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Thursday, December 14, 2006
Wednesday, December 13, 2006
Thursday Watch
Late-Night Headlines
Bloomberg:
- The SEC approved rules that may allow institutional investors to put up less collateral when buying stocks on margin and trading derivatives contracts.
- China’s spending on factories, real estate and other fixed assets grew at a slower pace for the fifth straight month in November after the government curbed lending and project approvals.
- BP Plc(BP), Europe’s second-biggest oil company, said the US CFTC’s staff is recommending civil enforcement actions against it for improper trading of unleaded gasoline futures contracts in 2002.
- Suncor Energy said it may acquire land near Edmonton, Alberta, to build a refining plant to handle future expansion of its oil-sands operations, the second-largest in the world.
- OPEC may decide to postpone a production cut when it meets today as crude oil trades above $61 a barrel.
- China, the world’s biggest energy user after the US, approved funding for $307 million of projects to turn biomaterials into fuels as the nation conserves resources and cuts its reliance on oil imports.
Wall Street Journal:
- The US need to take “bold action” to improve the education system, citing NYC Mayor Bloomberg. Bloomberg compared the system to the “flabby, inefficient, outdated” US auto industry in the 1970s. 18 out of 100 high-school freshman will graduate on time, enroll directly in college and earn a two-year degree in three years or a four-year degree in six. The US isn’t receiving sufficient returns from “enormous” investment in education. Many teachers are recruited from among the bottom third of college classes and receive lifetime tenure after three years. Students are left to flounder in the early years and later face expensive remediation programs with limited success.
Nihon Keizai:
- The Bank of Japan will probably refrain from raising interest rates at its final policy meeting of the year next week.
China Daily:
- Chinese exporters may face higher trade barriers as trading partners including the European Union and the US tighten rules regarding energy and chemical use, citing a Chinese quality-control official.
Late Buy/Sell Recommendations
Citigroup:
- Rated (NUAN) Buy, target $15.
- Raised 2007 Russell 2000 target to 888, implying 12.6% upside.
- Maintained 2007 S&P 500 target of 1600, implying 13.3% upside.
Night Trading
Asian Indices are +.50% to +.75% on average.
S&P 500 indicated +.01%.
NASDAQ 100 indicated +.04%.
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
- (ADBE)/.33
- (BSC)/3.36
- (CIEN)/.13
- (COST)/.50
- (LEH)/1.68
- (MGAM)/.00
- (PIR)/-.34
- (ZQK)/.51
- (SAPE)/.04
- (TEK)/.37
- (WGO)/.31
Upcoming Splits
- (GBCI) 3-for-2
- (AFG) 3-for-2
Economic Releases
8:30 am EST
- The Import Price Index for November is estimated to rise .1% versus a -2.0% decline in October.
- Initial Jobless Claims for last week are estimated to fall to 320K versus 324K the prior week.
- Continuing Claims are estimated to fall to 2475K versus 2524K prior.
10:30 pm EST
- Bloomberg consensus estimates call for a weekly natural gas drawdown of -147 bcf versus an -11 bcf decline the prior week.
Bloomberg:
- The SEC approved rules that may allow institutional investors to put up less collateral when buying stocks on margin and trading derivatives contracts.
- China’s spending on factories, real estate and other fixed assets grew at a slower pace for the fifth straight month in November after the government curbed lending and project approvals.
- BP Plc(BP), Europe’s second-biggest oil company, said the US CFTC’s staff is recommending civil enforcement actions against it for improper trading of unleaded gasoline futures contracts in 2002.
- Suncor Energy said it may acquire land near Edmonton, Alberta, to build a refining plant to handle future expansion of its oil-sands operations, the second-largest in the world.
- OPEC may decide to postpone a production cut when it meets today as crude oil trades above $61 a barrel.
- China, the world’s biggest energy user after the US, approved funding for $307 million of projects to turn biomaterials into fuels as the nation conserves resources and cuts its reliance on oil imports.
Wall Street Journal:
- The US need to take “bold action” to improve the education system, citing NYC Mayor Bloomberg. Bloomberg compared the system to the “flabby, inefficient, outdated” US auto industry in the 1970s. 18 out of 100 high-school freshman will graduate on time, enroll directly in college and earn a two-year degree in three years or a four-year degree in six. The US isn’t receiving sufficient returns from “enormous” investment in education. Many teachers are recruited from among the bottom third of college classes and receive lifetime tenure after three years. Students are left to flounder in the early years and later face expensive remediation programs with limited success.
Nihon Keizai:
- The Bank of Japan will probably refrain from raising interest rates at its final policy meeting of the year next week.
China Daily:
- Chinese exporters may face higher trade barriers as trading partners including the European Union and the US tighten rules regarding energy and chemical use, citing a Chinese quality-control official.
Late Buy/Sell Recommendations
Citigroup:
- Rated (NUAN) Buy, target $15.
- Raised 2007 Russell 2000 target to 888, implying 12.6% upside.
- Maintained 2007 S&P 500 target of 1600, implying 13.3% upside.
Night Trading
Asian Indices are +.50% to +.75% on average.
S&P 500 indicated +.01%.
NASDAQ 100 indicated +.04%.
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
- (ADBE)/.33
- (BSC)/3.36
- (CIEN)/.13
- (COST)/.50
- (LEH)/1.68
- (MGAM)/.00
- (PIR)/-.34
- (ZQK)/.51
- (SAPE)/.04
- (TEK)/.37
- (WGO)/.31
Upcoming Splits
- (GBCI) 3-for-2
- (AFG) 3-for-2
Economic Releases
8:30 am EST
- The Import Price Index for November is estimated to rise .1% versus a -2.0% decline in October.
- Initial Jobless Claims for last week are estimated to fall to 320K versus 324K the prior week.
- Continuing Claims are estimated to fall to 2475K versus 2524K prior.
10:30 pm EST
- Bloomberg consensus estimates call for a weekly natural gas drawdown of -147 bcf versus an -11 bcf decline the prior week.
BOTTOM LINE: Asian indices are higher, boosted by automaker and technology shares in the region. I expect US equities to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.
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.
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