Bloomberg:
- Billionaire investor Warren Buffett, stung by $955 million in losses from an incorrect bet against the US dollar in 2005, slashed his bet against the dollar this year, just before its steepest decline in 18 months.
- The week-long heat wave that has hit the US East Coast will start rolling out by this morning.
- According to Thomson Financial, US companies’ second-quarter earnings rose by an average of 19%.
- The NFL, which became the world’s richest sports league mainly through its multibillion-dollar tv contracts, may be positioning itself to challenge its biggest benefactors.
- Senate Republicans’ failed in attempts to lure Democrats into voting for a reduction in the death tax by combining it with an increase in the minimum wage and popular tax breaks.
- Best Buy(BBY) is considering further acquisitions in China, including Beijing Dazhong Electrical Appliances, as the biggest US home-appliance chain prepares to open its first store in the world’s most populous country.
- Shares of Sanofi-Aventis SA(SNY) and partner Bristol-Myers(BMY) fell after a US pharmaceutical distributor said Apotex may introduce a generic version of their best-selling Plavix clot treatment.
- Futures traders see another interest-rate increase by the Fed this year as unlikely after a government report showed weaker-than-expected job creation.
- Shares of DreamWorks Animation SKG(DWA), maker of the “Shrek” films, rose as much as 17% after Bank of America(BAC) analyst Michael Savner said the company may buy back shares from Paul Allen, its largest investor.
- Crude oil fell more than $1/bbl. on signs slower global economic growth will curtail fuel consumption.
- US Treasuries are rising, pushing the 10-year yield to the lowest since April.
Wall Street Journal:
- Buyout funds, hedge funds and other speculators are pouring billions of dollars into energy related businesses of all kinds. Energy is “as hot right now as tech was in 2000,” Ben Dell, an analyst with Sanford C. Bernstein said.
- A group of nine advertisers including Wal-Mart Stores(WMT) and Toyota Motor(TM) is starting a Web site today that introduces their plan for an Internet auction for television advertising time.
- Warner Music Group plans to sell DVDs with a music album that plays stereo and surround-sound on a standard player and has video footage that can been displayed using a DVD player or computer.
- France is playing a different role in its approach to the conflict in Lebanon than it did toward the US decision to liberate Iraq in 2003 and is working more closely with the US on the issue.
- US hedge-fund firms sometimes set up separate accounts known as “side-pockets” to hold investments that are difficult to value.
- Managers of “value” mutual funds have been putting money into stocks, as opposed to last year’s cash investments, a move which indicates professionals see bargains in the US stock market.
NY Times:
- Merck’s(MRK) strategy of trying every case of plaintiffs claiming they suffered heart attacks after taking the painkiller Vioxx could be paying off, as the company has won five of seven jury trials.
Philadelphia Inquirer:
- DuPont(DD) said 40% of its businesses aren’t reaching profitability goals and it may restructure or sell some of them.
AP:
- Some computers using wireless Internet access are vulnerable to being taken over by another user who could gain passwords, bank account numbers and other personal information.
- Two New Jersey scientists are seeking money for a plan to place pumps in the ocean that could cool waters in a hurricane’s path, potentially weakening it before it hits land.
Friday, August 04, 2006
Payroll Growth Below Estimates, Hourly Earnings Rise More Than Estimates
- The Change in Non-farm Payrolls for July was 113K versus estimates of 144K and an upwardly revised 124K in June.
- The Change in Manufacturing Payrolls for July was -15K versus estimates of 5K and an upwardly revised 22k in June.
- The Unemployment Rate for July rose to 4.8% versus estimates of 4.6% and 4.6% in June.
- Average Hourly Earnings for July rose .4% versus estimates of a .3% gain and a downwardly revised .4% increase in June.
- The Change in Manufacturing Payrolls for July was -15K versus estimates of 5K and an upwardly revised 22k in June.
- The Unemployment Rate for July rose to 4.8% versus estimates of 4.6% and 4.6% in June.
- Average Hourly Earnings for July rose .4% versus estimates of a .3% gain and a downwardly revised .4% increase in June.
BOTTOM LINE: Employers in the US added fewer jobs than expected in July and the unemployment rate climbed, making it easier for the Fed to refrain from raising interest rates next week, Bloomberg said. Monthly payroll growth of about 100,000-125,000 is needed to keep unemployment stable, according to most economists. Average hourly earnings rose 3.8% from the same month a year ago. A labor market that is too tight generates rising unit labor costs, which account for two-thirds of inflation. Thus, the 10-year yield is falling 7 basis points on this news as investors’ inflation worries continue to decline at a rapid rate. I still expect the labor market to remain healthy over the intermediate-term without generating substantial unit labor cost increases. Today’s data make a Fed “pause” very likely. I suspect the “pause” will be a long one.
Thursday, August 03, 2006
Friday Watch
Late-Night Headlines
Bloomberg:
- Israeli Defense Minister Amir Peretz ordered the army late today to advance into southern Lebanon up to the Litani River after almost 500 rockets fell on Israel in the past two days, killing nine civians.
- Many of the rockets Hezbollah is firing into Israel are made in Iran, demonstrating the Islamic republic’s success in copying Chinese and Russian technology to build its own weapons industry.
- The benchmark US 10-year Treasury yield touched the lowest since April on speculation inflation would decelerate after a private report showed growth in the service industries slowed for a third month.
- Apple Computer(AAPL) said it will probably restate earnings after an internal investigation into options backdating found additional suspicious grants.
- Copper prices in Shanghai fell after charts some traders use to predict price moves gave sell signals, indicating more declines may be in store.
- Crude oil fell in NY for a second day as Tropical Storm Chris dissipated.
- Chicago Mercantile Exchange Holdings(CME) will join the S&P 500 Index next week.
NY Times:
- Campaign donors in New York state have used limited liability corporations, or LLCs, to legally get around a prohibition against individuals giving more than $50,100 to statewide candidates. Eliot Spitzer, who is running for governor, received money from LLCs connected to hedge fund managers.
Business Week:
- Digg.com, the 24th-most popular US Web site, is worth about $200 million.
Nation:
- PTT Pcl, a Thai oil and gas company, is studying the start of large-scale production of bio-diesel as a cheap alternative to diesel refined from imported crude oil, citing Energy Minister Viset Choopiban.
Xinhua News:
- French Foreign Minister Philippe Douste-Blazy said he believes “more than ever” a durable ceasefire between Lebanon’s Hezbollah and Israel would come soon.
Late Buy/Sell Recommendations
Goldman Sachs:
- Rated (STP) Outperform, target $34.95.
Citigroup:
- Rated (DKS) Buy, target $47.
Business Week:
- Shares of Norfolk Southern(NSC) may rise 26% in the next year.
- Radiation Therapy Services(RTXS) may rise 28% within a year because fears that Medicare reimbursements would be cut, which caused shares to fall this year, were “overblown.”
Night Trading
Asian Indices are -.25% to +.50% on average.
S&P 500 indicated -.07%.
NASDAQ 100 indicated -.15%.
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
- (CRDN)/1.05
- (GT)/.18
- (MXIM)/.48
- (MEDX)/-.37
- (MHS)/.61
- (OXY)/2.79
- (OMG)/.80
Upcoming Splits
- (FUL) 2-for-1
Economic Releases
8:30 am EST
- The Change in Non-farm Payrolls for July is estimated at 144K versus 121K in June.
- The Change in Manufacturing Payrolls for July is estimated at 5K versus 15K in June.
- The Unemployment Rate for July is estimated at 4.6% versus 4.6% in June.
- Average Hourly Earnings for July are estimated to rise .3% versus a .5% increase in June.
Bloomberg:
- Israeli Defense Minister Amir Peretz ordered the army late today to advance into southern Lebanon up to the Litani River after almost 500 rockets fell on Israel in the past two days, killing nine civians.
- Many of the rockets Hezbollah is firing into Israel are made in Iran, demonstrating the Islamic republic’s success in copying Chinese and Russian technology to build its own weapons industry.
- The benchmark US 10-year Treasury yield touched the lowest since April on speculation inflation would decelerate after a private report showed growth in the service industries slowed for a third month.
- Apple Computer(AAPL) said it will probably restate earnings after an internal investigation into options backdating found additional suspicious grants.
- Copper prices in Shanghai fell after charts some traders use to predict price moves gave sell signals, indicating more declines may be in store.
- Crude oil fell in NY for a second day as Tropical Storm Chris dissipated.
- Chicago Mercantile Exchange Holdings(CME) will join the S&P 500 Index next week.
NY Times:
- Campaign donors in New York state have used limited liability corporations, or LLCs, to legally get around a prohibition against individuals giving more than $50,100 to statewide candidates. Eliot Spitzer, who is running for governor, received money from LLCs connected to hedge fund managers.
Business Week:
- Digg.com, the 24th-most popular US Web site, is worth about $200 million.
Nation:
- PTT Pcl, a Thai oil and gas company, is studying the start of large-scale production of bio-diesel as a cheap alternative to diesel refined from imported crude oil, citing Energy Minister Viset Choopiban.
Xinhua News:
- French Foreign Minister Philippe Douste-Blazy said he believes “more than ever” a durable ceasefire between Lebanon’s Hezbollah and Israel would come soon.
Late Buy/Sell Recommendations
Goldman Sachs:
- Rated (STP) Outperform, target $34.95.
Citigroup:
- Rated (DKS) Buy, target $47.
Business Week:
- Shares of Norfolk Southern(NSC) may rise 26% in the next year.
- Radiation Therapy Services(RTXS) may rise 28% within a year because fears that Medicare reimbursements would be cut, which caused shares to fall this year, were “overblown.”
Night Trading
Asian Indices are -.25% to +.50% on average.
S&P 500 indicated -.07%.
NASDAQ 100 indicated -.15%.
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
- (CRDN)/1.05
- (GT)/.18
- (MXIM)/.48
- (MEDX)/-.37
- (MHS)/.61
- (OXY)/2.79
- (OMG)/.80
Upcoming Splits
- (FUL) 2-for-1
Economic Releases
8:30 am EST
- The Change in Non-farm Payrolls for July is estimated at 144K versus 121K in June.
- The Change in Manufacturing Payrolls for July is estimated at 5K versus 15K in June.
- The Unemployment Rate for July is estimated at 4.6% versus 4.6% in June.
- Average Hourly Earnings for July are estimated to rise .3% versus a .5% increase in June.
BOTTOM LINE: Asian indices are mostly higher, boosted by financial and real estate stocks in the region. I expect US equities to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.
***Alert***
I will be unable to post the Thursday Close due to a scheduling conflict. I will post the Friday Watch later this evening.
Stocks Higher into Final Hour on Strong Retail Sales, Falling Energy Prices and Lower Long-term Rates
BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Biotech longs, Retail longs and Computer longs. I covered my (QQQQ) and (IWM) hedges this morning, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is higher, most sectors are rising and volume is about average. While I still suspect the Fed is done for this cycle, I am not ruling out the possibility of a hike and the suggestion of a pause in their policy statement. Either way, I believe stocks will rally. The futures are telegraphing a pause. However, I sense many equity managers are in an "I'll believe it when I see it" state. The S&P 500 has rallied 5% from recent lows and is now almost 4% higher for the year. I expect overwhelmingly bearish sentiment and performance anxiety will continue to propel stocks higher next week. I still expect the S&P 500 to return a total of about 15% for the year. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, lower long-term rates, lower energy prices, strong retail sales and bargain-hunting.
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