BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Internet longs, Semi longs and Biotech longs. I covered some of my (QQQQ) and (IWM) shorts, thus leaving the Portfolio 75% net long. The tone of the market is neutral as the advance/decline line is modestly lower, most sectors are higher and volume is above average. The Johnson Redbook same-store sales index rose 1.7% year-over-year last week vs. a 2.4% rise the prior week. The long-term average is a gain of around 2.5%. The Morgan Stanley Retail Index is 21.6% higher since late October, almost double the 11.5% gain for the S&P 500 (SPX) over the same time period. I expect retail to perform more in line with the market going forward. Stock selection will become even more important as consumer spending slows to average levels. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, stable long-term rates and lower energy prices.
Tuesday, April 04, 2006
Stocks Higher into Final Hour as Rates Stabilize and Oil Declines
Today's Headlines
Bloomberg:
- Manhattan apartment prices rose at the slowest pace in three years during the first quarter, more evidence that an increase in mortgage rates has cooled off the most expensive urban real estate market in the US.
- Microsoft(MSFT) won its biggest-ever contract for mobile-phone software, an order form the US Census Bureau that covers 500,000 handsets.
- The Iraqi Special Tribunal will file genocide charges against former ousted dictator Saddam Hussein for the Anfal campaign against the Kurds.
- Kuwaiti women are voting today for the first time, in municipal elections.
- International Paper(IP) agreed to sell 5.1 million acres of forestlands in the US to two investor groups for about $6.1 billion.
- The US Fed reversed a year-old order that effectively barred Citigroup(C) from making big acquisitions.
- Caterpillar(CAT) stands to gain as much as $5 billion in sales as a boom in oil squeezed from Canadian sand boosts demand for mining trucks and parts.
- French student groups and labor unions began their fifth nationwide protest against a new labor law today, with police looking out for the violence that marred earlier demonstrations.
- Crude oil is falling on speculation that a government report will show US inventories rose for the seventh time in eight weeks.
Wall Street Journal:
- Finland’s Nokia Corp.(NOK) said the company missed its own deadline for shipments of its E-series mobile phones, designed to compete with Research in Motion’s(RIMM) BlackBerry devices.
- Goldman Sachs(GS) was the investment bank that did the most business in the Asia-Pacific region excluding Japan in the first quarter of the year, with estimated revenue of $95 million, citing Dealogic Plc.
- Franklin Templeton Investments plans to launch the US’s first mutual fund focused on the populous emerging markets of Brazil, Russia, India and China, known as a BRIC, citing a filing with the SEC.
- Computer Sciences(CSC) is in talks that could lead to a sale of the business.
- The FCC accepted five offers for its May 10 sale of airwaves used to provide high-speed Internet access on planes, at the same time ruling that an application by Verizon(VZ) Airfone Inc. is incomplete.
- US investor Carl Icahn has dropped plans to take control of Blockbuster Inc.(BBI).
- Citigroup(C), agreed with 7-Eleven to put its brand on 5,500 ATMs within the convenience-store chain’s US outlets.
- The US would incite “geopolitical disaster and a moral calamity” if it caved into pressure from critics to withdraw troops from Iraq immediately, Pete Wehner, director of the White House’s Office of Strategic Initiatives said.
Washington Post:
- News Corp.’s(NWS) MySpace.com, Google’s(GOOG) Blogger.com, Wikipedia and CitySearch ranked top among Internet sites for visitor growth.
NY Times:
- Venezuelan President Hugo Chavez is spending billions of dollars garnered from oil revenue in a bid to set up his socialist government as a contrast to US President Bush’s conservative administration.
- IBM(IBM) will work with Rapport, a Silicon Valley start-up that has designed a flexible microprocessor to perform video processing for less than a tenth the power of existing chips.
- New York state allocated $479 million in the state budget for “pork-barrel spending” by lawmakers in the past three years.
Financial Times:
- Emerging-market bonds have not been especially volatile so far, even though global interest rates are rising and risks may be rising in markets such as Poland, Ukraine, and Hungary.
- Manhattan apartment prices rose at the slowest pace in three years during the first quarter, more evidence that an increase in mortgage rates has cooled off the most expensive urban real estate market in the US.
- Microsoft(MSFT) won its biggest-ever contract for mobile-phone software, an order form the US Census Bureau that covers 500,000 handsets.
- The Iraqi Special Tribunal will file genocide charges against former ousted dictator Saddam Hussein for the Anfal campaign against the Kurds.
- Kuwaiti women are voting today for the first time, in municipal elections.
- International Paper(IP) agreed to sell 5.1 million acres of forestlands in the US to two investor groups for about $6.1 billion.
- The US Fed reversed a year-old order that effectively barred Citigroup(C) from making big acquisitions.
- Caterpillar(CAT) stands to gain as much as $5 billion in sales as a boom in oil squeezed from Canadian sand boosts demand for mining trucks and parts.
- French student groups and labor unions began their fifth nationwide protest against a new labor law today, with police looking out for the violence that marred earlier demonstrations.
- Crude oil is falling on speculation that a government report will show US inventories rose for the seventh time in eight weeks.
Wall Street Journal:
- Finland’s Nokia Corp.(NOK) said the company missed its own deadline for shipments of its E-series mobile phones, designed to compete with Research in Motion’s(RIMM) BlackBerry devices.
- Goldman Sachs(GS) was the investment bank that did the most business in the Asia-Pacific region excluding Japan in the first quarter of the year, with estimated revenue of $95 million, citing Dealogic Plc.
- Franklin Templeton Investments plans to launch the US’s first mutual fund focused on the populous emerging markets of Brazil, Russia, India and China, known as a BRIC, citing a filing with the SEC.
- Computer Sciences(CSC) is in talks that could lead to a sale of the business.
- The FCC accepted five offers for its May 10 sale of airwaves used to provide high-speed Internet access on planes, at the same time ruling that an application by Verizon(VZ) Airfone Inc. is incomplete.
- US investor Carl Icahn has dropped plans to take control of Blockbuster Inc.(BBI).
- Citigroup(C), agreed with 7-Eleven to put its brand on 5,500 ATMs within the convenience-store chain’s US outlets.
- The US would incite “geopolitical disaster and a moral calamity” if it caved into pressure from critics to withdraw troops from Iraq immediately, Pete Wehner, director of the White House’s Office of Strategic Initiatives said.
Washington Post:
- News Corp.’s(NWS) MySpace.com, Google’s(GOOG) Blogger.com, Wikipedia and CitySearch ranked top among Internet sites for visitor growth.
NY Times:
- Venezuelan President Hugo Chavez is spending billions of dollars garnered from oil revenue in a bid to set up his socialist government as a contrast to US President Bush’s conservative administration.
- IBM(IBM) will work with Rapport, a Silicon Valley start-up that has designed a flexible microprocessor to perform video processing for less than a tenth the power of existing chips.
- New York state allocated $479 million in the state budget for “pork-barrel spending” by lawmakers in the past three years.
Financial Times:
- Emerging-market bonds have not been especially volatile so far, even though global interest rates are rising and risks may be rising in markets such as Poland, Ukraine, and Hungary.
Monday, April 03, 2006
Tuesday Watch
Late-Night Headlines
Bloomberg:
- Congressman Tom DeLay, former majority leader of the US House of Representatives, plans to quit his post “within months,” Time magazine reported on its web site.
- The Univ. of Florida beat UCLA 73-57 in the championship game of the national men’s college basketball tournament for the school’s first title.
USA Today:
- A growing number of US doctors are making house calls under a three-year Medicare pilot program in California, Texas and Florida.
Nikkei English News:
- Hitachi Ltd. will increase production of flat-panel screens to better match demand and improve its position in the market.
Xinhua News Agency:
- Chinese Internet search firm Baidu.com(BIDU) had a 56.6% share of China’s Internet search market in 2005, ahead of Google’s(GOOG) 32.8% market share.
Wen Wei Po:
- China should gradually reduce its holdings of US debt, citing Cheng Siwei, vice chairman of the Standing Committee of the National People’s Congress.
Late Buy/Sell Recommendations
- None of note
Night Trading
Asian Indices are unch. to +.25% on average.
S&P 500 indicated +.07%.
NASDAQ 100 indicated +.04%.
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
- (DLP)/.46
- (DRC)/.39
- (PQE)/.52
- (TDS)/.31
Upcoming Splits
- (PVR) 2-for-1
- (BER) 3-for-2
Economic Releases
- None of note
Bloomberg:
- Congressman Tom DeLay, former majority leader of the US House of Representatives, plans to quit his post “within months,” Time magazine reported on its web site.
- The Univ. of Florida beat UCLA 73-57 in the championship game of the national men’s college basketball tournament for the school’s first title.
USA Today:
- A growing number of US doctors are making house calls under a three-year Medicare pilot program in California, Texas and Florida.
Nikkei English News:
- Hitachi Ltd. will increase production of flat-panel screens to better match demand and improve its position in the market.
Xinhua News Agency:
- Chinese Internet search firm Baidu.com(BIDU) had a 56.6% share of China’s Internet search market in 2005, ahead of Google’s(GOOG) 32.8% market share.
Wen Wei Po:
- China should gradually reduce its holdings of US debt, citing Cheng Siwei, vice chairman of the Standing Committee of the National People’s Congress.
Late Buy/Sell Recommendations
- None of note
Night Trading
Asian Indices are unch. to +.25% on average.
S&P 500 indicated +.07%.
NASDAQ 100 indicated +.04%.
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
- (DLP)/.46
- (DRC)/.39
- (PQE)/.52
- (TDS)/.31
Upcoming Splits
- (PVR) 2-for-1
- (BER) 3-for-2
Economic Releases
- None of note
BOTTOM LINE: Asian indices are mostly higher, on gains in commodity stocks in the region. I expect US equities to open mixed and to trade modestly lower into the afternoon. The Portfolio is 50% net long heading into the day.
Stocks Finish Mixed, Closing Near Session Lows
Indices
S&P 500 1,297.81 +.23%
DJIA 11,144.94 +.32%
NASDAQ 2,336.74 -.13%
Russell 2000 759.22 -.77%
Wilshire 5000 13,131.27 +.07%
S&P Barra Growth 610.55 +.10%
S&P Barra Value 684.14 +.36%
Morgan Stanley Consumer 609.95 +.35%
Morgan Stanley Cyclical 821.11 +.89%
Morgan Stanley Technology 550.25 +.39%
Transports 4,622.04 +1.18%
Utilities 390.37 +.35%
Put/Call .67 -16.25%
NYSE Arms .63 -61.77%
Volatility(VIX) 11.57 +1.58%
ISE Sentiment 141.00 +17.50%
US Dollar 89.64 -.10%
CRB 335.61 +.73%
Futures Spot Prices
Crude Oil 66.37 -.55%
Unleaded Gasoline 185.60 -.39%
Natural Gas 7.17 -1.02%
Heating Oil 185.65 -.31%
Gold 592.80 -.25%
Base Metals 182.91 +3.21%
Copper 254.55 -.08%
10-year US Treasury Yield 4.86% +.25%
Leading Sectors
Steel +1.17%
Semis +1.11%
Wireless +.91%
Lagging Sectors
Retail -1.29%
Biotech -1.44%
REITs -1.96%
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
Banc of America:
- Rated (ISE) Buy, target $50.
Cowen:
- Rated (FLEX), (JBIL) Outperform.
Afternoon/Evening Headlines
Bloomberg:
- BKF Capital Group plans to shut down its hedge funds that generated about 20% of its revenue last year because two senior managers quit over a disagreement about long-term compensation.
- Continental AG, which provides vehicle-stability systems to GM and Porshe AG, agreed to buy the car-electronics unit of Motorola(MOT) for $1 billion to become the world’s biggest provider of in-vehicle communications.
- Novartis AG increased its offer for the rest of Chiron Corp.(CHIR) to about $5.33 billion from about $5.1 billion to win backing from shareholders who opposed the deal because the price was too low.
CNBC:
- General Motors(GM) is negotiating with lenders for an $8 billion to $9 billion loan.
Reuters:
- Clear Channel Communications(CCU) signed an agreement with Google(GOOG) to use Google’s software for Internet searches and advertising on radio Web sites.
Financial Times:
- McDonald’s Corp.(MCD) will put photographs of customers on the side of its burger packaging as part of a marketing competition.
S&P 500 1,297.81 +.23%
DJIA 11,144.94 +.32%
NASDAQ 2,336.74 -.13%
Russell 2000 759.22 -.77%
Wilshire 5000 13,131.27 +.07%
S&P Barra Growth 610.55 +.10%
S&P Barra Value 684.14 +.36%
Morgan Stanley Consumer 609.95 +.35%
Morgan Stanley Cyclical 821.11 +.89%
Morgan Stanley Technology 550.25 +.39%
Transports 4,622.04 +1.18%
Utilities 390.37 +.35%
Put/Call .67 -16.25%
NYSE Arms .63 -61.77%
Volatility(VIX) 11.57 +1.58%
ISE Sentiment 141.00 +17.50%
US Dollar 89.64 -.10%
CRB 335.61 +.73%
Futures Spot Prices
Crude Oil 66.37 -.55%
Unleaded Gasoline 185.60 -.39%
Natural Gas 7.17 -1.02%
Heating Oil 185.65 -.31%
Gold 592.80 -.25%
Base Metals 182.91 +3.21%
Copper 254.55 -.08%
10-year US Treasury Yield 4.86% +.25%
Leading Sectors
Steel +1.17%
Semis +1.11%
Wireless +.91%
Lagging Sectors
Retail -1.29%
Biotech -1.44%
REITs -1.96%
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
Banc of America:
- Rated (ISE) Buy, target $50.
Cowen:
- Rated (FLEX), (JBIL) Outperform.
Afternoon/Evening Headlines
Bloomberg:
- BKF Capital Group plans to shut down its hedge funds that generated about 20% of its revenue last year because two senior managers quit over a disagreement about long-term compensation.
- Continental AG, which provides vehicle-stability systems to GM and Porshe AG, agreed to buy the car-electronics unit of Motorola(MOT) for $1 billion to become the world’s biggest provider of in-vehicle communications.
- Novartis AG increased its offer for the rest of Chiron Corp.(CHIR) to about $5.33 billion from about $5.1 billion to win backing from shareholders who opposed the deal because the price was too low.
CNBC:
- General Motors(GM) is negotiating with lenders for an $8 billion to $9 billion loan.
Reuters:
- Clear Channel Communications(CCU) signed an agreement with Google(GOOG) to use Google’s software for Internet searches and advertising on radio Web sites.
Financial Times:
- McDonald’s Corp.(MCD) will put photographs of customers on the side of its burger packaging as part of a marketing competition.
BOTTOM LINE: The Portfolio finished unchanged today as gains in my Semi longs and Networking longs offset losses in my Retail longs and Medical longs. I did not trade in the final hour, thus leaving the Portfolio 50% net long. The tone of the market was negative today as the advance/decline line finished lower, sector performance was mixed and volume was above-average. Measures of investor anxiety were mostly lower into the close. Overall, today's market performance was mildly bearish. Oil is continuing its late afternoon reversal lower in electronic trading. I still believe that U.S. economic growth will slow back to average levels later this year, likely leading to a period of sustained underperformance for the cyclicals that have recently spiked higher. I expect more healthy consolidation near-term for the averages.
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