BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Medical longs, Internet longs, Networking longs and Energy-related shorts. I have not traded today, thus leaving the Portfolio 75% net long. The tone of the market is modestly negative as the advance/decline line is slightly lower, sector performance is mixed and volume is above average. Overall, today’s market action looks like a healthy consolidation of recent gains. I expect US stocks to trade mixed-to-higher into the close from current levels on lower energy prices, stable long-term rates and short-covering.
Monday, March 20, 2006
Stocks Mixed into Final Hour as Strengh in Tech Offsets Weakness in Commodities
Today's Headlines
Bloomberg:
- The crown jewel in Pfizer’s(PFE) research pipeline, a new type of cholesterol drug the company says is key to future growth, may be sold in the US years earlier than doctors and investors expect.
- Commercial construction, one of the last industries to recover from the most recent recession, is poised for the best year since 2001, contributing more to economic growth just as homebuilding starts to ebb.
- Saudi Arabia, seeking to stem a slump in its stock market, will allow foreign residents to buy shares directly from the local exchange for the first time.
- US Treasuries due in 10 years or more are rising on speculation Fed Chairman Bernanke will signal that low long-term yields won’t influence interest-rate policy.
- Crude oil is falling as US inventories approached a seven-year high, easing concern about supply disruptions in Nigeria and Iran.
Wall Street Journal:
- General Motors’(GM) board demanded an inquiry into accounting mistakes that forced the carmaker to postpone filing its annual report and that might delay the planned sale of all or part of GMAC, its financing unit.
- Michaels Stores(MIK), the biggest US arts-and-crafts retailer, may say that it will examine alternatives including sale of the company.
- Citigroup(C) has tackled weakness in its regulatory controls and improved its corporate-governance practices.
- Cray Inc.(CRAY), which makes supercomputers used by scientists and engineers, will announce a new design in an attempt to improve the fortunes of the company.
- Pioneer Telephone Cooperative, an Oklahoma rural phone company, has begun to install technology to connect its Internet-based television service by wireless to home television sets.
- AT&T(T), Time Warner(TWX) and other phone and cable companies that tried to stop cut-rate or free wireless Internet access in cities are now trying to enter the municipal Wi-Fi market.
- “Life-cycle” funds, which alter periodically the mix of stocks and bonds they hold, in line with people’s changing needs as they age, are growing in popularity.
NY Daily News:
- The Newspaper Assoc. of America is starting a $50 million campaign to lure advertising in the face of declining circulation and smaller market shares.
NY Post:
- Ford Motor(F) is being asked by politicians to make a gasoline-electric model of its Crown Victoria sedan, the most popular vehicle for taxis in NYC.
USA Today:
- US military deaths in Iraq fell last month close to their lowest level since the insurgency began two years ago.
NY Times:
- For the first time since 1981, the US Supreme Court will hear a case this week that involves discerning what kind of inventions can be patented.
- Verizon Communications(VZ) wants to buy Vodafone Group’s(VOD) 45% stake in the company’s wireless operations so it can book 100% of the profits.
San Jose Mercury News:
- Microsoft(MSFT) is developing a handheld entertainment device that combines games, music, and video.
Business Standard:
-.One vehicle is sold every 10 minutes on EBay India’s business-to-business Web site.
Dagens Industri:
- Ericsson AB(ERICY) is taking market share and expects to continue doing so, citing CEO Svanberg.
- The crown jewel in Pfizer’s(PFE) research pipeline, a new type of cholesterol drug the company says is key to future growth, may be sold in the US years earlier than doctors and investors expect.
- Commercial construction, one of the last industries to recover from the most recent recession, is poised for the best year since 2001, contributing more to economic growth just as homebuilding starts to ebb.
- Saudi Arabia, seeking to stem a slump in its stock market, will allow foreign residents to buy shares directly from the local exchange for the first time.
- US Treasuries due in 10 years or more are rising on speculation Fed Chairman Bernanke will signal that low long-term yields won’t influence interest-rate policy.
- Crude oil is falling as US inventories approached a seven-year high, easing concern about supply disruptions in Nigeria and Iran.
Wall Street Journal:
- General Motors’(GM) board demanded an inquiry into accounting mistakes that forced the carmaker to postpone filing its annual report and that might delay the planned sale of all or part of GMAC, its financing unit.
- Michaels Stores(MIK), the biggest US arts-and-crafts retailer, may say that it will examine alternatives including sale of the company.
- Citigroup(C) has tackled weakness in its regulatory controls and improved its corporate-governance practices.
- Cray Inc.(CRAY), which makes supercomputers used by scientists and engineers, will announce a new design in an attempt to improve the fortunes of the company.
- Pioneer Telephone Cooperative, an Oklahoma rural phone company, has begun to install technology to connect its Internet-based television service by wireless to home television sets.
- AT&T(T), Time Warner(TWX) and other phone and cable companies that tried to stop cut-rate or free wireless Internet access in cities are now trying to enter the municipal Wi-Fi market.
- “Life-cycle” funds, which alter periodically the mix of stocks and bonds they hold, in line with people’s changing needs as they age, are growing in popularity.
NY Daily News:
- The Newspaper Assoc. of America is starting a $50 million campaign to lure advertising in the face of declining circulation and smaller market shares.
NY Post:
- Ford Motor(F) is being asked by politicians to make a gasoline-electric model of its Crown Victoria sedan, the most popular vehicle for taxis in NYC.
USA Today:
- US military deaths in Iraq fell last month close to their lowest level since the insurgency began two years ago.
NY Times:
- For the first time since 1981, the US Supreme Court will hear a case this week that involves discerning what kind of inventions can be patented.
- Verizon Communications(VZ) wants to buy Vodafone Group’s(VOD) 45% stake in the company’s wireless operations so it can book 100% of the profits.
San Jose Mercury News:
- Microsoft(MSFT) is developing a handheld entertainment device that combines games, music, and video.
Business Standard:
-.One vehicle is sold every 10 minutes on EBay India’s business-to-business Web site.
Dagens Industri:
- Ericsson AB(ERICY) is taking market share and expects to continue doing so, citing CEO Svanberg.
Leading Indicators Forecast Decelerating Growth
- Leading Indicators for February fell .2% versus estimates of a .3% decline and a downwardly revised .5% gain in January.
BOTTOM LINE: An index of US leading indicators fell in February after four months of gains, signaling slower economic growth in the second half of the year. The US economy is projected to grow by a very strong 4.7% this quarter, the fastest pace in two years, boosted by increasing corporate spending and still healthy consumer spending. I continue to expect US growth to peak this quarter and decelerate back to average levels of around 3% through year-end. This should provide a very good backdrop for investing in US stocks.
Sunday, March 19, 2006
Monday Watch
Weekend Headlines
Bloomberg:
- A federal judge said Google(GOOG) doesn’t have to turn over any search queries to the US, which sought the data to defend a law aimed at blocking children’s access to Internet pornography.
- The US, Japan and Australia have “grave concerns” about Iran’s nuclear program and called for concerted action by the UN Security Council to convince the country to suspend uranium enrichment.
- US 10-year Treasuries had their biggest weekly gain since December as slower-than-expected inflation spurred traders to scale back bets for how high the Fed will raise rates this year.
- President Bush said Iraqi political leaders are “making good progress” toward forming a unity government, and that recent violence in the country has spurred them to set aside their differences.
- Hundreds of thousands of students, workers and other protestors marched through Paris, seeking to force Prime Minister Dominique de Villepin to withdraw proposed new labor contracts, unions said.
- Through a period marked by a boom-bust in many stocks, terrorist attacks on US soil and the war in Iraq, stocks have significantly outperformed the two other main classes of financial assets.
Denver Post:
- Colorado Governor Owens said he will sign a statewide ban on smoking at workplaces that was passed by the legislators yesterday.
LA Times:
- Los Angeles area speculators who profited for the rising price of real estate in the second-largest US city have started to buy property in places such as Las Vegas and Arizona instead.
Crain’s Chicago Business:
- JC Penney(JCP) plans to open more than a dozen free-standing stores in the Chicago area over the next two years, targeting rival Kohl’s Corp.(KSS) in Kohl’s biggest market.
Financial Times:
- US executive pay rises slowed even as companies had record growth in profits, citing findings from the Corporate Library, an independent corporate governance watchdog.
Nihon Keizai:
- Sony Corp.(SNE) plans to triple production capacity for LCDs in Europe this year, aiming to grab a 20% share of the market in the region.
Sing Tao Daily:
- Ingram Micro(IM) plans to pay $260 million for a 60% stake in Digital China Holdings’ distribution business to expand in China.
Weekend Recommendations
Barron's:
- Had positive comments on (UNP), (LUV), (RRI), (AMR), (AAI), (GNW), (FNM) and (CYTC).
Night Trading
Asian indices are +.25% to +1.25% on average.
S&P 500 indicated +.07%.
NASDAQ 100 indicated +.21%.
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
- (IMDC)/.64
- (ORCL)/.18
- (SHFL)/.21
- (WSM)/1.09
Economic Releases
10:00 am EST
- Leading Indicators for February are estimated to fall .3% versus a 1.1% rise in January.
Bloomberg:
- A federal judge said Google(GOOG) doesn’t have to turn over any search queries to the US, which sought the data to defend a law aimed at blocking children’s access to Internet pornography.
- The US, Japan and Australia have “grave concerns” about Iran’s nuclear program and called for concerted action by the UN Security Council to convince the country to suspend uranium enrichment.
- US 10-year Treasuries had their biggest weekly gain since December as slower-than-expected inflation spurred traders to scale back bets for how high the Fed will raise rates this year.
- President Bush said Iraqi political leaders are “making good progress” toward forming a unity government, and that recent violence in the country has spurred them to set aside their differences.
- Hundreds of thousands of students, workers and other protestors marched through Paris, seeking to force Prime Minister Dominique de Villepin to withdraw proposed new labor contracts, unions said.
- Through a period marked by a boom-bust in many stocks, terrorist attacks on US soil and the war in Iraq, stocks have significantly outperformed the two other main classes of financial assets.
Denver Post:
- Colorado Governor Owens said he will sign a statewide ban on smoking at workplaces that was passed by the legislators yesterday.
LA Times:
- Los Angeles area speculators who profited for the rising price of real estate in the second-largest US city have started to buy property in places such as Las Vegas and Arizona instead.
Crain’s Chicago Business:
- JC Penney(JCP) plans to open more than a dozen free-standing stores in the Chicago area over the next two years, targeting rival Kohl’s Corp.(KSS) in Kohl’s biggest market.
Financial Times:
- US executive pay rises slowed even as companies had record growth in profits, citing findings from the Corporate Library, an independent corporate governance watchdog.
Nihon Keizai:
- Sony Corp.(SNE) plans to triple production capacity for LCDs in Europe this year, aiming to grab a 20% share of the market in the region.
Sing Tao Daily:
- Ingram Micro(IM) plans to pay $260 million for a 60% stake in Digital China Holdings’ distribution business to expand in China.
Weekend Recommendations
Barron's:
- Had positive comments on (UNP), (LUV), (RRI), (AMR), (AAI), (GNW), (FNM) and (CYTC).
Night Trading
Asian indices are +.25% to +1.25% on average.
S&P 500 indicated +.07%.
NASDAQ 100 indicated +.21%.
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
- (IMDC)/.64
- (ORCL)/.18
- (SHFL)/.21
- (WSM)/1.09
Economic Releases
10:00 am EST
- Leading Indicators for February are estimated to fall .3% versus a 1.1% rise in January.
BOTTOM LINE: Asian Indices are higher, boosted by financial shares in the region after some better-than-expected earnings reports. I expect US stocks to open modestly higher and to maintain gains into the afternoon. 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 of note and some significant corporate earnings reports scheduled for release this week.
Economic reports for the week include:
Mon. - Leading Indicators
Tues. - Producer Price Index
Wed. - None of note
Thur. - Initial Jobless Claims, Existing Home Sales
Fri. - Durable Goods Orders, New Home Sales
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - INAMED Corp.(IMDC), Oracle Corp.(ORCL), Shuffle Master(SHFL), Sonic Corp.(SONC), Williams-Sonoma(WSM)
Tues. - Biomet Inc.(BMET), Commercial Metal(CMC), Darden Restaurants(DRI), Dollar General(DG), Factset Research(FDS), GameStop Corp.(GME), McCormick(MKC), Nike(NKE), Paychex(PAYX), Telephone & Data(TDS)
Wed. - Adobe Systems(ADBE), FedEx Corp.(FDX), Herman Miller(MLHR), Interpublic Group(IPG), Jabil Circuit(JBL), KB Home(KBH), Morgan Stanley(MWD), Worthington Industries(WOR)
Thur. - 3Com Corp.(COMS), Aeropostale(ARO), Apollo Group(APOL), Carnival Corp.(CCL), ConAgra Foods(CAG), Family Dollar(FDO), General Mills(GIS), Palm Inc.(PALM), Scholastic Corp.(SCHL), Solectron(SLR)
Fri. - Bausch & Lomb(BOL)
Other events that have market-moving potential this week include:
Mon. - JPMorgan Gaming/Lodging/Restaurants Conference, Howard Weil Energy Conference, Piper Jaffray Financial Services Conference
Tue. - Piper Jaffray Financial Services Conference, Howard Weil Energy Conference, JPMorgan Gaming/Lodging/Restaurants Conference, Merrill Lynch Retailing Leaders Conference
Wed. - Citigroup Latin America Conference, JPMorgan Gaming/Lodging/Restaurants Conference, Merrill Lynch Retailing Leaders Conference, Howard Weil Energy Conference
Thur. - Citigroup Latin America Conference, Howard Weil Energy Conference
Fri. - None of note
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. - Leading Indicators
Tues. - Producer Price Index
Wed. - None of note
Thur. - Initial Jobless Claims, Existing Home Sales
Fri. - Durable Goods Orders, New Home Sales
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - INAMED Corp.(IMDC), Oracle Corp.(ORCL), Shuffle Master(SHFL), Sonic Corp.(SONC), Williams-Sonoma(WSM)
Tues. - Biomet Inc.(BMET), Commercial Metal(CMC), Darden Restaurants(DRI), Dollar General(DG), Factset Research(FDS), GameStop Corp.(GME), McCormick(MKC), Nike(NKE), Paychex(PAYX), Telephone & Data(TDS)
Wed. - Adobe Systems(ADBE), FedEx Corp.(FDX), Herman Miller(MLHR), Interpublic Group(IPG), Jabil Circuit(JBL), KB Home(KBH), Morgan Stanley(MWD), Worthington Industries(WOR)
Thur. - 3Com Corp.(COMS), Aeropostale(ARO), Apollo Group(APOL), Carnival Corp.(CCL), ConAgra Foods(CAG), Family Dollar(FDO), General Mills(GIS), Palm Inc.(PALM), Scholastic Corp.(SCHL), Solectron(SLR)
Fri. - Bausch & Lomb(BOL)
Other events that have market-moving potential this week include:
Mon. - JPMorgan Gaming/Lodging/Restaurants Conference, Howard Weil Energy Conference, Piper Jaffray Financial Services Conference
Tue. - Piper Jaffray Financial Services Conference, Howard Weil Energy Conference, JPMorgan Gaming/Lodging/Restaurants Conference, Merrill Lynch Retailing Leaders Conference
Wed. - Citigroup Latin America Conference, JPMorgan Gaming/Lodging/Restaurants Conference, Merrill Lynch Retailing Leaders Conference, Howard Weil Energy Conference
Thur. - Citigroup Latin America Conference, Howard Weil Energy Conference
Fri. - None of note
BOTTOM LINE: I expect US stocks to finish the week modestly higher on decelerating inflation readings, short-covering, stable-to-lower long-term rates and falling energy prices. My trading indicators are now giving mostly bullish signals and the Portfolio is 75% net long heading into the week.
Subscribe to:
Posts (Atom)