BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Semi longs, Medical 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 modestly lower, most sectors are rising and volume is below average. Considering the weakness in Asia last night, today’s slight losses aren't too bad. A number of sectors are higher, led by steel and reits. Phelps Dodge (PD) is surging on FCX's takeover bid. Freeport's CEO Adkerson said the deal would be accretive unless copper falls "significantly" from current levels. I think copper will fall significantly from current levels and the deal won't be accretive for years. In my opinion, (FCX) vastly overpaid for (PD) and the stock is now an excellent short. The 10-year yield is stable after leading indicators came in at estimates. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, investor performance anxiety, more economic optimism and buyout speculation.
Monday, November 20, 2006
Stocks Slightly Lower into Final Hour on Profit-taking
Today's Headlines
Bloomberg:
- Natural gas is falling in NY as speculators trim bets amid record inventories and forecasts for a milder-than-normal winter.
- US Treasury Secretary Henry Paulson said a thicket of accounting and governance rules may pose a risk to the US economy and he plans to host a conference early next year to sort through the issue.
- Evraz Group SA, a steelmaker partly owned by billionaire Roman Abramovich, agreed to buy Oregon Steel Mills(OS) for $2.3 billion, the biggest-ever purchase in the US by a Russian company.
- Boston Properties(BXP), the real estate trust run by billionaire Mortimer Zuckerman, agreed to sell 5 Times Square for about $1.28 billion, a record price for a NYC office tower.
- Bank of America(BAC) will buy US Trust, the private-banking unit of Charles Schwab(SCHW), for $3.3 billion in cash to better compete for wealthy clients against Citigroup(C) and JPMorgan(JPM).
- Nasdaq Stocks Market(NDAQ) renewed its bid for London Stock Exchange Group Plc, sweetening an unsolicited offer that values Europe’s biggest equity market at about $5.1 billion.
- The price of zinc, used to galvanize steel, may fall 14% by 2008 as the market moves into “significant” surplus on rising production, Canaccord Adams said.
- Blackstone Alternative Asset Management will begin seeding hedge funds next year.
Wall Street Journal:
- US Airways Group is seeking to gain backing for its $8.67 billion hostile takeover for bankrupt rival Delta Air Lines from bondholders and other creditors who don’t belong to Delta’s creditors committee.
- Shareholder motions at US company annual meetings aimed at limiting executive pay could double in 2007 from this year.
- Walt Disney(DIS) and Mattel(MAT) are among companies facing toy shortages this holiday season because of stronger-than-expected US consumer demand and labor problems in Chinese toy factories.
NY Times:
- Yahoo! and seven US newspaper groups representing 176 publications have agreed to share content, advertising and technology.
AP:
- Iran has invited Iraqi President Jalal Talabani and his Syrian counterpart, Bashar al-Assad, to a meeting this weekend in Tehran with Iranian President Mahmoud Ahmadinejad to discuss how to stabilize Iraq.
Aftenposten:
- Statoil ASA, Norway’s largest oil company, will double the number of exploration wells it drills this year to about 40 as it hunts for new oil and gas reserves, the company’s CEO said.
La Tribune:
- The French population is ready to accept overhauls in the labor market and the education and pension systems, citing an Ipsos poll.
al-Awsat:
- Saudi Arabia and the UAE are among Arab Gulf states that want Iran to confirm it’s not enriching uranium to develop nuclear weapons.
Corriere della Sera:
- Egyptian President Hosni Mubarak said the sudden withdrawal of foreign troops from Iraq would aggravate tensions in the Middle East.
- Natural gas is falling in NY as speculators trim bets amid record inventories and forecasts for a milder-than-normal winter.
- US Treasury Secretary Henry Paulson said a thicket of accounting and governance rules may pose a risk to the US economy and he plans to host a conference early next year to sort through the issue.
- Evraz Group SA, a steelmaker partly owned by billionaire Roman Abramovich, agreed to buy Oregon Steel Mills(OS) for $2.3 billion, the biggest-ever purchase in the US by a Russian company.
- Boston Properties(BXP), the real estate trust run by billionaire Mortimer Zuckerman, agreed to sell 5 Times Square for about $1.28 billion, a record price for a NYC office tower.
- Bank of America(BAC) will buy US Trust, the private-banking unit of Charles Schwab(SCHW), for $3.3 billion in cash to better compete for wealthy clients against Citigroup(C) and JPMorgan(JPM).
- Nasdaq Stocks Market(NDAQ) renewed its bid for London Stock Exchange Group Plc, sweetening an unsolicited offer that values Europe’s biggest equity market at about $5.1 billion.
- The price of zinc, used to galvanize steel, may fall 14% by 2008 as the market moves into “significant” surplus on rising production, Canaccord Adams said.
- Blackstone Alternative Asset Management will begin seeding hedge funds next year.
Wall Street Journal:
- US Airways Group is seeking to gain backing for its $8.67 billion hostile takeover for bankrupt rival Delta Air Lines from bondholders and other creditors who don’t belong to Delta’s creditors committee.
- Shareholder motions at US company annual meetings aimed at limiting executive pay could double in 2007 from this year.
- Walt Disney(DIS) and Mattel(MAT) are among companies facing toy shortages this holiday season because of stronger-than-expected US consumer demand and labor problems in Chinese toy factories.
NY Times:
- Yahoo! and seven US newspaper groups representing 176 publications have agreed to share content, advertising and technology.
AP:
- Iran has invited Iraqi President Jalal Talabani and his Syrian counterpart, Bashar al-Assad, to a meeting this weekend in Tehran with Iranian President Mahmoud Ahmadinejad to discuss how to stabilize Iraq.
Aftenposten:
- Statoil ASA, Norway’s largest oil company, will double the number of exploration wells it drills this year to about 40 as it hunts for new oil and gas reserves, the company’s CEO said.
La Tribune:
- The French population is ready to accept overhauls in the labor market and the education and pension systems, citing an Ipsos poll.
al-Awsat:
- Saudi Arabia and the UAE are among Arab Gulf states that want Iran to confirm it’s not enriching uranium to develop nuclear weapons.
Corriere della Sera:
- Egyptian President Hosni Mubarak said the sudden withdrawal of foreign troops from Iraq would aggravate tensions in the Middle East.
Leading Indicators Project Accelerating US Growth
- Leading Indicators for October rose .2% versus estimates of a .2% increase and an upwardly revised .4% gain in September.
BOTTOM LINE: An index of leading US economic indicators rose in October, driven by growing optimism among consumers and gains in stock prices, Bloomberg said. Consumer expectations jumped to a 15-month high in the latest Univ. of Mich. Consumer Confidence report and the S&P 500 has surged 15.6% from June lows. I expect 4Q US GDP growth to rise more than estimates of 2.5% as the deflator subtracts less from growth than most expect. Growth of around 3% is likely.
Sunday, November 19, 2006
Monday Watch
Weekend Headlines
Bloomberg:
- Democratic Representative Charles Rangel said he will again introduce legislation to revive a US military draft when his party takes control of Congress in January. Military leaders spoke out against reinstating the draft when Rangel introduced such legislation in January 2003.
- The global economy will keep expanding at a “solid pace,” central bankers and finance ministers from the world’s 20 largest economies said.
- China National Offshore Oil Corp., the nation’s third-largest oil company, will “actively pursue clean energy” alternatives to crude oil and natural gas. China, the world’s second-biggest energy consumer, plans to spend $186 billion in the next 15 years to boost the use of renewable resources and reduce pollution.
- Crude oil is falling again in NY as mild temperatures and ample supplies reduce speculation.
- President Bush prodded Chinese President Hu Jintao to unleash the spending power of Chinese consumers to help boost American exports to the world’s largest developing economy.
- Freeport-McMoRan Copper & Gold Inc.(FCX) agreed to buy Phelps Dodge(PD) for $25.9 billion in cash and stock to form the world’s largest publicly traded copper company.
- European Central Bank President Jean-Claude Trichet said he and his Group of 10 colleagues must be “strongly vigilant” about the risk of inflation because of dynamic global growth.
Wall Street Journal:
- Executives at Yahoo!(YHOO) are examining proposals to revamp the company’s business that include staff cuts of as much as 20%.
- The Blackstone Group LP will announce a $20 billion takeover bid for Equity Office Properties Trust(EOP), the largest US office-building owner and manager.
Dow Jones:
- AT&T(T) is unlikely to offer more concessions to the FCC to win approval of its $80 billion purchase of BellSouth Corp.(BLS) and expects it to be completed this year, citing an AT&T executive.
NY Times:
- Farmers in Iowa and other states in the US Upper Midwest are abandoning corn and soybeans and turning to growing wine grapes to take advantage of the far more lucrative economic returns.
Cambridge Energy Research:
- In contrast to a widely discussed theory, "peak oil", that world oil production will soon reach a peak and go into sharp decline, a new analysis of the subject by Cambridge Energy Research Associates (CERA) finds that the remaining global oil resource base is actually 3.74 trillion barrels -- three times as large as the 1.2 trillion barrels estimated by the theory’s proponents -- and that the “peak oil” argument is based on faulty analysis which could, if accepted, distort critical policy and investment decisions and cloud the debate over the energy future.
Washington Post:
- An increasing number of private Russian companies founded after the fall of the Soviet Union are now under state control or are consolidated and led by businessmen with strong ties to President Putin’s government.
- Opponents of Venezuelan President Hugo Chavez are mounting a strong challenge to unseat him in the Dec.3 presidential election.
San Francisco Chronicle:
- EBay’s(EBAY) Skype Internet phone service complements PayPal’s payment system by allowing buyers and sellers to talk on EBay’s Web-based auction site, CEO Whitman said.
AP:
- House Democrats plan to consider repealing billions of dollars in oil company tax breaks early next year and hold off on proposals to increase alternative energy sources and conservation. Democrats specifically want to repeal tax breaks for refinery expansion, geological studies to further oil exploration, and a measure that gives companies credit for drilling in the US rather than in other countries.
c/net News.com:
- Personal navigation systems could become the next must-have gadgets.
Financial Times:
- US Treasury Paulson will map out steps that the country’s regulatory system must take to fight competition from financial centers in London and Asia.
Sunday Times:
- Amvescap Plc, the owner of Aim and Invesco mutual funds, has emerged as a leading candidate to buy Putnam Investments, the money management group Marsh & McLennan cos. is selling.
Aksam:
- Iraq and Turkey signed an agreement to carry Iraqi natural gas through a pipeline to Europe.
Weekend Recommendations
Barron's:
- Made positive comments on (CCE) and (DD).
- Made negative comments on (MTG).
CSFB:
- Reiterated Outperform on (SEPR), raised target to $65.
Night Trading
Asian indices are -1.25% to -.25% on average.
S&P 500 indicated -.13%
NASDAQ 100 indicated -.19%.
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
Conference Calendar
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/Estimate
- (ATVI)/-.10
- (ACS)/.81
- (CAR)/.47
- (CPB)/.61
- (DY)/.25
- (FMCN)/.49
- (JAS)/-.07
- (LOW)/.43
- (MDT)/.56
- (JWN)/.51
- (PVH)/.84
Upcoming Splits
- (STLD) 2-for-1
Economic Releases
10:00 am EST
- Leading Indicators for October rose .2% versus a .1% increase in September.
Bloomberg:
- Democratic Representative Charles Rangel said he will again introduce legislation to revive a US military draft when his party takes control of Congress in January. Military leaders spoke out against reinstating the draft when Rangel introduced such legislation in January 2003.
- The global economy will keep expanding at a “solid pace,” central bankers and finance ministers from the world’s 20 largest economies said.
- China National Offshore Oil Corp., the nation’s third-largest oil company, will “actively pursue clean energy” alternatives to crude oil and natural gas. China, the world’s second-biggest energy consumer, plans to spend $186 billion in the next 15 years to boost the use of renewable resources and reduce pollution.
- Crude oil is falling again in NY as mild temperatures and ample supplies reduce speculation.
- President Bush prodded Chinese President Hu Jintao to unleash the spending power of Chinese consumers to help boost American exports to the world’s largest developing economy.
- Freeport-McMoRan Copper & Gold Inc.(FCX) agreed to buy Phelps Dodge(PD) for $25.9 billion in cash and stock to form the world’s largest publicly traded copper company.
- European Central Bank President Jean-Claude Trichet said he and his Group of 10 colleagues must be “strongly vigilant” about the risk of inflation because of dynamic global growth.
Wall Street Journal:
- Executives at Yahoo!(YHOO) are examining proposals to revamp the company’s business that include staff cuts of as much as 20%.
- The Blackstone Group LP will announce a $20 billion takeover bid for Equity Office Properties Trust(EOP), the largest US office-building owner and manager.
Dow Jones:
- AT&T(T) is unlikely to offer more concessions to the FCC to win approval of its $80 billion purchase of BellSouth Corp.(BLS) and expects it to be completed this year, citing an AT&T executive.
NY Times:
- Farmers in Iowa and other states in the US Upper Midwest are abandoning corn and soybeans and turning to growing wine grapes to take advantage of the far more lucrative economic returns.
Cambridge Energy Research:
- In contrast to a widely discussed theory, "peak oil", that world oil production will soon reach a peak and go into sharp decline, a new analysis of the subject by Cambridge Energy Research Associates (CERA) finds that the remaining global oil resource base is actually 3.74 trillion barrels -- three times as large as the 1.2 trillion barrels estimated by the theory’s proponents -- and that the “peak oil” argument is based on faulty analysis which could, if accepted, distort critical policy and investment decisions and cloud the debate over the energy future.
Washington Post:
- An increasing number of private Russian companies founded after the fall of the Soviet Union are now under state control or are consolidated and led by businessmen with strong ties to President Putin’s government.
- Opponents of Venezuelan President Hugo Chavez are mounting a strong challenge to unseat him in the Dec.3 presidential election.
San Francisco Chronicle:
- EBay’s(EBAY) Skype Internet phone service complements PayPal’s payment system by allowing buyers and sellers to talk on EBay’s Web-based auction site, CEO Whitman said.
AP:
- House Democrats plan to consider repealing billions of dollars in oil company tax breaks early next year and hold off on proposals to increase alternative energy sources and conservation. Democrats specifically want to repeal tax breaks for refinery expansion, geological studies to further oil exploration, and a measure that gives companies credit for drilling in the US rather than in other countries.
c/net News.com:
- Personal navigation systems could become the next must-have gadgets.
Financial Times:
- US Treasury Paulson will map out steps that the country’s regulatory system must take to fight competition from financial centers in London and Asia.
Sunday Times:
- Amvescap Plc, the owner of Aim and Invesco mutual funds, has emerged as a leading candidate to buy Putnam Investments, the money management group Marsh & McLennan cos. is selling.
Aksam:
- Iraq and Turkey signed an agreement to carry Iraqi natural gas through a pipeline to Europe.
Weekend Recommendations
Barron's:
- Made positive comments on (CCE) and (DD).
- Made negative comments on (MTG).
CSFB:
- Reiterated Outperform on (SEPR), raised target to $65.
Night Trading
Asian indices are -1.25% to -.25% on average.
S&P 500 indicated -.13%
NASDAQ 100 indicated -.19%.
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
Conference Calendar
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/Estimate
- (ATVI)/-.10
- (ACS)/.81
- (CAR)/.47
- (CPB)/.61
- (DY)/.25
- (FMCN)/.49
- (JAS)/-.07
- (LOW)/.43
- (MDT)/.56
- (JWN)/.51
- (PVH)/.84
Upcoming Splits
- (STLD) 2-for-1
Economic Releases
10:00 am EST
- Leading Indicators for October rose .2% versus a .1% increase in September.
BOTTOM LINE: Asian Indices are lower, weighed down by technology and automaker shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the week.
Weekly Outlook
Click here for The Week Ahead by Reuters
There are a few economic reports of note and some significant corporate earnings reports scheduled for release this week.
Economic reports for the week include:
Mon. - Leading Indicators
Tues. - None of note
Wed. - Initial Jobless Claims, Univ. of Mich. Consumer Confidence
Thur. - US markets closed for Thanksgiving
Fri. - US markets close 1 pm EST
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - Activision(ATVI), Affiliate Computer Services(ACS), Avis Budget Group(CAR), Campbell Soup(CPB), Jo-Ann Stores(JAS), Lowe’s(LOW), Medtronic(MDT), Nordstrom(JWN), Phillips-Van Heusen(PVH)
Tues. - Borders Group(BGP), Brown Shoe(BWS), CBRL Group(CBRL), Coldwater Creek(CWTR), Deere & Co(DE), Dollar Tree(DLTR), Eaton Vance(EV), Gamestop(GME), J Crew(JCG), Jack in the Box(JBX), Payless Shoesource(PSS), Perry Ellis(PERY), Tech Data(TECD), United Natural Foods(UNFI)
Wed. - Dell Inc.(DELL), Dollar General(DG), Fred’s(FRED), Genesco(GCO), Hormel Foods(HRL), OSI Restaurant(OSI), Patterson Cos.(PDCO)
Thur. - US markets closed for Thanksgiving
Fri. - US markets close 1 pm EST
Other events that have market-moving potential this week include:
Mon. - Treasury’s Paulson speaking, Fed’s Fisher speaking
Tue. - Fed’s Lacker speaking
Wed. - None of note
Thur. - US markets closed for Thanksgiving
Fri. - US equity markets close 1 pm EST
There are a few economic reports of note and some significant corporate earnings reports scheduled for release this week.
Economic reports for the week include:
Mon. - Leading Indicators
Tues. - None of note
Wed. - Initial Jobless Claims, Univ. of Mich. Consumer Confidence
Thur. - US markets closed for Thanksgiving
Fri. - US markets close 1 pm EST
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - Activision(ATVI), Affiliate Computer Services(ACS), Avis Budget Group(CAR), Campbell Soup(CPB), Jo-Ann Stores(JAS), Lowe’s(LOW), Medtronic(MDT), Nordstrom(JWN), Phillips-Van Heusen(PVH)
Tues. - Borders Group(BGP), Brown Shoe(BWS), CBRL Group(CBRL), Coldwater Creek(CWTR), Deere & Co(DE), Dollar Tree(DLTR), Eaton Vance(EV), Gamestop(GME), J Crew(JCG), Jack in the Box(JBX), Payless Shoesource(PSS), Perry Ellis(PERY), Tech Data(TECD), United Natural Foods(UNFI)
Wed. - Dell Inc.(DELL), Dollar General(DG), Fred’s(FRED), Genesco(GCO), Hormel Foods(HRL), OSI Restaurant(OSI), Patterson Cos.(PDCO)
Thur. - US markets closed for Thanksgiving
Fri. - US markets close 1 pm EST
Other events that have market-moving potential this week include:
Mon. - Treasury’s Paulson speaking, Fed’s Fisher speaking
Tue. - Fed’s Lacker speaking
Wed. - None of note
Thur. - US markets closed for Thanksgiving
Fri. - US equity markets close 1 pm EST
BOTTOM LINE: I expect US stocks to finish the week modestly higher on diminishing inflation worries, rising consumer spending optimism, lower energy prices, seasonal strength, strong corporate profits, investment manager performance anxiety and short-covering. My trading indicators are still giving bullish signals and the Portfolio is 100% net long heading into the week.
Subscribe to:
Posts (Atom)