BOTTOM LINE: The Portfolio is slightly lower into the final hour as gains in my Commodity shorts are mostly offsetting losses in my Retail and Internet longs. I added to my (EEM), (IWM) and (QQQQ) shorts this morning and then took profits, thus leaving the Portfolio 75% net long. The tone of the market is negative as the advance/decline line is lower, most sectors are declining and volume is about average. Gold is breaking back below its 50-day moving average today, falling another $21.90. It has declined almost $50 in less than two days. This action is very bearish for the metal considering the Middle East situation and today's PPI. I continue to believe Gold, copper and oil are all in the process of forming major tops. Oil will likely continue to trade at very inflated levels into hurricane season, at which time I suspect it will finally begin falling substantially. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering and lower energy prices ahead of Bernanke’s speech tomorrow.
Tuesday, July 18, 2006
Stocks Mostly Lower into Final Hour as Commodities Weaken Further and Long Rates Rise
Today's Headlines
Bloomberg:
- Shares of PartyGaming Plc, the world’s largest Internet poker company, dropped after Betonsports Plc and its CEO were indicted by a US grand jury.
- Gold declined in NY and London on speculation that conflict is easing in the Middle East.
- Natural gas fell for a second day in NY as forecasters predicted hot weather across the country would ease later this week, reducing consumption of the power-plant fuel.
- US 10-year Treasuries fell for the first day in almost two weeks after a report showed producer prices increased in June by more than economists forecast.
Wall Street Journal:
- US tea sales reached $6.2 billion last year, having quadrupled since the early 1990s, and there are 2,000 tea houses across the country, compared with 200 a decade ago.
- General Motors(GM) top North American sales and marketing executive says eliminating discounts in favor of permanent low prices has helped the automaker stabilize its market share.
- UnitedHealth Group(UNH) remains a high-quality company whose stock investors remain keen to snap up.
- Some US venture capitalists no longer bet on start-up companies with bright ideas but on businesses that are to be had cheaply after going through hard times.
NY Times:
- A Chicago alderman wants the city to be the first to outlaw restaurants’ use of cooking oils that contain so-called trans fats in order to improve the city’s health.
- US researchers say they are making rapid strides in the field of artificial intelligence as they try to simulate the human brain 50 years after the term was coined.
- Pfizer’s(PFE) research chief says the company and other drugmakers are on the verge of a new age of discovery that will make debilitating illnesses such as cancer and diabetes more manageable.
- General Dynamics(GD) will offer new cockpit systems in its Gulfstream business jets that give pilots computer-generated views of terrain regardless of weather.
- The US Justice Department’s attorney for the Eastern District of NY is looking at possible overcharging in the stock-lending business, along with use of so-called finders’ fees, as part of an inquiry into short-selling practices.
AP:
- The NAACP is calling on black consumers to stop shopping at Target(TGT) until the company answers the civil rights group’s survey questions.
Daily Telegraph:
- UK home prices are likely to rise almost 50% between now and 2011, meaning the average home would cost almost $546,000 in five years’ time, according to Oxford Economic Forecasting, a research group.
Yediot Aharonot:
- Four out of five Israelis support fighting Hezbollah until it withdraws from the Lebanese border and 58% say the terrorist organization must be destroyed.
Sky News:
- The Israeli assault on Lebanon will end within a few weeks, an Israeli army official said.
- Shares of PartyGaming Plc, the world’s largest Internet poker company, dropped after Betonsports Plc and its CEO were indicted by a US grand jury.
- Gold declined in NY and London on speculation that conflict is easing in the Middle East.
- Natural gas fell for a second day in NY as forecasters predicted hot weather across the country would ease later this week, reducing consumption of the power-plant fuel.
- US 10-year Treasuries fell for the first day in almost two weeks after a report showed producer prices increased in June by more than economists forecast.
Wall Street Journal:
- US tea sales reached $6.2 billion last year, having quadrupled since the early 1990s, and there are 2,000 tea houses across the country, compared with 200 a decade ago.
- General Motors(GM) top North American sales and marketing executive says eliminating discounts in favor of permanent low prices has helped the automaker stabilize its market share.
- UnitedHealth Group(UNH) remains a high-quality company whose stock investors remain keen to snap up.
- Some US venture capitalists no longer bet on start-up companies with bright ideas but on businesses that are to be had cheaply after going through hard times.
NY Times:
- A Chicago alderman wants the city to be the first to outlaw restaurants’ use of cooking oils that contain so-called trans fats in order to improve the city’s health.
- US researchers say they are making rapid strides in the field of artificial intelligence as they try to simulate the human brain 50 years after the term was coined.
- Pfizer’s(PFE) research chief says the company and other drugmakers are on the verge of a new age of discovery that will make debilitating illnesses such as cancer and diabetes more manageable.
- General Dynamics(GD) will offer new cockpit systems in its Gulfstream business jets that give pilots computer-generated views of terrain regardless of weather.
- The US Justice Department’s attorney for the Eastern District of NY is looking at possible overcharging in the stock-lending business, along with use of so-called finders’ fees, as part of an inquiry into short-selling practices.
AP:
- The NAACP is calling on black consumers to stop shopping at Target(TGT) until the company answers the civil rights group’s survey questions.
Daily Telegraph:
- UK home prices are likely to rise almost 50% between now and 2011, meaning the average home would cost almost $546,000 in five years’ time, according to Oxford Economic Forecasting, a research group.
Yediot Aharonot:
- Four out of five Israelis support fighting Hezbollah until it withdraws from the Lebanese border and 58% say the terrorist organization must be destroyed.
Sky News:
- The Israeli assault on Lebanon will end within a few weeks, an Israeli army official said.
PPI Rises, Foreign Demand for US Assets Strong
- The Producer Price Index for June rose .5% versus estimates of a .3% increase and a .2% rise in May.
- The PPI Ex Food & Energy rose .2% versus estimates of a .2% increase and a .3% gain in May.
- Net Foreign Security Purchases for May rose to $69.6B versus estimates of $58.4B and $51.1B in April.
- The PPI Ex Food & Energy rose .2% versus estimates of a .2% increase and a .3% gain in May.
- Net Foreign Security Purchases for May rose to $69.6B versus estimates of $58.4B and $51.1B in April.
BOTTOM LINE: Prices paid to US producers rose at a faster rate in June on higher costs for food, energy and autos, Bloomberg reported. Prices of raw materials fell 1.7% and prices for computers declined 3.2% last month. So far this year, wholesale prices are rising at an annual rate of 2.1% versus a 3.6% gain in the first part of lat year. I expect producer prices to continue to decelerate over the intermediate-term.
International investors increased purchases of US financial assets in May as holding in the world’s largest economy offered security from sagging emerging markets, Bloomberg said. Purchases of Treasury securities rose a net $13.2 billion versus $3.4 billion in April. Foreign purchases of US equities rose $2.7 billion, while corporate bond purchases increased to $36.5 billion. I expect foreign demand to remain strong and increase over the intermediate-term.
Monday, July 17, 2006
Tuesday Watch
Late-Night Headlines
Bloomberg:
- Target Corp.(TGT) cut is forecast for July same-store sales to growth of 3 to 4 percent from prior estimates of 4-6% growth.
- China’s economy grew at the fastest pace in more than a decade in the second quarter as higher borrowing costs and government lending curbs failed to slow investment in factories and real estate.
- Dell Inc.(DELL) is selling its first color-laser printers in Japan at lower prices than competing products from Canon Inc. and Seiko Epson Corp. to expand market share.
- The yuan fell for a third day as China said there won’t be another “one-off” revaluation of the currency and that speculators betting on faster gains will “not succeed.”
Late Buy/Sell Recommendations
- None of note
Night Trading
Asian Indices are -1.50% to unch. on average.
S&P 500 indicated -.06%.
NASDAQ 100 indicated -.35%.
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
- (ASO)/.53
- (BLK)/1.16
- (SCHW)/.20
- (CHKP)/.32
- (KO)/.72
- (CSX)/1.15
- (FRX)/.52
- (FCX)/1.45
- (IBM)/1.29
- (JNJ)/.97
- (KEY)/.70
- (MER)/1.52
- (MTG)/1.73
- (RJF)/.45
- (PCU)/3.20
- (STT)/.83
- (AMTD)/.22
- (TER)/.25
- (UTX)/1.0
- (USB)/.64
- (WDC)/1.24
- (YHOO)/.11
Upcoming Splits
- (RS) 2-for-1
Economic Releases
8:30 am EST
- The Producer Price Index for June is estimated to rise .3% versus a .2% gain in May.
- The PPI Ex Food & Energy for June is estimated to rise .2% versus a .3% increase in May.
9:00 am EST
- Net Foreign Security Purchases for May are estimated to rise to $56.0B versus $46.7B.
1:00 pm EST
- The NAHB Housing Market Index for July is estimated to fall to 41 versus a reading of 42 in June.
Bloomberg:
- Target Corp.(TGT) cut is forecast for July same-store sales to growth of 3 to 4 percent from prior estimates of 4-6% growth.
- China’s economy grew at the fastest pace in more than a decade in the second quarter as higher borrowing costs and government lending curbs failed to slow investment in factories and real estate.
- Dell Inc.(DELL) is selling its first color-laser printers in Japan at lower prices than competing products from Canon Inc. and Seiko Epson Corp. to expand market share.
- The yuan fell for a third day as China said there won’t be another “one-off” revaluation of the currency and that speculators betting on faster gains will “not succeed.”
Late Buy/Sell Recommendations
- None of note
Night Trading
Asian Indices are -1.50% to unch. on average.
S&P 500 indicated -.06%.
NASDAQ 100 indicated -.35%.
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
- (ASO)/.53
- (BLK)/1.16
- (SCHW)/.20
- (CHKP)/.32
- (KO)/.72
- (CSX)/1.15
- (FRX)/.52
- (FCX)/1.45
- (IBM)/1.29
- (JNJ)/.97
- (KEY)/.70
- (MER)/1.52
- (MTG)/1.73
- (RJF)/.45
- (PCU)/3.20
- (STT)/.83
- (AMTD)/.22
- (TER)/.25
- (UTX)/1.0
- (USB)/.64
- (WDC)/1.24
- (YHOO)/.11
Upcoming Splits
- (RS) 2-for-1
Economic Releases
8:30 am EST
- The Producer Price Index for June is estimated to rise .3% versus a .2% gain in May.
- The PPI Ex Food & Energy for June is estimated to rise .2% versus a .3% increase in May.
9:00 am EST
- Net Foreign Security Purchases for May are estimated to rise to $56.0B versus $46.7B.
1:00 pm EST
- The NAHB Housing Market Index for July is estimated to fall to 41 versus a reading of 42 in June.
BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and technology stocks in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.
Stocks Finish Mostly Lower on Weakness in Commodity Shares
Indices
S&P 500 1,234.49 -.14%
DJIA 10,747.36 +.07%
NASDAQ 2,037.72 +.02%
Russell 2000 677.69 -.52%
Wilshire 5000 12,373.32 -.24%
S&P Barra Growth 570.36 -.06%
S&P Barra Value 662.56 -.21%
Morgan Stanley Consumer 601.10 -.03%
Morgan Stanley Cyclical 769.35 -.78%
Morgan Stanley Technology 459.13 +.04%
Transports 4,570.83 -.43%
Utilities 419.11 +.24%
Put/Call 1.07 -13.71%
NYSE Arms 1.04 -11.73%
Volatility(VIX) 18.64 +3.27%
ISE Sentiment 131.00 +3.15%
US Dollar 86.98 +1.02%
CRB 347.31 -2.77%
Futures Spot Prices
Crude Oil 75.39 +.12%
Unleaded Gasoline 228.60 +.03%
Natural Gas 5.75 -.57%
Heating Oil 202.72 +.39%
Gold 644.50 -1.14%
Base Metals 229.13 -3.20%
Copper 359.00 -.26%
10-year US Treasury Yield 5.06% -.04%
Leading Sectors
Restaurants +2.40%
Gaming +.95%
Retail +.93%
Lagging Sectors
Energy -3.08%
Gold & Silver -3.41%
Oil Service -4.42%
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
Bear Stearns:
- Reiterated Outperform on (UTX).
Afternoon/Evening Headlines
Bloomberg:
- Copper fell the most in five weeks leading a decline in metals prices, on concern that escalating violence in the Middle East will slow economic growth and curb demand for raw materials.
- Cocoa plunged 16% in London, the biggest one-day decline since at least 1989, on concern that record buying by speculators had inflated prices to unsustainable levels.
- The US dollar surged to the highest level in almost three months against the yen and strengthened versus the euro as investors sought a safe haven from escalating violence in the Middle East.
- Nymex Holdings, owner of the world’s largest energy marketplace, plans to sell $250 million of stock in an IPO as record oil prices and trading sparks interest in energy exchanges.
- Crude oil fell in NY by the most in five weeks, on speculation that Israel may stop its attack on Lebanon within days.
S&P 500 1,234.49 -.14%
DJIA 10,747.36 +.07%
NASDAQ 2,037.72 +.02%
Russell 2000 677.69 -.52%
Wilshire 5000 12,373.32 -.24%
S&P Barra Growth 570.36 -.06%
S&P Barra Value 662.56 -.21%
Morgan Stanley Consumer 601.10 -.03%
Morgan Stanley Cyclical 769.35 -.78%
Morgan Stanley Technology 459.13 +.04%
Transports 4,570.83 -.43%
Utilities 419.11 +.24%
Put/Call 1.07 -13.71%
NYSE Arms 1.04 -11.73%
Volatility(VIX) 18.64 +3.27%
ISE Sentiment 131.00 +3.15%
US Dollar 86.98 +1.02%
CRB 347.31 -2.77%
Futures Spot Prices
Crude Oil 75.39 +.12%
Unleaded Gasoline 228.60 +.03%
Natural Gas 5.75 -.57%
Heating Oil 202.72 +.39%
Gold 644.50 -1.14%
Base Metals 229.13 -3.20%
Copper 359.00 -.26%
10-year US Treasury Yield 5.06% -.04%
Leading Sectors
Restaurants +2.40%
Gaming +.95%
Retail +.93%
Lagging Sectors
Energy -3.08%
Gold & Silver -3.41%
Oil Service -4.42%
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
Bear Stearns:
- Reiterated Outperform on (UTX).
Afternoon/Evening Headlines
Bloomberg:
- Copper fell the most in five weeks leading a decline in metals prices, on concern that escalating violence in the Middle East will slow economic growth and curb demand for raw materials.
- Cocoa plunged 16% in London, the biggest one-day decline since at least 1989, on concern that record buying by speculators had inflated prices to unsustainable levels.
- The US dollar surged to the highest level in almost three months against the yen and strengthened versus the euro as investors sought a safe haven from escalating violence in the Middle East.
- Nymex Holdings, owner of the world’s largest energy marketplace, plans to sell $250 million of stock in an IPO as record oil prices and trading sparks interest in energy exchanges.
- Crude oil fell in NY by the most in five weeks, on speculation that Israel may stop its attack on Lebanon within days.
BOTTOM LINE: The Portfolio finished higher today on gains in my Computer longs, Networking longs and Commodity shorts. I did not trade in the final hour, thus leaving the Portfolio 75% net long. The tone of the market was negative today as the advance/decline line finished lower, sector performance was mixed and volume was below average. Measures of investor anxiety were mixed into the close. Overall, today's market performance was mildly bearish. Given the decline in oil, I would have expected a better showing for the broad market. But the sharp declines in commodity stocks, which many perceive as market leaders, didn't do much damage to the broad market, which is a positive. The fact that the 10-year maintained recent gains, despite a somewhat calmer environment, is also a positive. My intraday measures of investor angst were above average throughout the day. I expect a better performance for stocks tomorrow.
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