BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Medical longs, Retail longs and Biotech longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is neutral as the advance/decline line is slightly higher, sector performance is mixed and volume is above average. Bloomberg just reported that commodity hedge funds fell for the fourth straight month in August and are now down 13.8% year-to-date, according to the Center of International Securities and Derivatives Markets. These declines came despite worries over war, inflation, U.S. dollar weakness and booming global growth. I suspect a large portion of the mountain of cash that has been deployed into these funds recently is very hot money. I expect another down-leg in most commodities will commence during the fourth quarter as funds raise cash to meet year-end redemptions. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering.
Wednesday, September 27, 2006
Stocks Mixed into Final Hour on Bounce Higher in Oil
Today's Headlines
Bloomberg:
- The Dow Jones Industrial Average is 25 points from an all-time record high as an unexpected increase in new-home sales bolstered confidence that consumer spending will support economic growth.
- Natural Gas futures in New York are plunging about 9% to their lowest in almost four years as mild weather cut demand and record inventories pared the need for fresh purchases.
- US gasoline supplies are now at the highest level for this time of the year in 15 years.
- Federated Department Stores(FD) said billionaire investor Carl Icahn plans to buy $113.4 million to $500 million of additional stock, sending the retailer’s shares to a record.
- The NY Merc told Amaranth Advisors LLC that the hedge fund’s natural gas bets were too big a month before the trades led to a $6 billion loss.
- NY’s 18,000 restaurants would have to stop cooking with artificial trans fats, blamed for increasing the risk of heart disease, under regulations proposed by the city’s Health Department.
- McDonald’s(MCD) raised its annual dividend 50%, the biggest gain in three years, as sales climbed.
Wall Street Journal:
- General Motors(GM), Ford Motor(F) and DaimlerChrysler AG(DCX) are reducing some sticker prices for the 2007 model year, in an attempt to lure consumers with “value pricing.”
- General Motors(GM) will ask for a multi-billion dollar payment to form an alliance with Nissan Motor and Renault SA.
- Florida’s younger families are being pushed out of the state by rising housing prices and insurance, an influx of retirees and concern over another big hurricane.
- The US oil industry and Silicon Valley venture capital firms are involved in an increasingly vicious fight over a proposed tax to fund conservation and alternative-energy measures.
- Pirate Capital LLC, a hedge fund that pressures companies for changes that might boost their stock price, is experiencing problems this year with below-industry performance and a SEC investigation into possible securities-law violations.
- Citigroup(C), Merrill Lynch(MER), and Goldman Sachs(GS) are among six Wall Street firms planning a new electronic trading service for big stock trades, a venture that will compete with NYSE Group’s(NYX) NYSE and Nasdaq Stock Market(NDAQ).
NY Times:
- US clinics and medical centers are developing a consistent set of forensic methods to detect elder abuse.
- Qwest Communications(Q), the fourth-largest US phone company, has enough cash to buy a rival, perhaps a wireless carrier or a corporate provider of telecommunications services.
USA Today:
- At least seven men have died from electrocution in the US since July after a surge in thefts of copper wiring used for electricity, citing police and utility officials in five states.
Washington Post:
- More state and local law enforcement are beginning to check the immigration status of people they come into contract with as part of a nationwide effort to better police those living in the US illegally.
Reuters:
- The NYSE expects to refer 140 cases of potential insider trading to the SEC, 26% more than last year, citing Robert Marchman, the executive vice president of NYSE Regulation, a unit of the bourse.
Washington Square News:
- NYU, the largest private university in the US, raised a record $397.5 million in fiscal 2006, including $68 million for financial aid.
AP:
- 7-Eleven, Inc., the largest US operator of convenience stores, is dropping Citgo Petroleum as its gasoline supplier throughout the country. Citgo, a subsidiary of Venezuela’s state-owned oil company, became a “public-relations issue” for 7-Eleven because of recent comments by Venezuelan President Hugo Chavez that President Bush was an alcoholic devil. “Regardless of politics, we sympathize with many Americans’ concern over derogatory comments about our country and its leadership.” 7-Eleven will instead purchase fuel from several US distributors, including Sinclair Oil and Frontier Oil.
Financial Times:
- The US hedge-fund industry may regret that a SEC rule requiring registration and “modest” disclosure was thrown out by a court this year, because more rigorous rules may replace it.
- The Dow Jones Industrial Average is 25 points from an all-time record high as an unexpected increase in new-home sales bolstered confidence that consumer spending will support economic growth.
- Natural Gas futures in New York are plunging about 9% to their lowest in almost four years as mild weather cut demand and record inventories pared the need for fresh purchases.
- US gasoline supplies are now at the highest level for this time of the year in 15 years.
- Federated Department Stores(FD) said billionaire investor Carl Icahn plans to buy $113.4 million to $500 million of additional stock, sending the retailer’s shares to a record.
- The NY Merc told Amaranth Advisors LLC that the hedge fund’s natural gas bets were too big a month before the trades led to a $6 billion loss.
- NY’s 18,000 restaurants would have to stop cooking with artificial trans fats, blamed for increasing the risk of heart disease, under regulations proposed by the city’s Health Department.
- McDonald’s(MCD) raised its annual dividend 50%, the biggest gain in three years, as sales climbed.
Wall Street Journal:
- General Motors(GM), Ford Motor(F) and DaimlerChrysler AG(DCX) are reducing some sticker prices for the 2007 model year, in an attempt to lure consumers with “value pricing.”
- General Motors(GM) will ask for a multi-billion dollar payment to form an alliance with Nissan Motor and Renault SA.
- Florida’s younger families are being pushed out of the state by rising housing prices and insurance, an influx of retirees and concern over another big hurricane.
- The US oil industry and Silicon Valley venture capital firms are involved in an increasingly vicious fight over a proposed tax to fund conservation and alternative-energy measures.
- Pirate Capital LLC, a hedge fund that pressures companies for changes that might boost their stock price, is experiencing problems this year with below-industry performance and a SEC investigation into possible securities-law violations.
- Citigroup(C), Merrill Lynch(MER), and Goldman Sachs(GS) are among six Wall Street firms planning a new electronic trading service for big stock trades, a venture that will compete with NYSE Group’s(NYX) NYSE and Nasdaq Stock Market(NDAQ).
NY Times:
- US clinics and medical centers are developing a consistent set of forensic methods to detect elder abuse.
- Qwest Communications(Q), the fourth-largest US phone company, has enough cash to buy a rival, perhaps a wireless carrier or a corporate provider of telecommunications services.
USA Today:
- At least seven men have died from electrocution in the US since July after a surge in thefts of copper wiring used for electricity, citing police and utility officials in five states.
Washington Post:
- More state and local law enforcement are beginning to check the immigration status of people they come into contract with as part of a nationwide effort to better police those living in the US illegally.
Reuters:
- The NYSE expects to refer 140 cases of potential insider trading to the SEC, 26% more than last year, citing Robert Marchman, the executive vice president of NYSE Regulation, a unit of the bourse.
Washington Square News:
- NYU, the largest private university in the US, raised a record $397.5 million in fiscal 2006, including $68 million for financial aid.
AP:
- 7-Eleven, Inc., the largest US operator of convenience stores, is dropping Citgo Petroleum as its gasoline supplier throughout the country. Citgo, a subsidiary of Venezuela’s state-owned oil company, became a “public-relations issue” for 7-Eleven because of recent comments by Venezuelan President Hugo Chavez that President Bush was an alcoholic devil. “Regardless of politics, we sympathize with many Americans’ concern over derogatory comments about our country and its leadership.” 7-Eleven will instead purchase fuel from several US distributors, including Sinclair Oil and Frontier Oil.
Financial Times:
- The US hedge-fund industry may regret that a SEC rule requiring registration and “modest” disclosure was thrown out by a court this year, because more rigorous rules may replace it.
Durable Goods Orders Fall, New Home Sales Rise Pushing Down Housing Inventories
- Durable Goods Orders for August fell .5% versus estimates of a .5% gain and a 2.7% decline in July.
- Durables Ex Transports for August fell 2.0% versus estimates of a .5% gain and unch. in July.
- New Home Sales for August came in at 1040K versus estimates of 1050K and 1009K in July.
- Durables Ex Transports for August fell 2.0% versus estimates of a .5% gain and unch. in July.
- New Home Sales for August came in at 1040K versus estimates of 1050K and 1009K in July.
BOTTOM LINE: Orders placed with US factories for durable goods unexpectedly dropped in August, Bloomberg reported. Orders for non-defense capital goods excluding aircraft, a gauge of future business spending, fell .3% versus a .9% gain in July. Auto bookings rose 4.4% in August versus a 6.9% decline in July. Manufacturing is temporarily weakening, mainly due to auto production cutbacks, but should rebound over the intermediate-term.
New home sales in the US unexpectedly rose in August, signaling a possible stabilizing of the housing market. Plunging mortgage rates and bargain-hunting in many areas are helping. The median price of a new home is $237,000. New home sales are considered a leading indicator of the housing market. The number of unsold new homes fell to a 6.6-month supply at the current sales pace versus a 7-month supply in July. Sales rose 21.7% in the Northeast, 12.2% in the Midwest and 11.1% in the South. Purchases fell 17.7% in the West. Net home equity extraction fell to an annualized $141 billion in the second quarter versus $196 billion a year earlier, yet consumer spending remained healthy. I continue to believe housing will stabilize at relatively robust levels over the next few months after modest price declines.
Tuesday, September 26, 2006
Wednesday Watch
Late-Night Headlines
Bloomberg:
- US stocks extended this week’s rally, lifting the Dow Jones Industrial Average to its second-highest close in history, after a rebound in consumer confidence suggested household spending will keep the economy healthy.
- ABC won the first week of the new television season as a decision to switch “Grey’s Anatomy” to Thursday night from Sunday paid off.
- Brazil’s steel industry will double by 2011 as Mittal Steel(MT) and its rivals build new mills near iron-ore mines to lower their costs.
Detroit News:
- Carlos Ghosn, CEO of Renault SA and Nissan Motor, will tell GM than an alliance between their companies could save $10 billion a year.
Financial Times:
- Amaranth Advisors LLC, the hedge-fund company that lost $6 billion betting on rising natural gas prices, has told investors that it will either liquidate its remaining assets or sell itself to a larger institution.
Apple Daily:
- Acer Inc. expects its fourth-quarter sales to grow between 10%-20% from the third quarter as new orders for its personal computers flooded in, citing Acer Chairman J.T. Wang.
Late Buy/Sell Recommendations
Morgan Stanley:
- Reiterated Overweight on (JBL), target $38.
- Reiterated Overweight on (BAC), target $55.
Jeffries:
- Cisco Systems(CSCO) shares may rise to $30 as the company beats competitors for orders to upgrade telephone networks, said analyst Bill Choi, who started coverage of the stock with a “buy” rating.
Night Trading
Asian Indices are +.75% to +1.50% on average.
S&P 500 indicated -.08%.
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
- (ATU)/.78
- (MKC)/.36
- (RECN)/.24
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- Durable Goods Orders for August are estimated to rise .5% versus a 2.4% decline in July.
- Durables Ex Transportation for August are estimated to rise .5% versus a .5% gain in July.
10:00 am EST
- New Home Sales for August are estimated to fall to 1040K versus 1072K in July.
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil drawdown of 1,700,000 barrels. Gasoline supplies are estimated to rise by 700,000 barrels. Distillate inventories are expected to rise by 2,600,000 barrels. Finally, Refinery Utilization is estimated to fall .73%.
Bloomberg:
- US stocks extended this week’s rally, lifting the Dow Jones Industrial Average to its second-highest close in history, after a rebound in consumer confidence suggested household spending will keep the economy healthy.
- ABC won the first week of the new television season as a decision to switch “Grey’s Anatomy” to Thursday night from Sunday paid off.
- Brazil’s steel industry will double by 2011 as Mittal Steel(MT) and its rivals build new mills near iron-ore mines to lower their costs.
Detroit News:
- Carlos Ghosn, CEO of Renault SA and Nissan Motor, will tell GM than an alliance between their companies could save $10 billion a year.
Financial Times:
- Amaranth Advisors LLC, the hedge-fund company that lost $6 billion betting on rising natural gas prices, has told investors that it will either liquidate its remaining assets or sell itself to a larger institution.
Apple Daily:
- Acer Inc. expects its fourth-quarter sales to grow between 10%-20% from the third quarter as new orders for its personal computers flooded in, citing Acer Chairman J.T. Wang.
Late Buy/Sell Recommendations
Morgan Stanley:
- Reiterated Overweight on (JBL), target $38.
- Reiterated Overweight on (BAC), target $55.
Jeffries:
- Cisco Systems(CSCO) shares may rise to $30 as the company beats competitors for orders to upgrade telephone networks, said analyst Bill Choi, who started coverage of the stock with a “buy” rating.
Night Trading
Asian Indices are +.75% to +1.50% on average.
S&P 500 indicated -.08%.
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
- (ATU)/.78
- (MKC)/.36
- (RECN)/.24
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- Durable Goods Orders for August are estimated to rise .5% versus a 2.4% decline in July.
- Durables Ex Transportation for August are estimated to rise .5% versus a .5% gain in July.
10:00 am EST
- New Home Sales for August are estimated to fall to 1040K versus 1072K in July.
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil drawdown of 1,700,000 barrels. Gasoline supplies are estimated to rise by 700,000 barrels. Distillate inventories are expected to rise by 2,600,000 barrels. Finally, Refinery Utilization is estimated to fall .73%.
BOTTOM LINE: Asian indices are higher, boosted by automaker, commodity and technology shares in the region. I expect US equities to open modestly higher and to fade into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.
***Alert***
Due to a scheduling conflict I am unable to post the Tuesday Close. I will post the Wednesday Watch later this evening.
Subscribe to:
Posts (Atom)