BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Semi longs, Retail longs and Networking longs. I have not traded today, thus leaving the Portfolio 75% net long. The tone of the market is very negative as the advance/decline line is substantially lower, most sectors are falling and volume is heavy. I have suspected for quite a while that a number of very well-known companies that have had an almost monopolistic hold on their markets were vulnerable to significant customer defections when a viable alternative arose. In my opinion, poor customer service is the main issue. I believe this is what is happening at Dell (DELL). I continue to believe Apple's (AAPL) opportunity is much larger than most perceive and remain long the stock. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering.
Friday, July 21, 2006
Stocks Lower into Final Hour on Economic and Geopolitical Concerns
Today's Headlines
Bloomberg:
- The US dollar fell for a third day after minutes of the Fed’s last meeting and comments from Chairman Bernanke suggested the Fed is close to stopping two years of interest-rate increases.
- Israel mobilized several thousand reserve soldiers today to reinforce units fighting Hezbollah gunmen in southern Lebanon.
- Morgan Stanley(MS) CEO Mack will be interviewed by the SEC in connection with a probe into possible insider trading at hedge fund Pequot Capital.
- Dell Inc.(DELL) said profit and sales will fail to meet analysts’ estimates, sending the stock plunging, after the world’s largest pc maker slashed prices to reclaim market share.
- News Corp.(NWS) Chairman Rupert Murdoch said US regulators would find it difficult to reject a merger of his DirectTV Group and rival satellite television provider EchoStar Communications(DISH).
- A new group called Communities United to Strengthen America has opened 12 “resource centers” this year for the avowed purpose of “educating citizens about issues such as health care and energy.” It’s probably no coincidence that all 12 are located in Republican –held congressional districts targeted by Democrats trying to recapture control of the House of Representatives in November’s mid-term elections. Campaign-finance experts cite Communities United as an example of the type of non-profit group that Democrats and their allies are crating to help their campaign, permitting unlimited and undisclosed donations from corporations, unions and the wealthy.
Wall Street Journal:
- US companies’ reserves of cash and their own stock have never been greater after years of record earnings growth, citing research that will be released by S&P.
- US, European and Japanese consumer-electronics companies will cut license fees for an important connector used in high-definition television sets, as they hope to convince Chinese manufacturers to use the same standards.
- General Electric’s(GE) NBC channel signed an agreement with Toyota Motor(TM) requiring the network to demonstrate that its viewers are able to recall particular details about a TV show, such as its storyline.
USA Today:
- Political action committees for US unions, including the Service Employees International Union, have raised more campaign funds in the past 18 months than in the lead-up to the 2002 election.
NY Times:
- An Indiana judge’s order may force law firm Milberg Weiss Bershad & Schulman LLP, accused of paying people to serve as plaintiffs, to turn over its financial records dating back to 1998.
- The US economy has withstood the effect of higher crude oil prices, which reflects a lesser dependence on oil and a smaller share of consumer spending than 30 years ago.
- Wal-Mart Stores(WMT) and DuPont both took their business away from law firms that haven’t hired more minority and female lawyers.
Washington Post:
- The Plaza Hotel in NYC this week started selling 152 so-called hotel condominiums.
The Times of London:
- Iran threatened to escalate “activity” in the Middle East during talks about its nuclear program if too much pressure was applied to halt it.
- The US dollar fell for a third day after minutes of the Fed’s last meeting and comments from Chairman Bernanke suggested the Fed is close to stopping two years of interest-rate increases.
- Israel mobilized several thousand reserve soldiers today to reinforce units fighting Hezbollah gunmen in southern Lebanon.
- Morgan Stanley(MS) CEO Mack will be interviewed by the SEC in connection with a probe into possible insider trading at hedge fund Pequot Capital.
- Dell Inc.(DELL) said profit and sales will fail to meet analysts’ estimates, sending the stock plunging, after the world’s largest pc maker slashed prices to reclaim market share.
- News Corp.(NWS) Chairman Rupert Murdoch said US regulators would find it difficult to reject a merger of his DirectTV Group and rival satellite television provider EchoStar Communications(DISH).
- A new group called Communities United to Strengthen America has opened 12 “resource centers” this year for the avowed purpose of “educating citizens about issues such as health care and energy.” It’s probably no coincidence that all 12 are located in Republican –held congressional districts targeted by Democrats trying to recapture control of the House of Representatives in November’s mid-term elections. Campaign-finance experts cite Communities United as an example of the type of non-profit group that Democrats and their allies are crating to help their campaign, permitting unlimited and undisclosed donations from corporations, unions and the wealthy.
Wall Street Journal:
- US companies’ reserves of cash and their own stock have never been greater after years of record earnings growth, citing research that will be released by S&P.
- US, European and Japanese consumer-electronics companies will cut license fees for an important connector used in high-definition television sets, as they hope to convince Chinese manufacturers to use the same standards.
- General Electric’s(GE) NBC channel signed an agreement with Toyota Motor(TM) requiring the network to demonstrate that its viewers are able to recall particular details about a TV show, such as its storyline.
USA Today:
- Political action committees for US unions, including the Service Employees International Union, have raised more campaign funds in the past 18 months than in the lead-up to the 2002 election.
NY Times:
- An Indiana judge’s order may force law firm Milberg Weiss Bershad & Schulman LLP, accused of paying people to serve as plaintiffs, to turn over its financial records dating back to 1998.
- The US economy has withstood the effect of higher crude oil prices, which reflects a lesser dependence on oil and a smaller share of consumer spending than 30 years ago.
- Wal-Mart Stores(WMT) and DuPont both took their business away from law firms that haven’t hired more minority and female lawyers.
Washington Post:
- The Plaza Hotel in NYC this week started selling 152 so-called hotel condominiums.
The Times of London:
- Iran threatened to escalate “activity” in the Middle East during talks about its nuclear program if too much pressure was applied to halt it.
Thursday, July 20, 2006
Friday Watch
Late-Night Headlines
Bloomberg:
- Coca-Cola(KO) may buy back as much as $13.2 billion of its stock, representing 13% of outstanding shares.
- Microsoft(MSFT) announced plans to buy back $40 billion in stock, sending the shares higher after-hours.
- National CineMedia LLC, a seller of on-screen ads for movie theaters, may raise more than $500 million in an IPO, said six people with direct knowledge of the plan.
- China and Russia may be reneging on commitments to demand that Iran stop enriching uranium, a British diplomat said after giving the UN Security Council a resolution threatening the Islamic nation with economic penalties for refusing to comply.
- Investors are paring bets the yuan will appreciate after losing money on wagers they made a year ago when China abandoned a peg to the dollar.
- Copper prices in Shanghai fell by the daily allowable maximum limit of 4%.
Financial Times:
- Morgan Stanley(MS) analyst Huw van Steenis has been chosen to lead a team that will offer investment banking advice to hedge funds and asset managers. The switch reflects the growing importance of hedge funds as corporate clients of investment banks.
Seattle Post-Intelligencer:
- Yahoo!(YHOO) signed a deal with Zillow.com, a real estate pricing site, to power Yahoo’s home value section.
Xinhua News:
- Overseas investors bought $4.5 billion of property in China in the first quarter, 32% more than the investment in the entire year of 2005.
Late Buy/Sell Recommendations
Business Week:
- ConocoPhillips(COP) is undervalued at a time when prices for crude oil are reaching record highs, citing Stephen Leeb, president of Leeb Capital Management.
- First Horizon National(FHN), a Memphis, Tennessee-based bank that has braches in 30 states, may rise as much as 26% because it may be an acquisition target of companies such as Wells Fargo(WFC), citing Ryan Beck Managing Director Jacqueline Reeves.
Night Trading
Asian Indices are -.75% to -.25% on average.
S&P 500 indicated +.26%.
NASDAQ 100 indicated +.25%.
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
- (ACI)/.43
- (CAT)/1.42
- (LLY)/.75
- (JBLU)/.04
- (NUE)/1.33
- (RSH)/.12
- (REY)/.39
- (SLB)/.63
Upcoming Splits
- (CX) 2-for-1
- (MRVL) 2-for-1
Economic Releases
- None of note
Bloomberg:
- Coca-Cola(KO) may buy back as much as $13.2 billion of its stock, representing 13% of outstanding shares.
- Microsoft(MSFT) announced plans to buy back $40 billion in stock, sending the shares higher after-hours.
- National CineMedia LLC, a seller of on-screen ads for movie theaters, may raise more than $500 million in an IPO, said six people with direct knowledge of the plan.
- China and Russia may be reneging on commitments to demand that Iran stop enriching uranium, a British diplomat said after giving the UN Security Council a resolution threatening the Islamic nation with economic penalties for refusing to comply.
- Investors are paring bets the yuan will appreciate after losing money on wagers they made a year ago when China abandoned a peg to the dollar.
- Copper prices in Shanghai fell by the daily allowable maximum limit of 4%.
Financial Times:
- Morgan Stanley(MS) analyst Huw van Steenis has been chosen to lead a team that will offer investment banking advice to hedge funds and asset managers. The switch reflects the growing importance of hedge funds as corporate clients of investment banks.
Seattle Post-Intelligencer:
- Yahoo!(YHOO) signed a deal with Zillow.com, a real estate pricing site, to power Yahoo’s home value section.
Xinhua News:
- Overseas investors bought $4.5 billion of property in China in the first quarter, 32% more than the investment in the entire year of 2005.
Late Buy/Sell Recommendations
Business Week:
- ConocoPhillips(COP) is undervalued at a time when prices for crude oil are reaching record highs, citing Stephen Leeb, president of Leeb Capital Management.
- First Horizon National(FHN), a Memphis, Tennessee-based bank that has braches in 30 states, may rise as much as 26% because it may be an acquisition target of companies such as Wells Fargo(WFC), citing Ryan Beck Managing Director Jacqueline Reeves.
Night Trading
Asian Indices are -.75% to -.25% on average.
S&P 500 indicated +.26%.
NASDAQ 100 indicated +.25%.
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
- (ACI)/.43
- (CAT)/1.42
- (LLY)/.75
- (JBLU)/.04
- (NUE)/1.33
- (RSH)/.12
- (REY)/.39
- (SLB)/.63
Upcoming Splits
- (CX) 2-for-1
- (MRVL) 2-for-1
Economic Releases
- None of note
BOTTOM LINE: Asian indices are mostly lower, weighed down by 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.
***Alert***
I am unable to post the Thursday Close due to a scheduling conflict. I will post the Friday Watch later this evening.
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