Portfolio Manager's Commentary on Investing and Trading in the U.S. Financial Markets
Wednesday, August 09, 2006
***Alert***
I am unable to post the Wednesday Close due to a scheduling conflict. I finished the day postioned 75% net long. I will post the Thursday Watch later this evening.
Today's Headlines
Bloomberg:
- The Lilly Endowment, the fifth-largest US foundation, and the Wal-Mart(WMT) Foundation, the retailer’s charitable arm, were among the biggest donors to hurricane relief and recovery efforts.
- There are no conspiracy theories or political manifestos in Oliver Stone’s new movie “World Trade Center” that opens this weekend. It is a straightforward, old-fashioned tale of heroism, honor, friendship and family, themes that have brought the film praise.
- Ford Motor’s(F) Americas chief said demand for fuel-efficient vehicles is “more permanent” that the company had expected, prompting last month’s announcement that the company would further revamp North American operations. Ford may invest as much as $1 billion in Michigan to make factories more efficient and fund development of hybrid vehicles.
- Federated Dept. Stores(FD), the second largest US dept. store operator, said second-quarter net income more than doubled.
- Walt Disney(DIS) said third-quarter profit rose 39%, led by revenue gains at theme parks and its cable networks.
- Israel’s security cabinet today approved expanding Israel’s incursion into Lebanon as far north as the Litani River in a bid to stop rockets launched by Hezbollah from the region.
- France plans to open new kinds of accommodations for the homeless as it seeks to cut the growing number of people in tents in the streets of Paris.
- Crude oil is rising after the EIA said US gas and oil inventories fell more than expected.
- Shares of Cisco Systems(CSCO), the world’s biggest maker of computer-networking equipment, rose the most in more than four years after the company forecast full-year sales growth that exceeded analysts’ estimates.
Wall Street Journal:
- AMR’s(AMR) American Airlines, Delta Airlines and Continental Airlines have lowered leisure fares following a similar move by UAL Corp.’s United Airlines on Monday.
- A new US bill awaiting President Bush’s signature would let older taxpayers give up to $100,000 a year tax-free from their IRAs to a charity.
- Cinemark USA agreed to buy a rival movie chain, Century Theatres for an undisclosed price to expand its reach in western states.
- First Reserve Corp., a private-equity firm that buys energy companies, will today give details of a $7.8 billion fund, the largest ever pool for investing in the sector.
- US homes and industry could have a reliable source of power for decades to come if energy companies can find further shale-gas fields, such as Barnett Shale, near Forth Worth, Texas. Barnett Shale was a relatively insignificant field until the companies worked out how to extract gas from the rock. Now the field produces 1.3 billion cubic feet of gas a day, or 2.5% of US natural gas production. There are signs that the success may be repeated.
NY Times:
- The FDA may require medical-device manufactures and hospitals to adopt technology for tracking individual items, much like a 2004 rule for identifying drugs and vaccines.
USA Today:
- About 13% of children age 10-17 said they were sexually solicited on the Internet last year, down from 19% five years ago, citing a survey of 1,500 young people to be released today by the Univ. of New Hampshire.
Chronicle of Higher Education:
- Foreign students admitted to graduate schools in the US increased for the second straight year in 2006-2007 by 12% over the previous year.
- Graduate business study programs in the US saw an increase last school year, continuing a trend toward growth. The starting pay for those earning an MBA degree this year was up 4.2% to $92,360. Businesses said they plan to hire 18% more graduates this year than they did last year.
Tex Report:
- Exports of metallurgical coal from Australia to India in the first four months of the year fell 25% from a year ago.
Financial Times:
- Private-equity firms are being flooded with so much money that returns are almost guaranteed to go down as competition for takeovers boosts costs.
- The Lilly Endowment, the fifth-largest US foundation, and the Wal-Mart(WMT) Foundation, the retailer’s charitable arm, were among the biggest donors to hurricane relief and recovery efforts.
- There are no conspiracy theories or political manifestos in Oliver Stone’s new movie “World Trade Center” that opens this weekend. It is a straightforward, old-fashioned tale of heroism, honor, friendship and family, themes that have brought the film praise.
- Ford Motor’s(F) Americas chief said demand for fuel-efficient vehicles is “more permanent” that the company had expected, prompting last month’s announcement that the company would further revamp North American operations. Ford may invest as much as $1 billion in Michigan to make factories more efficient and fund development of hybrid vehicles.
- Federated Dept. Stores(FD), the second largest US dept. store operator, said second-quarter net income more than doubled.
- Walt Disney(DIS) said third-quarter profit rose 39%, led by revenue gains at theme parks and its cable networks.
- Israel’s security cabinet today approved expanding Israel’s incursion into Lebanon as far north as the Litani River in a bid to stop rockets launched by Hezbollah from the region.
- France plans to open new kinds of accommodations for the homeless as it seeks to cut the growing number of people in tents in the streets of Paris.
- Crude oil is rising after the EIA said US gas and oil inventories fell more than expected.
- Shares of Cisco Systems(CSCO), the world’s biggest maker of computer-networking equipment, rose the most in more than four years after the company forecast full-year sales growth that exceeded analysts’ estimates.
Wall Street Journal:
- AMR’s(AMR) American Airlines, Delta Airlines and Continental Airlines have lowered leisure fares following a similar move by UAL Corp.’s United Airlines on Monday.
- A new US bill awaiting President Bush’s signature would let older taxpayers give up to $100,000 a year tax-free from their IRAs to a charity.
- Cinemark USA agreed to buy a rival movie chain, Century Theatres for an undisclosed price to expand its reach in western states.
- First Reserve Corp., a private-equity firm that buys energy companies, will today give details of a $7.8 billion fund, the largest ever pool for investing in the sector.
- US homes and industry could have a reliable source of power for decades to come if energy companies can find further shale-gas fields, such as Barnett Shale, near Forth Worth, Texas. Barnett Shale was a relatively insignificant field until the companies worked out how to extract gas from the rock. Now the field produces 1.3 billion cubic feet of gas a day, or 2.5% of US natural gas production. There are signs that the success may be repeated.
NY Times:
- The FDA may require medical-device manufactures and hospitals to adopt technology for tracking individual items, much like a 2004 rule for identifying drugs and vaccines.
USA Today:
- About 13% of children age 10-17 said they were sexually solicited on the Internet last year, down from 19% five years ago, citing a survey of 1,500 young people to be released today by the Univ. of New Hampshire.
Chronicle of Higher Education:
- Foreign students admitted to graduate schools in the US increased for the second straight year in 2006-2007 by 12% over the previous year.
- Graduate business study programs in the US saw an increase last school year, continuing a trend toward growth. The starting pay for those earning an MBA degree this year was up 4.2% to $92,360. Businesses said they plan to hire 18% more graduates this year than they did last year.
Tex Report:
- Exports of metallurgical coal from Australia to India in the first four months of the year fell 25% from a year ago.
Financial Times:
- Private-equity firms are being flooded with so much money that returns are almost guaranteed to go down as competition for takeovers boosts costs.
Wholesale Inventories at Record Lows
- Wholesale Inventories for June rose .8% versus estimates of a .6% increase and a .9% gain in May.
BOTTOM LINE: Stockpiles at US wholesalers rose .8% in June and sales increased faster, suggesting companies will need to boost production to keep up with demand, Bloomberg said. The inventory-to-sales ratio fell to an all-time low of 1.14 months in June. Stronger-than-expected inventory rebuilding will likely lead to an upward revision to second quarter US GDP growth. I continue to believe inventory rebuilding will help keep US growth relatively healthy over the intermediate-term.
Wednesday Watch
Late-Night Headlines
Bloomberg:
- The Bank of Japan will probably keep interest rates unchanged this week as the economy’s expansion cools.
- Long-time Democratic Senator Joe Lieberman conceded defeat in the Connecticut Democratic primary, losing to anti-war cable mogul Ned Lamont. Lamont is the great-grandson of legendary JP Morgan Chairman Thomas W. Lamont. Lieberman said he intended to file papers to run as an independent in the November general election.
- Roger Goodell, who started as an intern at NFL headquarters and rose to chief operating officer, was named commissioner in a vote by the league’s 32 owners.
- The US dollar strengthened against the euro and yen as the US Fed suggested it may increase interest rates again after keeping them on hold for the first time in two years.
AP:
- Sprint Nextel(S) mobile phones will be able to play radio broadcasts of Major League Baseball games under an agreement with Major League Baseball Advanced Media LP that will be announced tomorrow.
China Daily:
- China’s passenger car sales growth slowed to 5.4% in July as consumers postponed buying new models to wait for discounts, citing the China Assoc. of Auto Manufacturers’ spokeswoman.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (CSCO), target $26.
Morgan Stanley:
- Reiterated Overweight on (CSCO), target $26.
Night Trading
Asian Indices are -1.0% to unch. on average.
S&P 500 indicated +.02%.
NASDAQ 100 indicated +.34%.
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
- (ACS)/.79
- (AIG)/1.39
- (RMK)/.36
- (CD)/.34
- (CTRP)/.21
- (DYN)/-.06
- (FD)/.44
- (FWLT)/.41
- (HB)/.72
- (HGSI)/-.46
- (IPG)/.02
- (KG)/.39
- (TWPG)/.21
- (VIA)/.44
- (DIS)/.44
- (WMS)/.31
Upcoming Splits
- (PCAR) 3-for-2
Economic Releases
10:00 am EST
- Wholesale Inventories for June are estimated to rise .6% versus a .8% increase in May.
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude drawdown of 1,000,000 barrels. Gasoline supplies are expected to fall 1,000,000 barrels. Distillate inventories are estimated to rise by 700,000 barrels. Finally, Refinery Utilization is estimated to rise .33%.
Bloomberg:
- The Bank of Japan will probably keep interest rates unchanged this week as the economy’s expansion cools.
- Long-time Democratic Senator Joe Lieberman conceded defeat in the Connecticut Democratic primary, losing to anti-war cable mogul Ned Lamont. Lamont is the great-grandson of legendary JP Morgan Chairman Thomas W. Lamont. Lieberman said he intended to file papers to run as an independent in the November general election.
- Roger Goodell, who started as an intern at NFL headquarters and rose to chief operating officer, was named commissioner in a vote by the league’s 32 owners.
- The US dollar strengthened against the euro and yen as the US Fed suggested it may increase interest rates again after keeping them on hold for the first time in two years.
AP:
- Sprint Nextel(S) mobile phones will be able to play radio broadcasts of Major League Baseball games under an agreement with Major League Baseball Advanced Media LP that will be announced tomorrow.
China Daily:
- China’s passenger car sales growth slowed to 5.4% in July as consumers postponed buying new models to wait for discounts, citing the China Assoc. of Auto Manufacturers’ spokeswoman.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (CSCO), target $26.
Morgan Stanley:
- Reiterated Overweight on (CSCO), target $26.
Night Trading
Asian Indices are -1.0% to unch. on average.
S&P 500 indicated +.02%.
NASDAQ 100 indicated +.34%.
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
- (ACS)/.79
- (AIG)/1.39
- (RMK)/.36
- (CD)/.34
- (CTRP)/.21
- (DYN)/-.06
- (FD)/.44
- (FWLT)/.41
- (HB)/.72
- (HGSI)/-.46
- (IPG)/.02
- (KG)/.39
- (TWPG)/.21
- (VIA)/.44
- (DIS)/.44
- (WMS)/.31
Upcoming Splits
- (PCAR) 3-for-2
Economic Releases
10:00 am EST
- Wholesale Inventories for June are estimated to rise .6% versus a .8% increase in May.
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude drawdown of 1,000,000 barrels. Gasoline supplies are expected to fall 1,000,000 barrels. Distillate inventories are estimated to rise by 700,000 barrels. Finally, Refinery Utilization is estimated to rise .33%.
BOTTOM LINE: Asian indices are mostly lower, pressured by commodity 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.
Tuesday, August 08, 2006
Stocks Finish Lower on Profit-taking after Fed Leaves Rates Unchanged
Indices
S&P 500 1,271.48 -.34%
DJIA 11,173.59 -.41%
NASDAQ 2,060.85 -.56%
Russell 2000 687.47 -1.23%
Wilshire 5000 12,702.11 -.45%
S&P Barra Growth 585.88 -.24%
S&P Barra Value 684.20 -.43%
Morgan Stanley Consumer 618.80 +.02%
Morgan Stanley Cyclical 784.58 -.90%
Morgan Stanley Technology 462.83 -.31%
Transports 4,287.82 -.66%
Utilities 433.44 +.71%
Put/Call .95 +10.47%
NYSE Arms 1.37 +35.25%
Volatility(VIX) 15.23 unch.
ISE Sentiment 116.00 -4.13%
US Dollar 84.83 +.11%
CRB 350.73 -.35%
Futures Spot Prices
Crude Oil 76.31 -.87%
Unleaded Gasoline 222.63 -1.12%
Natural Gas 7.16 +3.63%
Heating Oil 211.64 -1.26%
Gold 653.00 -.65%
Base Metals 230.67 +.09%
Copper 357.75 -.68%
10-year US Treasury Yield 4.91% -.04%
Leading Sectors
Utilities +.71%
Foods +.14%
Broadcasting +.07%
Lagging Sectors
Coal -2.18%
Disk Drives -2.33%
Homebuilders -2.47%
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
Think Equity:
- Rated (VPRT) Buy, target $31.
Afternoon/Evening Headlines
Bloomberg:
- The Federal Reserve kept the benchmark US interest rate at 5.25%, ending a record two-year run of increases while leaving room for further moves should inflation accelerate.
- Futures trades pared bets that the Fed will boost its overnight lending rate between banks by year-end after the central bank ended its streak of 17 consecutive increases.
- Cisco Systems(CSCO) said fourth-quarter profit was unchanged as stock-option costs countered the company’s fastest sales growth in two years. The stock rose 10% after-hours on the report.
- News Corp.(NWS/A) said fiscal fourth-quarter profit rose 19%, driven by blockbusters including the latest “X-Men” movie and revenue from cable-tv networks.
- Barr Pharmaceuticals(BRL) said US regulators told the company they would act quickly on a revised application to see its “morning after” contraceptive pill without a prescription.
- Bill Gross, CEO at PIMCO and manager of the world’s biggest bond fund, said the Fed has finished raising interest rates this economic cycle.
- Crude oil fell on speculation that US stockpiles are sufficient to make up for supply disruptions caused by the shutdown of Alaska’s Prudhoe Bay oil field.
Australian:
- Australia will increase its military presence in Afghanistan starting next month to counter the threat from Taliban forces in the south of the country.
S&P 500 1,271.48 -.34%
DJIA 11,173.59 -.41%
NASDAQ 2,060.85 -.56%
Russell 2000 687.47 -1.23%
Wilshire 5000 12,702.11 -.45%
S&P Barra Growth 585.88 -.24%
S&P Barra Value 684.20 -.43%
Morgan Stanley Consumer 618.80 +.02%
Morgan Stanley Cyclical 784.58 -.90%
Morgan Stanley Technology 462.83 -.31%
Transports 4,287.82 -.66%
Utilities 433.44 +.71%
Put/Call .95 +10.47%
NYSE Arms 1.37 +35.25%
Volatility(VIX) 15.23 unch.
ISE Sentiment 116.00 -4.13%
US Dollar 84.83 +.11%
CRB 350.73 -.35%
Futures Spot Prices
Crude Oil 76.31 -.87%
Unleaded Gasoline 222.63 -1.12%
Natural Gas 7.16 +3.63%
Heating Oil 211.64 -1.26%
Gold 653.00 -.65%
Base Metals 230.67 +.09%
Copper 357.75 -.68%
10-year US Treasury Yield 4.91% -.04%
Leading Sectors
Utilities +.71%
Foods +.14%
Broadcasting +.07%
Lagging Sectors
Coal -2.18%
Disk Drives -2.33%
Homebuilders -2.47%
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
Think Equity:
- Rated (VPRT) Buy, target $31.
Afternoon/Evening Headlines
Bloomberg:
- The Federal Reserve kept the benchmark US interest rate at 5.25%, ending a record two-year run of increases while leaving room for further moves should inflation accelerate.
- Futures trades pared bets that the Fed will boost its overnight lending rate between banks by year-end after the central bank ended its streak of 17 consecutive increases.
- Cisco Systems(CSCO) said fourth-quarter profit was unchanged as stock-option costs countered the company’s fastest sales growth in two years. The stock rose 10% after-hours on the report.
- News Corp.(NWS/A) said fiscal fourth-quarter profit rose 19%, driven by blockbusters including the latest “X-Men” movie and revenue from cable-tv networks.
- Barr Pharmaceuticals(BRL) said US regulators told the company they would act quickly on a revised application to see its “morning after” contraceptive pill without a prescription.
- Bill Gross, CEO at PIMCO and manager of the world’s biggest bond fund, said the Fed has finished raising interest rates this economic cycle.
- Crude oil fell on speculation that US stockpiles are sufficient to make up for supply disruptions caused by the shutdown of Alaska’s Prudhoe Bay oil field.
Australian:
- Australia will increase its military presence in Afghanistan starting next month to counter the threat from Taliban forces in the south of the country.
BOTTOM LINE: The Portfolio finished slightly lower today on losses in my Retail longs and Computer longs. I did not trade in the final hour, thus leaving the Portfolio 100% net long. The tone of the market was negative today as the advance/decline line finished lower, sector performance was mostly negative and volume was about average. Measures of investor anxiety were mostly higher into the close. Overall, today's market performance was mildly bearish. Homebuilders and Retail were especially weak as investors continue to anticipate a hard-landing in consumer spending despite few signs that this is occurring. The 10-year maintained recent gains despite dovish Fed talk, which is a positive. Moreover, a number of market leading stocks were higher today despite broad market weakness. I expect equities to perform better later this week as investors reposition their portfolios to reflect today's positive developments.
Subscribe to:
Posts (Atom)