BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Biotech longs, Retail longs and Commodity shorts. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is slightly negative as the advance/decline line is lower, sector performance is mixed and volume is above average. The rise in gold has helped pump air into the current “negativity bubble.” An ad from a local commodity broker just aired. It spoke of bird flu, nuclear war, drought, famine, stock market crashes, housing collapses, a plunging dollar and soaring inflation. Meanwhile gold is down another $11/oz. to $585.30. It is down $147/oz. from May highs or 20%. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering and lower energy prices.
Thursday, September 14, 2006
Stocks Slightly Lower in Final Hour on Another Decline into Commodity Shares
Today's Headlines
Bloomberg:
- Crude oil is falling again, pulled lower by natural gas, after an EIA report showed that US inventories of the competing fuel jumped.
- France considers itself a terrorist target after an al-Qaeda leader this week asked an Algerian group to lead attacks against French “apostates,” Prime Minister Dominique de Villepin said.
- Natural gas plunged below $5 per million btus for the first time in almost two years in New York as cool weather cut demand and a very mild hurricane season curtailed speculation.
- Nintendo will start selling its latest video-game console on Dec. 2 in Japan, betting a low price will lure holiday shoppers and make up for a debut that comes three weeks after Sony Corp.(SNE) introduces the PlayStation 3.
- Amnesty International, the London-based human-rights group, today accused Muslim group Hezbollah of war crimes for deliberately targeting Israeli civilians during the Lebanon war.
- Gold in NY fell to the lowest since June and is now 20% off its recent highs as falling energy prices ease inflation concerns.
Wall Street Journal:
- Prices of flash-memory chips used in digital music players and cameras have begun to level off since late August after falling for months.
- Wal-Mart(WMT) hired designer Colin Cowie to produce the chain’s first celebrity-designed line of home-decoration products.
- Microsoft(MSFT) founder Gates and his wife Melinda are to give $68.2 million in grants through their charitable foundation to battle three deadly parasitic diseases which kill or disable millions of people each year.
- Oil prices are close to five-month lows and that’s good news for many companies. Appaloosa Management LP, a $4 billion hedge fund, is among investors that have bought airline carriers’ shares recently.
- Verizon Communications(VZ) replaced software and personnel from Microsoft(MSFT) working on a television set-top box with some of its own after delays and technical glitches.
- Bristol-Myers Squibb(BMY) options trading rose this week on speculation the drugmaker may be up for sale.
NY Times:
- World Bank President Paul Wolfowitz’s tough stance on corruption in poor countries is coming under criticism from colleagues at the bank and financial officials abroad.
- Google’s(GOOG) philanthropy unit is a for-profit organization that will pay taxes as it uses $1 billion in seed money to fulfill its mandate of fighting poverty.
Boston Globe:
- The Massachusetts Institute of Technology’s Sloan School of Management will be getting new quarters as part of a $750 million, 1 million-square-foot expansion over the next few years.
NY Sun:
- Al Franken, who hosts a talk show on Air America Radio, says the network is in financial trouble since he hasn’t been paid recently.
Washington Post:
- Prosthetic limbs, parts of which can be controlled by thought alone, offer amputees using the devices a chance to almost “feel” their missing arm or leg and better control the artificial limb.
Globe and Mail:
- Open Text(OTEX), the Canadian software maker that’s buying rival Hummingbird, may be a takeover target for a larger company such a Hewlett-Packard(HPQ).
Yediot Ahronot:
- Nice Systems(NICE), a maker of digital-recording equipment, is in talks to acquire chief competitor Witness Systems(WITS) for more than $750 million.
- Crude oil is falling again, pulled lower by natural gas, after an EIA report showed that US inventories of the competing fuel jumped.
- France considers itself a terrorist target after an al-Qaeda leader this week asked an Algerian group to lead attacks against French “apostates,” Prime Minister Dominique de Villepin said.
- Natural gas plunged below $5 per million btus for the first time in almost two years in New York as cool weather cut demand and a very mild hurricane season curtailed speculation.
- Nintendo will start selling its latest video-game console on Dec. 2 in Japan, betting a low price will lure holiday shoppers and make up for a debut that comes three weeks after Sony Corp.(SNE) introduces the PlayStation 3.
- Amnesty International, the London-based human-rights group, today accused Muslim group Hezbollah of war crimes for deliberately targeting Israeli civilians during the Lebanon war.
- Gold in NY fell to the lowest since June and is now 20% off its recent highs as falling energy prices ease inflation concerns.
Wall Street Journal:
- Prices of flash-memory chips used in digital music players and cameras have begun to level off since late August after falling for months.
- Wal-Mart(WMT) hired designer Colin Cowie to produce the chain’s first celebrity-designed line of home-decoration products.
- Microsoft(MSFT) founder Gates and his wife Melinda are to give $68.2 million in grants through their charitable foundation to battle three deadly parasitic diseases which kill or disable millions of people each year.
- Oil prices are close to five-month lows and that’s good news for many companies. Appaloosa Management LP, a $4 billion hedge fund, is among investors that have bought airline carriers’ shares recently.
- Verizon Communications(VZ) replaced software and personnel from Microsoft(MSFT) working on a television set-top box with some of its own after delays and technical glitches.
- Bristol-Myers Squibb(BMY) options trading rose this week on speculation the drugmaker may be up for sale.
NY Times:
- World Bank President Paul Wolfowitz’s tough stance on corruption in poor countries is coming under criticism from colleagues at the bank and financial officials abroad.
- Google’s(GOOG) philanthropy unit is a for-profit organization that will pay taxes as it uses $1 billion in seed money to fulfill its mandate of fighting poverty.
Boston Globe:
- The Massachusetts Institute of Technology’s Sloan School of Management will be getting new quarters as part of a $750 million, 1 million-square-foot expansion over the next few years.
NY Sun:
- Al Franken, who hosts a talk show on Air America Radio, says the network is in financial trouble since he hasn’t been paid recently.
Washington Post:
- Prosthetic limbs, parts of which can be controlled by thought alone, offer amputees using the devices a chance to almost “feel” their missing arm or leg and better control the artificial limb.
Globe and Mail:
- Open Text(OTEX), the Canadian software maker that’s buying rival Hummingbird, may be a takeover target for a larger company such a Hewlett-Packard(HPQ).
Yediot Ahronot:
- Nice Systems(NICE), a maker of digital-recording equipment, is in talks to acquire chief competitor Witness Systems(WITS) for more than $750 million.
Import Prices Decelerate, Retail Sales Healthy, Job Market Strong
- The Import Price Index for August rose .8% versus estimates of a .3% gain and a 1.0% rise in July.
- Advance Retail Sales for August rose .2% versus estimates of a .2% decline and a 1.4% gain in July.
- Retail Sales Less Autos for August rose .2% versus estimates of a .3% increase and a .6% increase in June.
- Initial Jobless Claims for last week fell to 308K versus estimates of 315K and 313K prior.
- Continuing Claims were 2499K versus estimates of 2495K and 2481K prior.
- Advance Retail Sales for August rose .2% versus estimates of a .2% decline and a 1.4% gain in July.
- Retail Sales Less Autos for August rose .2% versus estimates of a .3% increase and a .6% increase in June.
- Initial Jobless Claims for last week fell to 308K versus estimates of 315K and 313K prior.
- Continuing Claims were 2499K versus estimates of 2495K and 2481K prior.
BOTTOM LINE: Prices of goods imported into the US rose more than forecast in August, led by increases in oil, natural gas and metals. Over the last 12 months, import prices have risen 6.6%. However, excluding petroleum, prices have risen only 2.7%. Oil has declined 18.7% since peaking on July 14. Substantial declines in most commodity prices should dramatically cut import price increases going forward.
Retail sales in the US unexpectedly rose in August, a sign the economy is withstanding a slowing housing market, Bloomberg reported. Rising incomes and falling energy prices should give consumers added spending power. The unemployment rate is near a five-year low, while employee compensation rose at a 6.6% annual rate in the second quarter. Moreover, filling station sales decreased 1% in August, the largest drop since February. The average price of regular-grade gasoline at the pump dropped to $2.58 a gallon on Sept. 13, down 15% from highs of $3.04 on Aug. 9. I expect retail sales to continue to exceed estimates over the intermediate-term as energy prices continue to fall, stocks rise, housing stabilizes, inflation decelerates, interest rates remain low, the job market remains healthy and irrational pessimism lifts.
The number of US workers filing first-time applications for state jobless benefits unexpectedly dropped last week, evidence demand remains strong enough to encourage companies to retail workers. The four-week moving-average of jobless claims fell to 314,250. The unemployment rate among those eligible for benefits, which tracks the US unemployment rate remained steady at 1.9%. I continue to believe the job market will remain healthy over the intermediate-term without generating substantial unit labor cost increases.
Thursday Watch
Late-Night Headlines
Bloomberg:
- Legislation authorizing key parts of President Bush’s anti-terrorism strategy advanced in Congress, setting up votes in the House and Senate.
- Chevron Corp.(CVX) is in talks to join with Chinese petroleum producers on exploration and production projects one year after beating out China’s Cnooc Ltd. to acquire Unocal Corp.
- Microsoft(MSFT) boosted its dividend by 11% as the company seeks to distribute more of its $34 billion cash hoard.
- Business confidence among Japanese manufacturers fell in September from three months earlier, according to the Reuters monthly Tanken survey. Sentiment fell to 30 from 39 in June.
- China halted sales of brokerages to overseas firms, thwarting plans by Citigroup(C), Merrill Lynch(MER) and other securities companies to increase trading in the country.
Wall Street Journal:
- The US, European Union and Canada plan to make a complaint to the World Trade Organization about China’s tariffs on auto parts.
Financial Times:
- Poland has emerged as the main potential source of new troops for NATO’s mission in Afghanistan, after the alliance put out an urgent request for more troops.
Xinhua:
- Chinas Premier Wen Jiabao personally signed guidelines giving state-run Xinhua News Agency administrative and censorship powers over foreign new agencies.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (DG), target $17.
- Reiterated Buy on (HUM), target $75.
- Reiterated Buy on (IDTI), target $22.
- Reiterated Buy on (INTU), target $36.
CSFB:
- Global steel prices have begun falling as we envisioned. In view of the inventory glut in the US, price declines could be worse than those during 1H 2005, leading to a prolonged deterioration in the market.
Night Trading
Asian Indices are -.50% to +.75% on average.
S&P 500 indicated -.07%.
NASDAQ 100 indicated +.03%.
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
- (ADBE)/.26
- (BSC)/2.87
- (PIR)/-.28
- (TEK)/.33
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- The Import Price Index for August is estimated to rise .3% versus a .9% gain in July.
- Advance Retail Sales for August are estimated to fall .2% versus a 1.4% increase in July.
- Retail Sales Less Autos for August are estimated to rise .3% versus a 1.0% gain in July.
- Initial Jobless Claims for last week are estimated to rise to 315K versus 310K the prior week.
- Continuing Claims are estimated to rise to 2495K versus 2492K prior.
10:00 am EST
- Business Inventories for July are estimated to rise .5% versus a .8% increase in June.
Bloomberg:
- Legislation authorizing key parts of President Bush’s anti-terrorism strategy advanced in Congress, setting up votes in the House and Senate.
- Chevron Corp.(CVX) is in talks to join with Chinese petroleum producers on exploration and production projects one year after beating out China’s Cnooc Ltd. to acquire Unocal Corp.
- Microsoft(MSFT) boosted its dividend by 11% as the company seeks to distribute more of its $34 billion cash hoard.
- Business confidence among Japanese manufacturers fell in September from three months earlier, according to the Reuters monthly Tanken survey. Sentiment fell to 30 from 39 in June.
- China halted sales of brokerages to overseas firms, thwarting plans by Citigroup(C), Merrill Lynch(MER) and other securities companies to increase trading in the country.
Wall Street Journal:
- The US, European Union and Canada plan to make a complaint to the World Trade Organization about China’s tariffs on auto parts.
Financial Times:
- Poland has emerged as the main potential source of new troops for NATO’s mission in Afghanistan, after the alliance put out an urgent request for more troops.
Xinhua:
- Chinas Premier Wen Jiabao personally signed guidelines giving state-run Xinhua News Agency administrative and censorship powers over foreign new agencies.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (DG), target $17.
- Reiterated Buy on (HUM), target $75.
- Reiterated Buy on (IDTI), target $22.
- Reiterated Buy on (INTU), target $36.
CSFB:
- Global steel prices have begun falling as we envisioned. In view of the inventory glut in the US, price declines could be worse than those during 1H 2005, leading to a prolonged deterioration in the market.
Night Trading
Asian Indices are -.50% to +.75% on average.
S&P 500 indicated -.07%.
NASDAQ 100 indicated +.03%.
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
- (ADBE)/.26
- (BSC)/2.87
- (PIR)/-.28
- (TEK)/.33
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- The Import Price Index for August is estimated to rise .3% versus a .9% gain in July.
- Advance Retail Sales for August are estimated to fall .2% versus a 1.4% increase in July.
- Retail Sales Less Autos for August are estimated to rise .3% versus a 1.0% gain in July.
- Initial Jobless Claims for last week are estimated to rise to 315K versus 310K the prior week.
- Continuing Claims are estimated to rise to 2495K versus 2492K prior.
10:00 am EST
- Business Inventories for July are estimated to rise .5% versus a .8% increase in June.
BOTTOM LINE: Asian indices are modestly higher, boosted by commodity and technology shares in the region. I expect US equities to open modestly higher and to maintain gains into the afternoon. The Portfolio is 100% net long heading into the day.
Wednesday, September 13, 2006
Stocks Finish Modestly Higher, Building on Recent Gains
Indices
S&P 1,318.07 +.38%
DJIA 11,543.32 +.39%
NASDAQ 2,227.67 +.53%
Russell 2000 730.70 +.86%
Wilshire 5000 13,186.82 +.46%
S&P Barra Growth 612.54 +.21%
S&P Barra Value 703.37 +.54%
Morgan Stanley Consumer 648.68 -.44%
Morgan Stanley Cyclical 822.31 +1.0%
Morgan Stanley Technology 519.98 +.13%
Transports 4,451.45 +1.87%
Utilities 429.81 +.41%
Put/Call .75 -20.21%
NYSE Arms .79 -11.83%
Volatility(VIX) 11.18 -6.21%
ISE Sentiment 113.00 -.88%
US Dollar 85.86 -.07%
CRB 311.27 +.18%
Futures Spot Prices
Crude Oil 64.10 +.53%
Unleaded Gasoline 156.50 +.83%
Natural Gas 5.40 -3.03%
Heating Oil 175.00 -.55%
Gold 596.70 +.07%
Base Metals 226.00 -.87%
Copper 339.45 +.28%
10-year US Treasury Yield 4.75% -.25%
Leading Sectors
Oil Service +3.14%
Steel +2.62%
I-Banks +2.39%
Lagging Sectors
Drugs -.27%
Gaming -.47%
Semis -.76%
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
- None of note
Afternoon/Evening Headlines
Bloomberg:
- Natural gas fell to the lowest in almost two years in NY as moderate US temperatures cut demand for the fuel and speculators abandoned losing bets on the commodity.
- Xilinx(XLNX) said second-quarter sales may fall 4-7%, slightly more than originally forecast. The stock is down .02 on the news.
Mobile Press-Register:
- Nascar driver Dale Earnhardt Jr. and two siblings are part of a group that plans to build a $624 million auto-racing track in southwestern Alabama.
S&P 1,318.07 +.38%
DJIA 11,543.32 +.39%
NASDAQ 2,227.67 +.53%
Russell 2000 730.70 +.86%
Wilshire 5000 13,186.82 +.46%
S&P Barra Growth 612.54 +.21%
S&P Barra Value 703.37 +.54%
Morgan Stanley Consumer 648.68 -.44%
Morgan Stanley Cyclical 822.31 +1.0%
Morgan Stanley Technology 519.98 +.13%
Transports 4,451.45 +1.87%
Utilities 429.81 +.41%
Put/Call .75 -20.21%
NYSE Arms .79 -11.83%
Volatility(VIX) 11.18 -6.21%
ISE Sentiment 113.00 -.88%
US Dollar 85.86 -.07%
CRB 311.27 +.18%
Futures Spot Prices
Crude Oil 64.10 +.53%
Unleaded Gasoline 156.50 +.83%
Natural Gas 5.40 -3.03%
Heating Oil 175.00 -.55%
Gold 596.70 +.07%
Base Metals 226.00 -.87%
Copper 339.45 +.28%
10-year US Treasury Yield 4.75% -.25%
Leading Sectors
Oil Service +3.14%
Steel +2.62%
I-Banks +2.39%
Lagging Sectors
Drugs -.27%
Gaming -.47%
Semis -.76%
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
- None of note
Afternoon/Evening Headlines
Bloomberg:
- Natural gas fell to the lowest in almost two years in NY as moderate US temperatures cut demand for the fuel and speculators abandoned losing bets on the commodity.
- Xilinx(XLNX) said second-quarter sales may fall 4-7%, slightly more than originally forecast. The stock is down .02 on the news.
Mobile Press-Register:
- Nascar driver Dale Earnhardt Jr. and two siblings are part of a group that plans to build a $624 million auto-racing track in southwestern Alabama.
BOTTOM LINE: The Portfolio finished higher today on gains in my Internet longs, Medical 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 positive today as the advance/decline line finished higher, most sectors rose and volume was above average. Measures of investor anxiety were mostly lower into the close. Overall, today's market performance was bullish. Natural gas finished near session lows and oil barely bounced notwithstanding recent declines. The tone of the broad market is very good right now and feels more like November than September. I suspect this bodes very well for a strong finish to the year. Tomorrow's import price index will likely rise less than estimates, while retail sales will probably exceed estimates.
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