BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Semi longs, Telecom longs and Retail longs. I covered my (IWM)/(QQQQ) hedges today, thus leaving the Portfolio 100% net long. The tone of the market is very positive as the advance/decline line is higher, almost every sector is rising and volume is heavy. This morning CNBC reported that a gas station in Omaha, Nebraska is selling "terror-free" gas. I just heard of this initiative recently. I went to the website and looked at the polling, which I found interesting. Here are some of the findings:
1. 50% said they would drive more than 5 miles to buy fuel that was not originated in the Middle East.
2. 85% believe at least part of the money we spend on gas consumption goes towards the financing of terrorism.
3. 36% said their next vehicle would likely or definitely be hybrid, FFV or biodiesel-powered.
Due to environmental concerns and terrorism worries, I believe that the demand for gas-guzzling vehicles will continue subsiding substantially even if gas prices plunge further, which I expect. I think long-term oil bulls remain amazingly complacent regarding the prospects for alternative energy and conservation given the substantial global demand destruction that is already occurring. I expect US stocks to trade mixed-to-higher into the close from current levels on bargain-hunting, short-covering, stable long-term rates and more economic optimism.
Wednesday, January 24, 2007
Stocks Higher into Final Hour, Led by Surging Technology Shares
Today's Headlines
Bloomberg:
- Venezuelan President Hugo Chavez’ announcement that he will shut the private station, Radio Caracas Television, violates rules of due process and defies the presumption of innocence, said Marcel Granier, the company’s chairman.
- President Bush equated Iran, which does billions of dollars in trade with European countries, with the terrorist group al-Qaeda. Hezbollah, a militant organization that warred with Israel over the summer, is a terrorist group “second only to al-Qaeda in the American lives it has taken,” Bush said. Hezbollah isn’t listed as a terrorist group by the European Union.
- The NFL and its players’ union agreed to increase weekly drug tests to 10 from seven per team and added an endurance-builder linked to cyclists and skiers to the list of banned substances.
- Corning Inc.(GLW) posted a fourth-quarter profit that beat analysts’ estimates as sales of glass for television sets rose. The shares are soaring 13%, the most in 2 years.
- AT&T shares surged the most in six months after the company’s Cingular Wireless unit added a record 2.4 million mobile-phone subscribers in the fourth quarter.
Wall Street Journal:
- Coca-Cola Co.(KO) will introduce new beverage coolers that it says use less energy as part of a plan to highlight its interest in the environment.
NY Times:
- Former President Jimmy Carter defended his book “Palestine: Peace Not Apartheid” in his first major public speech on criticism the work has received. He told the audience at Brandeis Univ. that he apologized for an “improper and stupid” sentence in the book that suggests Palestinians shouldn’t end suicide bombings against Israelis and other acts of terrorism until Israel withdraws from the territories. The book led 14 members of the Carter Center’s advisory board to resign.
AP:
- The North Carolina State Bar charged prosecutor Mike Nifong with new ethics violations stemming from his pursuit of a rape case against three Duke University lacrosse players. Nifong, district attorney for Durham County, is accused of withholding DNA evidence and making misleading statements to the court.
El Universal:
- Venezuelan President Chavez ousted Food Minister Erika Farias amid growing food shortages and discontent with the state-subsidized Mercal supermarkets.
El Nacional:
- State-owned Petroleos de Venezuela SA, South America’s largest oil company, plans to more than triple gas prices in coming weeks to end subsidies that cost it $1 billion a year.
- Venezuelan President Hugo Chavez’ announcement that he will shut the private station, Radio Caracas Television, violates rules of due process and defies the presumption of innocence, said Marcel Granier, the company’s chairman.
- President Bush equated Iran, which does billions of dollars in trade with European countries, with the terrorist group al-Qaeda. Hezbollah, a militant organization that warred with Israel over the summer, is a terrorist group “second only to al-Qaeda in the American lives it has taken,” Bush said. Hezbollah isn’t listed as a terrorist group by the European Union.
- The NFL and its players’ union agreed to increase weekly drug tests to 10 from seven per team and added an endurance-builder linked to cyclists and skiers to the list of banned substances.
- Corning Inc.(GLW) posted a fourth-quarter profit that beat analysts’ estimates as sales of glass for television sets rose. The shares are soaring 13%, the most in 2 years.
- AT&T shares surged the most in six months after the company’s Cingular Wireless unit added a record 2.4 million mobile-phone subscribers in the fourth quarter.
Wall Street Journal:
- Coca-Cola Co.(KO) will introduce new beverage coolers that it says use less energy as part of a plan to highlight its interest in the environment.
NY Times:
- Former President Jimmy Carter defended his book “Palestine: Peace Not Apartheid” in his first major public speech on criticism the work has received. He told the audience at Brandeis Univ. that he apologized for an “improper and stupid” sentence in the book that suggests Palestinians shouldn’t end suicide bombings against Israelis and other acts of terrorism until Israel withdraws from the territories. The book led 14 members of the Carter Center’s advisory board to resign.
AP:
- The North Carolina State Bar charged prosecutor Mike Nifong with new ethics violations stemming from his pursuit of a rape case against three Duke University lacrosse players. Nifong, district attorney for Durham County, is accused of withholding DNA evidence and making misleading statements to the court.
El Universal:
- Venezuelan President Chavez ousted Food Minister Erika Farias amid growing food shortages and discontent with the state-subsidized Mercal supermarkets.
El Nacional:
- State-owned Petroleos de Venezuela SA, South America’s largest oil company, plans to more than triple gas prices in coming weeks to end subsidies that cost it $1 billion a year.
Tuesday, January 23, 2007
Wednesday Watch
Late-Night Headlines
Bloomberg:
- President Bush, in the State of the Union address, urged both political parties to put aside differences and focus on battling terrorism and accomplishing “big things” for the American people.
- The risk premium on high-yield, high-risk corporate bonds fell to the lowest in a decade as a drop in oil prices and surging consumer confidence boosts optimism the US economy will grow fast enough to limit defaults.
- Broadcom Corp.(BRCM) restated financial results to reflect $2.2 billion in costs for misdated stock-option grants, a problem it blamed on former CEO Henry Nicholas.
- Australia’s consumer prices unexpectedly fell for the first time in almost eight years, driving down the nation’s bond yields and currency as investors bet the central bank won’t raise interest rates.
Financial Times:
- Rupert Murdoch’s News Corp.(NWS) joined the Chandler family in its offer to buy Tribune Co.(TRB).
Guardian:
- The UK is not involved in a “war on terror” and “fear-driven” responses to a perceived threat could harm respect for fair trials and provide a temptation to “abandon our values,” citing an interview with Director of Public Prosecutions Ken MacDonald.
BBC:
- Ford Motor(F) has developed a vehicle that runs on non carbon-based alternative fuels, citing Sue Cischke, head of Ford’s safety programs. The car, called the Edge, is a hybrid that can operate on a combination of compressed hydrogen and a battery pack that plugs into a light socket.
Xinhua News Agency:
- China’s government will punish local officials who expand investments “blindly” without saving energy and protecting the environment, citing construction minister Wang Guangtao.
Night Trading
Asian Indices are +.75% to +1.0% on average.
S&P 500 indicated +.13%.
NASDAQ 100 indicated +.34%.
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
- (ABT)/.74
- (AMG)/1.73
- (APD)/.93
- (ATI)/1.61
- (ABC)/.56
- (CBT)/.50
- (CHKP)/.39
- (CPS)/.39
- (COP)/1.95
- (GLW)/.28
- (EBAY).28
- (ETH)/.70
- (FFIV)/.45
- (FDC)/.34
- (GD)/1.14
- (HSY)/.71
- (HTCH)/.10
- (LSI)/.17
- (MCD)/.61
- (NSC)/.96
- (NVLS).55
- (PMTC)/.21
- (QCOM)/.42
- (RMBS).09
- (RYL)/1.84
- (SYMC)/.25
- (TER)/.02
- (TDW)/1.49
- (TRID)/.26
- (VAR)/.36
Upcoming Splits
- None of note
Economic Releases
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil build of 1,300,000 barrels versus a 6,768,000 barrel build the prior week. Gasoline supplies are expected to rise by 1,500,000 barrels versus a 3,491,000 barrel increase the prior week. Distillate inventories are estimated to fall by -250,000 barrels versus a 910,000 barrel increase the prior week. Refinery Utilization is estimated to fall -.40% versus a -3.53% decline the prior week.
Bloomberg:
- President Bush, in the State of the Union address, urged both political parties to put aside differences and focus on battling terrorism and accomplishing “big things” for the American people.
- The risk premium on high-yield, high-risk corporate bonds fell to the lowest in a decade as a drop in oil prices and surging consumer confidence boosts optimism the US economy will grow fast enough to limit defaults.
- Broadcom Corp.(BRCM) restated financial results to reflect $2.2 billion in costs for misdated stock-option grants, a problem it blamed on former CEO Henry Nicholas.
- Australia’s consumer prices unexpectedly fell for the first time in almost eight years, driving down the nation’s bond yields and currency as investors bet the central bank won’t raise interest rates.
Financial Times:
- Rupert Murdoch’s News Corp.(NWS) joined the Chandler family in its offer to buy Tribune Co.(TRB).
Guardian:
- The UK is not involved in a “war on terror” and “fear-driven” responses to a perceived threat could harm respect for fair trials and provide a temptation to “abandon our values,” citing an interview with Director of Public Prosecutions Ken MacDonald.
BBC:
- Ford Motor(F) has developed a vehicle that runs on non carbon-based alternative fuels, citing Sue Cischke, head of Ford’s safety programs. The car, called the Edge, is a hybrid that can operate on a combination of compressed hydrogen and a battery pack that plugs into a light socket.
Xinhua News Agency:
- China’s government will punish local officials who expand investments “blindly” without saving energy and protecting the environment, citing construction minister Wang Guangtao.
Night Trading
Asian Indices are +.75% to +1.0% on average.
S&P 500 indicated +.13%.
NASDAQ 100 indicated +.34%.
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
- (ABT)/.74
- (AMG)/1.73
- (APD)/.93
- (ATI)/1.61
- (ABC)/.56
- (CBT)/.50
- (CHKP)/.39
- (CPS)/.39
- (COP)/1.95
- (GLW)/.28
- (EBAY).28
- (ETH)/.70
- (FFIV)/.45
- (FDC)/.34
- (GD)/1.14
- (HSY)/.71
- (HTCH)/.10
- (LSI)/.17
- (MCD)/.61
- (NSC)/.96
- (NVLS).55
- (PMTC)/.21
- (QCOM)/.42
- (RMBS).09
- (RYL)/1.84
- (SYMC)/.25
- (TER)/.02
- (TDW)/1.49
- (TRID)/.26
- (VAR)/.36
Upcoming Splits
- None of note
Economic Releases
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil build of 1,300,000 barrels versus a 6,768,000 barrel build the prior week. Gasoline supplies are expected to rise by 1,500,000 barrels versus a 3,491,000 barrel increase the prior week. Distillate inventories are estimated to fall by -250,000 barrels versus a 910,000 barrel increase the prior week. Refinery Utilization is estimated to fall -.40% versus a -3.53% decline the prior week.
BOTTOM LINE: Asian indices are higher, boosted by technology and commodity shares in the region. I expect US equities to open modestly higher and to maintain gains into the afternoon. The Portfolio is 75% net long heading into the day.
Stocks Finish Higher on Rising Economic Optimism, Led by Cyclicals and Small-Caps
Indices
S&P 500 1,427.99 +.35%
DJIA 12,533.80 +.45%
NASDAQ 2,431.41 +.01%
Russell 2000 785.38 +.95%
Wilshire 5000 14,333.19 +.43%
Russell 1000 Growth 562.58 +.23%
Russell 1000 Value 820.34 +.49%
Morgan Stanley Consumer 709.71 +.21%
Morgan Stanley Cyclical 921.14 +1.04%
Morgan Stanley Technology 556.86 -.22%
Transports 4,827.36 +.30%
Utilities 449.52 +.48%
Put/Call .89 -6.32%
NYSE Arms .94 -28.26%
Volatility(VIX) 10.34 -3.99%
ISE Sentiment 137.0 -10.46%
US Dollar 84.66 -.44%
CRB 296.65 +2.30%
Futures Spot Prices
Crude Oil 54.80 +4.22%
Reformulated Gasoline 144.35 +4.95%
Natural Gas 7.63 +4.22%
Heating Oil 157.54 +4.44%
Gold 648.10 +2.21%
Base Metals 230.50 +2.49%
Copper 258.70 +2.27%
10-year US Treasury Yield 4.81% +1.02%
Leading Sectors
Gold & Silver +4.41%
Steel +4.25%
Oil Service +2.86%
Lagging Sectors
Internet -.80%
Networking -1.15%
Airlines -3.57%
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
Deutsche Bank:
- Rated (NSR) Buy, target $40.
Afternoon/Evening Headlines
Bloomberg:
- President Bush plans to double the size of the country’s emergency oil reserves by 2027, Energy Secretary Bodman said. This would amount to only 100,000 barrels per day or .12% of daily global oil demand. Current global oil demand is 85.7 million barrels per day, however oil is rising $2.27/barrel on the report. Bush will also propose tonight cutting US gasoline consumption by 20% over the next 10 years through a combination of higher vehicle fuel efficiency and greater use of renewable fuels like ethanol.
- Sun Microsystems(SUNW) reported a profit after five quarters of losses and said it received a $700 million investment from KKR. SUNW is rising 8.3% after-hours.
- Citrix Systems(CTXS) reported annual revenue growth of 25%. CTXS is rising 11.2% after-hours.
- DuPont Co.(DD) said supplies of the company’s most profitable variety of corn seed will sell out this year because rising demand for ethanol in North America has spurred increased planting.
- US crude-oil inventories probably rose last week as refiners began maintenance programs, a Bloomberg News survey indicated.
- Yahoo! Inc.(YHOO) said fourth-quarter profit dropped 61% after delays in its newest Internet advertising software and costs from employee stock options. YHOO is falling 2.2% in after-hours trading.
- Advanced Micro Devices(AMD) reported a loss of $574 million on expenses tied to its acquisition of ATI Technologies. AMD is falling 4.9% after-hours.
- Lieutenant General David Petraeus said he couldn’t successfully carry out his new mission of leading US forces in Iraq and providing security for Baghdad without the additional 21,500 troops that President Bush plans to send.
- The Colts’ 38-34 win over the New England Patriots for a berth in the Super Bowl drew 46.7 million viewers on CBS, the most-watched American Football Conference championship game in 21 years.
S&P 500 1,427.99 +.35%
DJIA 12,533.80 +.45%
NASDAQ 2,431.41 +.01%
Russell 2000 785.38 +.95%
Wilshire 5000 14,333.19 +.43%
Russell 1000 Growth 562.58 +.23%
Russell 1000 Value 820.34 +.49%
Morgan Stanley Consumer 709.71 +.21%
Morgan Stanley Cyclical 921.14 +1.04%
Morgan Stanley Technology 556.86 -.22%
Transports 4,827.36 +.30%
Utilities 449.52 +.48%
Put/Call .89 -6.32%
NYSE Arms .94 -28.26%
Volatility(VIX) 10.34 -3.99%
ISE Sentiment 137.0 -10.46%
US Dollar 84.66 -.44%
CRB 296.65 +2.30%
Futures Spot Prices
Crude Oil 54.80 +4.22%
Reformulated Gasoline 144.35 +4.95%
Natural Gas 7.63 +4.22%
Heating Oil 157.54 +4.44%
Gold 648.10 +2.21%
Base Metals 230.50 +2.49%
Copper 258.70 +2.27%
10-year US Treasury Yield 4.81% +1.02%
Leading Sectors
Gold & Silver +4.41%
Steel +4.25%
Oil Service +2.86%
Lagging Sectors
Internet -.80%
Networking -1.15%
Airlines -3.57%
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
Deutsche Bank:
- Rated (NSR) Buy, target $40.
Afternoon/Evening Headlines
Bloomberg:
- President Bush plans to double the size of the country’s emergency oil reserves by 2027, Energy Secretary Bodman said. This would amount to only 100,000 barrels per day or .12% of daily global oil demand. Current global oil demand is 85.7 million barrels per day, however oil is rising $2.27/barrel on the report. Bush will also propose tonight cutting US gasoline consumption by 20% over the next 10 years through a combination of higher vehicle fuel efficiency and greater use of renewable fuels like ethanol.
- Sun Microsystems(SUNW) reported a profit after five quarters of losses and said it received a $700 million investment from KKR. SUNW is rising 8.3% after-hours.
- Citrix Systems(CTXS) reported annual revenue growth of 25%. CTXS is rising 11.2% after-hours.
- DuPont Co.(DD) said supplies of the company’s most profitable variety of corn seed will sell out this year because rising demand for ethanol in North America has spurred increased planting.
- US crude-oil inventories probably rose last week as refiners began maintenance programs, a Bloomberg News survey indicated.
- Yahoo! Inc.(YHOO) said fourth-quarter profit dropped 61% after delays in its newest Internet advertising software and costs from employee stock options. YHOO is falling 2.2% in after-hours trading.
- Advanced Micro Devices(AMD) reported a loss of $574 million on expenses tied to its acquisition of ATI Technologies. AMD is falling 4.9% after-hours.
- Lieutenant General David Petraeus said he couldn’t successfully carry out his new mission of leading US forces in Iraq and providing security for Baghdad without the additional 21,500 troops that President Bush plans to send.
- The Colts’ 38-34 win over the New England Patriots for a berth in the Super Bowl drew 46.7 million viewers on CBS, the most-watched American Football Conference championship game in 21 years.
BOTTOM LINE: The Portfolio finished about even today as gains in my Retail longs, Medical longs and Telecom longs were offset by losses in my Computer longs and Commodity shorts. I did not trade in the final hour, thus leaving the Portfolio 75% net long. The tone of the market was slightly positive today as the advance/decline line finished modestly higher, sector performance was mixed and volume was above average. Measures of investor anxiety were mostly lower into the close. Today's overall market action was mildly bullish. Tech lagged, however small-caps and cyclicals outperformed on rising economic optimism. I do believe the economy is accelerating, but not enough to buy deep cyclicals. Oil is $2.46 higher on news of Bush's proposals and a weaker U.S. Dollar. I believe oil bulls are misinterpreting the President’s initiatives. Adding 100,000 barrels per day to the SPR is only equivalent to .12% of current global demand of 85.7 million bpd. Plans to curtail U.S. gasoline consumption by 20% within 10 years would way more than offset that increase in demand for the SPR. I suspect the current rally in energy will prove short-lived as this sinks in. The 10-year yield is finished at 4.81%, rising 4 basis points. I continue to believe it would take a move above 5.25% to result in any meaningful weakness for equity investors. I do not expect that as economic growth is only accelerating modestly and inflation measures are poised to decelerate further. I have heard and read numerous bears insinuate or flat out state that they are the only ones that are bearish, which is one of the really surreal aspects of the current U.S. "negativity bubble." I don't closely follow the recently released UBS survey of investor sentiment that rose to a three-year high. However, its findings are very interesting. Notwithstanding the rise in the headline index, I would hardly call the overall survey "bullish" much less "excessively bullish." Only 37% of those surveyed expect the DJIA to rise this year. Of those 37%, only 11% expect a gain of more than 10%. As well, of the 37% that expect a rise, 22% expect a meager gain of 1%-4%. Finally, 46% expect the DJIA to remain unchanged for the year. I think the fact that the findings of this survey, which began when the bubble was bursting in 2000, are construed as “bullish” is a great example how deep-seated and ingrained the pessimism really is.
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