BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Computer longs, Semi longs and Commodity shorts. I took profits in some of my (EEM) short and covered my (QQQQ)/(IWM) hedges today, thus leaving the Portfolio 100% net long. The tone of the market is slightly negative as the advance/decline line is modestly lower, sector performance is mixed and volume is above average. Briefing.com is reporting that Wal-Mart's (WMT) CEO is saying that he is "very pleased" with the back-to-school selling season. I continue to believe most retailers will exceed holiday estimates as the effects of mortgage resets are vastly overestimated, pessimism dissipates, the labor market remains healthy, energy prices fall, long-term rates remain low and stocks rise. I expect US stocks to trade modestly higher into the close from current levels on bargain hunting, short covering and declining energy prices.
Thursday, September 07, 2006
Stocks Modestly Lower into Final Hour on Growth Worries
Today's Headlines
- Crude oil is falling to a five-month low after an EIA report showed that US oil inventories are higher than a year ago.
- Facebook, the college friend-finder Web site that competes with News Corp.’s MySpace.com, is encountering rising opposition from its members to new features that track changes made to profiles pages.
- NY developer Larry Silverstein’s plans for the World Trade center site include the construction of three of the city’s four tallest buildings, including the planned 1,776-foot Freedom Tower.
- The Nasdaq Stock Market(NDAQ) plans to expand into options trading, entering a market that’s growing more than twice as fast as equities.
- Stanley Fink, who build Man Group Plc into the world’s largest publicly traded hedge-fund manager, is stepping down as CEO after almost two decades at the company and as returns in the industry decline.
Wall Street Journal:
- Clear Channel Communications(CCU) is to provide real-time traffic information free to US customers who buy BMW’s 2007 models with a satellite navigation system.
- Wal-Mart Stores(WMT) began diversifying merchandise in different outlets in an effort to boost sales by catering to different local demographics groups.
- ESPN Inc. and apparel maker VF Corp. plan a sportswear line that will go on sale this month.
- BlackBerry’s new Pearl model offers video, camera, music and e-mail designed to appeal to consumers who want a device with all the bells and whistles.
- Some investors are withdrawing money from index funds that track hedge funds, having noticed that they tend to lag.
NY Times:
- Members of the Clinton Administration, including ex-Secretary of State Madeline Albright, sent letters to Walt Disney(DIS) complaining about an upcoming TV movie on the 9/11 terrorist attacks that depicts Clinton administration as preventing efforts to find Osama bin Laden.
AP:
- H&R Block(HRB) will offer bank accounts to customers who need to electronically deposit their income tax refunds.
Washington Post:
- Dunkin’ Donuts, a doughnut chain with 4,400 stores, is moving into new markets while chasing the coffee-drinking customers of Starbucks(SBUX).
China Coal News:
- China’s raw coal production in August rose 8.8% to 193.4 million metric tons as generators added capacity.
AFP:
- Iraq’s Prime Minister Nuri al-Maliki signed an agreement today with the US Army that put Iraq’s military back under control of the government.
- Facebook, the college friend-finder Web site that competes with News Corp.’s MySpace.com, is encountering rising opposition from its members to new features that track changes made to profiles pages.
- NY developer Larry Silverstein’s plans for the World Trade center site include the construction of three of the city’s four tallest buildings, including the planned 1,776-foot Freedom Tower.
- The Nasdaq Stock Market(NDAQ) plans to expand into options trading, entering a market that’s growing more than twice as fast as equities.
- Stanley Fink, who build Man Group Plc into the world’s largest publicly traded hedge-fund manager, is stepping down as CEO after almost two decades at the company and as returns in the industry decline.
Wall Street Journal:
- Clear Channel Communications(CCU) is to provide real-time traffic information free to US customers who buy BMW’s 2007 models with a satellite navigation system.
- Wal-Mart Stores(WMT) began diversifying merchandise in different outlets in an effort to boost sales by catering to different local demographics groups.
- ESPN Inc. and apparel maker VF Corp. plan a sportswear line that will go on sale this month.
- BlackBerry’s new Pearl model offers video, camera, music and e-mail designed to appeal to consumers who want a device with all the bells and whistles.
- Some investors are withdrawing money from index funds that track hedge funds, having noticed that they tend to lag.
NY Times:
- Members of the Clinton Administration, including ex-Secretary of State Madeline Albright, sent letters to Walt Disney(DIS) complaining about an upcoming TV movie on the 9/11 terrorist attacks that depicts Clinton administration as preventing efforts to find Osama bin Laden.
AP:
- H&R Block(HRB) will offer bank accounts to customers who need to electronically deposit their income tax refunds.
Washington Post:
- Dunkin’ Donuts, a doughnut chain with 4,400 stores, is moving into new markets while chasing the coffee-drinking customers of Starbucks(SBUX).
China Coal News:
- China’s raw coal production in August rose 8.8% to 193.4 million metric tons as generators added capacity.
AFP:
- Iraq’s Prime Minister Nuri al-Maliki signed an agreement today with the US Army that put Iraq’s military back under control of the government.
Job Market Remains Healthy, Inventories Still at Record Lows
- Initial Jobless Claims for last week fell to 310K versus estimates of 315K and 319K the prior week.
- Continuing Claims rose to 2492K versus estimates of 2483K and 2477K prior.
- Wholesale Inventories for July rose .8% versus estimates of a .6% increase and a .8% gain in June.
- Continuing Claims rose to 2492K versus estimates of 2483K and 2477K prior.
- Wholesale Inventories for July rose .8% versus estimates of a .6% increase and a .8% gain in June.
BOTTOM LINE: The number of Americans seeking unemployment benefits for the first time fell to the lowest in more than a month, signaling the labor market remains healthy, Bloomberg reported. The four-week average of jobless claims fell to 315,250 versus 318,250 the prior week. The unemployment rate among those eligible for benefits, which tracks the US unemployment rate, held steady at 1.9%. Job cut announcements by US businesses fell 24% in August from year-ago levels, according to a recent report by Challenger, Gray & Christmas. I continue to believe the labor market will remain healthy over the intermediate-term without generating substantial unit labor cost increases.
Inventories at US wholesalers increased twice as fast as sales in July, Bloomberg reported. Sales rose .4% versus a 1.2% gain the prior month. The inventory-to-sales ratio remained at an all-time low of 1.15 months. I continue to believe inventory rebuilding will add to economic growth as companies gain confidence in the durability of the current expansion.
Wednesday, September 06, 2006
Thursday Watch
Late-Night Headlines
Bloomberg:
- Crude oil traded near a five-month low in NY amid above average US supplies and less speculation of a significant production disruption.
- Merck & Co.’s(MRK) special investigation on the 2004 withdrawal of its Vioxx painkiller concluded that company scientists and managers “acted with integrity” in studying the drug’s potential heart risks. Former federal judge John Martin Jr. released a 1,700-page report saying Merck adequately studied red flags before the drug’s launch in May 1999.
- KB Home(KBH) reduced its earnings forecast, saying a decline in new orders will cause profit to fall in fiscal 2006 as higher mortgage rates crimped demand.
- South Korea’s central bank left its benchmark interest rate unchanged at a five-year high, following banks in the US, Europe and Australia in signaling that slowing growth is a greater concern than inflation.
- Florida’s Anibal Sanchez pitched a no-hitter in a 2-0 win over the Arizona Diamondbacks, the first in Major League Baseball in more than two years.
Financial Times:
- European Union regulations are being implemented too rigorously, imposing higher costs on small UK businesses and preventing them from hiring new staff, citing a survey conducted by the UK government’s Foreign Policy Centre.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (CSCO), target $26.
Night Trading
Asian Indices are -1.25% to -.25% on average.
S&P 500 indicated -.08%.
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
- (COO)/.74
- (JOSB)/.35
- (KFY)/.29
- (NSM)/.32
- (ZQK)/.04
- (SHFL)/.24
- (UTIW)/.24
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- Initial Jobless Claims for last week are estimated to fall to 315K versus 316K the prior week.
- Continuing Claims are estimated to fall to 2483K versus 2486K prior.
10:00 am EST
- Wholesale Inventories for July are estimated to rise .6% versus a .8% gain in June.
Bloomberg:
- Crude oil traded near a five-month low in NY amid above average US supplies and less speculation of a significant production disruption.
- Merck & Co.’s(MRK) special investigation on the 2004 withdrawal of its Vioxx painkiller concluded that company scientists and managers “acted with integrity” in studying the drug’s potential heart risks. Former federal judge John Martin Jr. released a 1,700-page report saying Merck adequately studied red flags before the drug’s launch in May 1999.
- KB Home(KBH) reduced its earnings forecast, saying a decline in new orders will cause profit to fall in fiscal 2006 as higher mortgage rates crimped demand.
- South Korea’s central bank left its benchmark interest rate unchanged at a five-year high, following banks in the US, Europe and Australia in signaling that slowing growth is a greater concern than inflation.
- Florida’s Anibal Sanchez pitched a no-hitter in a 2-0 win over the Arizona Diamondbacks, the first in Major League Baseball in more than two years.
Financial Times:
- European Union regulations are being implemented too rigorously, imposing higher costs on small UK businesses and preventing them from hiring new staff, citing a survey conducted by the UK government’s Foreign Policy Centre.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (CSCO), target $26.
Night Trading
Asian Indices are -1.25% to -.25% on average.
S&P 500 indicated -.08%.
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
- (COO)/.74
- (JOSB)/.35
- (KFY)/.29
- (NSM)/.32
- (ZQK)/.04
- (SHFL)/.24
- (UTIW)/.24
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- Initial Jobless Claims for last week are estimated to fall to 315K versus 316K the prior week.
- Continuing Claims are estimated to fall to 2483K versus 2486K prior.
10:00 am EST
- Wholesale Inventories for July are estimated to rise .6% versus a .8% gain in June.
BOTTOM LINE: Asian indices are lower, weighed down by commodity stocks in the region. I expect US equities to open modestly lower and to maintain losses into the afternoon. The Portfolio is 75% net long heading into the day.
Stocks Finish Near Session Lows on Profit-taking
Indices
S&P 1,300.26 -.99%
DJIA 11,406.20 -.55%
NASDAQ 2,167.84 -1.72%
Russell 2000 712.04 -2.13%
Wilshire 5000 13,000.45 -1.14%
S&P Barra Growth 603.23 -1.04%
S&P Barra Value 695.04 -.94%
Morgan Stanley Consumer 642.96 -.39%
Morgan Stanley Cyclical 808.05 -1.03%
Morgan Stanley Technology 501.75 -2.22%
Transports 4,229.93 -1.76%
Utilities 434.73 -.77%
Put/Call 1.26 +29.90%
NYSE Arms 1.22 +46.15%
Volatility(VIX) 13.74 +8.79%
ISE Sentiment 102.00 +47.83%
US Dollar 85.13 +.15%
CRB 325.43 -.50%
Futures Spot Prices
Crude Oil 67.72 -1.28%
Unleaded Gasoline 164.90 +.15%
Natural Gas 5.95 -1.32%
Heating Oil 191.25 -1.23%
Gold 640.80 -.16%
Base Metals 236.40 +.57%
Copper 365.00 -.80%
10-year US Treasury Yield 4.79% +.29%
Leading Sectors
Foods -.15%
Banks -.18%
REITs -.41%
Lagging Sectors
Energy -3.3%
Alternative Energy -3.5%
Oil Service -3.85%
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 (ADPI) Buy, target $20.
- Rated (MSCS) Buy, target $21.
Afternoon/Evening Headlines
Bloomberg:
- Crude oil fell to the lowest close in five months as speculators continued to cut bets on an impending production disruption.
- Home Depot(HD) said federal prosecutors requested information regarding its stock options practices.
- NY Attorney General Eliot Spitzer has dropped “key charges” against former American International Group(AIG) CEO Greenberg.
S&P 1,300.26 -.99%
DJIA 11,406.20 -.55%
NASDAQ 2,167.84 -1.72%
Russell 2000 712.04 -2.13%
Wilshire 5000 13,000.45 -1.14%
S&P Barra Growth 603.23 -1.04%
S&P Barra Value 695.04 -.94%
Morgan Stanley Consumer 642.96 -.39%
Morgan Stanley Cyclical 808.05 -1.03%
Morgan Stanley Technology 501.75 -2.22%
Transports 4,229.93 -1.76%
Utilities 434.73 -.77%
Put/Call 1.26 +29.90%
NYSE Arms 1.22 +46.15%
Volatility(VIX) 13.74 +8.79%
ISE Sentiment 102.00 +47.83%
US Dollar 85.13 +.15%
CRB 325.43 -.50%
Futures Spot Prices
Crude Oil 67.72 -1.28%
Unleaded Gasoline 164.90 +.15%
Natural Gas 5.95 -1.32%
Heating Oil 191.25 -1.23%
Gold 640.80 -.16%
Base Metals 236.40 +.57%
Copper 365.00 -.80%
10-year US Treasury Yield 4.79% +.29%
Leading Sectors
Foods -.15%
Banks -.18%
REITs -.41%
Lagging Sectors
Energy -3.3%
Alternative Energy -3.5%
Oil Service -3.85%
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 (ADPI) Buy, target $20.
- Rated (MSCS) Buy, target $21.
Afternoon/Evening Headlines
Bloomberg:
- Crude oil fell to the lowest close in five months as speculators continued to cut bets on an impending production disruption.
- Home Depot(HD) said federal prosecutors requested information regarding its stock options practices.
- NY Attorney General Eliot Spitzer has dropped “key charges” against former American International Group(AIG) CEO Greenberg.
BOTTOM LINE: The Portfolio finished lower today on losses in my Semi longs, Computer longs and Retail longs. I added to my (EEM) short and added (IWM)/(QQQQ) hedges in the final hour, thus leaving the Portfolio 75% net long. The tone of the market was very negative today as the advance/decline line finished substantially lower, every sector declined and volume was about average. Measures of investor anxiety were mostly higher into the close. Overall, today's market performance was bearish. The 10-year yield is finished near session lows at 4.79% on growth worries and falling commodity prices. I still see little evidence of a substantial slowdown in economic activity even as this continues to be factored into stock prices. Today's losses were mainly the result of profit-taking and buyer's apprehension ahead of what everyone believes will be a weak month for stocks.
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