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Wednesday, December 13, 2006
Stocks Mixed into Final Hour on Another Healthy Consolidation of Recent Gains
BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Biotech longs, Medical longs and Energy-related shorts. I have not traded today, thus leaving the Portfolio 75% net long. The tone of the market is neutral as the advance/decline line is slightly lower, most sectors are rising and volume is below average. The 10-year yield is at session highs, rising 8 basis points to 4.57%. I think this is a result of bond investors finally acknowledging that an imminent recession is a remote possibility. Equity investors are so far ignoring this morning's positive economic data as many large funds continue to position right now for a pullback in stocks, thus adding to the massive bull firepower available on the sidelines. The DJIA hit another all-time high this morning. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, buyout speculation and portfolio manager performance anxiety.
Today's Headlines
Bloomberg:
- US Treasury yields are rising after the government said retail sales ex autos rose the most since January and the MBA said the US housing market will “fully regain its footing” by mid-2007.
- The SEC proposed ways to make it cheaper and easier for companies to conduct business-practice audits required by the Sarbanes-Oxley law.
- Billionaire investor and democratic political activist George Soros lodged an appeal today with a European court to overturn a 2002 French conviction for insider trading, arguing that the law was vague and that prosecutors took too long to bring him to trial.
- Ritchie Capital Management, a Geneva, Illinois-based hedge fund, struggling with two years of below-average returns, plans to shut down its flagship hedge fund because of “unforeseen circumstances,” according to an e-mail sent yesterday to investors.
- US Steel(X) and Deere(DE) are among the economically sensitive stocks set to end their fourth-quarter rally as slowing global growth finally takes its toll.
- Former Enron Corp. CEO Skilling, convicted of spearheading a fraud that destroyed his company, reported to prison in Minnesota today to begin a 24-year sentence, prison officials said.
Wall Street Journal:
- US shippers, chemical companies and other major consumers of petroleum products have called on Congress to tighten fuel-efficiency standards and allow more offshore oil and gas drilling.
- A GE(GE)-developed kiosk that can scan air travelers’ shoes and fingertips for explosives materials has been approved for use in US airports.
NY Times:
- Tribune(TRB) may receive a bid from a group led by the Chandler family, which sold the LA Times to Tribune and owns 20% of the company.
- Perverted Justice, a US-based Web site dedicated to finding and exposing would-be pedophiles, has become one of the most effective unofficial law enforcement groups in the US. The site, run by Xavier Von Eck has led to the conviction of 113 people since 2003, and is best known for its collaboration with Dateline NBC’s “To Catch a Predator” show.
Washington Post:
- Illinois Governor Rod Blagojevich is set to announce a program today meant to better integrate the state’s immigrants. Both legal and illegal immigrants will be guaranteed health care, education and job training as part of the program.
Iran Daily:
- The West should dismantle Israel, Iranian President Mahmoud Ahmadinejad said during a surprise visit to a Holocaust conference in Tehran late yesterday.
- US Treasury yields are rising after the government said retail sales ex autos rose the most since January and the MBA said the US housing market will “fully regain its footing” by mid-2007.
- The SEC proposed ways to make it cheaper and easier for companies to conduct business-practice audits required by the Sarbanes-Oxley law.
- Billionaire investor and democratic political activist George Soros lodged an appeal today with a European court to overturn a 2002 French conviction for insider trading, arguing that the law was vague and that prosecutors took too long to bring him to trial.
- Ritchie Capital Management, a Geneva, Illinois-based hedge fund, struggling with two years of below-average returns, plans to shut down its flagship hedge fund because of “unforeseen circumstances,” according to an e-mail sent yesterday to investors.
- US Steel(X) and Deere(DE) are among the economically sensitive stocks set to end their fourth-quarter rally as slowing global growth finally takes its toll.
- Former Enron Corp. CEO Skilling, convicted of spearheading a fraud that destroyed his company, reported to prison in Minnesota today to begin a 24-year sentence, prison officials said.
Wall Street Journal:
- US shippers, chemical companies and other major consumers of petroleum products have called on Congress to tighten fuel-efficiency standards and allow more offshore oil and gas drilling.
- A GE(GE)-developed kiosk that can scan air travelers’ shoes and fingertips for explosives materials has been approved for use in US airports.
NY Times:
- Tribune(TRB) may receive a bid from a group led by the Chandler family, which sold the LA Times to Tribune and owns 20% of the company.
- Perverted Justice, a US-based Web site dedicated to finding and exposing would-be pedophiles, has become one of the most effective unofficial law enforcement groups in the US. The site, run by Xavier Von Eck has led to the conviction of 113 people since 2003, and is best known for its collaboration with Dateline NBC’s “To Catch a Predator” show.
Washington Post:
- Illinois Governor Rod Blagojevich is set to announce a program today meant to better integrate the state’s immigrants. Both legal and illegal immigrants will be guaranteed health care, education and job training as part of the program.
Iran Daily:
- The West should dismantle Israel, Iranian President Mahmoud Ahmadinejad said during a surprise visit to a Holocaust conference in Tehran late yesterday.
Retail Sales Ex Autos Rise Most Since January, Mortgage Applications Surge
- Advance Retail Sales for November rose 1.0% versus estimates of a .2% increase and an upwardly revised .1% decline in October.
- Retail Sales Less Autos for November rose 1.1% versus estimates of a .3% gain and an upwardly revised .3% decline in October.
- Retail Sales Less Autos for November rose 1.1% versus estimates of a .3% gain and an upwardly revised .3% decline in October.
BOTTOM LINE: Retail Sales in the US rose moiré than forecast in November as consumer rushed to take advantage of early holiday discounts, Bloomberg said. Purchases excluding autos rose the most since January. Sales at electronics and appliances stores surged 4.6%. Purchases at non-store retailers, which includes online and catalog sales, gained 1.3%. Wage gains and low unemployment are the main reasons for continuing healthy consumer spending. Average hourly earnings rose 4.1% from a year earlier in November, almost four time the rate of the Consumer Price Index. The average price of a gallon of gas was $2.23 in November, about the same as the prior month. Gasoline prices plunged 27% from August through October. The ICSC and UBS Securities said yesterday that weekly retail sales rose at their fastest pace so far this holiday season last week. Mortgage applications surged 11.4% last week. This is the second time in less than three months that mortgage applications have seen weekly double digit percentage gains. The last time this happened was mid-2004. I continue to believe consumer spending, which accounts for almost 70% of US economic growth, will stay healthy over the intermediate-term as energy prices fall further, the job market remains healthy, stocks rise, housing stabilizes at relatively high levels, long-term rates remain low, irrational pessimism subsides and inflation decelerates.
Tuesday, December 12, 2006
Wednesday Watch
Late-Night Headlines
Bloomberg:
- Israel will “vanish” just like the Soviet Union collapsed, Iran’s President Mahmoud Ahmadinejad told a conference in Tehran that questions the Holocaust.
- The yen fell to a record low against the euro after Morgan Stanley Japan and Barclays Capital Japan cut growth forecasts for the world’s second-largest economy.
- China increased oil production at the fastest pace in 10 months in November as PetroChina and Cnooc Ltd. pumped more crude.
- Copper futures fell in Shanghai amid concern that slowing economic growth in the US and China might translate into reduced demand for the industrial metal as global stockpiles surge.
- China’s industrial production growth held close to a two-year low in November, suggesting the government is achieving a gradual slowdown in the world’s fastest-growing major economy.
New York Times:
- United Air Lines and Continental Airlines are discussing a possible merger.
Financial Times:
- The US plans military force, backed by Britain, to end violence in Sudan’s Darfur region. Over 200,000 people have died through violence and disease since the conflict began in February 2003, the UN says.
AFP:
- Russian authorities have banned a planned march in memory of killed journalists.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (CRM), target $44.
Night Trading
Asian Indices are -% to +.% on average.
S&P 500 indicated -.%.
NASDAQ 100 indicated -.%.
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
- (PLCE)/1.23
Upcoming Splits
- (GBCI) 3-for-2
Economic Releases
8:30 am EST
- Advance Retail Sales for November are estimated to rise .2% versus a .4% decline in October.
- Retail Sales Less Autos for November are estimated to rise .3% versus a .4% decline in October.
10:00 pm EST
- Business Inventories for October are estimated to rise .4% versus a .4% increase in September.
10:30 pm EST
- Bloomberg consensus estimates call for a weekly crude oil drawdown of 1,300,000 barrels versus a 1,049,000 barrel decline the prior week. Gasoline supplies are expected to rise by 1,000,000 barrels versus a 1,038,000 barrel decline the prior week. Distillate supplies are estimated to decline by 250,000 barrels versus a 459,000 barrel drawdown the prior week. Refinery Utilization is expected to rise .5% versus a 2.39% increase the prior week.
Bloomberg:
- Israel will “vanish” just like the Soviet Union collapsed, Iran’s President Mahmoud Ahmadinejad told a conference in Tehran that questions the Holocaust.
- The yen fell to a record low against the euro after Morgan Stanley Japan and Barclays Capital Japan cut growth forecasts for the world’s second-largest economy.
- China increased oil production at the fastest pace in 10 months in November as PetroChina and Cnooc Ltd. pumped more crude.
- Copper futures fell in Shanghai amid concern that slowing economic growth in the US and China might translate into reduced demand for the industrial metal as global stockpiles surge.
- China’s industrial production growth held close to a two-year low in November, suggesting the government is achieving a gradual slowdown in the world’s fastest-growing major economy.
New York Times:
- United Air Lines and Continental Airlines are discussing a possible merger.
Financial Times:
- The US plans military force, backed by Britain, to end violence in Sudan’s Darfur region. Over 200,000 people have died through violence and disease since the conflict began in February 2003, the UN says.
AFP:
- Russian authorities have banned a planned march in memory of killed journalists.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (CRM), target $44.
Night Trading
Asian Indices are -% to +.% on average.
S&P 500 indicated -.%.
NASDAQ 100 indicated -.%.
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
- (PLCE)/1.23
Upcoming Splits
- (GBCI) 3-for-2
Economic Releases
8:30 am EST
- Advance Retail Sales for November are estimated to rise .2% versus a .4% decline in October.
- Retail Sales Less Autos for November are estimated to rise .3% versus a .4% decline in October.
10:00 pm EST
- Business Inventories for October are estimated to rise .4% versus a .4% increase in September.
10:30 pm EST
- Bloomberg consensus estimates call for a weekly crude oil drawdown of 1,300,000 barrels versus a 1,049,000 barrel decline the prior week. Gasoline supplies are expected to rise by 1,000,000 barrels versus a 1,038,000 barrel decline the prior week. Distillate supplies are estimated to decline by 250,000 barrels versus a 459,000 barrel drawdown the prior week. Refinery Utilization is expected to rise .5% versus a 2.39% increase the prior week.
BOTTOM LINE: Asian indices are mostly lower, weighed down by financial and technology shares in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.
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