BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Semi longs, Computer longs and Commodity shorts. I added to my (BBY), (AAPL) and (UARM) longs and to my (IWM)/(QQQQ) hedges today, thus leaving the Portfolio 75% net long. The tone of the market is slightly positive as the advance/decline line is modestly higher, most sectors are rising and volume is below average. Many market-leading stocks are giving back too much of today’s gains. I want to see better price action before further shifting market exposure. I expect US stocks to trade mixed into the close from current levels as lower energy prices offset higher long-term rates.
Monday, August 14, 2006
Stocks Modestly Higher into Final Hour as Energy Prices Continue Recent Decline
Today's Headlines
Bloomberg:
- Gold in NY fell for the third straight session as lower energy costs reduced the appeal of the precious metal as a hedge against inflation.
- Crude oil fell and gasoline tumbled to a three-month lower after BP Plc(BP) dropped plans to shut the largest US oil field and a cease-fire began in Lebanon.
- Wall Street bonuses will jump 15% this year, with investment bankers and equities traders reaping the rewards of rising stock markets and record mergers and initial share sales.
- Israel said it was calling back some troops from southern Lebanon after its military and Hezbollah stopped fighting in compliance with a UN-brokered cease-fire.
Wall Street Journal:
- The Bush administration has approved new Cuban immigration rules to make it easier for people from the island to rejoin their families in the US.
- The US Transportation Security Administration is testing an Israeli-developed sensor that measures biometric responses for blood pressure, pulse and sweat levels to determine if someone may be a security risk.
- The shares of many re-insurers are trading at low multiples of the companies’ forecast profits and could be a good bet, since fears of another record storm season may well prove unfounded.
- Barclays Global Advisors and PowerShares Capital Management LLC both plan exchange-traded funds that would track preferred shares.
NY Times:
- Verizon Communications(VZ) plans to spend $3 billion to build a fiber optic phone, broadband Internet and video network for NYC’s 3.1 million homes and apartments. Verizon plans to spend about $20 billion by the end of the decade to extend its network to 16 million homes from Florida to California.
NY Daily News:
- IAC/InteractiveCorp’s(IACI) Home Shopping Network is offering a “Shop-By-Remote” service that will enable viewers to make purchases by using their cable TV remote control.
Financial Times:
- Cazenove Capital Management aims to raise as much as $142 million in an IPO of shares of a fund of hedge funds.
Fars:
- The volume of Iran’s trade with Venezuela will increase eightfold to $8 billion a year.
- Gold in NY fell for the third straight session as lower energy costs reduced the appeal of the precious metal as a hedge against inflation.
- Crude oil fell and gasoline tumbled to a three-month lower after BP Plc(BP) dropped plans to shut the largest US oil field and a cease-fire began in Lebanon.
- Wall Street bonuses will jump 15% this year, with investment bankers and equities traders reaping the rewards of rising stock markets and record mergers and initial share sales.
- Israel said it was calling back some troops from southern Lebanon after its military and Hezbollah stopped fighting in compliance with a UN-brokered cease-fire.
Wall Street Journal:
- The Bush administration has approved new Cuban immigration rules to make it easier for people from the island to rejoin their families in the US.
- The US Transportation Security Administration is testing an Israeli-developed sensor that measures biometric responses for blood pressure, pulse and sweat levels to determine if someone may be a security risk.
- The shares of many re-insurers are trading at low multiples of the companies’ forecast profits and could be a good bet, since fears of another record storm season may well prove unfounded.
- Barclays Global Advisors and PowerShares Capital Management LLC both plan exchange-traded funds that would track preferred shares.
NY Times:
- Verizon Communications(VZ) plans to spend $3 billion to build a fiber optic phone, broadband Internet and video network for NYC’s 3.1 million homes and apartments. Verizon plans to spend about $20 billion by the end of the decade to extend its network to 16 million homes from Florida to California.
NY Daily News:
- IAC/InteractiveCorp’s(IACI) Home Shopping Network is offering a “Shop-By-Remote” service that will enable viewers to make purchases by using their cable TV remote control.
Financial Times:
- Cazenove Capital Management aims to raise as much as $142 million in an IPO of shares of a fund of hedge funds.
Fars:
- The volume of Iran’s trade with Venezuela will increase eightfold to $8 billion a year.
Sunday, August 13, 2006
Monday Watch
Weekend Headlines
Bloomberg:
- Israel today, endorsed a UN resolution to call a cease-fire with Hezbollah, while intensifying its offensive in southern Lebanon to weaken Hezbollah’s ability to fire rockets across the border.
- The UK downgraded the threat of terrorism against the country from the highest level, four days after police foiled an alleged plot to blow up passenger planes.
- BP Plc(BP) will keep pumping the western half of the Prudhoe Bay oil field in Alaska while it replaces corroded pipe on the eastern half.
- Cuban leader Fidel Castro is walking around his hospital room and is talking “buoyantly” two weeks after a surgery for intestinal bleeding, Cuba’s official newspaper Granma said, citing a friend of Castro’s it declined to name.
- UK airlines canceled as many as a third of their flights today and called for the army to be deployed at airports, as Home Secretary John Reid warned the threat of more terror attacks was “very substantial.”
- Investors may gain more from bets on price swings in US Treasuries, Japanese and German government bonds in the next two years than gold and copper, according to the company running the world’s best-performing commodity fund.
- The world’s biggest bond fund managers say US Treasuries will return more than European government debt for the first time in four years.
- Crude oil fell in NY after BP Plc said it will keep half the Prudhoe Bay field in Alaska open and as a cease-fire nears between Israeli and Iranian-backed Hezbollah forces in Lebanon.
Wall Street Journal:
- Small and mid-sized businesses in Silicon Valley have stepped up hiring, reversing a trend that saw the California technology hub lose one in five jobs from 2001 to 2005.
Barron’s:
- An inverted yield curve may be due to contained inflation, low risk premiums or supply-and-demand concerns, rather than a harbinger of recession, author Burton Malkiel wrote.
NY Times:
- Zalmay Khalilzad, the US ambassador to Iraq, blamed Iran for fomenting violence in Iraq by pushing Shiite Muslim militias to attack US-led forces.
Washington Post:
- Connecticut Democrat Ned Lamont, who beat the incumbent Democratic Senator Joe Lieberman in the recent primary, is turning to party veterans and Washington-based groups that tend to support Democrats, such as labor unions, for backing as the November election looms.
Business 2.0:
- TopGolf transforms the typical driving range. The UK-based outfit has created a high-tech family entertainment center that’s bringing new customers onto the links.
Detroit Free Press:
- Three men were arrested in Caro, Michigan, yesterday on terrorism charges after purchasing 80 prepaid cell phones, which can be difficult for authorities to track.
Chicago Tribune:
- Mills Corp.(MLS), the owner of shopping centers in the US, Canada and Europe, agreed to sell some office and residential units to Golub & Co. for an undisclosed price.
Financial Times:
- Barclays Bank Plc and Goldman Sachs(GS) are among the companies that are benefiting from growth in quantitative investing. Three of the 10 biggest hedge funds in the world are purely quantitative and critics say this type of investing only works with companies that have accounting characteristics easily measured by computers.
Business:
- Oil companies are planning to spend $2.4 billion on drilling wells in the UK’s North Sea in the next two years, citing consultant Hannon Westwood.
Sunday Times:
- Harrah’s Entertainment(HET) is considering bidding for Stanley Leisure Plc and London Clubs Intl. Plc, two British casino companies that are in talks to complete a $634 million merger.
Observer:
- UK police are investigating two dozen terrorist groups, which may include people associated with an alleged plot to blow up passenger planes uncovered last week.
Shanghai Securities News:
- China may need to raise interest rates further to cool investment and economic growth.
- Overseas institutions licensed to invest in China’s local-currency shares cut their stock holdings by 36% in the second quarter from the previous month.
South China Morning Post:
- China Petroleum & Chemical Corp., Asia’s biggest refiner, will lead a five-member venture with China National Coal Group to build a $2.6 billion clean-fuel project in China.
Xinhua News:
- Chinese Vice Premier Zeng Peiyan urged local authorities to carry out the central government’s macro-economic control policies to ensure sustainable economic growth.
Bild am Sonntag:
- The people arrested in connection with a plot to blow up airliners traveling from the UK and the US had ties to Germany.
Weekend Recommendations
Barron's:
- Had positive comments on (CSCO), (WFMI) and (MOT).
Night Trading
Asian indices are +.50% to +1.0% on average.
S&P 500 indicated +.35%
NASDAQ 100 indicated +.33%.
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
- (A)/.41
- (HEW)/.32
- (NTES)/.27
- (PBY)/.02
- (SYY)/.42
Upcoming Splits
- (RAI) 2-for-1
- (CSX) 2-for-1
- (GRMN) 2-for-1
- (GISX) 2-for-1
- (OXY) 2-for-1
Economic Releases
- None of note
Bloomberg:
- Israel today, endorsed a UN resolution to call a cease-fire with Hezbollah, while intensifying its offensive in southern Lebanon to weaken Hezbollah’s ability to fire rockets across the border.
- The UK downgraded the threat of terrorism against the country from the highest level, four days after police foiled an alleged plot to blow up passenger planes.
- BP Plc(BP) will keep pumping the western half of the Prudhoe Bay oil field in Alaska while it replaces corroded pipe on the eastern half.
- Cuban leader Fidel Castro is walking around his hospital room and is talking “buoyantly” two weeks after a surgery for intestinal bleeding, Cuba’s official newspaper Granma said, citing a friend of Castro’s it declined to name.
- UK airlines canceled as many as a third of their flights today and called for the army to be deployed at airports, as Home Secretary John Reid warned the threat of more terror attacks was “very substantial.”
- Investors may gain more from bets on price swings in US Treasuries, Japanese and German government bonds in the next two years than gold and copper, according to the company running the world’s best-performing commodity fund.
- The world’s biggest bond fund managers say US Treasuries will return more than European government debt for the first time in four years.
- Crude oil fell in NY after BP Plc said it will keep half the Prudhoe Bay field in Alaska open and as a cease-fire nears between Israeli and Iranian-backed Hezbollah forces in Lebanon.
Wall Street Journal:
- Small and mid-sized businesses in Silicon Valley have stepped up hiring, reversing a trend that saw the California technology hub lose one in five jobs from 2001 to 2005.
Barron’s:
- An inverted yield curve may be due to contained inflation, low risk premiums or supply-and-demand concerns, rather than a harbinger of recession, author Burton Malkiel wrote.
NY Times:
- Zalmay Khalilzad, the US ambassador to Iraq, blamed Iran for fomenting violence in Iraq by pushing Shiite Muslim militias to attack US-led forces.
Washington Post:
- Connecticut Democrat Ned Lamont, who beat the incumbent Democratic Senator Joe Lieberman in the recent primary, is turning to party veterans and Washington-based groups that tend to support Democrats, such as labor unions, for backing as the November election looms.
Business 2.0:
- TopGolf transforms the typical driving range. The UK-based outfit has created a high-tech family entertainment center that’s bringing new customers onto the links.
Detroit Free Press:
- Three men were arrested in Caro, Michigan, yesterday on terrorism charges after purchasing 80 prepaid cell phones, which can be difficult for authorities to track.
Chicago Tribune:
- Mills Corp.(MLS), the owner of shopping centers in the US, Canada and Europe, agreed to sell some office and residential units to Golub & Co. for an undisclosed price.
Financial Times:
- Barclays Bank Plc and Goldman Sachs(GS) are among the companies that are benefiting from growth in quantitative investing. Three of the 10 biggest hedge funds in the world are purely quantitative and critics say this type of investing only works with companies that have accounting characteristics easily measured by computers.
Business:
- Oil companies are planning to spend $2.4 billion on drilling wells in the UK’s North Sea in the next two years, citing consultant Hannon Westwood.
Sunday Times:
- Harrah’s Entertainment(HET) is considering bidding for Stanley Leisure Plc and London Clubs Intl. Plc, two British casino companies that are in talks to complete a $634 million merger.
Observer:
- UK police are investigating two dozen terrorist groups, which may include people associated with an alleged plot to blow up passenger planes uncovered last week.
Shanghai Securities News:
- China may need to raise interest rates further to cool investment and economic growth.
- Overseas institutions licensed to invest in China’s local-currency shares cut their stock holdings by 36% in the second quarter from the previous month.
South China Morning Post:
- China Petroleum & Chemical Corp., Asia’s biggest refiner, will lead a five-member venture with China National Coal Group to build a $2.6 billion clean-fuel project in China.
Xinhua News:
- Chinese Vice Premier Zeng Peiyan urged local authorities to carry out the central government’s macro-economic control policies to ensure sustainable economic growth.
Bild am Sonntag:
- The people arrested in connection with a plot to blow up airliners traveling from the UK and the US had ties to Germany.
Weekend Recommendations
Barron's:
- Had positive comments on (CSCO), (WFMI) and (MOT).
Night Trading
Asian indices are +.50% to +1.0% on average.
S&P 500 indicated +.35%
NASDAQ 100 indicated +.33%.
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
- (A)/.41
- (HEW)/.32
- (NTES)/.27
- (PBY)/.02
- (SYY)/.42
Upcoming Splits
- (RAI) 2-for-1
- (CSX) 2-for-1
- (GRMN) 2-for-1
- (GISX) 2-for-1
- (OXY) 2-for-1
Economic Releases
- None of note
BOTTOM LINE: Asian Indices are higher, boosted by exporting shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon. The Portfolio is 75% net long heading into the week.
Weekly Outlook
Click here for The Week Ahead by Reuters
There are a number of economic reports of note and several significant corporate earnings reports scheduled for release this week.
Economic reports for the week include:
Mon. - None of note
Tues. - Producer Price Index, Empire Manufacturing, Net Foreign Security Purchases, NAHB Housing Market Index
Wed. - Consumer Price Index, Housing Starts, Building Permits, Industrial Production, Capacity Utilization
Thur. - Initial Jobless Claims, Leading Indicators, Philly Fed
Fri. - Univ. of Mich. Consumer Confidence
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - Agilent Tech(A), Hewitt Assoc.(HEW), Netease.com(NTES), Sysco Corp.(SYY)
Tues. - Abercrombie & Fitch(ANF), American Eagle Outfitters(AEOS), Applied Materials(AMAT), Barr Pharma(BRL), BJ’s Wholesale(BJ), Deere & Co.(DE), Dick’s Sporting Goods(DKS), Fossil Inc.(FOSL), Harman Intl.(HAR), Home Depot(HD), PetSmart(PETM), Saks Inc.(SKS), Staples Inc.(SPLS), TJX Cos(TJX), Wal-Mart Stores(WMT)
Wed. - BEA Systems(BEAS), Caci Intl.(CACI), Estee Lauder(EL), Hewlett-Packard(HPQ), Longs Drug Stores(LDG), Men’s Wearhouse(MW), Network Appliance(NTAP), Ross Stores(ROST), Salesforce.com(CRM), Synopsys Inc.(SNPS), Talbots(TLB)
Thur. - Aeropostale(ARO), Autodesk(ADSK), Barnes & Noble(BKS), Bebe Stores(BEBE), Children’s Place(PLCE), Dell Inc.(DELL), Foot Locker(FL), GameStop(GME), Gap Inc.(GPS), Limited Brands(LTD), Marvell Tech(MRVL), Nordstrom Inc.(JWN), Royal Gold(RGLD), Sears Holdings(SHLD)
Fri. - AnnTaylor(ANN), Dillard’s(DDS)
Other events that have market-moving potential this week include:
Mon. - Keefe, Bruyette Large Cap Bank Conference
Tue. - CSFB Networking/Communications Equip./Optical Components Conference, Keefe Bruyette Large Cap Bank Conference
Wed. - CSFB Networking/Communications Equip./Optical Components Conference
Thur. - None of note
Fri. - None of note
There are a number of economic reports of note and several significant corporate earnings reports scheduled for release this week.
Economic reports for the week include:
Mon. - None of note
Tues. - Producer Price Index, Empire Manufacturing, Net Foreign Security Purchases, NAHB Housing Market Index
Wed. - Consumer Price Index, Housing Starts, Building Permits, Industrial Production, Capacity Utilization
Thur. - Initial Jobless Claims, Leading Indicators, Philly Fed
Fri. - Univ. of Mich. Consumer Confidence
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - Agilent Tech(A), Hewitt Assoc.(HEW), Netease.com(NTES), Sysco Corp.(SYY)
Tues. - Abercrombie & Fitch(ANF), American Eagle Outfitters(AEOS), Applied Materials(AMAT), Barr Pharma(BRL), BJ’s Wholesale(BJ), Deere & Co.(DE), Dick’s Sporting Goods(DKS), Fossil Inc.(FOSL), Harman Intl.(HAR), Home Depot(HD), PetSmart(PETM), Saks Inc.(SKS), Staples Inc.(SPLS), TJX Cos(TJX), Wal-Mart Stores(WMT)
Wed. - BEA Systems(BEAS), Caci Intl.(CACI), Estee Lauder(EL), Hewlett-Packard(HPQ), Longs Drug Stores(LDG), Men’s Wearhouse(MW), Network Appliance(NTAP), Ross Stores(ROST), Salesforce.com(CRM), Synopsys Inc.(SNPS), Talbots(TLB)
Thur. - Aeropostale(ARO), Autodesk(ADSK), Barnes & Noble(BKS), Bebe Stores(BEBE), Children’s Place(PLCE), Dell Inc.(DELL), Foot Locker(FL), GameStop(GME), Gap Inc.(GPS), Limited Brands(LTD), Marvell Tech(MRVL), Nordstrom Inc.(JWN), Royal Gold(RGLD), Sears Holdings(SHLD)
Fri. - AnnTaylor(ANN), Dillard’s(DDS)
Other events that have market-moving potential this week include:
Mon. - Keefe, Bruyette Large Cap Bank Conference
Tue. - CSFB Networking/Communications Equip./Optical Components Conference, Keefe Bruyette Large Cap Bank Conference
Wed. - CSFB Networking/Communications Equip./Optical Components Conference
Thur. - None of note
Fri. - None of note
BOTTOM LINE: I expect US stocks to finish the week mixed as calming Middle Eastern tensions, short-covering and bargain hunting offset worries over slowing economic growth and terrorism. My trading indicators are now giving mostly bearish signals and the Portfolio is 75% net long heading into the week.
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