BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Semi longs and Retail longs. 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 about even, most sectors are falling and volume is below average. The Wall Street Journal is confirming that Google (GOOG) is in talks to acquire YouTube for $1.6 billion. However, the talks are still at a sensitive stage. I think this would make an excellent acquisition for Google. This price tag seems high, but over the long term it would be well worth it, in my opinion. Google remains my largest long position. I expect US stocks to trade modestly higher into the close from current levels on short-covering, less pessimism, performance anxiety and bargain-hunting.
Friday, October 06, 2006
Stocks Slightly Lower into Final Hour on Profit-Taking and Higher Long-Term Rates
Today's Headlines
Bloomberg:
- Natural gas is falling again in NY after US inventories soared to a record last week.
- Heating oil futures are falling as inventories are 18% above the 5-year average for this time of the year and forecasts call for warm weather in the Northeast.
- Crude oil fell more than $1/bbl. on speculation that members of OPEC won’t follow through with production cuts.
- Gold is set to post a weekly decline as falling oil prices reduced the appeal of the precious metal as a hedge against inflation.
- The US dollar posted the biggest gain since July against the yen and euro after a government report showed the US jobless rate unexpectedly fell in September.
- Jerome York, an aide to billionaire investor Kirk Kerkorian, resigned form GM’s board after the automaker failed to support Kerkorian’s proposal for an alliance with Renault SA and Nissan Motor.
- Crown Castle(CCI), the second-biggest owner of US cellular-telephone towers, agreed to buy Global Signal(GSL) for about $3.93 billion to become the dominant provider in LA, Chicago and Dallas.
- US Treasuries are falling, pushing 10-year yields up the most since July, after the government said the nation’s jobless rate dropped in September while the economy added more jobs in prior months than reported earlier.
- Amaranth Advisors, LLC, the hedge-fund manager that’s liquidating after losing $6.5 billion betting on natural gas, plans to cut about 60% of its workforce within a week and help place them at other firms.
- The cost of transporting oil abroad supertankers may fall by year-end as OPEC members reduce production, leaving a glut of vessels.
Wall Street Journal:
- The end of Hong Kong’s “laissez-faire capitalist” economy policies will slow the territory’s growth and end its role as a model for Asian countries, economist Milton Friedman said.
- MySpace.com, the social networking site, has attracted older users.
- Hedge funds searching for investment opportunities are turning their attention to sub-Saharan Africa.
- JC Penney(JCP) is seeking to emulate department-store rival Kohl’s(KSS) by opening more freestanding stores, which customers are increasingly favoring over regional malls.
NY Times:
- Andrew Cuomo, Democratic candidate for NY’s Attorney General, made a 19% return when he invested more than half of his $1.2 million in campaign funds in the hedge fund of one of his supporters two years ago, citing campaign spokeswoman Wendy Katz. The hedge fund Cuomo invested in, Gregg Hymowitz’s EnTrust Partners, waived its minimum asset requirement and investment amount when it allowed the Cuomo campaign to invest in its fund.
Boersen:
- Dong Energy A/S of Denmark has applied for an exploration permit to search for oil and natural gas off the country’s northwest coast, citing Jan Terje, the company’s head of exploration.
- Natural gas is falling again in NY after US inventories soared to a record last week.
- Heating oil futures are falling as inventories are 18% above the 5-year average for this time of the year and forecasts call for warm weather in the Northeast.
- Crude oil fell more than $1/bbl. on speculation that members of OPEC won’t follow through with production cuts.
- Gold is set to post a weekly decline as falling oil prices reduced the appeal of the precious metal as a hedge against inflation.
- The US dollar posted the biggest gain since July against the yen and euro after a government report showed the US jobless rate unexpectedly fell in September.
- Jerome York, an aide to billionaire investor Kirk Kerkorian, resigned form GM’s board after the automaker failed to support Kerkorian’s proposal for an alliance with Renault SA and Nissan Motor.
- Crown Castle(CCI), the second-biggest owner of US cellular-telephone towers, agreed to buy Global Signal(GSL) for about $3.93 billion to become the dominant provider in LA, Chicago and Dallas.
- US Treasuries are falling, pushing 10-year yields up the most since July, after the government said the nation’s jobless rate dropped in September while the economy added more jobs in prior months than reported earlier.
- Amaranth Advisors, LLC, the hedge-fund manager that’s liquidating after losing $6.5 billion betting on natural gas, plans to cut about 60% of its workforce within a week and help place them at other firms.
- The cost of transporting oil abroad supertankers may fall by year-end as OPEC members reduce production, leaving a glut of vessels.
Wall Street Journal:
- The end of Hong Kong’s “laissez-faire capitalist” economy policies will slow the territory’s growth and end its role as a model for Asian countries, economist Milton Friedman said.
- MySpace.com, the social networking site, has attracted older users.
- Hedge funds searching for investment opportunities are turning their attention to sub-Saharan Africa.
- JC Penney(JCP) is seeking to emulate department-store rival Kohl’s(KSS) by opening more freestanding stores, which customers are increasingly favoring over regional malls.
NY Times:
- Andrew Cuomo, Democratic candidate for NY’s Attorney General, made a 19% return when he invested more than half of his $1.2 million in campaign funds in the hedge fund of one of his supporters two years ago, citing campaign spokeswoman Wendy Katz. The hedge fund Cuomo invested in, Gregg Hymowitz’s EnTrust Partners, waived its minimum asset requirement and investment amount when it allowed the Cuomo campaign to invest in its fund.
Boersen:
- Dong Energy A/S of Denmark has applied for an exploration permit to search for oil and natural gas off the country’s northwest coast, citing Jan Terje, the company’s head of exploration.
Job Market Even Stonger Than Previously Thought, Wages Rise 4% Over Last Year, Payroll Growth Decelerates
- The Change in Non-farm Payrolls for September was 51K versus estimates of 120K and an upwardly revised 188K in August.
- The Change in Manufacturing Payrolls for September was -19K versus estimates of -5K and an upwardly revised -7K in August.
- The Unemployment Rate for September fell to 4.6% versus estimates of 4.7% and 4.7% in August.
-
- The Change in Manufacturing Payrolls for September was -19K versus estimates of -5K and an upwardly revised -7K in August.
- The Unemployment Rate for September fell to 4.6% versus estimates of 4.7% and 4.7% in August.
-
BOTTOM LINE: The US economy created 51,000 jobs in September as unemployment fell back to a five-year low, Bloomberg reported. Job growth during the last year was revised 45% higher. 810,000 more jobs were created over the last 12 months than previously thought. This was the largest upward revision since at least 1991 when the labor market began benchmarking numbers. Wage growth over the last year matched a five-year high. The substantial upward revision to job growth over the last year is sending Treasuries lower and the US dollar higher. This shows the economy was even stronger than most realized earlier in the year. I continue to believe the job market will remain healthy over the intermediate-term as companies gain confidence in the sustainability of the current business cycle, optimism continues to grow, consumer spending remains strong, gas prices continue to fall and housing stabilizes at relatively high levels.
Thursday, October 05, 2006
Friday Watch
Late-Night Headlines
Bloomberg:
- John Kilduff, vice president of risk management at Fimat USA, see OPEC cutting output further as crude reaches $48/bbl.
- The yen weakened after Kyodo News reported US and Japanese officials were concerned N. Korea will test a nuclear bomb this weekend.
- A California appeals court said state laws banning same-sex marriage don’t violate the state’s constitution, handing a defeat to San Francisco officials who allowed 4,000 gay couples to marry in 2004.
- Tribune Co.(TRB) ousted the publisher of its biggest newspaper, the LA Times, after he resisted making newsroom changes ordered by his bosses.
- Google(GOOG) will give cash bonuses of up to $3 million to executives that are linked to annual sales and profit goals.
- John Olson, a co-manager of Houston Energy Partners who was skeptical of Enron before the scandal there, says rogue energy trading may have been going on at the collapsed Amaranth hedge fund.
- Crude oil is falling on speculation Saudi Arabia, the world’s largest producer, hasn’t agreed to participate in any output cut by OPEC. “Saudi Arabia seems not to agree on any cutback plan until oil falls below $55,” said Makoto Takeda, an energy analyst at Bansei Securities.
- Gold fell in Asia as oil prices struggled to hold above $60 a barrel and some investors deemed yesterday’s rally in the precious metal overdone.
Business Week:
- Citigroup(C) Chairman and CEO Prince is moving the company toward new purchases.
Kyodo News:
- The US and Japan are concerned North Korea may test a nuclear bomb as early as this weekend, citing Japanese Vice Foreign Minister Shotaro Yachi. North Korea announced on Oct. 3 it will conduct a nuclear test, prompting calls by the US, South Korea, China and Japan to abandon the plan and return to six-nation talks on dismantling its atomic weapons program.
Late Buy/Sell Recommendations
Citigroup:
- Downgraded (NFG) to Sell, target $33.
CSFB:
- Reiterated Outperform on (ROST), target $33.
- Reiterated Outperform on (TJX), target $32.
- Reiterated Outperform on (CRM), target $50.
Business Week:
- Shares of Intercontinental Hotels Group(IHG), which operates the most hotel rooms worldwide, may rise on demand for its rooms in China from the 2008 Beijing Olympics.
- Viasys Healthcare(VAS), a maker of ventilators for people with breathing problems that was spun off from Thermo Electron in 2001, could gain on emergency gear sales.
Night Trading
Asian Indices are unch. to +.25% on average.
S&P 500 indicated -.02%.
NASDAQ 100 indicated unch.
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
- None of note
Upcoming Splits
- None of note
Economic Releases
8:30 am EST:
- The Change in Non-farm Payrolls for September is estimated at 120K versus 128K the prior month.
- The Change in Manufacturing Payrolls for September is estimated at -5K versus -11K the prior month.
- The Unemployment Rate for September is estimated at 4.7% versus 4.7% the prior month.
- Average Hourly Earnings for September are estimated to rise .3% versus a .1% gain in August.
3:00 pm EST:
- Consumer Credit for August is estimated to fall to $5.0B versus $5.5B the prior month.
Bloomberg:
- John Kilduff, vice president of risk management at Fimat USA, see OPEC cutting output further as crude reaches $48/bbl.
- The yen weakened after Kyodo News reported US and Japanese officials were concerned N. Korea will test a nuclear bomb this weekend.
- A California appeals court said state laws banning same-sex marriage don’t violate the state’s constitution, handing a defeat to San Francisco officials who allowed 4,000 gay couples to marry in 2004.
- Tribune Co.(TRB) ousted the publisher of its biggest newspaper, the LA Times, after he resisted making newsroom changes ordered by his bosses.
- Google(GOOG) will give cash bonuses of up to $3 million to executives that are linked to annual sales and profit goals.
- John Olson, a co-manager of Houston Energy Partners who was skeptical of Enron before the scandal there, says rogue energy trading may have been going on at the collapsed Amaranth hedge fund.
- Crude oil is falling on speculation Saudi Arabia, the world’s largest producer, hasn’t agreed to participate in any output cut by OPEC. “Saudi Arabia seems not to agree on any cutback plan until oil falls below $55,” said Makoto Takeda, an energy analyst at Bansei Securities.
- Gold fell in Asia as oil prices struggled to hold above $60 a barrel and some investors deemed yesterday’s rally in the precious metal overdone.
Business Week:
- Citigroup(C) Chairman and CEO Prince is moving the company toward new purchases.
Kyodo News:
- The US and Japan are concerned North Korea may test a nuclear bomb as early as this weekend, citing Japanese Vice Foreign Minister Shotaro Yachi. North Korea announced on Oct. 3 it will conduct a nuclear test, prompting calls by the US, South Korea, China and Japan to abandon the plan and return to six-nation talks on dismantling its atomic weapons program.
Late Buy/Sell Recommendations
Citigroup:
- Downgraded (NFG) to Sell, target $33.
CSFB:
- Reiterated Outperform on (ROST), target $33.
- Reiterated Outperform on (TJX), target $32.
- Reiterated Outperform on (CRM), target $50.
Business Week:
- Shares of Intercontinental Hotels Group(IHG), which operates the most hotel rooms worldwide, may rise on demand for its rooms in China from the 2008 Beijing Olympics.
- Viasys Healthcare(VAS), a maker of ventilators for people with breathing problems that was spun off from Thermo Electron in 2001, could gain on emergency gear sales.
Night Trading
Asian Indices are unch. to +.25% on average.
S&P 500 indicated -.02%.
NASDAQ 100 indicated unch.
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
- None of note
Upcoming Splits
- None of note
Economic Releases
8:30 am EST:
- The Change in Non-farm Payrolls for September is estimated at 120K versus 128K the prior month.
- The Change in Manufacturing Payrolls for September is estimated at -5K versus -11K the prior month.
- The Unemployment Rate for September is estimated at 4.7% versus 4.7% the prior month.
- Average Hourly Earnings for September are estimated to rise .3% versus a .1% gain in August.
3:00 pm EST:
- Consumer Credit for August is estimated to fall to $5.0B versus $5.5B the prior month.
BOTTOM LINE: Asian indices are mixed as gains in metal shares are offsetting losses in financial equities in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.
Dow Jones Industrial Average Makes Another All-Time High
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
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
BOTTOM LINE: The Portfolio finished higher today on gains in my Medical longs, Semi longs and Biotech 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 about average. Measures of investor anxiety were mostly higher into the close. Overall, today's market performance was bullish. I would classify today's action as healthy given the underlying strength. Small-caps, cyclicals and growth outperformed throughout the day. I have heard some say the public has embraced the recent rally, yet I see little evidence of this. TrimTabs just reported $900 million in U.S. fund outflows once again this week, despite the recent rally. I continue to believe there is massive bull firepower available to propel US stocks substantially higher from current levels. Tomorrow's jobs report will likely come in slightly below expectations of 120,000. However, I expect stocks to build on recent gains again tomorrow as investors continue to anticipate better data over the next few months.
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