BOTTOM LINE: The Portfolio is about even into the final hour as gains in my Networking longs are offsetting losses in my Retail longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is neutral as the advance/decline line is slightly lower, sector performance is mixed and volume is average. For the second week in a row, the energy sector saw the greatest amount of net insider selling in the S&P 500 last week. Insiders sold $1,161,986,392 worth of stock, while purchasing $1,043,576 worth. This is the greatest insider selling I have seen in any S&P 500 sector in quite some time. I expect US stocks to trade mixed-to-higher into the close from current levels on lower energy prices and short-covering ahead of Wednesday’s FOMC meeting.
Monday, May 08, 2006
Stocks Slightly Higher Into Final Hour as Energy Prices Fall
Today's Headlines
Bloomberg:
- Ford Motor(F) and General Motors(GM), seeking to boost sales, want the federal government to force NY and California to let solo drivers of their hybrid vehicles join those of Honda and Toyota cars in highway carpool lanes.
- Iranian President Ahmadinejad, who said last month his country has successfully produced nuclear fuel, has written a letter to President Bush proposing new ways to ease tensions over Iran’s nuclear program.
- Apple Computer(AAPL) won a trademark dispute with the Beatles over the use of the apple name and logo on its iTunes music store.
- China’s government settled most of its wrong-way bets on copper as the metal climbed to a record this year, extending its losses to hundreds of millions of dollars.
- Thermo Electron(TMO) agreed to buy Fisher Scientific International(FSH) for $10.6 billion to become the largest supplier of lab equipment form beakers to sterilizers.
- Intel Corp.(INTC) separated the production of memory chips from other processors, signaling the company may be preparing to jettison its memory unit.
- Crude oil is falling $1.44/bbl. to a three-week low of $68.75 on easing tensions with Iran as US supplies approach 9-year highs and gasoline demand wanes.
Wall Street Journal:
- University of California officials said on May 5 that they will restart human cloning work. Advanced Cell Technology Inc. also said it will announce cloning plans soon.
- Multigig Inc., a closely held California company, says it has come up with a new way of synchronizing silicon-chip operations, a move that it says could reach a 75% power savings.
- Charles Koch, chairman and CEO of Kansas-based Koch Industries, said requirements such as Sarbanes-Oxley audit rules hinder publicly traded companies and will lead to more takeovers by closely held companies.
- US health experts from the Food and Drug Administration, Centers for Disease Control and Prevention and National Institute of Allergy and Infectious Disease are to meet Thursday in Atlanta to focus on deadly infections that may have been caused by the RU-486 abortion pill.
- The US Centers for Disease Control and Prevention plans to recommend that doctors provide voluntary HIV tests as a part of routine medical care for all patients in the US between the ages of 13 and 64.
- Several US investment banks have begun offering advice and funding to activist hedge funds, encouraged by Lazard’s role advising Carl Icahn in his effort to split up Time Warner(TWX).
- ValueClick(VCLK) and aQuantive(AQNT), two Internet ad companies, almost agreed to merge in recent days.
- Microsoft(MSFT), Google(GOOG) and Yahoo!(YHOO) are striking deals with wireless phone providers including AT&T(T) and Vodafone Group(VOD) to extend their search engines to cell phones.
LA Times:
- Walt Disney(DIS) won’t renew its decades-long cross-promotional agreement with McDonald’s(MCD) in part because of concern about childhood obesity.
NY Times:
- The Forbes family, publishers of the NYC-based Forbes financial magazine, is talking to investors as it considers expanding its publishing ventures into Europe and online.
- (IBM) plans to introduce software tools, academic programs and support for outside developers today as part of its efforts to add customers and programmers for its mainframe unit.
NY Post:
- A group of media companies is developing a 24-hour children’s television network that won’t show commercials for junk food and other products that have drawn objections from parents.
- Ford Motor(F) and General Motors(GM), seeking to boost sales, want the federal government to force NY and California to let solo drivers of their hybrid vehicles join those of Honda and Toyota cars in highway carpool lanes.
- Iranian President Ahmadinejad, who said last month his country has successfully produced nuclear fuel, has written a letter to President Bush proposing new ways to ease tensions over Iran’s nuclear program.
- Apple Computer(AAPL) won a trademark dispute with the Beatles over the use of the apple name and logo on its iTunes music store.
- China’s government settled most of its wrong-way bets on copper as the metal climbed to a record this year, extending its losses to hundreds of millions of dollars.
- Thermo Electron(TMO) agreed to buy Fisher Scientific International(FSH) for $10.6 billion to become the largest supplier of lab equipment form beakers to sterilizers.
- Intel Corp.(INTC) separated the production of memory chips from other processors, signaling the company may be preparing to jettison its memory unit.
- Crude oil is falling $1.44/bbl. to a three-week low of $68.75 on easing tensions with Iran as US supplies approach 9-year highs and gasoline demand wanes.
Wall Street Journal:
- University of California officials said on May 5 that they will restart human cloning work. Advanced Cell Technology Inc. also said it will announce cloning plans soon.
- Multigig Inc., a closely held California company, says it has come up with a new way of synchronizing silicon-chip operations, a move that it says could reach a 75% power savings.
- Charles Koch, chairman and CEO of Kansas-based Koch Industries, said requirements such as Sarbanes-Oxley audit rules hinder publicly traded companies and will lead to more takeovers by closely held companies.
- US health experts from the Food and Drug Administration, Centers for Disease Control and Prevention and National Institute of Allergy and Infectious Disease are to meet Thursday in Atlanta to focus on deadly infections that may have been caused by the RU-486 abortion pill.
- The US Centers for Disease Control and Prevention plans to recommend that doctors provide voluntary HIV tests as a part of routine medical care for all patients in the US between the ages of 13 and 64.
- Several US investment banks have begun offering advice and funding to activist hedge funds, encouraged by Lazard’s role advising Carl Icahn in his effort to split up Time Warner(TWX).
- ValueClick(VCLK) and aQuantive(AQNT), two Internet ad companies, almost agreed to merge in recent days.
- Microsoft(MSFT), Google(GOOG) and Yahoo!(YHOO) are striking deals with wireless phone providers including AT&T(T) and Vodafone Group(VOD) to extend their search engines to cell phones.
LA Times:
- Walt Disney(DIS) won’t renew its decades-long cross-promotional agreement with McDonald’s(MCD) in part because of concern about childhood obesity.
NY Times:
- The Forbes family, publishers of the NYC-based Forbes financial magazine, is talking to investors as it considers expanding its publishing ventures into Europe and online.
- (IBM) plans to introduce software tools, academic programs and support for outside developers today as part of its efforts to add customers and programmers for its mainframe unit.
NY Post:
- A group of media companies is developing a 24-hour children’s television network that won’t show commercials for junk food and other products that have drawn objections from parents.
Sunday, May 07, 2006
Monday Watch
Weekend Headlines
Bloomberg:
- President Bush said the new Medicare prescription drug program will save the elderly an average of more than $1,000 a year each and urged them to sign up before a May 15 deadline.
- Barbaro ran to a seven-length victory at the 132nd Kentucky Derby, becoming the sixth undefeated winner of the most prestigious US horse race.
- The Federal Reserve will raise interest rates this week for the last time until at least August as central bankers assess the impact of two years of increases, most of Wall Street’s biggest bond trading firms said.
- Wachovia Corp.(WB), the no. 4 US bank, may offer to buy Golden West Financial(GDW) for more than $25 billion to gain about 280 branches in 10 states, said three people with knowledge of the talks.
- Warren Buffett, , the billionaire chairman and CEO of Berkshire Hathaway, said his son, Howard Buffett, would be “a double-protector of the culture” as the company’s future chairman.
CBS News:
- The US may have enough ethanol fuel stations within three years, citing Daniel Kammen, head of the Renewable Energy Lab at the Univ. of Cal., Berkeley. Kammen estimates it takes $30,000-$40,000 to retrofit a gasoline station to sell E-85, which is 85% ethanol and 15% gas. The retrofitting can be done in “weeks.” Sun Microsystems founder Vinod Khosla, who is investing in ethanol, told Dateline NBC that within five years, the US can be on a path to petroleum independence.
NY Times:
- A study of a recent outbreak of infections among Bausch & Lomb’s(BOL) lens-cleaning solution users may not be caused directly by the product.
- Somme US states and governors are unhappy with the Real ID Act passed by the US Congress last year that requires them to check the legal status of driver’s license applicants.
- Business travelers have driven up prices in Las Vegas as their numbers increased by 5.7% to 6.2 million in 2005.
- The path of Democrats to regain control of the US Congress by winning House and Senate races in Ohio isn’t going to be an easy one, judging by early results in primary elections.
- Former CIA officer Valerie Plame, whose identity was compromised three years ago, has received $2.5 million for her memoir.
- Boeing co.(BA) has received enough orders to fill out the first three years of production for its 787 Dreamliner, the lighter, larger and more efficient commercial airplane due out in 2008,
- New Orleans mayoral candidates Ray Nagin and Mitch Landrieu are courting white conservative voters who may cast the deciding votes in the May 20 runoff election for mayor.
Washington Post:
- Wachovia Corp.(WB) faces protest movements by Muslim activists over its decision in January to shut accounts held by the Foundation for Appropriate and Immediate Temporary Help, a Muslim organization.
- Democrats plan to investigate the White House’s first-term energy task force and its use of intelligence before the war in Iraq should they take control of the US House in November elections, citing Democratic House Minority Leader Nancy Pelosi.
NY Post:
- Nathan’s Famous(NATH) plans to begin selling treats for dogs under its brand name in specialty pet stores later this month.
Barron’s:
- Eastman Kodak(EK) may be able to pay off all its debts from a sale of its health-imaging division, which could fetch as much as $4 billion.
- America’s toll roads and bridges may be worth more than $200 billion if sold to private operators.
San Jose Mercury News:
- Apple Computer(AAPL) applied for a patent for a wireless mobile device in December 2004, citing the US Patent and Trademark Office.
Fortune:
- We will all likely be communicating and being entertained with bandwidth-intensive video. In such a world, the data centers will be vast, many in number, and loaded with servers, storage and switches.
Financial Times:
- US venture capitalists increased investments in internet-based media companies this year, following the popularity of Web sites such as MySpace.com.
- Yahoo!(YHOO) may say it has overhauled its online advertising system and installed new technology designed to deal with ads targeted at specific consumers.
Sunday Telegraph:
- EMI Group is preparing to make a revised offer of $4.4 billion to buy rival Warner Music Group(WMG) within the next few weeks.
Business Standard:
- Reliance Industries of India plans to spend as much as $444.9 million for a refining plant to produce bio-diesel.
Finanz und Wirtschaft:
- Alcon(ACL) has gained customers who switched from using Bausch & Lomb(BOL) products that have been linked to eye infections.
Globe and Mail:
- EnCana Corp.(ECA), Anadarko Petroleum(APC), ConocoPhillips(COP) and Royal Dutch Shell will invest $47 million over five years to explore Canada’s Beaufort Sea for oil and natural gas.
London-based Times:
- Airtricity, Ireland’s largest wind-park operator, and ABB AB plan to create Europe’s first cross-border wind power network.
Weekend Recommendations
Barron's:
- Had positive comments on (PLT), (DGIN), (PFE), (KO), (BUD) and (UTX).
- Had negative comments on (EMC).
Night Trading
Asian indices are +.50% to +1.0% on average.
S&P 500 indicated +.05%.
NASDAQ 100 indicated +.10%.
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
- (AES)/.21
- (AQNT)/.06
- (BSG)/.17
- (CMG)/.12
- (FLR)/.65
- (GDP)/.34
- (HW)/.44
- (NBR)/.74
- (OSIP)/-.11
- (SBAC)/-.12
- (SVM)/.04
- (SONS)/.01
- (TKLC)/.19
- (VCLK)/.11
Upcoming Splits
- (LTR) 3-for-1
Economic Releases
- None of note
Bloomberg:
- President Bush said the new Medicare prescription drug program will save the elderly an average of more than $1,000 a year each and urged them to sign up before a May 15 deadline.
- Barbaro ran to a seven-length victory at the 132nd Kentucky Derby, becoming the sixth undefeated winner of the most prestigious US horse race.
- The Federal Reserve will raise interest rates this week for the last time until at least August as central bankers assess the impact of two years of increases, most of Wall Street’s biggest bond trading firms said.
- Wachovia Corp.(WB), the no. 4 US bank, may offer to buy Golden West Financial(GDW) for more than $25 billion to gain about 280 branches in 10 states, said three people with knowledge of the talks.
- Warren Buffett, , the billionaire chairman and CEO of Berkshire Hathaway, said his son, Howard Buffett, would be “a double-protector of the culture” as the company’s future chairman.
CBS News:
- The US may have enough ethanol fuel stations within three years, citing Daniel Kammen, head of the Renewable Energy Lab at the Univ. of Cal., Berkeley. Kammen estimates it takes $30,000-$40,000 to retrofit a gasoline station to sell E-85, which is 85% ethanol and 15% gas. The retrofitting can be done in “weeks.” Sun Microsystems founder Vinod Khosla, who is investing in ethanol, told Dateline NBC that within five years, the US can be on a path to petroleum independence.
NY Times:
- A study of a recent outbreak of infections among Bausch & Lomb’s(BOL) lens-cleaning solution users may not be caused directly by the product.
- Somme US states and governors are unhappy with the Real ID Act passed by the US Congress last year that requires them to check the legal status of driver’s license applicants.
- Business travelers have driven up prices in Las Vegas as their numbers increased by 5.7% to 6.2 million in 2005.
- The path of Democrats to regain control of the US Congress by winning House and Senate races in Ohio isn’t going to be an easy one, judging by early results in primary elections.
- Former CIA officer Valerie Plame, whose identity was compromised three years ago, has received $2.5 million for her memoir.
- Boeing co.(BA) has received enough orders to fill out the first three years of production for its 787 Dreamliner, the lighter, larger and more efficient commercial airplane due out in 2008,
- New Orleans mayoral candidates Ray Nagin and Mitch Landrieu are courting white conservative voters who may cast the deciding votes in the May 20 runoff election for mayor.
Washington Post:
- Wachovia Corp.(WB) faces protest movements by Muslim activists over its decision in January to shut accounts held by the Foundation for Appropriate and Immediate Temporary Help, a Muslim organization.
- Democrats plan to investigate the White House’s first-term energy task force and its use of intelligence before the war in Iraq should they take control of the US House in November elections, citing Democratic House Minority Leader Nancy Pelosi.
NY Post:
- Nathan’s Famous(NATH) plans to begin selling treats for dogs under its brand name in specialty pet stores later this month.
Barron’s:
- Eastman Kodak(EK) may be able to pay off all its debts from a sale of its health-imaging division, which could fetch as much as $4 billion.
- America’s toll roads and bridges may be worth more than $200 billion if sold to private operators.
San Jose Mercury News:
- Apple Computer(AAPL) applied for a patent for a wireless mobile device in December 2004, citing the US Patent and Trademark Office.
Fortune:
- We will all likely be communicating and being entertained with bandwidth-intensive video. In such a world, the data centers will be vast, many in number, and loaded with servers, storage and switches.
Financial Times:
- US venture capitalists increased investments in internet-based media companies this year, following the popularity of Web sites such as MySpace.com.
- Yahoo!(YHOO) may say it has overhauled its online advertising system and installed new technology designed to deal with ads targeted at specific consumers.
Sunday Telegraph:
- EMI Group is preparing to make a revised offer of $4.4 billion to buy rival Warner Music Group(WMG) within the next few weeks.
Business Standard:
- Reliance Industries of India plans to spend as much as $444.9 million for a refining plant to produce bio-diesel.
Finanz und Wirtschaft:
- Alcon(ACL) has gained customers who switched from using Bausch & Lomb(BOL) products that have been linked to eye infections.
Globe and Mail:
- EnCana Corp.(ECA), Anadarko Petroleum(APC), ConocoPhillips(COP) and Royal Dutch Shell will invest $47 million over five years to explore Canada’s Beaufort Sea for oil and natural gas.
London-based Times:
- Airtricity, Ireland’s largest wind-park operator, and ABB AB plan to create Europe’s first cross-border wind power network.
Weekend Recommendations
Barron's:
- Had positive comments on (PLT), (DGIN), (PFE), (KO), (BUD) and (UTX).
- Had negative comments on (EMC).
Night Trading
Asian indices are +.50% to +1.0% on average.
S&P 500 indicated +.05%.
NASDAQ 100 indicated +.10%.
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
- (AES)/.21
- (AQNT)/.06
- (BSG)/.17
- (CMG)/.12
- (FLR)/.65
- (GDP)/.34
- (HW)/.44
- (NBR)/.74
- (OSIP)/-.11
- (SBAC)/-.12
- (SVM)/.04
- (SONS)/.01
- (TKLC)/.19
- (VCLK)/.11
Upcoming Splits
- (LTR) 3-for-1
Economic Releases
- None of note
BOTTOM LINE: Asian Indices are higher, technology shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon. The Portfolio is 100% 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 significant corporate earnings reports scheduled for release this week.
Economic reports for the week include:
Mon. - None of note
Tues. - Wholesale Inventories
Wed. - Monthly Budget Statement, FOMC Rate Decision
Thur. - Advance Retail Sales, Business Inventories, Initial Jobless Claims
Fri. - Trade Balance, Import Price Index, Univ. of Mich. Consumer Confidence
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - AES Corp.(AES), BISYS Group(BSG), Chipotle Mexican(CMG), Flour Corp.(FLR), Guidant Corp.(GDT), Human Genome Sciences(HGSI), Nabors Industries(NBR)
Tues. - Brightpoint Inc.(CELL), Cablevision Systems(CVC), Cisco Systems(CSCO), Energy Conversion Devices(ENER), Hansen Natural(HANS), Lamar Advertising(LAMR), Mylan Labs(MYL), Sara Lee(SLE), Symantec Corp.(SYMC), Walt Disney(DIS)
Wed. - Federated Dept. Store(FD), Legg Mason(LM), News Corp.(NWS/A)
Thur. - Echostar Communications(DISH), Expedia Inc.(EXPE), JC Penney(JCP), Kohl’s Corp.(KSS), Nvidia Corp.(NVDA), Pacific Sunwear(PSUN), Urban Outfitters(URBN), Viacom Inc.(VIA)
Fri. - Bausch & Lomb(BOL), DRS Technologies(DRS), Pacific Ethanol(PEIX)
Other events that have market-moving potential this week include:
Mon. - Jeffries Gaming/Lodging/Media/Entertainment Conference
Tue. - Merrill Lynch Global Metals/Mining/Steel Conference, Bear Stearns Global Transportation Conference, Jeffries Gaming/Lodging/Media Conference, CIBC Media/Internet/Telecom Conference
Wed. - Merrill Lynch Global Metals/Mining/Steel Conference, Bear Stearns Global Transportation Conference, Piper Jaffray Hardware & Communications Conference, CIBC Media/Internet/Telecom Conference, Jeffries Gaming/Lodging/Media/Entertainment Conference
Thur. - Merrill Lynch Global Metals/Mining/Steel Conference, Piper Jaffray Hardware & Communications Conference, Goldman Sachs Power & Utility Conference
Fri. - Goldman Sachs Power & Utility Conference
There are a few economic reports of note and significant corporate earnings reports scheduled for release this week.
Economic reports for the week include:
Mon. - None of note
Tues. - Wholesale Inventories
Wed. - Monthly Budget Statement, FOMC Rate Decision
Thur. - Advance Retail Sales, Business Inventories, Initial Jobless Claims
Fri. - Trade Balance, Import Price Index, Univ. of Mich. Consumer Confidence
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - AES Corp.(AES), BISYS Group(BSG), Chipotle Mexican(CMG), Flour Corp.(FLR), Guidant Corp.(GDT), Human Genome Sciences(HGSI), Nabors Industries(NBR)
Tues. - Brightpoint Inc.(CELL), Cablevision Systems(CVC), Cisco Systems(CSCO), Energy Conversion Devices(ENER), Hansen Natural(HANS), Lamar Advertising(LAMR), Mylan Labs(MYL), Sara Lee(SLE), Symantec Corp.(SYMC), Walt Disney(DIS)
Wed. - Federated Dept. Store(FD), Legg Mason(LM), News Corp.(NWS/A)
Thur. - Echostar Communications(DISH), Expedia Inc.(EXPE), JC Penney(JCP), Kohl’s Corp.(KSS), Nvidia Corp.(NVDA), Pacific Sunwear(PSUN), Urban Outfitters(URBN), Viacom Inc.(VIA)
Fri. - Bausch & Lomb(BOL), DRS Technologies(DRS), Pacific Ethanol(PEIX)
Other events that have market-moving potential this week include:
Mon. - Jeffries Gaming/Lodging/Media/Entertainment Conference
Tue. - Merrill Lynch Global Metals/Mining/Steel Conference, Bear Stearns Global Transportation Conference, Jeffries Gaming/Lodging/Media Conference, CIBC Media/Internet/Telecom Conference
Wed. - Merrill Lynch Global Metals/Mining/Steel Conference, Bear Stearns Global Transportation Conference, Piper Jaffray Hardware & Communications Conference, CIBC Media/Internet/Telecom Conference, Jeffries Gaming/Lodging/Media/Entertainment Conference
Thur. - Merrill Lynch Global Metals/Mining/Steel Conference, Piper Jaffray Hardware & Communications Conference, Goldman Sachs Power & Utility Conference
Fri. - Goldman Sachs Power & Utility Conference
BOTTOM LINE: I expect US stocks to finish the week modestly higher on better-than-expected earnings reports, lower energy prices, short-covering and stable long-term rates. My trading indicators are giving bullish signals and the Portfolio is 100% net long heading into the week.
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