BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Retail longs, Biotech longs and Commodity shorts. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is higher, almost every sector is rising and volume is very light. I continue to believe declining commodity prices, which have been the main source of inflation angst, are a function of a speculative mania ending and not the result of a significant decline in demand. I view the breakdown in the CRB Index as a huge positive for the broad market that will result in P/E multiple expansion. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering and lower energy prices.
Monday, August 28, 2006
Stocks Higher into Final Hour on Falling Energy Prices
Today's Headlines
Bloomberg:
- Google today will start offering customizable e-mail and calendar software to businesses and universities in a bid to lure more corporate customers and develop new sources of revenue.
- EBay(EBAY) chose Google(GOOG) to run advertising on its Web sites outside the US to tap a larger share of global online advertising market.
- Kinder Morgan(KMI) accepted an increased offer of $15 billion from a group led by Richard Kinder, the former Enron executive.
- Iran’s President Ahmadinejad told German Chancellor Merkel that the Nazi Holocaust may be an “excuse” by the nations that won World War II to keep Germans “ashamed.”
- US Bankruptcy filings fell to the lowest level in five years. Full-year 2006 filings will be the fewest since 1986.
- Crude oil fell more than $2/bbl. and natural gas plunged 10% as Tropical Storm Ernesto veered away from oil- and gas-producing areas in the Gulf of Mexico that were damaged by Hurricane Katrina a year ago.
Wall Street Journal:
- Royal Dutch Shell Plc and Chevron(CVX) are set to begin tests to extract oil from the US Rocky Mountains as high oil prices spur unconventional new methods of oil extraction.
- CBS Corp.(CBS) is to install “glueless” posters, projectors, light boxes and flat-paneled television screens in a $3 billion outdoor advertising contract with the London Underground as the industry adapts to new technology and intense competition.
- Foreign companies selling shares in IPOs on US exchanges have raised $5.85 billion so far this year, the highest year-to-date amount since the tech bubble burst in 2000, citing Dealogic Holdings.
- Terex is benefiting from a shortage in the large tires needed for mining trucks, citing the CEO.
- The NYSE’s plans to lift limits on the amount of stock traded electronically at the exchange may sideline trading floor specialists and brokers and hurt profit.
- UN Security Council Resolution 1701 failed to address the kidnapping of the two Israeli soldiers that caused fighting to break out between Israel and Lebanon, the parents of slain hostage Daniel Pearl wrote.
Washington Post:
- Biometric identification cards, containing information such as fingerprints and retinal scans, will be issued to US government employees in October to increase security.
NY Daily News:
- The recently discovered terrorist plot in London has created opportunities for bargain travel.
Star-Ledger:
- New Jersey taxes under the state’s new budget increased 5% over 2005, the most in the US.
L’Orient le Jour:
- 51% of Lebanese want Hezbollah to lay down its arms, citing an opinion poll by Ipsos SA.
- Google today will start offering customizable e-mail and calendar software to businesses and universities in a bid to lure more corporate customers and develop new sources of revenue.
- EBay(EBAY) chose Google(GOOG) to run advertising on its Web sites outside the US to tap a larger share of global online advertising market.
- Kinder Morgan(KMI) accepted an increased offer of $15 billion from a group led by Richard Kinder, the former Enron executive.
- Iran’s President Ahmadinejad told German Chancellor Merkel that the Nazi Holocaust may be an “excuse” by the nations that won World War II to keep Germans “ashamed.”
- US Bankruptcy filings fell to the lowest level in five years. Full-year 2006 filings will be the fewest since 1986.
- Crude oil fell more than $2/bbl. and natural gas plunged 10% as Tropical Storm Ernesto veered away from oil- and gas-producing areas in the Gulf of Mexico that were damaged by Hurricane Katrina a year ago.
Wall Street Journal:
- Royal Dutch Shell Plc and Chevron(CVX) are set to begin tests to extract oil from the US Rocky Mountains as high oil prices spur unconventional new methods of oil extraction.
- CBS Corp.(CBS) is to install “glueless” posters, projectors, light boxes and flat-paneled television screens in a $3 billion outdoor advertising contract with the London Underground as the industry adapts to new technology and intense competition.
- Foreign companies selling shares in IPOs on US exchanges have raised $5.85 billion so far this year, the highest year-to-date amount since the tech bubble burst in 2000, citing Dealogic Holdings.
- Terex is benefiting from a shortage in the large tires needed for mining trucks, citing the CEO.
- The NYSE’s plans to lift limits on the amount of stock traded electronically at the exchange may sideline trading floor specialists and brokers and hurt profit.
- UN Security Council Resolution 1701 failed to address the kidnapping of the two Israeli soldiers that caused fighting to break out between Israel and Lebanon, the parents of slain hostage Daniel Pearl wrote.
Washington Post:
- Biometric identification cards, containing information such as fingerprints and retinal scans, will be issued to US government employees in October to increase security.
NY Daily News:
- The recently discovered terrorist plot in London has created opportunities for bargain travel.
Star-Ledger:
- New Jersey taxes under the state’s new budget increased 5% over 2005, the most in the US.
L’Orient le Jour:
- 51% of Lebanese want Hezbollah to lay down its arms, citing an opinion poll by Ipsos SA.
Sunday, August 27, 2006
Monday Watch
Weekend Headlines
Bloomberg:
- The average US gasoline pump price fell 15.5 cents in the past two weeks to $2.87/gallaon as inventory of the fuel rose, Trilby Lundberg said, citing her survey of about 7,000 filling stations nationwide.
- Two Fox News journalists were freed in the Gaza Strip today after being kidnapped two weeks ago by a Palestinian group that demanded the release of Muslims held in US prisons.
- A Delta Air Lines Comair commuter plane crashed shortly after takeoff at Blue Grass Airport in Lexington, Kentucky, killing 49 and critically injuring one.
- Florida ordered the mandatory evacuation today of visitors in the Florida Keys as Tropical Storm Ernesto tracked toward the state from the Carribean.
- Energy companies have only evacuated some non-essential staff from platforms in the Gulf of Mexico as projections show Tropical Storm Ernesto moving away from the main offshore oil and gas producing regions.
- Hedge funds and other speculators are wagering more than ever on a continuing rally in US Treasuries.
- Gold’s appeal is fading as a slowing global economy and lower oil prices ease inflation concerns.
- FedEx(FDX) and the union for its pilots reached a tentative contract agreement after almost 30 months of talks.
- The dollar gained against the euro and yen this week as traders said bets against the US currency grew excessive.
- Wal-Mart Stores(WMT) said August same-store sales in the US rose about 2.7%, which bettered last month’s 2.4% gain. The company had forecast an increase of 1-3%.
Barron’s:
- Dell(DELL) plans to spend $150 million to improve its customer service.
NY Times:
- Sybase Inc.(SY) CEO Chen wants the company’s wireless business to have as much annual revenue as its database-software unit in three to five years, or about $500 million.
- US schools this year will have about 55 million students, the most in the nation’s history, amid an influx of immigrants similar to the early 20th century.
Business Week:
- Housing: The Roof Won’t Collapse on the US Economy
Detroit News:
- Ford Motor(F) is considering selling a “significant” stake in its Ford Credit finance unit.
InfoWorld:
- SAP’s CEO sees huge overcapacity being generated in China and an economic downturn there in 2008.
Sueddeutsche Zeitung:
- Electronic Arts(ERTS) is seeking to buy German rivals to boost its market share, citing the company’s Germany CEO.
Berliner Zeitung:
- A planned tax increase will act as a “major brake” on Germany’s economic expansion next year, just as the economy shows signs of recovering, citing Gustav Horn, chief economist at the IMK economic research institute.
Emirates Today:
- Monster.com, the job-listing service operated by Monster Worldwide(MNST), expects to increase 500% the number of listings on its new Gulf portal this year.
Al-Ahram:
- Hezbollah and Israel will swap prisoners within two to three weeks in an arrangement orchestrated by Germany.
Handelsblatt:
- Rio Tinto Group(RTP) CEO Clifford expects commodity prices to drop.
Commercial Times:
- AU Optronics(AUO) expects demand for its liquid-crystal displays to rise in the fourth quarter, citing company chairman KY Lee. Production lines at AU are running at capacity on lower inventories and rising orders for LCDs used in televisions.
Weekend Recommendations
Barron's:
- Had positive comments on (WRNC), (CTX), (TOL), (LEN), (KBH), (HOT), (HLT), (CBS), (ANAD) and (PHM).
Night Trading
Asian indices are -.50% to +.25% on average.
S&P 500 indicated -.02%
NASDAQ 100 indicated -.02%.
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
- (CAE)/.80
Upcoming Splits
- None of note
Economic Releases
- None of note
Bloomberg:
- The average US gasoline pump price fell 15.5 cents in the past two weeks to $2.87/gallaon as inventory of the fuel rose, Trilby Lundberg said, citing her survey of about 7,000 filling stations nationwide.
- Two Fox News journalists were freed in the Gaza Strip today after being kidnapped two weeks ago by a Palestinian group that demanded the release of Muslims held in US prisons.
- A Delta Air Lines Comair commuter plane crashed shortly after takeoff at Blue Grass Airport in Lexington, Kentucky, killing 49 and critically injuring one.
- Florida ordered the mandatory evacuation today of visitors in the Florida Keys as Tropical Storm Ernesto tracked toward the state from the Carribean.
- Energy companies have only evacuated some non-essential staff from platforms in the Gulf of Mexico as projections show Tropical Storm Ernesto moving away from the main offshore oil and gas producing regions.
- Hedge funds and other speculators are wagering more than ever on a continuing rally in US Treasuries.
- Gold’s appeal is fading as a slowing global economy and lower oil prices ease inflation concerns.
- FedEx(FDX) and the union for its pilots reached a tentative contract agreement after almost 30 months of talks.
- The dollar gained against the euro and yen this week as traders said bets against the US currency grew excessive.
- Wal-Mart Stores(WMT) said August same-store sales in the US rose about 2.7%, which bettered last month’s 2.4% gain. The company had forecast an increase of 1-3%.
Barron’s:
- Dell(DELL) plans to spend $150 million to improve its customer service.
NY Times:
- Sybase Inc.(SY) CEO Chen wants the company’s wireless business to have as much annual revenue as its database-software unit in three to five years, or about $500 million.
- US schools this year will have about 55 million students, the most in the nation’s history, amid an influx of immigrants similar to the early 20th century.
Business Week:
- Housing: The Roof Won’t Collapse on the US Economy
Detroit News:
- Ford Motor(F) is considering selling a “significant” stake in its Ford Credit finance unit.
InfoWorld:
- SAP’s CEO sees huge overcapacity being generated in China and an economic downturn there in 2008.
Sueddeutsche Zeitung:
- Electronic Arts(ERTS) is seeking to buy German rivals to boost its market share, citing the company’s Germany CEO.
Berliner Zeitung:
- A planned tax increase will act as a “major brake” on Germany’s economic expansion next year, just as the economy shows signs of recovering, citing Gustav Horn, chief economist at the IMK economic research institute.
Emirates Today:
- Monster.com, the job-listing service operated by Monster Worldwide(MNST), expects to increase 500% the number of listings on its new Gulf portal this year.
Al-Ahram:
- Hezbollah and Israel will swap prisoners within two to three weeks in an arrangement orchestrated by Germany.
Handelsblatt:
- Rio Tinto Group(RTP) CEO Clifford expects commodity prices to drop.
Commercial Times:
- AU Optronics(AUO) expects demand for its liquid-crystal displays to rise in the fourth quarter, citing company chairman KY Lee. Production lines at AU are running at capacity on lower inventories and rising orders for LCDs used in televisions.
Weekend Recommendations
Barron's:
- Had positive comments on (WRNC), (CTX), (TOL), (LEN), (KBH), (HOT), (HLT), (CBS), (ANAD) and (PHM).
Night Trading
Asian indices are -.50% to +.25% on average.
S&P 500 indicated -.02%
NASDAQ 100 indicated -.02%.
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
- (CAE)/.80
Upcoming Splits
- None of note
Economic Releases
- None of note
BOTTOM LINE: Asian Indices are mostly lower, weighed down by commodity and technology shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% 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 a few significant corporate earnings reports scheduled for release this week.
Economic reports for the week include:
Mon. - None of note
Tues. - Consumer Confidence, Minutes of Aug. 8 FOMC Meeting
Wed. - ADP Employment Change, Preliminary 2Q GDP, Preliminary 2Q GDP Price Index, Preliminary Personal Consumption, Preliminary Core PCE
Thur. - Personal Income, Personal Spending, PCE Deflator, PCE Core, Initial Jobless Claims, Help Wanted Index, Chicago Purchasing Manager, Factory Orders
Fri. - Change in Non-farm Payrolls, Unemployment Rate, Avg. Hourly Earnings, Univ. of Mich. Consumer Confidence, Construction Spending, ISM Manufacturing, ISM Prices Paid, Pending Home Sales, Total Vehicle Sales
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - BISYS Group(BSG), Cascade(CAE)
Tues. - ADC Telecom(ADCT), Dycom Industries(DY), FuelCell(FCEL), Micros Systems(MCRS), Novell(NOVL), Semtech(SMTC)
Wed. - JDS Uniphase(JDSU), Tivo Inc.(TIVO), United Natural Foods(UNFI)
Thur. - Brown-Forman(BF/A), Cheesecake Factory(CAKE), Ciena Corp.(CIEN), Del Monte(DLM), Dollar General(DG), H&R Block(HRB), HJ Heinz(HNZ), Joy Global(JOYG), Nvidia Corp.(NVDA), Omnivision Tech(OVTI), Tiffany(TIF), Wind River(DRIV), Zale Corp.(ZLC)
Fri. - Corinthian Colleges(COCO), Vimpelcom(VIP)
Other events that have market-moving potential this week include:
Mon. - None of note
Tue. - Fed’s Fisher speaks
Wed. - Fed’s Fisher speaks
Thur. - Fed’s Bernanke speaks
Fri. - pre-Labor day: Financial & Bond markets early close
There are a number of economic reports of note and a few significant corporate earnings reports scheduled for release this week.
Economic reports for the week include:
Mon. - None of note
Tues. - Consumer Confidence, Minutes of Aug. 8 FOMC Meeting
Wed. - ADP Employment Change, Preliminary 2Q GDP, Preliminary 2Q GDP Price Index, Preliminary Personal Consumption, Preliminary Core PCE
Thur. - Personal Income, Personal Spending, PCE Deflator, PCE Core, Initial Jobless Claims, Help Wanted Index, Chicago Purchasing Manager, Factory Orders
Fri. - Change in Non-farm Payrolls, Unemployment Rate, Avg. Hourly Earnings, Univ. of Mich. Consumer Confidence, Construction Spending, ISM Manufacturing, ISM Prices Paid, Pending Home Sales, Total Vehicle Sales
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - BISYS Group(BSG), Cascade(CAE)
Tues. - ADC Telecom(ADCT), Dycom Industries(DY), FuelCell(FCEL), Micros Systems(MCRS), Novell(NOVL), Semtech(SMTC)
Wed. - JDS Uniphase(JDSU), Tivo Inc.(TIVO), United Natural Foods(UNFI)
Thur. - Brown-Forman(BF/A), Cheesecake Factory(CAKE), Ciena Corp.(CIEN), Del Monte(DLM), Dollar General(DG), H&R Block(HRB), HJ Heinz(HNZ), Joy Global(JOYG), Nvidia Corp.(NVDA), Omnivision Tech(OVTI), Tiffany(TIF), Wind River(DRIV), Zale Corp.(ZLC)
Fri. - Corinthian Colleges(COCO), Vimpelcom(VIP)
Other events that have market-moving potential this week include:
Mon. - None of note
Tue. - Fed’s Fisher speaks
Wed. - Fed’s Fisher speaks
Thur. - Fed’s Bernanke speaks
Fri. - pre-Labor day: Financial & Bond markets early close
BOTTOM LINE: I expect US stocks to finish the week modestly higher on short-covering, lower energy prices and mostly positive economic data. My trading indicators are still giving bullish signals and the Portfolio is 100% net long heading into the week.
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