Bloomberg:
- Crude oil is falling .80 as warmer temperatures are expected to further lower demand and speculators trim bets.
- Bank of New York(BK) agreed to buy Mellon Financial(MEL) for about $16.5 billion, creating the biggest custodian of assets for institutional investors.
- Pilgrim’s Pride(PPC), the second-largest US poultry processor, said Gold Kist(GKIS) agreed to a sweetened $1.1 billion takeover offer, ending a hostile bid and creating the world’s biggest chicken company.
- Station Casinos(STN) said its management offered to take the company private for $4.7 billion, the industry’s second biggest takeover this year.
- Billionaire investor Carl Icahn made a $4.3 billion cash and stock offer for Reckson Assoc. Realty(RA), replacing an all-cash bid for the real estate investment trust after his two partners withdrew over the weekend.
- Cerberus Capital is in talks with Delphi Corp. and Delphi’s largest union that may lead to the investment company’s purchase of 12 of the bankrupt auto-parts maker’s US plants.
- Morgan Stanley(MS) acquired Brookville Capital, a four-year-old company that overseas about $221 million in debt, in the firm’s fourth investment in a hedge fund in the past two months.
- LSI Logic(LSI) agreed to buy Agere Systems(AGR) for about $4 billion in stock to move into a faster growing business for mobile-phone chips and gain customers such as Samsung Electronics.
- The number of people suffering from diabetes has soared to 246 million and kills more people than AIDS globally, the head of the International Diabetes Federation said.
- James Lennon, executive director of commodities research at Macquarie Bank Ltd sees commodity demand “easing” in China.
Wall Street Journal:
- US advertising spending growth will slow and older media such as newspapers and television will lose ground to online outlets next year, citing surveys by Merrill Lynch, Publicis Groupe SA and WPP Group Plc.
- Wall Street firms are putting money into casino investments as the number of US states permitting such gambling increases.
NY Times:
- Wal-Mart(WMT) has developed a program to show appreciation for its 1.3 million workers in the US.
NY Post:
- Dow Jones(DJ) will unveil today the Wall Street Journal’s revised format that will trim three inches form the newspaper’s width and cut $18 million a year from expenses.
Financial Times:
- Reuters Group Plc and Yahoo!(YHOO) agreed to work together on a venture to gather and distribute news photos and video sent by the public, citing the president of Reuters Media, Chris Ahearn.
- Improved energy productivity could cut annual growth in global demand for energy to less than 1% from 2.2% between 2003 and 2020, citing McKinsey & Co. data. Subsidies by governments to citizens and corporations are harmful because they encourage waste and less innovation.
Financial Times Deutschland:
- The European Central Bank expects inflation to fall below its 2% limit in 2008, according to projections that are due to be published on Dec. 7.
Tageblatt:
- The economy of the dozen nations sharing the euro will continue to expand next year if at a “slightly weaker pace,” ECB council member Erkki Liikanen said.
Argus Leader:
- Livestock processors and meatpackers such as Tyson Foods(TSN) and Smithfield Food(SFD) are investing in facilities to produce biofuels from manure, animal fats and vegetable oils, citing Jeff Webster, a vice president for Tyson.
Sparkspread:
- Goldman Sachs(GS) expects its Horizon Wind Energy unit for renewable energy will be the third largest owner of wind farm assets in the US by the end of next year.
Interfax:
- OAO Lukoil will invest $5.7 billion this year in oil and gas production and refining in Russia and abroad.
Monday, December 04, 2006
Pending Home Sales Fall Slightly
- Pending Home Sales for October fell 1.7% versus estimates of a .5% decline and a 1.1% decline in September.
BOTTOM LINE: Contracts to buy previously owned homes in the US fell more than expected in October, Bloomberg reported. Pending re-sales fell 2.7% in the West, .6% in the Mid-west, 1.7% in the South and 2.1% in the Northeast. Fed Chairman Bernanke said in a speech last week that there is little evidence that the weakness in housing markets is spilling over more broadly to consumer spending or aggregate employment. The Fed’s Moskow reiterated those thoughts this morning. The Case-Schiller Housing futures are only projecting a 3.4% decline in the average home price over the next six months, up from projections of a 5.2% decrease a couple of months ago. I continue to believe the housing market is well into the process of stabilizing at relatively high levels.
Sunday, December 03, 2006
Monday Watch
Weekend Headlines
Bloomberg:
- Federal Reserve Vice Chairman Donald Kohn said that inflation is beginning to recede even as risks remain “tilted to the upside.”
- Saudi Arabian Oil Minister Ali Al-Naimi said crude inventories are too high. Global oil inventories stand at 2.3 billion barrels, Naimi said, which is 100 million barrels more than a year earlier.
- European stocks had their biggest weekly decline since July as the dollar fell against the euro and the pound.
- Pfizer Inc.’s(PFE) shares will likely drop after the world’s biggest drugmaker unexpectedly ended development of its most important drug
- The SEC postponed a vote on hedge-fund regulations scheduled for tomorrow to give agency staff more time to revise legal language.
- Tiger Woods plans to design a golf course in Dubai, United Arab Emirates, the first by his Tiger Woods Design company set up last month.
- US investors who are congratulating themselves for putting money into stocks in Europe and Asia may soon find the best times are over. US investors have poured $106.1 billion this year into mutual funds that invest in stocks outside the US, up 40% from the same period in 2005, according to a report last week from Banc of America. They have pulled $1.4 billion out of domestic stock funds, versus inflows of $18.7 billion a year earlier.
- Jinchuan Group Co. has completed construction of a copper smelter capable of producing 200,000 metric tons a year of the metal, doubling output capacity, used in wires and pipes.
- Russia’s oil production rose in November as ExxonMobil Corp.’s(XOM) project on Sakhalin Island increased output.
Wall Street Journal:
- Eli Lilly(LLY) CEO Sidney Taurel said government price-controls in the US would stifle research. Taurel said Euoprean companies 30 years ago were the most innovative. Since then, more drug research has shifted to the US. The CEO said drugmakers’ profits are compensation for long-term investments and that drugmakers are posting growth of 5% to 6%, less than the double-digit increases at the end of the last decade. He said they currently spend about 10 times as much on research and development as on marketing.
Time Magazine:
- President Bush may announce a new plan in coming weeks to link the level of American troops in Iraq with the performance of the Iraqi government in quelling violence.
NY Times:
- The crime rate in Venezuela has soared even as oil wealth has been used to try and cut poverty, and President Hugo Chavez has mostly ignored the violence. Homicides are up 67% since 1999, citing figures from the Criminal Investigation Police. Chavez’s government has pushed aside police officers who don’t agree with the president’s “socialist revolution” principles, citing crime analysts.
- Walt Disney(DIS) plans to produce brief cartoons again, after making few in the last half-century, beginning with a film showing character Goofy trying to figure out home-theater installation.
Philadelphia Inquirer:
- Verizon Communications(VZ) will challenge Comcast Corp.(CMCSA) in the Philadelphia-area market with a telephone, internet and television package it’s expected to start selling this week.
Washington Post:
- The American Civil Liberties Union(ACLU) urged the US government to end a program that screens and creates risk profiles for every airline traveler entering or leaving the US.
Detroit Free Press:
- DaimlerChrysler AG(DCX) will offer dealer incentives of as much as $7,000 per car to help clear out 2006 model-year vehicles beginning Dec. 5.
Financial Times:
- Goldman Sachs(GS) has developed a product that replicates the performance of thousands of hedge funds at a fraction of the cost to investors, citing Edgar Senior, Goldman’s executive director for fund derivative structuring. The Absolute Return Tracker index will replicate the aggregate position of the hedge fund industry. Goldman will charge a flat 1 percent annual fee, compared with between 4% and 7% charged for investments through funds of funds, and will allow trading on a daily basis.
- Hewlett-Packard(HPQ) will supply Amazon.com(AMZN) with high-speed digital printers for the online retailer’s books-on-demand service.
Sunday Times:
- First Data Corp.(FDC) may take over the credit card operation of Allied Irish Banks Plc, Ireland’s biggest lender my market value
Business Times:
- Western Digital(WDC) of the US may spend $150 million to more than double production at its Malaysian plant that makes hard-disk drives.
Weekend Recommendations
Barron's:
- Made positive comments on (RL), (DUK), (IBM), (CCRT) and (DTV).
Night Trading
Asian indices are -.25% to +.50% on average.
S&P 500 indicated -.15%
NASDAQ 100 indicated -.11%.
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
- (CMTL)/.33
- (PLL)/.24
- (RVI)/.05
Upcoming Splits
- (AMED) 4-for-3
- (FMD) 3-for-2
Economic Releases
10:00 am EST
- Pending Home Sales for October are estimated to fall .5% versus a 1.1% decline in September.
Bloomberg:
- Federal Reserve Vice Chairman Donald Kohn said that inflation is beginning to recede even as risks remain “tilted to the upside.”
- Saudi Arabian Oil Minister Ali Al-Naimi said crude inventories are too high. Global oil inventories stand at 2.3 billion barrels, Naimi said, which is 100 million barrels more than a year earlier.
- European stocks had their biggest weekly decline since July as the dollar fell against the euro and the pound.
- Pfizer Inc.’s(PFE) shares will likely drop after the world’s biggest drugmaker unexpectedly ended development of its most important drug
- The SEC postponed a vote on hedge-fund regulations scheduled for tomorrow to give agency staff more time to revise legal language.
- Tiger Woods plans to design a golf course in Dubai, United Arab Emirates, the first by his Tiger Woods Design company set up last month.
- US investors who are congratulating themselves for putting money into stocks in Europe and Asia may soon find the best times are over. US investors have poured $106.1 billion this year into mutual funds that invest in stocks outside the US, up 40% from the same period in 2005, according to a report last week from Banc of America. They have pulled $1.4 billion out of domestic stock funds, versus inflows of $18.7 billion a year earlier.
- Jinchuan Group Co. has completed construction of a copper smelter capable of producing 200,000 metric tons a year of the metal, doubling output capacity, used in wires and pipes.
- Russia’s oil production rose in November as ExxonMobil Corp.’s(XOM) project on Sakhalin Island increased output.
Wall Street Journal:
- Eli Lilly(LLY) CEO Sidney Taurel said government price-controls in the US would stifle research. Taurel said Euoprean companies 30 years ago were the most innovative. Since then, more drug research has shifted to the US. The CEO said drugmakers’ profits are compensation for long-term investments and that drugmakers are posting growth of 5% to 6%, less than the double-digit increases at the end of the last decade. He said they currently spend about 10 times as much on research and development as on marketing.
Time Magazine:
- President Bush may announce a new plan in coming weeks to link the level of American troops in Iraq with the performance of the Iraqi government in quelling violence.
NY Times:
- The crime rate in Venezuela has soared even as oil wealth has been used to try and cut poverty, and President Hugo Chavez has mostly ignored the violence. Homicides are up 67% since 1999, citing figures from the Criminal Investigation Police. Chavez’s government has pushed aside police officers who don’t agree with the president’s “socialist revolution” principles, citing crime analysts.
- Walt Disney(DIS) plans to produce brief cartoons again, after making few in the last half-century, beginning with a film showing character Goofy trying to figure out home-theater installation.
Philadelphia Inquirer:
- Verizon Communications(VZ) will challenge Comcast Corp.(CMCSA) in the Philadelphia-area market with a telephone, internet and television package it’s expected to start selling this week.
Washington Post:
- The American Civil Liberties Union(ACLU) urged the US government to end a program that screens and creates risk profiles for every airline traveler entering or leaving the US.
Detroit Free Press:
- DaimlerChrysler AG(DCX) will offer dealer incentives of as much as $7,000 per car to help clear out 2006 model-year vehicles beginning Dec. 5.
Financial Times:
- Goldman Sachs(GS) has developed a product that replicates the performance of thousands of hedge funds at a fraction of the cost to investors, citing Edgar Senior, Goldman’s executive director for fund derivative structuring. The Absolute Return Tracker index will replicate the aggregate position of the hedge fund industry. Goldman will charge a flat 1 percent annual fee, compared with between 4% and 7% charged for investments through funds of funds, and will allow trading on a daily basis.
- Hewlett-Packard(HPQ) will supply Amazon.com(AMZN) with high-speed digital printers for the online retailer’s books-on-demand service.
Sunday Times:
- First Data Corp.(FDC) may take over the credit card operation of Allied Irish Banks Plc, Ireland’s biggest lender my market value
Business Times:
- Western Digital(WDC) of the US may spend $150 million to more than double production at its Malaysian plant that makes hard-disk drives.
Weekend Recommendations
Barron's:
- Made positive comments on (RL), (DUK), (IBM), (CCRT) and (DTV).
Night Trading
Asian indices are -.25% to +.50% on average.
S&P 500 indicated -.15%
NASDAQ 100 indicated -.11%.
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
- (CMTL)/.33
- (PLL)/.24
- (RVI)/.05
Upcoming Splits
- (AMED) 4-for-3
- (FMD) 3-for-2
Economic Releases
10:00 am EST
- Pending Home Sales for October are estimated to fall .5% versus a 1.1% decline in September.
BOTTOM LINE: Asian Indices are mixed as losses in automaker shares are offsetting gains in technology stocks in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing modestly higher. 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. - Pending Home Sales
Tues. - Challenger Job Cuts, Final 3Q Non-farm Productivity, Final 3Q Unit Labor Costs, Factory Orders, ISM Non-Manufacturing
Wed. - ADP Employment Change
Thur. - Initial Jobless Claims, Consumer Credit
Fri. - Change in Non-farm Payrolls, Unemployment Rate, Average Hourly Earnings, Univ. of Mich. Consumer Confidence
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - Pall Corp.(PLL)
Tues. - Activision Inc.(ATVI), Kroger(KO), Novell(NOVL), Photronics(PLAB), Sanderson Farms(SAFM), Toll Brothers(TOL), Witness Systems(WITS)
Wed. - John Wiley(JW/A), Korn/Ferry(KFY), OSI Restaurant Partners(OSI), Quanex Corp.(NX), Veritas DGC(VTS)
Thur. - Atwood Oceanics(ATW), Central Garden(CENT), Credence Systems(CMOS), Esterline Technologies(ESL), Jacuzzi Brands(JJZ), Jos. A. Bank Clothiers(JOSB), National Semi(NSM), Pathmark Stores(PTMK), Toro Co.(TTC), UTi Worldwide(UTIW), VeriFone Holdings(PAY)
Fri. - None of note
Other events that have market-moving potential this week include:
Mon. - Bank of America Credit Conference, UBS Global Media Conference, CSFB Media & Telecom Week, Bear Stearns Real Estate Conference
Tue. - Wachovia Real Estate Conference, Bank of America Credit Conference, Bear Stearns Real Estate Conference, CSFB Aerospace & Defense Conference, Citigroup Chemical Conference, Lehman Global Tech Conference, CSFB Media & Telecom Week, UBS Global Media Conference
Wed. - BMO Nesbitt Burns Healthcare Conference, Lehman Brothers Global Tech Conference, Citigroup Chemical Conference, CSFB Aerospace & Defense Conference, UBS Global Media Conference, CSB Media & Telecom Week, Piper Jaffray Online Ad & Search Symposium
Thur. - Lehman Global Tech Conference, UBS Global Media Conference, CSFB Aerospace & Defense Conference, CSFB Media & Telecom Week, Citigroup Global Paper & Forest Products Conference, BMO Nesbitt Burns Healthcare Conference, Cowen Internet Conference
Fri. - None of note
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. - Pending Home Sales
Tues. - Challenger Job Cuts, Final 3Q Non-farm Productivity, Final 3Q Unit Labor Costs, Factory Orders, ISM Non-Manufacturing
Wed. - ADP Employment Change
Thur. - Initial Jobless Claims, Consumer Credit
Fri. - Change in Non-farm Payrolls, Unemployment Rate, Average Hourly Earnings, Univ. of Mich. Consumer Confidence
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - Pall Corp.(PLL)
Tues. - Activision Inc.(ATVI), Kroger(KO), Novell(NOVL), Photronics(PLAB), Sanderson Farms(SAFM), Toll Brothers(TOL), Witness Systems(WITS)
Wed. - John Wiley(JW/A), Korn/Ferry(KFY), OSI Restaurant Partners(OSI), Quanex Corp.(NX), Veritas DGC(VTS)
Thur. - Atwood Oceanics(ATW), Central Garden(CENT), Credence Systems(CMOS), Esterline Technologies(ESL), Jacuzzi Brands(JJZ), Jos. A. Bank Clothiers(JOSB), National Semi(NSM), Pathmark Stores(PTMK), Toro Co.(TTC), UTi Worldwide(UTIW), VeriFone Holdings(PAY)
Fri. - None of note
Other events that have market-moving potential this week include:
Mon. - Bank of America Credit Conference, UBS Global Media Conference, CSFB Media & Telecom Week, Bear Stearns Real Estate Conference
Tue. - Wachovia Real Estate Conference, Bank of America Credit Conference, Bear Stearns Real Estate Conference, CSFB Aerospace & Defense Conference, Citigroup Chemical Conference, Lehman Global Tech Conference, CSFB Media & Telecom Week, UBS Global Media Conference
Wed. - BMO Nesbitt Burns Healthcare Conference, Lehman Brothers Global Tech Conference, Citigroup Chemical Conference, CSFB Aerospace & Defense Conference, UBS Global Media Conference, CSB Media & Telecom Week, Piper Jaffray Online Ad & Search Symposium
Thur. - Lehman Global Tech Conference, UBS Global Media Conference, CSFB Aerospace & Defense Conference, CSFB Media & Telecom Week, Citigroup Global Paper & Forest Products Conference, BMO Nesbitt Burns Healthcare Conference, Cowen Internet Conference
Fri. - None of note
BOTTOM LINE: I expect US stocks to finish the week modestly higher on better economic data, a stronger US dollar, lower energy prices, seasonal strength, strong corporate profits, bargain-hunting, 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.
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