street Journal:
- US homeowners are slowing the rate at which they take out credit against their houses as interest rates rise and the housing market cools, citing data from the Federal Reserve.
- Capital One(COF) is near an agreement to buy North Fork Bancorp.(NFB) for about $14.5 billion in cash and stock.
CNNMoney.com:
- While big drugmakers stumble, their nimbler rivals are delivering products – and profits.
NY Times:
- McClatchy Co. is the bidder most likely to buy Knight Ridder because its $4.8 billion cash and stock bid for the No. 2 US newspaper chain is the highest and the most binding.
- The National People’s Congress of China is debating whether to continue with its efforts to promote more investment and economic growth or to rein in expansion to avoid disenfranchising the poor.
- Producers of specialized television shows whose audiences are too small to justify late-night or cable slots are increasingly broadcasting over the Internet.
Rocky Mountain News:
- Broe Cos. is “very interested” in managing the six US ports that Dubai’s DP World will give up running. Broe’s OmniTRAX subsidiary owns the port at Churchhill, Manitoba.
Sky News:
- Slobodan Milosevic, the former president of Yugoslavia who was facing war crimes charges in The Hague, died in his jail cell.
Financial Times:
- US Homeland Security Secretary Michael Chertoff said an overreaction by Congress on security issues, such as the furor over DP World’s planned takeover of some US port facilities, threatens to damage the US economy.
- Dell Inc.(DELL) needs “to be bolder” in its attempts to reverse slowing revenue growth and sliding profit margins, citing an interview with CEO Rollins.
- Pfizer(PFE), Citigroup(C), Motorola(MOT), Ford Motor(F) and General Motors(GM) are among US companies preparing to end quarterly profit forecasts in favor of more detail on underlying performance.
Financial Mail on Sunday:
- Private equity firms including Apax Partners Worldwide and CVC Capital Partners Ltd. are planning a $173 billion bid for Vodafone Group Plc(VOD).
Business:
- Verizon Communications(VZ) may buy Vodafone Group’s(VOD) stake in its mobile-phone unit for about $40 billion.
- The NYSE(NYX) may bid for the London Stock Exchange after Nasdaq Stock Market Inc. made an unsolicited approach for Europe’s largest stock market.
- GlaxoSmithKline Plc(GLX), the biggest drugmaker in the UK, decided not to proceed with a possible $11 billion bid for Serono SA(SRA), Europe’s largest biotech company.
AFP:
- Saudi Arabia said it will support Hamas as the party seeks to form a Palestinian government, citing Ezzat al-Reshq, a member of the Hamas delegation currently visiting Riyadh.
Gulf News:
- China expects to start free trade talks with the United Arab Emirates this year in an effort to boost exports to the Persian Gulf’s second largest economy, citing a Chinese official.
Middle East Economic Digest:
- United Arab Emirates’ State-owned Abu Dhabi National Oil Co. plans to invite companies to bid for a contract to design facilities to raise production capacity by 25% from its Bab oil field.
Weekend Recommendations
Barron's:
- Had positive comments on (ITG), (BA), (ABXA), (TWX), (CBS), (CVC), (DIS), (MER), (JPM), (PFE), (DJ), (ALL) and (AVP).
Goldman Sachs:
- None of note
Night Trading
Asian indices are +.50% to +1.0% on average.
S&P 500 indicated +.09%.
NASDAQ 100 indicated +.24%.
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
- (ALO)/.27
- (ADRX)/.20
- (CMG)/.11
- (STAR)/.08
- (SONS)/.00
- (MTN)/.94
Upcoming Splits
- (ATLS) 3-for-2
- (MINI) 2-for-1
- (PD) 2-for-1
Economic Releases
- None of note
Bloomberg:
- The US dollar posted its broadest weekly rally since August as a jump in US job growth added to expectations that interest rates in the US will rise more than in other major economies such as Japan.
- US coffee consumption is at its highest in six years and “statistically equal” to soda drinks for the first time since 1990, the National Coffee Assoc. said.
- Bank of Japan Governor Toshihiko Fukui said that while his nation’s economy is “right on track,” the central bank hasn’t decided on the timing of interest rate increases.
- The leaders of Iraq’s religious factions today agreed to meet daily ahead of the nation’s first parliamentary session March 16 in an effort to choose a prime minister and create a national unity government.
- Billionaire investor Warren Buffett is losing his midas touch as retirement looms.
- China’s consumer prices rose in February by .9%, the slowest pace in five months, as gains in food prices eased.
- Kia Motors, South Korea’s second-largest automaker, will build a $1.2 billion factory in West Point, Georgia, choosing a site near its parent Hyundai Motor’s US plant to tap growing sales in North America.
Wall Street Journal:
- US homeowners are slowing the rate at which they take out credit against their houses as interest rates rise and the housing market cools, citing data from the Federal Reserve.
- Capital One(COF) is near an agreement to buy North Fork Bancorp.(NFB) for about $14.5 billion in cash and stock.
CNNMoney.com:
- While big drugmakers stumble, their nimbler rivals are delivering products – and profits.
NY Times:
- McClatchy Co. is the bidder most likely to buy Knight Ridder because its $4.8 billion cash and stock bid for the No. 2 US newspaper chain is the highest and the most binding.
- The National People’s Congress of China is debating whether to continue with its efforts to promote more investment and economic growth or to rein in expansion to avoid disenfranchising the poor.
- Producers of specialized television shows whose audiences are too small to justify late-night or cable slots are increasingly broadcasting over the Internet.
Rocky Mountain News:
- Broe Cos. is “very interested” in managing the six US ports that Dubai’s DP World will give up running. Broe’s OmniTRAX subsidiary owns the port at Churchhill, Manitoba.
Sky News:
- Slobodan Milosevic, the former president of Yugoslavia who was facing war crimes charges in The Hague, died in his jail cell.
Financial Times:
- US Homeland Security Secretary Michael Chertoff said an overreaction by Congress on security issues, such as the furor over DP World’s planned takeover of some US port facilities, threatens to damage the US economy.
- Dell Inc.(DELL) needs “to be bolder” in its attempts to reverse slowing revenue growth and sliding profit margins, citing an interview with CEO Rollins.
- Pfizer(PFE), Citigroup(C), Motorola(MOT), Ford Motor(F) and General Motors(GM) are among US companies preparing to end quarterly profit forecasts in favor of more detail on underlying performance.
Financial Mail on Sunday:
- Private equity firms including Apax Partners Worldwide and CVC Capital Partners Ltd. are planning a $173 billion bid for Vodafone Group Plc(VOD).
Business:
- Verizon Communications(VZ) may buy Vodafone Group’s(VOD) stake in its mobile-phone unit for about $40 billion.
- The NYSE(NYX) may bid for the London Stock Exchange after Nasdaq Stock Market Inc. made an unsolicited approach for Europe’s largest stock market.
- GlaxoSmithKline Plc(GLX), the biggest drugmaker in the UK, decided not to proceed with a possible $11 billion bid for Serono SA(SRA), Europe’s largest biotech company.
AFP:
- Saudi Arabia said it will support Hamas as the party seeks to form a Palestinian government, citing Ezzat al-Reshq, a member of the Hamas delegation currently visiting Riyadh.
Gulf News:
- China expects to start free trade talks with the United Arab Emirates this year in an effort to boost exports to the Persian Gulf’s second largest economy, citing a Chinese official.
Middle East Economic Digest:
- United Arab Emirates’ State-owned Abu Dhabi National Oil Co. plans to invite companies to bid for a contract to design facilities to raise production capacity by 25% from its Bab oil field.
Weekend Recommendations
Barron's:
- Had positive comments on (ITG), (BA), (ABXA), (TWX), (CBS), (CVC), (DIS), (MER), (JPM), (PFE), (DJ), (ALL) and (AVP).
Goldman Sachs:
- None of note
Night Trading
Asian indices are +.50% to +1.0% on average.
S&P 500 indicated +.09%.
NASDAQ 100 indicated +.24%.
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
- (ALO)/.27
- (ADRX)/.20
- (CMG)/.11
- (STAR)/.08
- (SONS)/.00
- (MTN)/.94
Upcoming Splits
- (ATLS) 3-for-2
- (MINI) 2-for-1
- (PD) 2-for-1
Economic Releases
- None of note
BOTTOM LINE: Asian Indices are higher, boosted by exporting shares in the region after the US dollar rose and US employment data exceeded estimates. I expect US stocks to open modestly higher and to maintain gains into the afternoon. The Portfolio is 50% net long heading into the week.
Weekly Outlook
Click here for The Week Ahead by Reuters
There are a number of important economic reports of note and a few significant corporate earnings reports scheduled for release this week.
Economic reports for the week include:
Mon. - None of note
Tues. - Current Account Deficit, Advance Retail Sales, Business Inventories
Wed. - Import Price Index, Empire Manufacturing, Net Foreign Security Purchases, NAHB Housing Market Index, Fed’s Beige Book
Thur. - Consumer Price Index, Housing Starts, Building Permits, Initial Jobless Claims, Philly Fed
Fri. - Industrial Production, Capacity Utilization, Univ. of Mich. Consumer Confidence
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - Chipotle Mexican Grill(CMG), Sonus Networks(SONS), Vail Resorts(MTN)
Tues. - Goldman Sachs(GS), Lexar Media(LEXR), Pride Intl.(PDE), Southern Union(SUG)
Wed. - AES Corp.(AES), Anteon Intl.(ANT), Beverly Enterprises(BEV), Comverse Tech(CMVT), EchoStar Communications(DISH), Gymboree Corp.(GYMB), HOT Topic(HOTT), Lehman Brothers(LEH), Medicis Pharmaceuticals(MRX), Navistar Intl.(NAV), Ross Stores(ROST), Sears Holdings(SHLD), Titanium Metals(TIE)
Thur. - American Intl. Group(AIG), Barnes & Noble(BKS), Bear Stearns(BSC), Borders Group(BGP), Cintas Corp.(CTAS), Dresser-Rand(DRC), Leap Wireless(LEAP), Patterson-UTI(PTEN), Tektronix(TEK), US Cellular(USM)
Fri. - Tekelec(TKLC), Terex Corp.(TEX)
Other events that have market-moving potential this week include:
Mon. - Deutsche Bank Tech Conference, CSFB Global Services Conference, JP Morgan Internet Conference
Tue. - Deutsche Bank Tech Conference, AG Edwards Energy Conference, Citigroup Small/Mid-cap Conference, JP Morgan Internet Conference, Banc of America Consumer Conference, CSFB Global Services Conference
Wed. - Deutsche Bank Tech Conference, Banc of America Consumer Conference, Citigroup Small/Mid-cap Conference, AG Edwards Energy Conference, CSFB Global Services Conference, Morgan Stanley Global Electricity/Energy Conference
Thur. - Banc of America Consumer Conference, Citigroup Small/Mid-cap Conference
Fri. - None of note
There are a number of important economic reports of note and a few significant corporate earnings reports scheduled for release this week.
Economic reports for the week include:
Mon. - None of note
Tues. - Current Account Deficit, Advance Retail Sales, Business Inventories
Wed. - Import Price Index, Empire Manufacturing, Net Foreign Security Purchases, NAHB Housing Market Index, Fed’s Beige Book
Thur. - Consumer Price Index, Housing Starts, Building Permits, Initial Jobless Claims, Philly Fed
Fri. - Industrial Production, Capacity Utilization, Univ. of Mich. Consumer Confidence
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - Chipotle Mexican Grill(CMG), Sonus Networks(SONS), Vail Resorts(MTN)
Tues. - Goldman Sachs(GS), Lexar Media(LEXR), Pride Intl.(PDE), Southern Union(SUG)
Wed. - AES Corp.(AES), Anteon Intl.(ANT), Beverly Enterprises(BEV), Comverse Tech(CMVT), EchoStar Communications(DISH), Gymboree Corp.(GYMB), HOT Topic(HOTT), Lehman Brothers(LEH), Medicis Pharmaceuticals(MRX), Navistar Intl.(NAV), Ross Stores(ROST), Sears Holdings(SHLD), Titanium Metals(TIE)
Thur. - American Intl. Group(AIG), Barnes & Noble(BKS), Bear Stearns(BSC), Borders Group(BGP), Cintas Corp.(CTAS), Dresser-Rand(DRC), Leap Wireless(LEAP), Patterson-UTI(PTEN), Tektronix(TEK), US Cellular(USM)
Fri. - Tekelec(TKLC), Terex Corp.(TEX)
Other events that have market-moving potential this week include:
Mon. - Deutsche Bank Tech Conference, CSFB Global Services Conference, JP Morgan Internet Conference
Tue. - Deutsche Bank Tech Conference, AG Edwards Energy Conference, Citigroup Small/Mid-cap Conference, JP Morgan Internet Conference, Banc of America Consumer Conference, CSFB Global Services Conference
Wed. - Deutsche Bank Tech Conference, Banc of America Consumer Conference, Citigroup Small/Mid-cap Conference, AG Edwards Energy Conference, CSFB Global Services Conference, Morgan Stanley Global Electricity/Energy Conference
Thur. - Banc of America Consumer Conference, Citigroup Small/Mid-cap Conference
Fri. - None of note
BOTTOM LINE: I expect US stocks to finish the week modestly higher on decelerating inflation readings, short-covering, bargain-hunting, lower long-term rates and falling energy prices. My trading indicators are now giving mostly bearish signals and the Portfolio is 50% net long heading into the week.
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