Thursday, December 07, 2006

Today's Headlines

Bloomberg:
- General Motors’(GM) decline in US sales has “bottomed out” and the company hopes to end a four-year slide in US market share next year, marketing chief Mark LaNeve said.
- MasterCard(MA) won a legal ruling awarding it the right to sponsor the next two World Cup soccer championships instead of its larger rival, Visa Intl.
- Reckson Assoc.(RA) received new bids for parts of the company today and they were rejected, said Reckson CEO Rechler.
- Democratic Representative John Dingell said that he will move to force the Bush administration to pressure pharmaceutical companies to lower prices when he takes over in January as chairman of the Energy and Commerce Committee.
- European Central Bank President Jean-Claude Trichet signaled the pace of interest-rate increases may slow after the bank lowered its inflation forecasts.
- Chevron Corp.(CVX) plans to raise capital spending by more than 20% next year to a record $19.6 billion as major projects move from the drawing board to construction. Chevron earmarked about 75% of its 2007 capital budget for exploration and production.
- Incoming US Senate Banking Committee Chairman Christopher Dodd said he’s concerned about pension-fund investments in hedge funds and plans to examine the risk for American workers.
- The US South may have wetter-than-normal weather during the next two to three months because of a strengthening weather pattern called El Nino that is heating the Pacific Ocean.
- Southern Copper(PCU), the world’s second-largest copper mining company by reserves, said it increased reserves at its two Peruvian copper mines, which account for half of its total output.
- Wheat prices will fall early next year due to increased winter plantings and good weather, according to a UN report.
- South Africa’s cabinet approved a plan to establish a biofuels industry in the country that is expected to attract $852 million in investment.
- Simon Wardell, head of energy research at Global Insight see less “upside” risk to oil prices.

Wall Street Journal:
- Avaya Inc.(AV) will be the last freestanding descendant of American Telephone & Telegraph(T) which came to be known as Ma Bell, after LSI Corp.(LSI) completes its acquisition of Agere Systems(AGR).
- Democrats have stepped up collecting donations from lobbyists while staffers are maneuvering to acquire positions before a promised clampdown on congressional ethics.
- Ford Motor(F) will debut an updated version of its small Focus car at an auto show in Detroit next month as it seeks US consumers interested in vehicles that use less gasoline.
- Motorola(MOT) has plenty of money but is struggling to make itself felt in technologies beyond cellphones.

USA Today:
- The federal government will begin screening cargo bound for the US from four overseas ports for radiation beginning early next year in an effort to stop terrorists from smuggling nuclear weapons.

NY Times:
- In 1980, 4% of Broadway theatergoers were under the age of 18, citing the League of American Theaters and Producers. Last season, 9.6% were under 18.
- An adviser to former President Jimmy Carter, Kenneth Stein, resigned because he doubted the accuracy and integrity of Carter’s new book. Stein, a professor of Middle Eastern history and political science at Emory University and former executive director of the Carter Center, wrote in a two-page letter that the book, “Palestine Peace Not Apartheid,” contains “factual errors, copied materials not cited, superficialities, glaring omissions and simply invented segments.”

Wichita Eagle:
- Raytheon Co.(RTN) may be in exclusive talks to sell its Raytheon Aircraft unit to Onex Corp. and Goldman Sachs(GS) for about $3 billion.

Kenya Broadcasting Corp.:
- Kenya will spend $1 billion upgrading and increasing electricity production by 2010. Additional electricity will be generated from wind, hydropower and geothermal stations.

Jobless Claims Fall Substantially From Prior Week, Monster Employment Index Hits Record

- Initial Jobless Claims last week fell to 324K versus estimates of 325K and 358K the prior week.
- Continuing Claims rose to 2524K versus estimates of 2460K and 2467K prior.
BOTTOM LINE: Fewer US workers filed first-time applications for jobless benefits last week, retreating from a 13-month high that was inflated by holiday adjustments, Bloomberg reported. The four-week moving-average rose to 328,750 from 325,250 the prior week. The unemployment rate among those eligible to receive benefits, which tracks the US unemployment rate, held steady at 1.9%. Moreover, the Monster Employment Index hit a record high in November, according to data released this morning. I continue to believe the job market will remain healthy over the intermediate-term without generating substantial unit labor cost increases.

Links of Interest

Market Snapshot
Detailed Market Summary
Quick Summary
Economic Commentary
Movers & Shakers
Today in IBD
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Real-time Intraday Chart/Quote

Wednesday, December 06, 2006

Thursday Watch

Late-Night Headlines
Bloomberg:
- East Asia’s economic growth may slow next year as exports cool, and the resulting moderation in inflation will reduce pressure on central banks in the region to raise interest rates, the Asian Development Bank said.

Wall Street Journal:
- News Corp.(NWS) is coming close to buying back Liberty Media’s(LINTA) $11 billion stake in its company, in exchange for a stake in DirectTV Group(DTV).
- Iraq’s draft hydrocarbons law recommends foreign companies be involved in developing the country’s deposits using production sharing contracts and buyback contracts.

Financial Times:
- Al-Qaeda is establishing its headquarters in Pakistan from where it trains recruits and directs terror attacks on other nations, citing the findings of Britain’s security services.
- Hershey Co.(HSY) lowered its profit forecast for 2006 because of a recall of Canadian candy last month and sales that were less than the company expected.
- Dell Inc.(DELL) hired a new vice president to oversee online sales and support in a push to increase Internet sales.
- International Securities Exchange(ISE) filed a patent infringement lawsuit against the Chicago Board Options Exchange, opening a new front in the rivalry between the two largest US options markets.
- Weyerhaeuser Co.(WY), North America’s largest lumber producer, said it may close some plants and curtail operations at others because of “challenging” market conditions.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (RVBD), target $39.
- Upgraded (AAP) to Buy, target $44.
- Reiterated Buys on (CVH), (UNH), (WLP), (HUM) and (HNT).
- Rated (SNPS) Buy, target $34.

Night Trading
Asian Indices are unch. to +.75% on average.
S&P 500 indicated -.09%.
NASDAQ 100 indicated unch.

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/EPS Estimate
- (ATW)/.80
- (CHP)/-.25
- (CENT)/.48
- (ESL)/.66
- (FLE)/-.32
- (IDT)/-.21
- (JJZ)/.14
- (JOSB)/.29
- (MOV)/.61
- (NSM)/.27
- (PTMK)/-.20
- (SWHC)/.08
- (TTC)/.08
- (UTIW)/.31
- (PAY)/.29

Upcoming Splits
- (CRVL) 3-for-2
- (GRC) 5-for-4

Economic Releases
8:30 am EST
- Initial Jobless Claims for last week are estimated to fall to 325K versus 357K the prior week.
- Continuing Claims are estimated to fall to 2460K versus 2480K prior.

3:00 pm EST
- Consumer Credit for October is estimated to rise to $4.0 billion versus -$1.2 billion in September.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology and automaker 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 Lower on Healthy Profit-taking

Indices
S&P 500 1,412.90 -.13%
DJIA 12,309.25 -.18%
NASDAQ 2,445.86 -.27%
Russell 2000 795.94 -.19%
Wilshire 5000 14,209.25 -.10%
S&P Barra Growth 654.46 -.20%
S&P Barra Value 756.42 -.06%
Morgan Stanley Consumer 685.53 -.17%
Morgan Stanley Cyclical 891.63 -.10%
Morgan Stanley Technology 573.27 -.73%
Transports 4,753.52 -.80%
Utilities 458.82 -.73%
Put/Call .84 +12.0%
NYSE Arms .98 +9.03%
Volatility(VIX) 11.33 +.53%
ISE Sentiment 173.0 +12.34%
US Dollar 82.74 +.28%
CRB 313.06 -1.07%

Futures Spot Prices
Crude Oil 62.31 -.19%
Reformulated Gasoline 162.66 -1.05%
Natural Gas 7.81 +1.68%
Heating Oil 179.85 +.01%
Gold 636.40 -1.77%
Base Metals 245.13 -1.70%
Copper 315.05 -2.97%
10-year US Treasury Yield 4.48% +.96%

Leading Sectors
Tobacco +2.90
Homebuilders +1.59%
HMOs +1.01%

Lagging Sectors
Utilities -.73%
Software -1.30%
Gold & Silver -1.75%

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
Oppenheimer:
- Rated (ATVI) Buy, target $21.
- Rated (THQI) Buy, target $38.

Afternoon/Evening Headlines
Bloomberg:
- Home Depot(HD) said it “routinely” backdated option grants to benefit employees for 19 years and had unrecorded expenses of about $200 million related to its grants practices.
- Fannie Mae(FNM) completed a $7.9 billion restatement of earnings from 2001 through 2004, giving investors the first accurate picture of the company’s performance.
- General Motors(GM) said it will cut production in January at three plants that build large SUVs because of slowing demand for the gas guzzlers.
- The US dollar had its biggest gain in three weeks against the yen.
- Duke Energy(DUK) plans to expand its Gulf Coast salt-cavern storage facilities by more than 35 billion cubic feet over the next six years to meet demand for natural gas services.

BOTTOM LINE: The Portfolio finished higher today on gains in my Telecom longs, Semi longs, Medical longs and Retail longs. I did not trade in the final hour, thus leaving the Portfolio 100% net long. The tone of the market was only slightly negative today as the advance/decline line finished slightly lower, sector performance was mostly positive and volume was above average. Measures of investor anxiety were mostly higher into the close. I would classify today's overall market action as a healthy consolidation of recent gains. First we have to guard the old copper pipes under our house, now our waistlines. Bloomberg is reporting that a business man in Miami intends to buy human fat from liposuction operations at the Jackson Memorial Hospital to convert into biodiesel. This sounds funny and absurd, but it is just another example of the lengths to which people are currently going in the current energy mania. Alternative energy projects are pervasive globally and will have a devastating impact on future demand for crude.

Stocks Slightly Lower into Final Hour on Healthy Profit-taking

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Telecom longs, Retail longs and Medical longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is slightly positive as the advance/decline line is about even, most sectors are rising and volume is above average. Today's mild weakness comes despite another surge in mortgage applications and a 4-month high in the ADP Employment Change report. The 10-week moving average of mortgage applications continues to trend higher. The Case-Schiller Housing futures are now projecting just a 2.9% decline in the average home price over the next six months, up from projections of a 5.2% decline a couple of months ago. I am seeing many market-leading stocks breaking out despite the slightly negative performance in the major averages. The major averages will likely close near session highs. I suspect that the Dow and Nasdaq will join the Russell 2000 and S&P 500 and make new highs by week's end. I expect US stocks to trade modestly higher into the close from current levels on short-covering, lower commodity prices, positive economic data and portfolio manager performance anxiety.