BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Internet 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 slightly higher, sector performance is mostly positive and volume is above average. HedgeFund.net reported on Monday that emerging market hedge fund assets have risen from $40 billion at the end of 2003 to $175 billion at the end of 2006 or a 337% increase. Emerging market hedge funds "have been springing up like the proverbial mushroom in the rain" and "countries from Romania to Vietnam became the focus of huge sums of hedge fund inflows in 2006," according to the report. The column concludes that the "fundamentals and the potential of these markets seem to outweigh any fear of volatility" and that even though "smart money has been in this space for a while," it "does not imply it is time to exit." Considering the general public's shunning of U.S. stocks and overwhelming affinity for emerging market equities, I would argue that this is just more evidence of the extreme complacency engulfing emerging market investors. I expect US stocks to trade modestly higher into the close from current levels on lower long-term rates, short-covering and stable energy prices.
Tuesday, February 06, 2007
Stocks Slightly Higher into Final Hour on Lower Long-term Rates, Buyout Activity
Today's Headlines
Bloomberg:
- Blackstone Group LP raised its cash offer for Equity Office Properties Trust(EOP) to $39 billion to thwart rival bidder Vornado Realty Trust(VNO) a day before shareholders vote on what would be the largest-ever leveraged buyout.
- Silver Lake Partners plans to raise as much as $10 billion for the biggest technology buyout fund after a record year of private-equity acquisitions.
- MGIC Investment Corp.(MGIC), the largest US mortgage insurer, agreed to buy Radian Group(RDN) for $4.9 billion in stock, following its biggest competitor into the bond insurance market.
- Mills Corp.(MLS) said it will begin talks with Simon Property Group and Farallon Capital Management LLC to consider their $1.56 billion bid for the company.
- The Chicago Merc(CME) can move forward with plans to offer the first exchange-traded credit derivative contacts, after the CFTC gave approval.
- Eastman Kodak(EK) for the first time plans to sell printers that use lower-cost ink cartridges to compete with Hewlett-Packard(HPQ).
- Investors should reduce holdings of telecom stocks in the emerging markets of Europe, the Middle East and Africa because gains in the past six months have left them expensive, Goldman Sachs(GS) said.
Wall Street Journal:
- DaimlerChrysler AG aims to revive Chrysler’s fortunes by integrating the unit with the luxury Mercedes-Benz brand, gambling that the latter’s exclusive image won’t be damaged.
- US utilities increased spending for electricity power lines to reduce choke points, improve reliability, and increase possibilities for using renewable energy.
- Compliance officers are in demand at US financial institutions as money is laundered by wrongdoers in increasingly sophisticated ways and regulators slap large fines
NY Times:
- Veterinarians who work on large food animals such as cows are in such short supply that the American Veterinary Medical Association predicts 4 in every 100 food-animal vet jobs will go unfilled by 2016.
- The SEC is examining whether employees at major financial institutions are tipping off preferred clients such as hedge funds to inside information about imminent large stock trades.
- Saudi Arabia is taking a more visible role in Middle East affairs to thwart Iran’s push to become a regional superpower, citing diplomats, analysts and officials throughout the Middle East.
- Wal-Mart Stores(WMT) is linking with six major Hollywood studios to sell digital movies and television shows on its Web site.
La Repubblica:
- Italian Industry Minister Pierluigi Bersani plans to introduce a series of measures to promote energy efficiency.
Frankfurter Allgemeine Zeitung:
- Alstom SA may purchase alternative energy companies this year, citing Philippe Joubert, president of the company’s Alstom Power unit.
- Blackstone Group LP raised its cash offer for Equity Office Properties Trust(EOP) to $39 billion to thwart rival bidder Vornado Realty Trust(VNO) a day before shareholders vote on what would be the largest-ever leveraged buyout.
- Silver Lake Partners plans to raise as much as $10 billion for the biggest technology buyout fund after a record year of private-equity acquisitions.
- MGIC Investment Corp.(MGIC), the largest US mortgage insurer, agreed to buy Radian Group(RDN) for $4.9 billion in stock, following its biggest competitor into the bond insurance market.
- Mills Corp.(MLS) said it will begin talks with Simon Property Group and Farallon Capital Management LLC to consider their $1.56 billion bid for the company.
- The Chicago Merc(CME) can move forward with plans to offer the first exchange-traded credit derivative contacts, after the CFTC gave approval.
- Eastman Kodak(EK) for the first time plans to sell printers that use lower-cost ink cartridges to compete with Hewlett-Packard(HPQ).
- Investors should reduce holdings of telecom stocks in the emerging markets of Europe, the Middle East and Africa because gains in the past six months have left them expensive, Goldman Sachs(GS) said.
Wall Street Journal:
- DaimlerChrysler AG aims to revive Chrysler’s fortunes by integrating the unit with the luxury Mercedes-Benz brand, gambling that the latter’s exclusive image won’t be damaged.
- US utilities increased spending for electricity power lines to reduce choke points, improve reliability, and increase possibilities for using renewable energy.
- Compliance officers are in demand at US financial institutions as money is laundered by wrongdoers in increasingly sophisticated ways and regulators slap large fines
NY Times:
- Veterinarians who work on large food animals such as cows are in such short supply that the American Veterinary Medical Association predicts 4 in every 100 food-animal vet jobs will go unfilled by 2016.
- The SEC is examining whether employees at major financial institutions are tipping off preferred clients such as hedge funds to inside information about imminent large stock trades.
- Saudi Arabia is taking a more visible role in Middle East affairs to thwart Iran’s push to become a regional superpower, citing diplomats, analysts and officials throughout the Middle East.
- Wal-Mart Stores(WMT) is linking with six major Hollywood studios to sell digital movies and television shows on its Web site.
La Repubblica:
- Italian Industry Minister Pierluigi Bersani plans to introduce a series of measures to promote energy efficiency.
Frankfurter Allgemeine Zeitung:
- Alstom SA may purchase alternative energy companies this year, citing Philippe Joubert, president of the company’s Alstom Power unit.
Monday, February 05, 2007
Tuesday Watch
Late-Night Headlines
Bloomberg:
- Investors should sell inflation-indexed bonds in Japan because consumer prices may fall for the first time in a year by June, JPMorgan Securities Japan Co. said.
- National Semi(NSM) cut its sales forecast for the third straight quarter after orders from Asia slowed.
- Shares of Baoshan Iron & Steel Co., China’s largest steelmaker, and other producers of the metal tumbled on speculation that China would further reduce tax incentives on exports, increasing domestic competition.
- Copper futures in Shanghai fell for a third day as concerns about losses at a metals-trading hedge fund continued to prompt selling. Red Kite, part of a $1 billion hedge fund run by RK Capital Management LLP, lost about 30% in January as metal prices plummeted.
Financial Times:
- China and the UN are working to establish a carbon trading exchange in Beijing, which may make the city a center for the multi billion dollar global trading in carbon credits, citing Khalid Malik, the UN’s top official in China.
- European carmakers will be told by the European Union on Feb. 7 that the car industry will have to cut carbon dioxide emissions to 130 grams a kilometer by 2012.
Economic Daily News:
- The Taiwan Stock Exchange may relax restrictions on short selling to boost trading volume.
Financial News:
- China must pay attention to “bubbles” in its stock market before they get out of hand, Cheng Siwei, vice chairman of the Nation’s People Congrees, wrote in a commentary.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (NUAN), target raised to $16.
- Reiterated Buy on (ONNN), target $13.
- Reiterated Buy on (EQ), target $60.
Night Trading
Asian Indices are unch. to +.75% on average.
S&P 500 indicated -.03%.
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
- (ATW)/.68
- (ADP)/.51
- (AVP)/.38
- (BOW)/-.22
- (CELL)/.19
- (BOB)/.40
- (CBG)/.56
- (CAKE)/.24
- (CSCO)/.31
- (CSC)/.83
- (DUK)/.40
- (EMR)/.53
- (FMC)//1.18
- (IT)/.22
- (IACI)/./53
- (ISE)/.37
- (LPNT)/.62
- (LPX)/-.15
- (NBR)/1.00
- (NOV)/1.06
- (PNR)/.32
- (JOE)/.24
- (TZOO)/.28
- (TYC)/.44
- (VFC)/1.22
- (VSH)/.23
- (XL)/2.34
Upcoming Splits
- None of note
Economic Releases
None of note:
Bloomberg:
- Investors should sell inflation-indexed bonds in Japan because consumer prices may fall for the first time in a year by June, JPMorgan Securities Japan Co. said.
- National Semi(NSM) cut its sales forecast for the third straight quarter after orders from Asia slowed.
- Shares of Baoshan Iron & Steel Co., China’s largest steelmaker, and other producers of the metal tumbled on speculation that China would further reduce tax incentives on exports, increasing domestic competition.
- Copper futures in Shanghai fell for a third day as concerns about losses at a metals-trading hedge fund continued to prompt selling. Red Kite, part of a $1 billion hedge fund run by RK Capital Management LLP, lost about 30% in January as metal prices plummeted.
Financial Times:
- China and the UN are working to establish a carbon trading exchange in Beijing, which may make the city a center for the multi billion dollar global trading in carbon credits, citing Khalid Malik, the UN’s top official in China.
- European carmakers will be told by the European Union on Feb. 7 that the car industry will have to cut carbon dioxide emissions to 130 grams a kilometer by 2012.
Economic Daily News:
- The Taiwan Stock Exchange may relax restrictions on short selling to boost trading volume.
Financial News:
- China must pay attention to “bubbles” in its stock market before they get out of hand, Cheng Siwei, vice chairman of the Nation’s People Congrees, wrote in a commentary.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (NUAN), target raised to $16.
- Reiterated Buy on (ONNN), target $13.
- Reiterated Buy on (EQ), target $60.
Night Trading
Asian Indices are unch. to +.75% on average.
S&P 500 indicated -.03%.
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
- (ATW)/.68
- (ADP)/.51
- (AVP)/.38
- (BOW)/-.22
- (CELL)/.19
- (BOB)/.40
- (CBG)/.56
- (CAKE)/.24
- (CSCO)/.31
- (CSC)/.83
- (DUK)/.40
- (EMR)/.53
- (FMC)//1.18
- (IT)/.22
- (IACI)/./53
- (ISE)/.37
- (LPNT)/.62
- (LPX)/-.15
- (NBR)/1.00
- (NOV)/1.06
- (PNR)/.32
- (JOE)/.24
- (TZOO)/.28
- (TYC)/.44
- (VFC)/1.22
- (VSH)/.23
- (XL)/2.34
Upcoming Splits
- None of note
Economic Releases
None of note:
BOTTOM LINE: Asian indices are 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 Mostly Lower on Profit-taking After Recent Gains
Indices
S&P 500 1,446.99 -.10%
DJIA 12,661.74 +.07%
NASDAQ 2,470.60 -.21%
Russell 2000 806.69 -.34%
Wilshire 5000 14,569.83 -.10%
Russell 1000 Growth 570.09 -.13%
Russell 1000 Value 834.25 -.02%
Morgan Stanley Consumer 709.41 -.27%
Morgan Stanley Cyclical 943.06 -.04%
Morgan Stanley Technology 568.78 -.12%
Transports 4,962.93 -.88%
Utilities 466.04 +.99%
MSCI Emerging Markets 115.17 -.16%
Sentiment/Internals
Put/Call .82 -14.58%
NYSE Arms .84 -24.87%
Volatility(VIX) 10.55 +4.66%
ISE Sentiment 146.0 +50.52%
Futures Spot Prices
Crude Oil 58.86 -.27%
Reformulated Gasoline 156.02 -.81%
Natural Gas 7.65 +2.35%
Heating Oil 168.0 -.24%
Gold 653.50 +.31%
Base Metals 221.55 -.98%
Copper 242.0 -.19%
Economy
10-year US Treasury Yield 4.80% -.34%
US Dollar 85.10 +.16%
CRB 301.19 -.05%
Leading Sectors
Alternative Energy +1.72%
Hospitals +1.57%
Utilities +.99%
Lagging Sectors
Airlines -.93%
Steel -.98%
Oil Tankers -1.09%
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
Bank of America:
- Rated (ANSS) Buy, target $61.
Afternoon/Evening Headlines
Bloomberg:
- Physical symptoms of depression such as fatigue and loss of appetite may be linked to hardening of the arteries, an early predictor of coronary artery disease, according to a study.
- Research on climate change and nanotechnology would be increased in President Bush’s proposed $6.55 billion US Commerce Dept. budget.
- Nasdaq Stock Market Inc.(NDAQ) won regulatory approval to raise its listing fees and offer its 3,200 members more services.
- Toyota Motor Corp., bidding to make its Prius hybrid a mainstream vehicle, is offering its first low-interest loan and lease incentives to boots the model’s US sales by at least 50%.
- CIBC World Markets’ chief strategist Jeffrey Rubin recommended investors scale back their holdings in Canadian energy stocks, citing cooling demand for crude oil in OECD countries and the prospect of a carbon emissions cap system in North America.
- The price of raw sugar traded in NY may fall over the next three years as global supply outpaces demand, Morgan Stanley said.
- Copper prices in NY dropped for the third straight session, extending a slump to a 10-month low, as global inventories at the highest since June 2004 signaled lower demand for the metal used in pipes and wires.
- Crude oil fell .16/bbl. to session lows on speculation recent gains were unjustified as demand wanes, the US dollar firms and supplies rise further.
Financial Times:
- German Finance Minister Peer Steinbrueck considers the billion-dollar business of hedge funds to be a possible risk to the world’s financial markets, citing his deputy.
S&P 500 1,446.99 -.10%
DJIA 12,661.74 +.07%
NASDAQ 2,470.60 -.21%
Russell 2000 806.69 -.34%
Wilshire 5000 14,569.83 -.10%
Russell 1000 Growth 570.09 -.13%
Russell 1000 Value 834.25 -.02%
Morgan Stanley Consumer 709.41 -.27%
Morgan Stanley Cyclical 943.06 -.04%
Morgan Stanley Technology 568.78 -.12%
Transports 4,962.93 -.88%
Utilities 466.04 +.99%
MSCI Emerging Markets 115.17 -.16%
Sentiment/Internals
Put/Call .82 -14.58%
NYSE Arms .84 -24.87%
Volatility(VIX) 10.55 +4.66%
ISE Sentiment 146.0 +50.52%
Futures Spot Prices
Crude Oil 58.86 -.27%
Reformulated Gasoline 156.02 -.81%
Natural Gas 7.65 +2.35%
Heating Oil 168.0 -.24%
Gold 653.50 +.31%
Base Metals 221.55 -.98%
Copper 242.0 -.19%
Economy
10-year US Treasury Yield 4.80% -.34%
US Dollar 85.10 +.16%
CRB 301.19 -.05%
Leading Sectors
Alternative Energy +1.72%
Hospitals +1.57%
Utilities +.99%
Lagging Sectors
Airlines -.93%
Steel -.98%
Oil Tankers -1.09%
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
Bank of America:
- Rated (ANSS) Buy, target $61.
Afternoon/Evening Headlines
Bloomberg:
- Physical symptoms of depression such as fatigue and loss of appetite may be linked to hardening of the arteries, an early predictor of coronary artery disease, according to a study.
- Research on climate change and nanotechnology would be increased in President Bush’s proposed $6.55 billion US Commerce Dept. budget.
- Nasdaq Stock Market Inc.(NDAQ) won regulatory approval to raise its listing fees and offer its 3,200 members more services.
- Toyota Motor Corp., bidding to make its Prius hybrid a mainstream vehicle, is offering its first low-interest loan and lease incentives to boots the model’s US sales by at least 50%.
- CIBC World Markets’ chief strategist Jeffrey Rubin recommended investors scale back their holdings in Canadian energy stocks, citing cooling demand for crude oil in OECD countries and the prospect of a carbon emissions cap system in North America.
- The price of raw sugar traded in NY may fall over the next three years as global supply outpaces demand, Morgan Stanley said.
- Copper prices in NY dropped for the third straight session, extending a slump to a 10-month low, as global inventories at the highest since June 2004 signaled lower demand for the metal used in pipes and wires.
- Crude oil fell .16/bbl. to session lows on speculation recent gains were unjustified as demand wanes, the US dollar firms and supplies rise further.
Financial Times:
- German Finance Minister Peer Steinbrueck considers the billion-dollar business of hedge funds to be a possible risk to the world’s financial markets, citing his deputy.
BOTTOM LINE: The Portfolio finished slightly higher today on gains in my Retail longs, Semi longs and Telecom longs. I did not trade in the final hour, thus leaving the Portfolio 100% net long. The tone of the market was mixed today as the advance/decline line finished modestly lower, 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 slightly bearish. Lingering weakness in Google (GOOG) and Apple (AAPL) appears to be weighing on other large-cap techs. However, many smaller/mid-sized “growth” stocks are moving solidly higher on good volume. I plan to add to my Google and Apple longs on any further meaningful weakness.
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