BOTTOM LINE: Inventories at US wholesalers rose more than forecast in August as companies made sure they had enough goods to meet demand, Bloomberg said. Sales at wholesalers in August surged 1.1% versus a .5% gain the prior month. The inventory-to-sales ratio remained at a record low of 1.15 months. Sales of durable goods to wholesalers jumped 1.4%, the most since May. Petroleum sales fell 1.6% versus a 1.5% rise the prior month. I continue to believe inventory rebuilding will accelerate over the intermediate-term as companies gain confidence in the sustainability of the current expansion.
Tuesday, October 10, 2006
Wholesale Inventories Rise, Inventory-to-Sales Ratio at Record Lows
Monday, October 09, 2006
Tuesday Watch
Late-Night Headlines
Bloomberg:
- The yen touched an eight-month low against the dollar after the North Korean government said it detonated its first nuclear bomb.
- Federal Reserve Bank of St. Louis President William Poole said the recent drop in long-term interest rates in the bond market is helping stabilize the US economy. “If we get an upside surprise, the long rate clearly has a lot of room to rise” without action by the Fed’s policy committee, Poole said.
- China will focus on measures to curb excessive growth in investments and loans and tackle the widening trade deficit in the second half of the year, Ma Kai, the nation’s top economic planner said. Measures are needed to avoid accelerated economic growth that might lead to overheating, he said.
- The impact from North Korea’s nuclear test on South Korea’s economy may become “serious” depending on the reaction by the United Nations, South Korea’s Ministry of Finance and Economy said.
NY Times:
- Sanofi-Aventis was the unnamed bidder ImClone Systems, a deal opposed by Carl C. Icahn.
NY Daily News:
- The Moinian Group, a developer of Manhattan luxury residences, is the first condo seller in NY to allow buyers to make down payments with their American Express(AXP) cards and earn membership points.
Financial Times:
- Berkshire Hathaway CEO Warren Buffett has told senior managers to crack down on “bad behavior,” such as stock options backdating, citing an internal memo.
Night Trading
Asian Indices are unch. to +.75% on average.
S&P 500 indicated +.01%.
NASDAQ 100 indicated +.04.
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
- (AA)/.77
- (CPKI)/.33
- (CHTT)/.42
- (DNA)/.51
- (IDT)/-.36
- (NAT)/.90
- (SVU)/.53
Upcoming Splits
- (ACH) 4-for-1
Economic Releases
10:00 am EST:
- Wholesale Inventories for August are estimated to rise .7% versus a .8% gain in July.
Bloomberg:
- The yen touched an eight-month low against the dollar after the North Korean government said it detonated its first nuclear bomb.
- Federal Reserve Bank of St. Louis President William Poole said the recent drop in long-term interest rates in the bond market is helping stabilize the US economy. “If we get an upside surprise, the long rate clearly has a lot of room to rise” without action by the Fed’s policy committee, Poole said.
- China will focus on measures to curb excessive growth in investments and loans and tackle the widening trade deficit in the second half of the year, Ma Kai, the nation’s top economic planner said. Measures are needed to avoid accelerated economic growth that might lead to overheating, he said.
- The impact from North Korea’s nuclear test on South Korea’s economy may become “serious” depending on the reaction by the United Nations, South Korea’s Ministry of Finance and Economy said.
NY Times:
- Sanofi-Aventis was the unnamed bidder ImClone Systems, a deal opposed by Carl C. Icahn.
NY Daily News:
- The Moinian Group, a developer of Manhattan luxury residences, is the first condo seller in NY to allow buyers to make down payments with their American Express(AXP) cards and earn membership points.
Financial Times:
- Berkshire Hathaway CEO Warren Buffett has told senior managers to crack down on “bad behavior,” such as stock options backdating, citing an internal memo.
Night Trading
Asian Indices are unch. to +.75% on average.
S&P 500 indicated +.01%.
NASDAQ 100 indicated +.04.
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
- (AA)/.77
- (CPKI)/.33
- (CHTT)/.42
- (DNA)/.51
- (IDT)/-.36
- (NAT)/.90
- (SVU)/.53
Upcoming Splits
- (ACH) 4-for-1
Economic Releases
10:00 am EST:
- Wholesale Inventories for August are estimated to rise .7% versus a .8% gain in July.
BOTTOM LINE: Asian indices are modestly higher, boosted by technology and financial shares in the region. I expect US equities to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.
Stocks Finish Slightly Higher as Oil Reverses and Shorts Cover
Indices
S&P 500 1,350.66 +.08%
DJIA 11,857.81 +.06%
NASDAQ 2,311.77 +.51%
Russell 2000 744.57 +.64%
Wilshire 5000 13,492.61 +.18%
S&P Barra Growth 626.55 -.02%
S&P Barra Value 722.05 +.17%
Morgan Stanley Consumer 654.40 +.23%
Morgan Stanley Cyclical 842.56 +.60%
Morgan Stanley Technology 542.38 +.88%
Transports 4,581.56 +.26%
Utilities 428.88 -.06%
Put/Call .96 unch.
NYSE Arms 1.07 +.91%
Volatility(VIX) 11.68 +1.04%
ISE Sentiment 111.0 +.91%
US Dollar 86.54 +.03%
CRB 303.56 +1.12%
Futures Spot Prices
Crude Oil 59.90 +.23%
Unleaded Gasoline 149.95 -.31%
Natural Gas 6.34 -1.28%
Heating Oil 172.57 +1.87%
Gold 580.0 -.48%
Base Metals 237.96 +3.10%
Copper 341.20 -.03%
10-year US Treasury Yield 4.69% unch.
Leading Sectors
Steel +2.35%
Homebuilders +1.66%
Computer Hardware +1.20%
Lagging Sectors
Hospitals -.99%
Energy -1.24%
Oil Service -1.68%
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
UBS:
- Rated (HAIN) Buy, target $31.
Citigroup:
- Rated (VAR) Buy, target $62.
- Rated (SPNC) Buy, target $17.
- Rated (HOLX) Buy, target $55.
Afternoon/Evening Headlines
Bloomberg:
- OPEC will rely on an informal agreement among members to cut supplies and won’t hold an emergency meeting, a spokesman for the group’s president said.
- Monster Worldwide(MNST) said founder Andrew McKelvey resigned as chairman and CEO, citing the time consumed by a probe of stock-options grants.
- Google(GOOG) agreed to buy YouTube Inc. for $1.65 billion in stock, adding the largest video-sharing site on the Web and an audience that watches more than 100 million clips a day.
S&P 500 1,350.66 +.08%
DJIA 11,857.81 +.06%
NASDAQ 2,311.77 +.51%
Russell 2000 744.57 +.64%
Wilshire 5000 13,492.61 +.18%
S&P Barra Growth 626.55 -.02%
S&P Barra Value 722.05 +.17%
Morgan Stanley Consumer 654.40 +.23%
Morgan Stanley Cyclical 842.56 +.60%
Morgan Stanley Technology 542.38 +.88%
Transports 4,581.56 +.26%
Utilities 428.88 -.06%
Put/Call .96 unch.
NYSE Arms 1.07 +.91%
Volatility(VIX) 11.68 +1.04%
ISE Sentiment 111.0 +.91%
US Dollar 86.54 +.03%
CRB 303.56 +1.12%
Futures Spot Prices
Crude Oil 59.90 +.23%
Unleaded Gasoline 149.95 -.31%
Natural Gas 6.34 -1.28%
Heating Oil 172.57 +1.87%
Gold 580.0 -.48%
Base Metals 237.96 +3.10%
Copper 341.20 -.03%
10-year US Treasury Yield 4.69% unch.
Leading Sectors
Steel +2.35%
Homebuilders +1.66%
Computer Hardware +1.20%
Lagging Sectors
Hospitals -.99%
Energy -1.24%
Oil Service -1.68%
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
UBS:
- Rated (HAIN) Buy, target $31.
Citigroup:
- Rated (VAR) Buy, target $62.
- Rated (SPNC) Buy, target $17.
- Rated (HOLX) Buy, target $55.
Afternoon/Evening Headlines
Bloomberg:
- OPEC will rely on an informal agreement among members to cut supplies and won’t hold an emergency meeting, a spokesman for the group’s president said.
- Monster Worldwide(MNST) said founder Andrew McKelvey resigned as chairman and CEO, citing the time consumed by a probe of stock-options grants.
- Google(GOOG) agreed to buy YouTube Inc. for $1.65 billion in stock, adding the largest video-sharing site on the Web and an audience that watches more than 100 million clips a day.
BOTTOM LINE: The Portfolio finished higher today on gains in my Medical longs, Internet longs, Biotech longs, and Semi 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 heavy. Measures of investor anxiety were mostly higher into the close. Overall, today's market performance was mildly bullish. The underlying tone was even better as many market-leading stocks posted substantial gains. Oil finished only .20 higher, losing almost all of the morning’s OPEC cut announcement gains. I still expect oil to head into the low 50s before year-end. The CBOE total put/call and NYSE Arms are finished near session highs at above-average levels. As well, the ISE Sentiment Index is finished near session lows, at a low 111.0. I expect further gains in the major averages in the near-term as investors continue remain very skeptical of the advance.
Stocks Higher into Final Hour on a Reversal Lower in Oil Prices and Short-Covering
BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Semi longs, Biotech longs and Medical longs. I add a small long position in (LVLT) and took some more profits in my (TLT) long, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is higher, most sectors are gaining and volume is light. The major averages were rising even in the face of a bounce in energy prices this morning. I suspect it would take a move in oil back near $70 per barrel to significantly impact the market in a negative way. I don't anticipate that happening. The underlying market action today is much better than the averages suggest. I am seeing a number of growth stock leaders gain substantial upside traction. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, less pessimism, performance anxiety, a reversal lower in oil and bargain-hunting.
Today's Headlines
Bloomberg:
- North Korea said it detonated a nuclear bomb, hours after the Japanese and Chinese governments joined the UN Security Council in warning the communist country against proceeding with the test.
- Total SA, Europe’s largest oil refiner, unveiled France’s first pump station for flexible fuel, which is partly derived from organic matter, as the government promotes alternatives to crude oil.
- Google(GOOG) and YouTube boosted their rival video-sharing services by agreeing with three of the world’s largest record companies to add their music videos.
- President Bush condemned North Korea’s reported first nuclear test and call on the UN to take quick, decisive action.
- Thomas Lee, the billionaire buyout investor, plans to raise $400 million in an IPO for a fund to invest in hedge funds.
- Crude oil is rising $1.40/bbl. after OPEC said Saudi Arabia, Libya, Algeria, Kuwait, Venezuela and Nigeria will reduce output to stem a 23% plunge in prices.
- Goldman Sachs(GS) may receive a windfall of as much as $3.9 billion from Industrial & Commercial Bank of China’s record IPO.
- New Star Asset Management Group plc will sell an investment that tracks the hedge fund market and can be bought and sold like a company share. New Star will sell the Hedge ETS on the London Stock Exchange.
- Calyon, the investment-banking unit of Credit Agricole SA, France’s second-largest bank, said copper and aluminum prices will probably average lower than this year because of a “deceleration” in global economic growth.
Wall Street Journal:
- Toyota Motor(TM) will set between $10 billion and $13 billion in capital spending annually for the next few years to add manufacturing capacity, citing Mitsuo Kinoshita, a Toyota executive vice president.
- LVMH Moet Hennessy Louis Vuitton SA introduced factory style techniques to speed up production of luxury items that were previously individually handcrafted.
- PNC Financial Services Group(PNC) is close to buying Mercantile Bankshares Corp. for about $6 billion in stock and cash, as the Pittsburgh-based bank seeks to expand in the US Northeast.
- Target Corp.(TGT) has told film studios it is concerned downloading services have obtained better terms for online movies than it gets for DVDs.
- Google(GOOG) is close to completing an agreement to buy online video site YouTube Inc. for about $1.65 billion in stock and may announce the purchase today.
NY Times:
- The Dolan family of NY offered to take Cablevision Systems(CVC) private in a $19.2 billion leveraged buyout, citing a letter written by founder Charles Dolan and CEO James Dolan to the company’s board.
- US conservative Christians in southeastern Virginia, a battleground for House and Senate races, say the disclosure of former Representative Mark Foley’s behavior with pages reinforced their reasons to vote for their two Republican incumbents in close re-election races, citing interviews.
- Cingular Wireless LLC and Tellme Networks are developing a directory service that will let callers make Internet-like searches of telephone directories using voice recognition technology.
Reuters:
- Chevron Corp.(CVX) may start producing crude oil from a joint development zone shared by Sao Tome and Principe, and Nigeria, within 3 years.
AFP:
- Former Iraqi dictator Saddam Hussein’s genocide trial resumed today after an adjournment that began Sept. 26.
- Uganda will begin commercial oil production in three years, breaking its exclusive dependence on imports, citing President Yoweri Museveni.
Vedomosti:
- Starbucks(SBUX) will open its first Russian coffee shop next year.
Dagens Industri:
- Svenska Cellulosa AB, Europe’s biggest tissue maker, may invest in hydropower projects to secure its own electricity supply and counter high energy costs.
Iran Daily:
- Ayatollah Mohammad Kazemeini Boroujerdi, a prominent religious figure and his supporters, were arrested on Oct. 7 in Tehran, citing a senior security official. Boroujerdi is known for advocating “traditional religion” in which religion and politics are separated.
Independent:
- John Thain, the CEO of the NYSE(NYX), said long-term shareholders in big stock exchanges shouldn’t let themselves be pushed into disadvantageous mergers by hedge funds.
Interfax:
- Russia will raise gas output as much as 18% within 8 years as production begins at projects such as Shtokman and Kovytka, and increases at fields off Sakhalin Island, citing the Energy Minister.
- North Korea said it detonated a nuclear bomb, hours after the Japanese and Chinese governments joined the UN Security Council in warning the communist country against proceeding with the test.
- Total SA, Europe’s largest oil refiner, unveiled France’s first pump station for flexible fuel, which is partly derived from organic matter, as the government promotes alternatives to crude oil.
- Google(GOOG) and YouTube boosted their rival video-sharing services by agreeing with three of the world’s largest record companies to add their music videos.
- President Bush condemned North Korea’s reported first nuclear test and call on the UN to take quick, decisive action.
- Thomas Lee, the billionaire buyout investor, plans to raise $400 million in an IPO for a fund to invest in hedge funds.
- Crude oil is rising $1.40/bbl. after OPEC said Saudi Arabia, Libya, Algeria, Kuwait, Venezuela and Nigeria will reduce output to stem a 23% plunge in prices.
- Goldman Sachs(GS) may receive a windfall of as much as $3.9 billion from Industrial & Commercial Bank of China’s record IPO.
- New Star Asset Management Group plc will sell an investment that tracks the hedge fund market and can be bought and sold like a company share. New Star will sell the Hedge ETS on the London Stock Exchange.
- Calyon, the investment-banking unit of Credit Agricole SA, France’s second-largest bank, said copper and aluminum prices will probably average lower than this year because of a “deceleration” in global economic growth.
Wall Street Journal:
- Toyota Motor(TM) will set between $10 billion and $13 billion in capital spending annually for the next few years to add manufacturing capacity, citing Mitsuo Kinoshita, a Toyota executive vice president.
- LVMH Moet Hennessy Louis Vuitton SA introduced factory style techniques to speed up production of luxury items that were previously individually handcrafted.
- PNC Financial Services Group(PNC) is close to buying Mercantile Bankshares Corp. for about $6 billion in stock and cash, as the Pittsburgh-based bank seeks to expand in the US Northeast.
- Target Corp.(TGT) has told film studios it is concerned downloading services have obtained better terms for online movies than it gets for DVDs.
- Google(GOOG) is close to completing an agreement to buy online video site YouTube Inc. for about $1.65 billion in stock and may announce the purchase today.
NY Times:
- The Dolan family of NY offered to take Cablevision Systems(CVC) private in a $19.2 billion leveraged buyout, citing a letter written by founder Charles Dolan and CEO James Dolan to the company’s board.
- US conservative Christians in southeastern Virginia, a battleground for House and Senate races, say the disclosure of former Representative Mark Foley’s behavior with pages reinforced their reasons to vote for their two Republican incumbents in close re-election races, citing interviews.
- Cingular Wireless LLC and Tellme Networks are developing a directory service that will let callers make Internet-like searches of telephone directories using voice recognition technology.
Reuters:
- Chevron Corp.(CVX) may start producing crude oil from a joint development zone shared by Sao Tome and Principe, and Nigeria, within 3 years.
AFP:
- Former Iraqi dictator Saddam Hussein’s genocide trial resumed today after an adjournment that began Sept. 26.
- Uganda will begin commercial oil production in three years, breaking its exclusive dependence on imports, citing President Yoweri Museveni.
Vedomosti:
- Starbucks(SBUX) will open its first Russian coffee shop next year.
Dagens Industri:
- Svenska Cellulosa AB, Europe’s biggest tissue maker, may invest in hydropower projects to secure its own electricity supply and counter high energy costs.
Iran Daily:
- Ayatollah Mohammad Kazemeini Boroujerdi, a prominent religious figure and his supporters, were arrested on Oct. 7 in Tehran, citing a senior security official. Boroujerdi is known for advocating “traditional religion” in which religion and politics are separated.
Independent:
- John Thain, the CEO of the NYSE(NYX), said long-term shareholders in big stock exchanges shouldn’t let themselves be pushed into disadvantageous mergers by hedge funds.
Interfax:
- Russia will raise gas output as much as 18% within 8 years as production begins at projects such as Shtokman and Kovytka, and increases at fields off Sakhalin Island, citing the Energy Minister.
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