Consumer Prices Rise on Higher Energy Costs

- The Consumer Price Index for April rose .6% versus estimates of a .5% increase and a .4% gain in March.
- The CPI Ex Food & Energy for April rose .3% versus estimates of a .2% gain and a .3% increase in March.

BOTTOM LINE: Prices paid by US consumers rose more than forecast in April, rekindling inflation concerns that may invite more interest-rate increases form the Fed, Bloomberg said. Consumer prices rose 3.5% year-over-year versus a 3.4% year-over-year increase the prior month. Core prices rose 2.3% from year-ago levels. Fuel costs have risen 17.8% over the last 12 months. I expect inflation fears are topping for the year right about now. Slower economic growth, subdued unit labor costs and falling commodity prices should quell inflation jitters over the coming months.

Links of Interest

Market Snapshot
Detailed Market Summary
Market Internals
Economic Commentary
Movers & Shakers
Today in IBD
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Real-time Intraday Chart/Quote

Wednesday Watch

Late-Night Headlines
Bloomberg:
- US Treasuries rose, sending the 10-year notes to their biggest two-day gain since January, after reports showed housing starts in April fell more than forecast and as core wholesale prices stayed in check.
- The Senate today did not eliminate a guest-worker program from legislation overhauling US immigration policy.
- President Bush will beat his timetable to cut the US budget deficit in half by 2009 because of surging tax revenue as a result of surging economic activity, Treasury Secretary John Snow said.
- Federal Reserve Chairman Bernanke said market discipline is a better regulator of the $1.2 trillion hedge fund industry than government, embracing the free-market views of his predecessor Greenspan.
- Honda Motor will spend $400 million for a new factory in the US.

Financial Times:
- Germany’s Bundesbank wants hedge funds to be more open about their activities, including allowing their books to be assessed by ratings companies and setting up a code of conduct.

London-based Times:
- NYSE Group Inc.(NYX) shareholder Thomas Caldwell said he is opposed to a merger with Euronext NV.

Nihon Keizai:
- The Japanese government will increase investments in oil development companies to help them expand production.

Late Buy/Sell Recommendations
Citigroup:
- Rated (MCD) Buy.

Night Trading
Asian Indices are +.25% to +.50% on average.
S&P 500 indicated +.04%.
NASDAQ 100 indicated +.09%.

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
- (ACXM)/.25
- (BEAS)/.10
- (CHRS)/.24
- (CTRP)/.19
- (FL)/.37
- (GYMB)/.46
- (INTU)/1.76
- (MW)/.49
- (PETM)/.30
- (ROST)/.41
- (CRM)/.04
- (SNDA)/.07
- (SNPS)/.15
- (TLB)/.51
- (TOO)/.30
- (ZLC)/.21

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- The Consumer Price Index for April is estimated to rise .5% versus a .4% gain in March.
- The CPI Ex Food & Energy for April is estimated to rise .2% versus a .3% increase in March.

10:30 EST
- Bloomberg consensus estimates call for a weekly crude drawdown of 1,000,000 barrels. Gasoline supplies are expected to rise 1,500,000 barrels. Distillate inventories are estimated to rise 700,000 barrels. Finally, refinery utilization is estimated to rise .80%.

BOTTOM LINE: Asian indices are higher, boosted by technology and automaker stocks in the region. I expect US equities to open mixed and to trade modestly higher into the afternoon. The Portfolio is 50% net long heading into the day.

Links of Interest

Market Snapshot
Detailed Market Summary
Market Internals
Economic Commentary
Movers & Shakers
IBD New America
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Real-time Intraday Chart/Quote

Tuesday Watch

Late-Night Headlines
Bloomberg:
- President Bush said he will send 6,000 National Guard troops to the US-Mexican border and endorsed creating a temporary worker program to ease the strain caused by the flood of illegal immigration.
- Global commodity markets are a bubble waiting to pop, prompted by false assumptions that China’s growth and energy inefficiencies will go unchanged, Morgan Stanley Chief Economist Stephen Roach said.
- Global metals prices plunged, led by gold’s biggest decline since 1993, on concern a speculative rally that sent commodities to record highs may be over.
- Emerging-market stocks posted their biggest drop in two years on speculation rising US interest rates will reduce demand for the riskiest assets, such as equities in South Korea and Russia.
- US Treasury notes rose, snapping a five-day slump, as yields at about a four-year high and falling commodity prices eased concern about inflation.
- Crude oil is falling for a third day in NY on concern that near-record fuel and commodity prices may slow economic growth and curb global demand.

China Securities Journal:
- China may need to raise lending rates in the second half of the year if growth in money supply, loans and investment does not slow, citing an economist with the nation’s top economic planning body.

Financial Times:
- Moody’s Investors Services said it did not upgrade the debt rating of Arabian Gulf banks on concern some properties are overvalued and loans are secured by volatile share holdings. The increase in consumer borrowing also led Moody’s to maintain “a cautious approach.”

Late Buy/Sell Recommendations
Piper Jaffray:
- Rated (ENDP) Outperform, target $35.

SunTrust:
- Rated (PRGS) Buy, target $37.

Night Trading
Asian Indices are -1.25% to -.50% 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
- (ANF)/.54
- (AEOS)/.41
- (AMAT)/.23
- (BJ)/.19
- (CPWR)/.13
- (DE)/2.30
- (DKS)/.17
- (HPQ)/.49
- (HD)/.67
- (NTES)/.24
- (REDF)/.05
- (SKS)/.09
- (SPLS)/.23
- (TJX)/.33
- (WMT)/.61

Upcoming Splits
- (ACI) 2-for-1
- (HTLD) 4-for-3
- (BLUD) 3-for-2
- (JEF) 2-for-1
- (TIE) 2-for-1
- (CELL) 6-for-5

Economic Releases
8:30 am EST
- The Producer Price Index for April is estimated to rise .8% versus a .5% increase in March.
- The PPI Ex Food & Energy for April is estimated to rise .2% versus a .1% gain in March.
- Housing Starts for April are estimated to fall to 1950K versus 1950K in March.
- Building Permits for April are estimated to fall to 2040K versus 2094K in March.

BOTTOM LINE: Asian indices are lower, weighed down by commodity stocks in the region. I expect US equities to open mixed and to trade modestly higher into the afternoon. The Portfolio is 50% net long heading into the day.

Evening Review

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

BOTTOM LINE: The Portfolio finished higher today on gains in my Medical longs, Retail longs, Energy shorts and Base Metal shorts. I covered some of my trading shorts in the afternoon, 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 action was mildly bearish. I expect many stocks, with the exception of commodities, made at least a short-term bottom today. I will closely monitor the bond market's reaction to tomorrow's PPI report before further shifting market exposure.