BOTTOM LINE: Confidence among US consumers fell more than forecast in August as Americans paid higher prices at the pump, Bloomberg said. The expectations component of the index fell to 64.5 versus 72.5 the prior month. The current conditions component fell to 100.8 from 103.5 the prior month. I continue to believe consumer confidence will make new cycle highs over the intermediate-term as stocks rise, energy prices fall, inflation decelerates, the job market remains healthy, housing stabilizes, interest rates remain low and irrational pessimism lifts.
Friday, August 18, 2006
Consumer Confidence Falls
- Preliminary Univ. of Mich. Consumer Confidence for August fell to 78.7 versus estimates of 83.8 and 84.7 in July.
Thursday, August 17, 2006
Friday Watch
Late-Night Headlines
Bloomberg:
- A diesel glut in Asia, the result of falling imports by China, Australia and Indonesia, may ease as traders including Morgan Stanly and Vitol Group ship the fuel to Europe and the US.
- The yuan dropped, erasing a weekly gain, on speculation China is allowing wider swings in the currency to deter traders betting on faster appreaciation.
Financial Times:
- US regulators are investigating possible price manipulation at the Chicago Mercantile Exchange’s(CME) daily cheddar cheese auction, which sets the benchmark price for the multi-billion dairy industry.
Apple Daily:
- Microsoft(MSFT) has asked computer makers including Acer Inc. to pay $5 to $7 for each upgrade of consumers’ operating systems to Windows Vista.
Late Buy/Sell Recommendations
Smith Barney:
- Rated (SUG) Buy, target $31.
Night Trading
Asian Indices are -.25% to +.25% on average.
S&P 500 indicated -.05%.
NASDAQ 100 indicated -.17%.
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
- (ANN)/.45
- (SJM)/.58
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- The Preliminary Univ. of Mich. Consumer Confidence reading for August is estimated to fall to 83.8 versus 84.7 in July.
Bloomberg:
- A diesel glut in Asia, the result of falling imports by China, Australia and Indonesia, may ease as traders including Morgan Stanly and Vitol Group ship the fuel to Europe and the US.
- The yuan dropped, erasing a weekly gain, on speculation China is allowing wider swings in the currency to deter traders betting on faster appreaciation.
Financial Times:
- US regulators are investigating possible price manipulation at the Chicago Mercantile Exchange’s(CME) daily cheddar cheese auction, which sets the benchmark price for the multi-billion dairy industry.
Apple Daily:
- Microsoft(MSFT) has asked computer makers including Acer Inc. to pay $5 to $7 for each upgrade of consumers’ operating systems to Windows Vista.
Late Buy/Sell Recommendations
Smith Barney:
- Rated (SUG) Buy, target $31.
Night Trading
Asian Indices are -.25% to +.25% on average.
S&P 500 indicated -.05%.
NASDAQ 100 indicated -.17%.
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
- (ANN)/.45
- (SJM)/.58
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- The Preliminary Univ. of Mich. Consumer Confidence reading for August is estimated to fall to 83.8 versus 84.7 in July.
BOTTOM LINE: Asian indices are mixed as gains in technology stocks are offsetting losses in commodity stocks in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.
Stocks Finish Slightly Higher on Continuing Energy Price Decline
Indices
S&P 500 1,297.48 +.16%
DJIA 11,334.96 +.07%
NASDAQ 2,157.61 +.38%
Russell 2000 710.78 +.48%
Wilshire 5000 12,970.29 +.16%
S&P Barra Growth 600.19 +.22%
S&P Barra Value 695.55 +.10%
Morgan Stanley Consumer 630.39 -.01%
Morgan Stanley Cyclical 802.96 -.29%
Morgan Stanley Technology 499.65 +.31%
Transports 4,403.38 -.40%
Utilities 432.59 -.32%
Put/Call .75 unch.
NYSE Arms .98 +19.38%
Volatility(VIX) 12.24 -1.37%
ISE Sentiment 104.0 -28.28%
US Dollar 85.04 +.19%
CRB 331.69 -1.73%
Futures Spot Prices
Crude Oil 70.06 -2.55%
Unleaded Gasoline 193.16 -2.35%
Natural Gas 6.69 -1.14%
Heating Oil 196.50 -2.57%
Gold 623.60 -.27%
Base Metals 223.03 -3.85%
Copper 331.60 +.03%
10-year US Treasury Yield 4.86% +.08%
Leading Sectors
I-Banks +1.40%
Restaurants +1.28%
Software +1.27%
Lagging Sectors
Oil Service -1.76%
Steel -1.84%
Gold & Silver -2.04%
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
Oppenheimer:
- Rated (MORN) Buy, target $42.
Afternoon/Evening Headlines
Bloomberg:
- China and Russia said they would oppose a US and British bid to send almost 21,000 UN troops to the Darfur region of Sudan because the government in Khartoum rejects the mission.
- Time Warner(TWX) said it will restate financial results back to 2000 after an independent examiner found improper accounting related to advertising revenue.
- Fed Chairman Bernanke’s gamble that he can suspend interest rate increases on the chance inflation will recede is showing signs of paying off.
- A federal judge ruled that Altria’s(MO) Philip Morris USA and other US cigarette makers violated anti-racketeering laws by marketing low-tar cigarettes as healthier alternatives to full-flavored brands.
- Dell(DELL) reported a slump in second-quarter profit after slashing prices and said the SEC is investigating its accounting.
Valor Economico:
- The Sao Paulo Stock Exchange picked Goldman Sachs Group(GS) to manage its IPO.
Sueddeutsche Zeitung:
- Partly-assembled suitcase bombs found in Germany on a train near Dortmund and at Koblenz rail station on July 31 were probably planted by terrorists.
AP:
- Two bottles of liquid in luggage that prompted authorities to evacuate a West Virginia airport terminal tested positive for explosives.
Chronicle of Charity:
- President Bush today signed into law a bill designed to stimulate charitable giving and curb abuses.
S&P 500 1,297.48 +.16%
DJIA 11,334.96 +.07%
NASDAQ 2,157.61 +.38%
Russell 2000 710.78 +.48%
Wilshire 5000 12,970.29 +.16%
S&P Barra Growth 600.19 +.22%
S&P Barra Value 695.55 +.10%
Morgan Stanley Consumer 630.39 -.01%
Morgan Stanley Cyclical 802.96 -.29%
Morgan Stanley Technology 499.65 +.31%
Transports 4,403.38 -.40%
Utilities 432.59 -.32%
Put/Call .75 unch.
NYSE Arms .98 +19.38%
Volatility(VIX) 12.24 -1.37%
ISE Sentiment 104.0 -28.28%
US Dollar 85.04 +.19%
CRB 331.69 -1.73%
Futures Spot Prices
Crude Oil 70.06 -2.55%
Unleaded Gasoline 193.16 -2.35%
Natural Gas 6.69 -1.14%
Heating Oil 196.50 -2.57%
Gold 623.60 -.27%
Base Metals 223.03 -3.85%
Copper 331.60 +.03%
10-year US Treasury Yield 4.86% +.08%
Leading Sectors
I-Banks +1.40%
Restaurants +1.28%
Software +1.27%
Lagging Sectors
Oil Service -1.76%
Steel -1.84%
Gold & Silver -2.04%
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
Oppenheimer:
- Rated (MORN) Buy, target $42.
Afternoon/Evening Headlines
Bloomberg:
- China and Russia said they would oppose a US and British bid to send almost 21,000 UN troops to the Darfur region of Sudan because the government in Khartoum rejects the mission.
- Time Warner(TWX) said it will restate financial results back to 2000 after an independent examiner found improper accounting related to advertising revenue.
- Fed Chairman Bernanke’s gamble that he can suspend interest rate increases on the chance inflation will recede is showing signs of paying off.
- A federal judge ruled that Altria’s(MO) Philip Morris USA and other US cigarette makers violated anti-racketeering laws by marketing low-tar cigarettes as healthier alternatives to full-flavored brands.
- Dell(DELL) reported a slump in second-quarter profit after slashing prices and said the SEC is investigating its accounting.
Valor Economico:
- The Sao Paulo Stock Exchange picked Goldman Sachs Group(GS) to manage its IPO.
Sueddeutsche Zeitung:
- Partly-assembled suitcase bombs found in Germany on a train near Dortmund and at Koblenz rail station on July 31 were probably planted by terrorists.
AP:
- Two bottles of liquid in luggage that prompted authorities to evacuate a West Virginia airport terminal tested positive for explosives.
Chronicle of Charity:
- President Bush today signed into law a bill designed to stimulate charitable giving and curb abuses.
BOTTOM LINE: The Portfolio finished higher today on gains in my Networking longs and Commodity shorts. I did not trade in the final hour, thus leaving the Portfolio 100% net long. The tone of the market was positive again today as the advance/decline line finished higher, most sectors rose and volume was above average. Measures of investor anxiety were mostly higher into the close. Overall, today's market performance was bullish. The bears were unable to gain downside traction despite the sell-off in commodity stocks and terrorism fears. This is a positive as most rotations are accompanied by broad market weakness. The 10-year held recent gains despite mixed talk from Fisher and a strong Philly Fed. The ISE Sentiment Index plunged 25% today to 109, a depressed level, which is also a positive. I suspect the weakness in commodities will soon be accompanied by another round of "imminent recession" talk. I strongly disagree with this assessment of why commodities are falling.
Stocks Mixed into Final Hour as Falling Commodity Shares Offset Gains Elsewhere
BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Networking longs and Commodity shorts. I added (BHP) short and added to a few existing longs today, 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 above average. Copper is breaking down today, falling another 3%. It has declined 17.6% since its high in May. Inventories at the London Metal Exchange, while still historically low, have surged 346% from lows seen in July 2005. Copper is priced as though a shortage is imminent. I suspect this entrenched belief is in the early stages of reversing. U.S. housing construction, which had been a huge source of demand, is slowing substantially. Substitution is also occurring. China's government has stated numerous times they would like construction in major cities completed by late this year in preparation for the Olympics. As well, as I said yesterday, it looks as though China's central government is finally getting serious about slowing its runaway growth. I think futures traders are beginning to anticipate copper inventories moving much higher over the intermediate term. I suspect copper prices have already put in place a major top. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, bargain-hunting and declining energy prices.
Today's Headlines
Bloomberg:
- President Bush signed into law with much fanfare today a measure revamping the US private pension system that also makes the first of his tax cuts permanent.
- A federal judge ordered the US government to stop wiretapping international telephone calls between suspected terrorists and their US-based affiliates without court warrants.
- Robert Merton, the Nobel Prize-winning economist and co-founder of defunct hedge fund Long-Term Capital Management, shut down his new firm’s latest fund after three months because it didn’t raise enough money.
- Crude oil in NY fell and gasoline dropped to a four-month low on decreased motor-fuel demand as the summer driving season ends.
- Gold prices in NY fell to a three-week low as falling energy costs eroded the appeal of the metal as a hedge against inflation.
- Connecticut Democratic Senator Joe Lieberman has a 12 percentage point lead over Democratic primary winner Ned Lamont in a three-way race with Lieberman running as an independent.
Wall Street Journal:
- Terracom, a company run by a US tech entrepreneur, is building a high-tech Internet service in strife-ridden Rwanda.
- Dell’s(DELL) recall of 4.1 million laptop batteries may prompt buyers to turn to Hewlett-Packard(HPQ) and other computer makers during the summer selling season.
- The New York Board of Trade futures marketplace has been approached by potential acquirers including CBOT Holdings, owner of the Chicago Board of Trade; Intercontinental Exchange; and the NY Merc.
- US companies are borrowing more money than they have for several years, to fund leveraged buyouts and acquisitions, rising capital spending and bigger dividends and share buybacks.
- US cable-tv companies may have to carry out network upgrades if they’re to stay abreast of competitors in the high-speed Internet business, according to a report by Cable Labs.
- Powerline adapters made my Netgear, Linksys Group and Belkin Components offer a simple and inexpensive way to route Internet connections around households over regular electrical power lines.
NY Times:
- Wal-Mart Stores(WMT), the largest private employer in the US, has become a target of Democrats running for national office. Senators including Hillary Clinton, Joseph Biden, John Edwards and Evan Bayh have denounced the retailer.
- Carl Icahn said yesterday that he planned to create a special fund to buy more Time Warner(TWX) stock.
- Mobile dentistry in corporate parking lots is a growing industry in the Western US.
- The US Transport Security Administration wants to add to its ranks of behavior screeners at airports.
- More white couples in the US adopted black children in 2004 compared with 1998, citing an analysis of data from the National Data Archive on Child Abuse and Neglect.
- Forensic scientists from around the world are evaluating bones, clothes, identity papers and spent bullet cases exhumed from mass Iraqi graves in an effort to reconstruct the final moments of Saddam Hussein’s victims.
Chronicle of Higher Education:
- Former US presidents George Bush and Bill Clinton have joined forces with the United Negro College Fund to raise money for historically black institutions damaged by Hurricane Katrina.
Hospodarske Noviny:
- The Czech Republic’s output of wind-generated electricity may grow as much as 2000% in the next 4 years, after the country adopted incentives for investment.
Le Monde:
- France plans to send only a symbolic contribution to the expanded UN peacekeeping force in Lebanon, prompting UN concerns that this may send a negative signal to other potential participants.
Bild Zeitung:
- A growing number of Germans are living off state welfare payments. Some 41.5% of the country’s 39 million households receive welfare.
Xinhua News Agency:
- China’s State Council today imposed the first sanctions on local leaders for ignoring polices aimed at cooling the economy.
- President Bush signed into law with much fanfare today a measure revamping the US private pension system that also makes the first of his tax cuts permanent.
- A federal judge ordered the US government to stop wiretapping international telephone calls between suspected terrorists and their US-based affiliates without court warrants.
- Robert Merton, the Nobel Prize-winning economist and co-founder of defunct hedge fund Long-Term Capital Management, shut down his new firm’s latest fund after three months because it didn’t raise enough money.
- Crude oil in NY fell and gasoline dropped to a four-month low on decreased motor-fuel demand as the summer driving season ends.
- Gold prices in NY fell to a three-week low as falling energy costs eroded the appeal of the metal as a hedge against inflation.
- Connecticut Democratic Senator Joe Lieberman has a 12 percentage point lead over Democratic primary winner Ned Lamont in a three-way race with Lieberman running as an independent.
Wall Street Journal:
- Terracom, a company run by a US tech entrepreneur, is building a high-tech Internet service in strife-ridden Rwanda.
- Dell’s(DELL) recall of 4.1 million laptop batteries may prompt buyers to turn to Hewlett-Packard(HPQ) and other computer makers during the summer selling season.
- The New York Board of Trade futures marketplace has been approached by potential acquirers including CBOT Holdings, owner of the Chicago Board of Trade; Intercontinental Exchange; and the NY Merc.
- US companies are borrowing more money than they have for several years, to fund leveraged buyouts and acquisitions, rising capital spending and bigger dividends and share buybacks.
- US cable-tv companies may have to carry out network upgrades if they’re to stay abreast of competitors in the high-speed Internet business, according to a report by Cable Labs.
- Powerline adapters made my Netgear, Linksys Group and Belkin Components offer a simple and inexpensive way to route Internet connections around households over regular electrical power lines.
NY Times:
- Wal-Mart Stores(WMT), the largest private employer in the US, has become a target of Democrats running for national office. Senators including Hillary Clinton, Joseph Biden, John Edwards and Evan Bayh have denounced the retailer.
- Carl Icahn said yesterday that he planned to create a special fund to buy more Time Warner(TWX) stock.
- Mobile dentistry in corporate parking lots is a growing industry in the Western US.
- The US Transport Security Administration wants to add to its ranks of behavior screeners at airports.
- More white couples in the US adopted black children in 2004 compared with 1998, citing an analysis of data from the National Data Archive on Child Abuse and Neglect.
- Forensic scientists from around the world are evaluating bones, clothes, identity papers and spent bullet cases exhumed from mass Iraqi graves in an effort to reconstruct the final moments of Saddam Hussein’s victims.
Chronicle of Higher Education:
- Former US presidents George Bush and Bill Clinton have joined forces with the United Negro College Fund to raise money for historically black institutions damaged by Hurricane Katrina.
Hospodarske Noviny:
- The Czech Republic’s output of wind-generated electricity may grow as much as 2000% in the next 4 years, after the country adopted incentives for investment.
Le Monde:
- France plans to send only a symbolic contribution to the expanded UN peacekeeping force in Lebanon, prompting UN concerns that this may send a negative signal to other potential participants.
Bild Zeitung:
- A growing number of Germans are living off state welfare payments. Some 41.5% of the country’s 39 million households receive welfare.
Xinhua News Agency:
- China’s State Council today imposed the first sanctions on local leaders for ignoring polices aimed at cooling the economy.
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