Indices
S&P 500 1,368.60 +.22%
DJIA 12,002.37 +.35%
NASDAQ 2,342.30 -.64%
Russell 2000 762.13 -.07%
Wilshire 5000 13,690.51 +.17%
S&P Barra Growth 635.34 +.56%
S&P Barra Value 731.11 -.12%
Morgan Stanley Consumer 663.57 +1.22%
Morgan Stanley Cyclical 848.11 -.83%
Morgan Stanley Technology 544.74 -1.82%
Transports 4,706.31 +1.04%
Utilities 447.46 +2.83%
MSCI Emerging Markets 101.80 -.10%
S&P 500 Cum A/D Line 8,381 unch.
Bloomberg Crude Oil % Bulls 28.6 -2.39%
CFTC Oil Large Speculative Longs 152,971 -4.0%
Put/Call .66 -21.43%
NYSE Arms 1.03 +15.73%
Volatility(VIX) 10.75 -7.0%
ISE Sentiment 146.0 -.68%
AAII % Bulls 54.20 +10.7%
AAII % Bears 29.77 -21.2%
US Dollar 86.27 -.98%
CRB 305.74 +.77%
ECRI Weekly Leading Index 135.50 +.59%
Futures Spot Prices
Crude Oil 59.33 -1.62%
Unleaded Gasoline 146.72 unch.
Natural Gas 7.24 +27.6%
Heating Oil 168.0 -2.30%
Gold 594.60 -.78%
Base Metals 247.0 +2.37%
Copper 346.0 -3.28%
10-year US Treasury Yield 4.78% -.41%
Average 30-year Mortgage Rate 6.36% -.16%
Leading Sectors
Airlines +4.53%
HMOs +3.05%
Drugs +2.92%
Utilities +2.83%
Oil Service +2.25%
Lagging Sectors
Papers -1.83%
I-Banks -1.96%
Defense -2.32%
Oil Tankers -2.67%
Semis -5.10%
One-Week High-Volume Gainers
One-Week High-Volume Losers
*5-Day % Change
Friday, October 20, 2006
Stocks Slightly Lower on Profit-taking as Oil Falls to New Lows for the Year
BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Biotech longs and Computer 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 lower, sector performance is mixed and volume is above average. U.K. housing prices surged 11.5% year-over-year, in the most recent survey, to record highs. The reason this is significant is that their downturn began before ours. The U.K.'s economy was even more levered to housing. Their "bubble" was supposedly bigger, according to industry analysts. The Lex column in the Financial Times is saying today that the number of new houses in the U.K. won't catch up to the number of new households for a decade. I continue to believe U.S. housing is in the process of stabilizing at relatively high levels and that the bears are greatly exaggerating the slowdown's overall negative impact on the U.S. economy. I expect US stocks to trade modestly higher into the close from current levels on short-covering, bargain-hunting, lower energy prices and investment manager performance anxiety.
Today's Headlines
Bloomberg:
- Crude oil is falling another $1.80/bbl. to the lowest this year in New York as traders said OPEC members will fail to cut production by 1.2 million barrels a day as planned.
- Russia will maintain its current oil production despite cuts from OPEC.
- A 20-year-old Wisconsin man was charged with making false threats on the Internet to detonate “dirty bombs” at seven NFL stadiums, federal prosecutors said.
- Goldman Sachs(GS), which urged investors to buy wheat futures five months ago, advised them to sell after prices surged recently. Goldman maintained its hold rating on corn.
- BHP Billiton Ltd.(BHP) may start drilling for oil and gas in the Orange Basin off the South African west coast in the next two years.
- Billionaire investor Carl Icahn moved closer to gaining control of ImClone Systems with the naming of an additional ally to the biotech company’s board.
- Iraqi religious leaders will meet late today in the Muslim holy city of Mecca, Saudi Arabia, in an effort to halt sectarian violence in their country.
Wall Street Journal:
- NBC Universal Television Group’s plan to drop prime-time high-cost dramas may hurt the network’s brand image and ability to attract viewers, citing industry officials.
- Young Republicans are flourishing at Univ. of California Berkeley, underscoring how the former bastion of liberal political thinking has filled with a more conservative student body.
- Eli Lilly’s(LLY) $2.1 billion purchase of Bothell, Washington-based biotech company ICOS may turn out to be a bargain because its product may have wider applications.
- Wal-Mart’s(WMT) unit, Sam’s Club, has hired a new advertising agency and it plans flashier marketing to lure customers this Christmas shopping season.
- Advanced Medical Optics(EYE), which makes devices for eye surgery, and rival Alcon Labs have started to market multi-focal lens implants as luxury items in an effort to spur sales.
NY Times:
- China may reduce oil shipments to North Korea if the latter conducts more nuclear test or refuses to return to negotiations, citing Chinese government advisers.
- The College Board, a powerful US educational organization, is studying whether virtual chemistry laboratories, used by 150,000 students, are an acceptable substitute for real lab work.
NY Daily News:
- Cantor Fitzgerald LP CEO Lutnick has conditionally pledged $25 million toward the construction of the World Trade Center Memorial.
Star-Ledger of Newark:
- New Jersey’s Assembly Appropriations Committee approved a measure to spend $270 million building stem-cell and biomedical-research facilities.
Petroleum Intelligence Weekly:
- European refiners expect a “flood” of Azeri Light crude oil as pumping volumes increase through the Baku-Tbilisi-Ceyhan pipeline.
Financial Times:
- UK housing price rises have not fallen to the level of household income growth, which suggests that supply of new homes is far outdistanced by demand. UK home prices rose 11.5% over the last year in the month ended Oct. 7, citing Rightmove Plc data. In contrast, real disposable income grew only 1.5% in the second quarter. The number of new houses will not catch up with the number of new households for at least a decade.
Handelsblatt:
- German companies invested less in Chinese businesses last year than competitors from the US and UK.
Chosun Ilbo:
- North Korean leader Kim Jong Il apologized to China for conducting a nuclear weapons test, during a meeting in Pyongyang with Chinese State Councilor Tang Jiaxuan.
- Crude oil is falling another $1.80/bbl. to the lowest this year in New York as traders said OPEC members will fail to cut production by 1.2 million barrels a day as planned.
- Russia will maintain its current oil production despite cuts from OPEC.
- A 20-year-old Wisconsin man was charged with making false threats on the Internet to detonate “dirty bombs” at seven NFL stadiums, federal prosecutors said.
- Goldman Sachs(GS), which urged investors to buy wheat futures five months ago, advised them to sell after prices surged recently. Goldman maintained its hold rating on corn.
- BHP Billiton Ltd.(BHP) may start drilling for oil and gas in the Orange Basin off the South African west coast in the next two years.
- Billionaire investor Carl Icahn moved closer to gaining control of ImClone Systems with the naming of an additional ally to the biotech company’s board.
- Iraqi religious leaders will meet late today in the Muslim holy city of Mecca, Saudi Arabia, in an effort to halt sectarian violence in their country.
Wall Street Journal:
- NBC Universal Television Group’s plan to drop prime-time high-cost dramas may hurt the network’s brand image and ability to attract viewers, citing industry officials.
- Young Republicans are flourishing at Univ. of California Berkeley, underscoring how the former bastion of liberal political thinking has filled with a more conservative student body.
- Eli Lilly’s(LLY) $2.1 billion purchase of Bothell, Washington-based biotech company ICOS may turn out to be a bargain because its product may have wider applications.
- Wal-Mart’s(WMT) unit, Sam’s Club, has hired a new advertising agency and it plans flashier marketing to lure customers this Christmas shopping season.
- Advanced Medical Optics(EYE), which makes devices for eye surgery, and rival Alcon Labs have started to market multi-focal lens implants as luxury items in an effort to spur sales.
NY Times:
- China may reduce oil shipments to North Korea if the latter conducts more nuclear test or refuses to return to negotiations, citing Chinese government advisers.
- The College Board, a powerful US educational organization, is studying whether virtual chemistry laboratories, used by 150,000 students, are an acceptable substitute for real lab work.
NY Daily News:
- Cantor Fitzgerald LP CEO Lutnick has conditionally pledged $25 million toward the construction of the World Trade Center Memorial.
Star-Ledger of Newark:
- New Jersey’s Assembly Appropriations Committee approved a measure to spend $270 million building stem-cell and biomedical-research facilities.
Petroleum Intelligence Weekly:
- European refiners expect a “flood” of Azeri Light crude oil as pumping volumes increase through the Baku-Tbilisi-Ceyhan pipeline.
Financial Times:
- UK housing price rises have not fallen to the level of household income growth, which suggests that supply of new homes is far outdistanced by demand. UK home prices rose 11.5% over the last year in the month ended Oct. 7, citing Rightmove Plc data. In contrast, real disposable income grew only 1.5% in the second quarter. The number of new houses will not catch up with the number of new households for at least a decade.
Handelsblatt:
- German companies invested less in Chinese businesses last year than competitors from the US and UK.
Chosun Ilbo:
- North Korean leader Kim Jong Il apologized to China for conducting a nuclear weapons test, during a meeting in Pyongyang with Chinese State Councilor Tang Jiaxuan.
Thursday, October 19, 2006
Friday Watch
Late-Night Headlines
Bloomberg:
- The Dow Jones Industrial Average closed above 12,000 for the first time, hitting another all-time high, after Coca-Cola’s(KO) profit beat analysts’ estimates and Lehman Brothers(LEH) predicted faster earnings growth for telephone companies.
- OPEC agreed to cut production by 1.2 million barrels a day to stem a three-month plunge in prices.
- Crude oil rose for a second day in NY after OPEC increased the size of a planned output cut to 1.2 million barrels a day and said it may reduce production again in December.
- Sony Corp.(SNE) will have more than 20 games for the new PlayStation 3 console for the holiday season as the company strives to build enthusiasm for the new system.
- Hedge funds attracted $44.5 billion from wealthy investors and institutions in the past three months, the most in one quarter since at least 2003, according to a new report by Hedge Fund Research.
- Google(GOOG) said third-quarter profit almost doubled, beating analysts’ estimates, as the world’s most-used Internet search engine sold more advertising and extended its lead over Yahoo!(YHOO). The shares rose 7% in after hours trading.
Wall Street Journal:
- Chinese banks have begun to halt transactions with North Korea as China seeks ways to pressure its ally to abandon further nuclear weapon tests and return to disarmament talks.
Financial Times:
- Ford Motor(F) may receive a bid for its Aston Martin brand from billionaires Bernard Arnault and Albert Frere.
- The European Union and Kazakhstan, Central Asia’s biggest energy producer, plan to form an energy alliance which would give European companies access to the Central Asian country’s large oil reserves.
AFP:
- A UK Muslim teaching assistant who was suspended for refusing to remove her veil in the classroom has lost a case of discrimination and harassment.
China Secrities Journal:
- Shanxi, China’s largest coal-producing province, will spend $1.14 billion extracting coal bed methane to fuel power generation.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (WYE), target $63.
- Reiterated Buy on (UNH), target $81.
- Reiterated Buy on (PKTR), target $15.
- Downgraded (APCC) to sell, target $17.
Business Week:
- The shares of Sonus Pharmaceuticals(SNUS) may almost double in a year, citing Needham analyst Mark Monane.
- Legg Mason(LM) may rise to $120 within 18 months because its earnings will exceed analyst estimates, citing Roge Partners Fund’s Steven Roge.
Night Trading
Asian Indices are +.25% to +.50% on average.
S&P 500 indicated +.06%.
NASDAQ 100 indicated +.10%.
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
- (MMM)/1.12
- (ACMR)/-.05
- (ACI)/.40
- (CAT)/1.35
- (HCA)/.65
- (MRK)/.50
- (SGP)/.15
- (SLB)/.77
- (VFC)/1.67
Upcoming Splits
- None of note
Economic Releases
- None of note
Bloomberg:
- The Dow Jones Industrial Average closed above 12,000 for the first time, hitting another all-time high, after Coca-Cola’s(KO) profit beat analysts’ estimates and Lehman Brothers(LEH) predicted faster earnings growth for telephone companies.
- OPEC agreed to cut production by 1.2 million barrels a day to stem a three-month plunge in prices.
- Crude oil rose for a second day in NY after OPEC increased the size of a planned output cut to 1.2 million barrels a day and said it may reduce production again in December.
- Sony Corp.(SNE) will have more than 20 games for the new PlayStation 3 console for the holiday season as the company strives to build enthusiasm for the new system.
- Hedge funds attracted $44.5 billion from wealthy investors and institutions in the past three months, the most in one quarter since at least 2003, according to a new report by Hedge Fund Research.
- Google(GOOG) said third-quarter profit almost doubled, beating analysts’ estimates, as the world’s most-used Internet search engine sold more advertising and extended its lead over Yahoo!(YHOO). The shares rose 7% in after hours trading.
Wall Street Journal:
- Chinese banks have begun to halt transactions with North Korea as China seeks ways to pressure its ally to abandon further nuclear weapon tests and return to disarmament talks.
Financial Times:
- Ford Motor(F) may receive a bid for its Aston Martin brand from billionaires Bernard Arnault and Albert Frere.
- The European Union and Kazakhstan, Central Asia’s biggest energy producer, plan to form an energy alliance which would give European companies access to the Central Asian country’s large oil reserves.
AFP:
- A UK Muslim teaching assistant who was suspended for refusing to remove her veil in the classroom has lost a case of discrimination and harassment.
China Secrities Journal:
- Shanxi, China’s largest coal-producing province, will spend $1.14 billion extracting coal bed methane to fuel power generation.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (WYE), target $63.
- Reiterated Buy on (UNH), target $81.
- Reiterated Buy on (PKTR), target $15.
- Downgraded (APCC) to sell, target $17.
Business Week:
- The shares of Sonus Pharmaceuticals(SNUS) may almost double in a year, citing Needham analyst Mark Monane.
- Legg Mason(LM) may rise to $120 within 18 months because its earnings will exceed analyst estimates, citing Roge Partners Fund’s Steven Roge.
Night Trading
Asian Indices are +.25% to +.50% on average.
S&P 500 indicated +.06%.
NASDAQ 100 indicated +.10%.
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
- (MMM)/1.12
- (ACMR)/-.05
- (ACI)/.40
- (CAT)/1.35
- (HCA)/.65
- (MRK)/.50
- (SGP)/.15
- (SLB)/.77
- (VFC)/1.67
Upcoming Splits
- None of note
Economic Releases
- None of note
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and commodity 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.
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