BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Medical longs, Computer longs and Commodity shorts. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is negative as the advance/decline line is lower, most sectors are falling and volume is below average. The S&P Case-Shiller Housing Composite futures point to a 5.1% decline in the average home price by May 2007 from current levels. I would hardly classify this as a hard landing, considering how much the median home price is up over the last decade. I expect a stabilizing housing market will be another catalyst for higher stock prices over the intermediate-term. I expect US stocks to trade modestly higher into the close from current levels on short-covering and bargain-hunting ahead of tomorrow’s Fed announcement.
Monday, August 07, 2006
Stocks Lower into Final Hour on Rising Apprehension ahead of Fed Meeting and Higher Energy Prices
Today's Headlines
Bloomberg:
- The US should merge the SEC and the Commodity Futures Trading Commission to create one federal regulatory body because distinctions between stocks and futures are growing increasingly blurred, former SEC Chairman Arthur Levitt said.
- KKR’s purchase of Royal Philips Electronics’ semiconductor unit last week ended a 10-day stretch of $46.7 billion worth of deals, almost a fifth of all leveraged takeovers this year.
- Gilead Sciences(GILD), maker of the world’s best-selling AIDS treatment, is offering to help generic-drug makers in India produce the medicine, a move intended to get the life-saving pill to millions more people in the world’s poorest countries.
- BHP Billiton(BHP) faces a strike today at Escondida, the biggest copper mine in the world, after failing to reach a wage agreement with the labor union.
- Vanguard Group and Fidelity Investments are among companies that will benefit from almost $2 trillion in new money likely to be pumped into US retirement funds as a result of pension legislation Congress passed last week.
- Natural gas may fall in the US on forecasts the hurricane season won’t be as severe as initially predicted, easing concern that Gulf of Mexico production will be disrupted.
- US Democratic Senator Joe Lieberman trails Ned Lamont, his anti-war challenger, by 51% to 45% among likely Democratic voters in tomorrow’s Connecticut primary, a Quinnipiac Univ. poll found.
- Crude oil surged above $77/bbl. in NY after BP Plc(BP) said it will shut Alaska’s Prudhoe Bay field, the largest in the US, at a time of peak gasoline consumption.
- CommScope(CTV) offered to buy Andrew Corp.(ANDW) for about $1.5 billion, outbidding ADC Telecom(ADCT).
Wall Street Journal:
- Kindred Healthcare(KND) and AmerisourceBergen(ABC) are close to an agreement to combine their institutional-pharmacy business and put them into a separate, publicly traded company.
- MGA Entertainment, the maker of Bratz fashion dolls, plans to sell a virtual-reality electronic gadget, putting it into more direct competition with Hasbro(HAS) and Mattel(MAT).
- Home Depot(HD) is developing a new unit to increase orders from professional customers in the $400-billion-a-year wholesale building-supply market in the US.
NY Times:
- Fifteen US states in the past year have expanded their self-defense laws, allowing crime victims to use deadly force against their aggressors.
- Asia and Central and Eastern Europe may be the world’s fastest growing regions for movie audiences over the next five years as attendance declines in the US.
- Costco Wholesale(COST) and other retailers are phasing out television models using glass cathode-ray tubes as consumers prefer wide-screen plasma and LCD flat panel sets.
Crain’s NY Business:
- NYC may allow Verizon Communications(VZ) and other phone companies to provide cable tv.
Washington Post:
- President Bush is expected to sign an executive order requiring federally financed health care providers adopt quality-measurement tools and uniform standards for keeping records.
Financial News:
- Warburg Pincus LLC is in talks with private equity firms Apollo Management LP and BC Partners about making a bid for HCA Inc.(HCA), the target of the biggest leveraged buyout.
- The US should merge the SEC and the Commodity Futures Trading Commission to create one federal regulatory body because distinctions between stocks and futures are growing increasingly blurred, former SEC Chairman Arthur Levitt said.
- KKR’s purchase of Royal Philips Electronics’ semiconductor unit last week ended a 10-day stretch of $46.7 billion worth of deals, almost a fifth of all leveraged takeovers this year.
- Gilead Sciences(GILD), maker of the world’s best-selling AIDS treatment, is offering to help generic-drug makers in India produce the medicine, a move intended to get the life-saving pill to millions more people in the world’s poorest countries.
- BHP Billiton(BHP) faces a strike today at Escondida, the biggest copper mine in the world, after failing to reach a wage agreement with the labor union.
- Vanguard Group and Fidelity Investments are among companies that will benefit from almost $2 trillion in new money likely to be pumped into US retirement funds as a result of pension legislation Congress passed last week.
- Natural gas may fall in the US on forecasts the hurricane season won’t be as severe as initially predicted, easing concern that Gulf of Mexico production will be disrupted.
- US Democratic Senator Joe Lieberman trails Ned Lamont, his anti-war challenger, by 51% to 45% among likely Democratic voters in tomorrow’s Connecticut primary, a Quinnipiac Univ. poll found.
- Crude oil surged above $77/bbl. in NY after BP Plc(BP) said it will shut Alaska’s Prudhoe Bay field, the largest in the US, at a time of peak gasoline consumption.
- CommScope(CTV) offered to buy Andrew Corp.(ANDW) for about $1.5 billion, outbidding ADC Telecom(ADCT).
Wall Street Journal:
- Kindred Healthcare(KND) and AmerisourceBergen(ABC) are close to an agreement to combine their institutional-pharmacy business and put them into a separate, publicly traded company.
- MGA Entertainment, the maker of Bratz fashion dolls, plans to sell a virtual-reality electronic gadget, putting it into more direct competition with Hasbro(HAS) and Mattel(MAT).
- Home Depot(HD) is developing a new unit to increase orders from professional customers in the $400-billion-a-year wholesale building-supply market in the US.
NY Times:
- Fifteen US states in the past year have expanded their self-defense laws, allowing crime victims to use deadly force against their aggressors.
- Asia and Central and Eastern Europe may be the world’s fastest growing regions for movie audiences over the next five years as attendance declines in the US.
- Costco Wholesale(COST) and other retailers are phasing out television models using glass cathode-ray tubes as consumers prefer wide-screen plasma and LCD flat panel sets.
Crain’s NY Business:
- NYC may allow Verizon Communications(VZ) and other phone companies to provide cable tv.
Washington Post:
- President Bush is expected to sign an executive order requiring federally financed health care providers adopt quality-measurement tools and uniform standards for keeping records.
Financial News:
- Warburg Pincus LLC is in talks with private equity firms Apollo Management LP and BC Partners about making a bid for HCA Inc.(HCA), the target of the biggest leveraged buyout.
Sunday, August 06, 2006
Monday Watch
Weekend Headlines
Bloomberg:
- Israel and Hezbollah intensified their attacks as the UN prepared a resolution that US Secretary of State Condoleezza Rice said is a first step to ending fighting in Lebanon now in its fourth week.
- The US and France agreed on a proposed UN Security Council resolution designed to end the fighting between Israel and the militant Islamic group Hezbollah in Lebanon.
- Iran won’t suspend uranium enrichment even after the UN Security Council called for it to do so or face possible sanctions.
- President Bush said comprehensive immigration overhaul must begin with border security and include a guest-worker program and a means for many of the undocumented workers in the US to gain legal status.
- Senator Joe Lieberman, trailing an anti-war challenger in Connecticut’s Democratic primary election race, said his support for President Bush’s decision to liberate Iraq doesn’t mean he’s turned his back on fellow Democrats.
- Crude oil rose after BP Plc shut Alaska’s Prudhoe Bay field, the largest in the US, because it found a pipeline was corroded.
Wall Street Journal:
- DirectTV Group(DTV) and EchoStar Communications(DISH), US satellite tv providers, are gaining few customers as cable companies offer telephone and Internet service.
NY Times:
- New York will require all school children to take a language exam after the federal government ordered it to improve testing of students who speak limited English.
- Adobe Systems(ADBE) is concerned Microsoft Corp.(MSFT) users will be blocked from using its software to create PDF documents, citing CEO Chizen.
EE Times:
- Strong sales of high-definition TVs and other consumer electronics are projected to continue the second half of the year, according to an executive for Sony Electronics Inc.(SNE)
Washington Post:
- Energy-efficient techniques are spreading in commercial real-estate construction and renovation in a bid to control energy costs. Innovations including sun-reflecting ceramic dots in windows, giant vats of ice for overnight energy storage, plant-covered rooftops, bigger eaves and compact fluorescent lighting are being used. Experts say new energy-saving devices, better construction and smarter management can reduce electricity consumption by 20% in older commercial buildings and as much as 50% in new ones.
San Jose Mercury News:
- Venture capital investments in alternative energy start-up companies rose almost 400% in the second quarter from year-ago levels, citing data from research group VentureOne.
Crain’s Chicago Business:
- RR Donnelley & Sons(RRD) CEO Angelson held discussions with a group of buyout firms in recent months.
LA Times Times:
- Steven Spielberg, Jeffrey Katzenberg and Haim Saban are among prominent Democratic donors in Hollywood endorsing Republican California Governor Arnold Schwarzenegger’s re-election bid.
Sunday Times:
- Iran is trying to import uranium from the Democratic Republic of Congo, citing a UN report and unidentified Tanzanian customs officials.
Il Sole/24 Ore:
- The European Central Bank will continue to raise interest rates in coming months as economic growth accelerates, Lorenzo Bini Smaghi, an ECB executive board member said.
Independent:
- Iran will consider “painful” reprisals if the UN imposes sanctions over its refusal to suspend its uranium enrichment program, citing Ali Larijani, Iran’s nuclear negotiator. Iran may use its oil exports as a “weapon,” Larijani said.
Nihon Keizai:
- Japan’s government is discussing countermeasures after China National Offshore Oil Corp. said on Friday it started gas production in the East China Sea near territory claimed by Japan.
Commercial Times:
- AU Optronics(AUO) and Chi Mei Optronics Corp., Taiwan’s two biggest makers of display panels used in televisions, are considering investing in production of solar cells.
Business Standard:
- Starbucks Corp.(SBUX) plans to open outlets in India in 2007.
Weekend Recommendations
Barron's:
- Had positive comments on (IP).
- Had negative comments on (ADM) and (DELL).
Night Trading
Asian indices are -.25% to +.25% on average.
S&P 500 indicated -.07%
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/Estimate
- (AES)/.16
- (AMT)/.02
- (ACF)/.55
- (CPKI)/.29
- (CUZ)/.27
- (EP)/.18
- (FST)/.55
- (FTO)/1.05
- (HANS)/.28
- (FLSH)/.22
- (MVL)/.11
- (MDR)/.53
- (MNT)/.27
- (OSIP)/-.03
- (PCLN)/.50
- (ELOS)/.39
- (WGR)/.61
Upcoming Splits
- None of note
Economic Releases
3:00 pm EST
- Consumer Credit for June is estimated to fall to $3.6 billion versus $4.4 billion in May.
Bloomberg:
- Israel and Hezbollah intensified their attacks as the UN prepared a resolution that US Secretary of State Condoleezza Rice said is a first step to ending fighting in Lebanon now in its fourth week.
- The US and France agreed on a proposed UN Security Council resolution designed to end the fighting between Israel and the militant Islamic group Hezbollah in Lebanon.
- Iran won’t suspend uranium enrichment even after the UN Security Council called for it to do so or face possible sanctions.
- President Bush said comprehensive immigration overhaul must begin with border security and include a guest-worker program and a means for many of the undocumented workers in the US to gain legal status.
- Senator Joe Lieberman, trailing an anti-war challenger in Connecticut’s Democratic primary election race, said his support for President Bush’s decision to liberate Iraq doesn’t mean he’s turned his back on fellow Democrats.
- Crude oil rose after BP Plc shut Alaska’s Prudhoe Bay field, the largest in the US, because it found a pipeline was corroded.
Wall Street Journal:
- DirectTV Group(DTV) and EchoStar Communications(DISH), US satellite tv providers, are gaining few customers as cable companies offer telephone and Internet service.
NY Times:
- New York will require all school children to take a language exam after the federal government ordered it to improve testing of students who speak limited English.
- Adobe Systems(ADBE) is concerned Microsoft Corp.(MSFT) users will be blocked from using its software to create PDF documents, citing CEO Chizen.
EE Times:
- Strong sales of high-definition TVs and other consumer electronics are projected to continue the second half of the year, according to an executive for Sony Electronics Inc.(SNE)
Washington Post:
- Energy-efficient techniques are spreading in commercial real-estate construction and renovation in a bid to control energy costs. Innovations including sun-reflecting ceramic dots in windows, giant vats of ice for overnight energy storage, plant-covered rooftops, bigger eaves and compact fluorescent lighting are being used. Experts say new energy-saving devices, better construction and smarter management can reduce electricity consumption by 20% in older commercial buildings and as much as 50% in new ones.
San Jose Mercury News:
- Venture capital investments in alternative energy start-up companies rose almost 400% in the second quarter from year-ago levels, citing data from research group VentureOne.
Crain’s Chicago Business:
- RR Donnelley & Sons(RRD) CEO Angelson held discussions with a group of buyout firms in recent months.
LA Times Times:
- Steven Spielberg, Jeffrey Katzenberg and Haim Saban are among prominent Democratic donors in Hollywood endorsing Republican California Governor Arnold Schwarzenegger’s re-election bid.
Sunday Times:
- Iran is trying to import uranium from the Democratic Republic of Congo, citing a UN report and unidentified Tanzanian customs officials.
Il Sole/24 Ore:
- The European Central Bank will continue to raise interest rates in coming months as economic growth accelerates, Lorenzo Bini Smaghi, an ECB executive board member said.
Independent:
- Iran will consider “painful” reprisals if the UN imposes sanctions over its refusal to suspend its uranium enrichment program, citing Ali Larijani, Iran’s nuclear negotiator. Iran may use its oil exports as a “weapon,” Larijani said.
Nihon Keizai:
- Japan’s government is discussing countermeasures after China National Offshore Oil Corp. said on Friday it started gas production in the East China Sea near territory claimed by Japan.
Commercial Times:
- AU Optronics(AUO) and Chi Mei Optronics Corp., Taiwan’s two biggest makers of display panels used in televisions, are considering investing in production of solar cells.
Business Standard:
- Starbucks Corp.(SBUX) plans to open outlets in India in 2007.
Weekend Recommendations
Barron's:
- Had positive comments on (IP).
- Had negative comments on (ADM) and (DELL).
Night Trading
Asian indices are -.25% to +.25% on average.
S&P 500 indicated -.07%
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/Estimate
- (AES)/.16
- (AMT)/.02
- (ACF)/.55
- (CPKI)/.29
- (CUZ)/.27
- (EP)/.18
- (FST)/.55
- (FTO)/1.05
- (HANS)/.28
- (FLSH)/.22
- (MVL)/.11
- (MDR)/.53
- (MNT)/.27
- (OSIP)/-.03
- (PCLN)/.50
- (ELOS)/.39
- (WGR)/.61
Upcoming Splits
- None of note
Economic Releases
3:00 pm EST
- Consumer Credit for June is estimated to fall to $3.6 billion versus $4.4 billion in May.
BOTTOM LINE: Asian Indices are mixed as gains in mining stocks are being offset by losses in exporting shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the week.
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