BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Telecom longs and Biotech longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is higher, most sectors are rising and volume is about average. An even more divided Senate, a House with many newly elected Democrats running to the right, a Republican President and Hillary Clinton likely running as a moderate in 08 should produce significant gridlock and result in much less market and economic damage than the many stock market bears would like. In my opinion, the 2008 election will have a much greater impact on the direction of the economy and stock market. Health care-related stocks are the only group under meaningful pressure today. I suspect the major averages have begun another meaningful surge higher into year-end. According to theflyonthewall.com, Reuters is reporting that Apple Computer (AAPL) executive Phil Schiller is saying that interest in the new iPod shuffle is "extremely high." He also said that shipments of the product began "when we expected" and that the company is "really excited" about the upcoming holiday period. The stock is rising to session highs on the report. I still see substantial upside in the shares and it remains my second largest long position behind Google (GOOG). I expect US stocks to trade modestly higher into the close from current levels on short-covering, performance anxiety, declining interest rates and less irrational pessimism.
Wednesday, November 08, 2006
Stocks Higher into Final Hour on Short-Covering, Less Political Uncertainty and Lower Long-term Interest Rates
Today's Headlines
Bloomberg:
- Defense Secretary Donald Rumsfeld, unable to fulfill US goals in Iraq and Afghanistan during his tenure, is stepping down and will be replaced by former CIA Director Robert Gates, President Bush said.
- Ethanol production in Japan may more than double by 2020 to 502 million gallons.
- Venezuelan President Hugo Chavez said oil prices should not fall under $50 a barrel and pledged to work with OPEC and non-OPEC states to keep prices from sliding further.
- Brazil’s 60% share of the world’s trade in ethanol is being challenged by China, according to Cargill, the largest US agricultural company.
- US ethanol production may rise to 15 billion gallons a year by 2013, allowing for every gallon of gasoline in the country to contain 10% of the alternative fuel, the Clean Fuels Development Coalition said.
- Kuwait may build a refinery in Louisiana, the second-largest crude-oil processing state in the US, as it seeks to invest more of its oil earnings outside the Middle East, the country’s oil minister said.
- Japan’s support for the US in Iraq won’t be affected by the outcome of the mid-term US elections, Japan’s Prime Minister Shinzo Abe said.
- Pakistan’s security forces will combat and crush the threat of terrorism threatening the country, President Pervez Musharraf told military commanders.
- Australia’s central bank raised its benchmark interest rate to the highest in almost six years to curb inflation, risking an economic slowdown as households grapple with record debt.
- A Cezanne still-life sold for $37 million and a Modigliani portrait of a boy fetched $31.1 million at Sotheby’s(BID) impressionist and modern art sale last night in NY, highlighting the largest single auction since 1990.
- Shares of drugmakers including Pfizer(PFE) and health-insurance providers such as Humana(HUM) fell after voters handed control of the US House of Representatives to Democrats who pledged to control pharmaceutical spending.
Wall Street Journal:
- Google Inc.(GOOG) is adding staff to capture more sales for advertising carried by large radio companies.
NY Times:
- Technological advancements in deepwater drilling have helped increase production in the Gulf of Mexico, tagged “the Dead Sea” a decade ago and abandoned by energy companies. About 40 billion barrels of undiscovered reserves lie in the deep water, enough to satisfy US consumption for more than five years.
- “Several thousand” people have returned to their homes in Sudan’s battle-stricken Darfur region. Some places such as corners in the southwester part of Darfur are peaceful now, citing aid workers.
Loyd’s List:
- UK oil producers will spend $572 billion to extract the North Sea’s remaining reserves, citing Malcolm Webb, CEO of the UK Offshore Operators Assoc. The UK will be able to produce 60% of its own oil requirements, and 20% of its gas needs by 2020, Webb said.
Xinhua News:
- China discovered a coal mine with estimated reserves of 6.4 billion tons in the northern Inner Mongolia Autonomous Region.
- Defense Secretary Donald Rumsfeld, unable to fulfill US goals in Iraq and Afghanistan during his tenure, is stepping down and will be replaced by former CIA Director Robert Gates, President Bush said.
- Ethanol production in Japan may more than double by 2020 to 502 million gallons.
- Venezuelan President Hugo Chavez said oil prices should not fall under $50 a barrel and pledged to work with OPEC and non-OPEC states to keep prices from sliding further.
- Brazil’s 60% share of the world’s trade in ethanol is being challenged by China, according to Cargill, the largest US agricultural company.
- US ethanol production may rise to 15 billion gallons a year by 2013, allowing for every gallon of gasoline in the country to contain 10% of the alternative fuel, the Clean Fuels Development Coalition said.
- Kuwait may build a refinery in Louisiana, the second-largest crude-oil processing state in the US, as it seeks to invest more of its oil earnings outside the Middle East, the country’s oil minister said.
- Japan’s support for the US in Iraq won’t be affected by the outcome of the mid-term US elections, Japan’s Prime Minister Shinzo Abe said.
- Pakistan’s security forces will combat and crush the threat of terrorism threatening the country, President Pervez Musharraf told military commanders.
- Australia’s central bank raised its benchmark interest rate to the highest in almost six years to curb inflation, risking an economic slowdown as households grapple with record debt.
- A Cezanne still-life sold for $37 million and a Modigliani portrait of a boy fetched $31.1 million at Sotheby’s(BID) impressionist and modern art sale last night in NY, highlighting the largest single auction since 1990.
- Shares of drugmakers including Pfizer(PFE) and health-insurance providers such as Humana(HUM) fell after voters handed control of the US House of Representatives to Democrats who pledged to control pharmaceutical spending.
Wall Street Journal:
- Google Inc.(GOOG) is adding staff to capture more sales for advertising carried by large radio companies.
NY Times:
- Technological advancements in deepwater drilling have helped increase production in the Gulf of Mexico, tagged “the Dead Sea” a decade ago and abandoned by energy companies. About 40 billion barrels of undiscovered reserves lie in the deep water, enough to satisfy US consumption for more than five years.
- “Several thousand” people have returned to their homes in Sudan’s battle-stricken Darfur region. Some places such as corners in the southwester part of Darfur are peaceful now, citing aid workers.
Loyd’s List:
- UK oil producers will spend $572 billion to extract the North Sea’s remaining reserves, citing Malcolm Webb, CEO of the UK Offshore Operators Assoc. The UK will be able to produce 60% of its own oil requirements, and 20% of its gas needs by 2020, Webb said.
Xinhua News:
- China discovered a coal mine with estimated reserves of 6.4 billion tons in the northern Inner Mongolia Autonomous Region.
Wednesday Watch
Late-Night Headlines
Bloomberg:
- Democrats are on the verge of taking control of the US House of Representatives for the first time in 12 years, while the US Senate is still too close to call with a recount likely in Virginia.
- Microsoft Corp.(MSFT) will pay $442 million to Novell(NOVL) in a technology accord signed last week to make their rival server software work together.
- The prices of London’s most-expensive homes are rising at the fastest pace in 18 years as bankers, traders and hedge fund managers anticipate record bonuses this year, real estate adviser Knight Frank LLC said.
- China will complete a highway across the world’s biggest sandy desert, near the ancient Silk Road, six months before schedule to tap oil fields in the west of the country and reduce reliance on imports.
- The US and its European allies differ so greatly from China and Russia over how to prevent Iran from developing nuclear weapons that a compromise on UN action may be impossible, China’s ambassador said.
Financial Times:
- Microsoft Corp.(MSFT) may offer some of its Office desktop software tools over the Internet, citing Bill Gates.
London-based Times:
- Ousted Iraqi dictator Saddam Hussein, convicted of crimes against humanity, could be executed by the end of this year, citing Iraqi Prime Minister Nuri al-Maliki.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (MGA), target $84.
- Downgraded (OSIP) to Sell, target $28.
Night Trading
Asian Indices are -.75% to unch. on average.
S&P 500 indicated -.22%.
NASDAQ 100 indicated -.17%.
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
- (UHAL)/2.95
- (BRL)/.74
- (BMC)/.32
- (CELL)/.18
- (CVC)/-.15
- (CSCO)/.29
- (CTRP)/.24
- (DYN)/.09
- (FD)/.25
- (FWLT)/.49
- (IPG)/-.14
- (LAMR)/.17
- (NWS/A)/.20
- (PCG)/.67
- (RL)/1.06
- (PCLN)/.67
- (SIRI)/-.14
- (BID)/-.33
Upcoming Splits
- None of note
Economic Releases
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil build of 750,000 barrels versus a 1,910,000 barrel increase the prior week. Gasoline inventories are expected to remain unchanged versus a 2,799,000 barrel decline the prior week. Distillate supplies are estimated to fall 800,000 barrels versus a 2,723,000 barrel decline the prior week. Finally, refinery utilization is expected to increase .5% versus a 2.72% rise the prior week.
Bloomberg:
- Democrats are on the verge of taking control of the US House of Representatives for the first time in 12 years, while the US Senate is still too close to call with a recount likely in Virginia.
- Microsoft Corp.(MSFT) will pay $442 million to Novell(NOVL) in a technology accord signed last week to make their rival server software work together.
- The prices of London’s most-expensive homes are rising at the fastest pace in 18 years as bankers, traders and hedge fund managers anticipate record bonuses this year, real estate adviser Knight Frank LLC said.
- China will complete a highway across the world’s biggest sandy desert, near the ancient Silk Road, six months before schedule to tap oil fields in the west of the country and reduce reliance on imports.
- The US and its European allies differ so greatly from China and Russia over how to prevent Iran from developing nuclear weapons that a compromise on UN action may be impossible, China’s ambassador said.
Financial Times:
- Microsoft Corp.(MSFT) may offer some of its Office desktop software tools over the Internet, citing Bill Gates.
London-based Times:
- Ousted Iraqi dictator Saddam Hussein, convicted of crimes against humanity, could be executed by the end of this year, citing Iraqi Prime Minister Nuri al-Maliki.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (MGA), target $84.
- Downgraded (OSIP) to Sell, target $28.
Night Trading
Asian Indices are -.75% to unch. on average.
S&P 500 indicated -.22%.
NASDAQ 100 indicated -.17%.
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
- (UHAL)/2.95
- (BRL)/.74
- (BMC)/.32
- (CELL)/.18
- (CVC)/-.15
- (CSCO)/.29
- (CTRP)/.24
- (DYN)/.09
- (FD)/.25
- (FWLT)/.49
- (IPG)/-.14
- (LAMR)/.17
- (NWS/A)/.20
- (PCG)/.67
- (RL)/1.06
- (PCLN)/.67
- (SIRI)/-.14
- (BID)/-.33
Upcoming Splits
- None of note
Economic Releases
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil build of 750,000 barrels versus a 1,910,000 barrel increase the prior week. Gasoline inventories are expected to remain unchanged versus a 2,799,000 barrel decline the prior week. Distillate supplies are estimated to fall 800,000 barrels versus a 2,723,000 barrel decline the prior week. Finally, refinery utilization is expected to increase .5% versus a 2.72% rise the prior week.
BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity shares in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.
Tuesday, November 07, 2006
Dow Jones Industrial Average Makes Another All-Time High on Falling Energy Prices and Lower Long-term Interest Rates
Indices
S&P 500 1,382.84 +.22%
DJIA 12,156.77 +.42%
NASDAQ 2,375.88 +.42%
Russell 2000 764.39 +.17%
Wilshire 5000 13,835.35 +.20%
S&P Barra Growth 642.48 +.23%
S&P Barra Value 738.13 +.21%
Morgan Stanley Consumer 674.86 +.47%
Morgan Stanley Cyclical 854.68 -.05%
Morgan Stanley Technology 556.69 +.32%
Transports 4,718.71 +.51%
Utilities 442.61 -.17%
Put/Call .76 +1.33%
NYSE Arms 1.11 +77.16%
Volatility(VIX) 11.09 -.63%
ISE Sentiment 172.0 +6.17%
US Dollar 85.41 -.40%
CRB 311.25 -.15%
Futures Spot Prices
Crude Oil 59.07 -1.58%
Unleaded Gasoline 152.45 -.29%
Natural Gas 7.75 +3.52%
Heating Oil 168.30 -2.06%
Gold 626.50 -.19%
Base Metals 248.82 +1.67%
Copper 335.0 -.46%
10-year US Treasury Yield 4.66% -.76%
Leading Sectors
Semis +1.91%
Airlines +1.57%
Networking +1.17%
Lagging Sectors
Energy -.92%
REITs -1.02%
Coal -2.05%
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
Bank of America:
- Rated (RCL) Buy, target $49.
- Rated (CCL) Buy, target $54.
- Rated (ATVI) Buy, target $19.
- Rated (THQI) Buy, target $36.
Afternoon/Evening Headlines
Bloomberg:
- The DJIA made another all-time high today and is 13% higher for the year.
- Crude oil fell more than $1/bbl. to $58.93/bbl. on speculation that US inventories rose and doubts that OPEC will make promised output cuts.
- Hedge funds globally returned an average of 1.98% in October as manager failed to keep pace with gains by the S&P 500 and other market benchmarks, according to data compiled by Hedge Fund Research.
- National Semi(NSM) said second-quarter revenue will decline more than previously thought. The stock fell .25 cents in after-hours trading.
- Consumer borrowing in the US unexpectedly declined for the first time in six months in September as Americans took out fewer car loans and spent less at the gasoline pump.
- Saudi Aramco, the world’s largest state-owned oil company, expects in coming months to finish hiring all the rigs it needs to explore for oil and natural gas for years.
Wall Street Journal:
- Dean Baquet, editor of the LA Times, will leave under pressure from newspaper owner Tribune(TRB).
Die Welt:
- German Chancellor Angela Merkel’s panel of economic advisers, known as the Five Wise Men, expect the economy to grow 1.8% next year after expanding 2.4% in 2006.
S&P 500 1,382.84 +.22%
DJIA 12,156.77 +.42%
NASDAQ 2,375.88 +.42%
Russell 2000 764.39 +.17%
Wilshire 5000 13,835.35 +.20%
S&P Barra Growth 642.48 +.23%
S&P Barra Value 738.13 +.21%
Morgan Stanley Consumer 674.86 +.47%
Morgan Stanley Cyclical 854.68 -.05%
Morgan Stanley Technology 556.69 +.32%
Transports 4,718.71 +.51%
Utilities 442.61 -.17%
Put/Call .76 +1.33%
NYSE Arms 1.11 +77.16%
Volatility(VIX) 11.09 -.63%
ISE Sentiment 172.0 +6.17%
US Dollar 85.41 -.40%
CRB 311.25 -.15%
Futures Spot Prices
Crude Oil 59.07 -1.58%
Unleaded Gasoline 152.45 -.29%
Natural Gas 7.75 +3.52%
Heating Oil 168.30 -2.06%
Gold 626.50 -.19%
Base Metals 248.82 +1.67%
Copper 335.0 -.46%
10-year US Treasury Yield 4.66% -.76%
Leading Sectors
Semis +1.91%
Airlines +1.57%
Networking +1.17%
Lagging Sectors
Energy -.92%
REITs -1.02%
Coal -2.05%
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
Bank of America:
- Rated (RCL) Buy, target $49.
- Rated (CCL) Buy, target $54.
- Rated (ATVI) Buy, target $19.
- Rated (THQI) Buy, target $36.
Afternoon/Evening Headlines
Bloomberg:
- The DJIA made another all-time high today and is 13% higher for the year.
- Crude oil fell more than $1/bbl. to $58.93/bbl. on speculation that US inventories rose and doubts that OPEC will make promised output cuts.
- Hedge funds globally returned an average of 1.98% in October as manager failed to keep pace with gains by the S&P 500 and other market benchmarks, according to data compiled by Hedge Fund Research.
- National Semi(NSM) said second-quarter revenue will decline more than previously thought. The stock fell .25 cents in after-hours trading.
- Consumer borrowing in the US unexpectedly declined for the first time in six months in September as Americans took out fewer car loans and spent less at the gasoline pump.
- Saudi Aramco, the world’s largest state-owned oil company, expects in coming months to finish hiring all the rigs it needs to explore for oil and natural gas for years.
Wall Street Journal:
- Dean Baquet, editor of the LA Times, will leave under pressure from newspaper owner Tribune(TRB).
Die Welt:
- German Chancellor Angela Merkel’s panel of economic advisers, known as the Five Wise Men, expect the economy to grow 1.8% next year after expanding 2.4% in 2006.
BOTTOM LINE: The Portfolio finished slightly higher today on gains in my Retail longs, Semi longs and Telecom longs. I did not trade in the final hour, thus leaving the Portfolio 100% net long. The tone of the market was modestly positive today as the advance/decline line finished slightly higher, most sectors gained and volume was above average. Measures of investor anxiety were mostly higher into the close. Today's overall market action was bullish. The DJIA made another all-time high. The market's ability to build on yesterday's sharp gains into still significant election uncertainty was a positive. The 10-year treasury finished off session highs, but the yield was still 3 basis points lower on the day. Technology and Consumer stocks outperformed throughout the day. I expect stocks to build on this week's gains towards week's end after a brief pause.
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