Indices
S&P 500 1,438.06 -.71%
DJIA 12,580.83 -.57%
NASDAQ 2,459.82 -.65%
Russell 2000 807.11 -.28%
Wilshire 5000 14,499.38 -.58%
Russell 1000 Growth 567.07 -.66%
Russell 1000 Value 829.62 -.57%
Morgan Stanley Consumer 705.18 -.86%
Morgan Stanley Cyclical 938.18 -.55%
Morgan Stanley Technology 572.86 +.60%
Transports 4,919.05 -1.75%
Utilities 473.54 +2.62%
MSCI Emerging Markets 115.24 -.11%
Sentiment/Internals
S&P 500 Cumulative A/D Line 11,969 -1.0%
Bloomberg Crude Oil % Bulls 33.00 -33.7%
CFTC Oil Large Speculative Longs 152,746 -8.0%
Total Put/Call .93 -3.12%
NYSE Arms 1.20 +8.0%
Volatility(VIX) 11.1 +10.1%
ISE Sentiment 111.0 +15.46%
AAII % Bulls 46.15 -.37%
AAII % Bears 30.0 -1.74%
Futures Spot Prices
Crude Oil 59.76 +1.0%
Reformulated Gasoline 161.34 +2.53%
Natural Gas 7.78 +4.16%
Heating Oil 172.40 +2.40%
Gold 671.50 +3.10%
Base Metals 218.32 -2.42%
Copper 251.75 +4.07%
Economy
10-year US Treasury Yield 4.78% -4 basis points
4-Wk MA of Jobless Claims 308,100 +1.1%
Average 30-year Mortgage Rate 6.28% -6 basis points
Weekly Mortgage Applications -.2%
Weekly Retail Sales +2.9%
Nationwide Gas $2.20/gallon +.04
ECRI Weekly Leading Economic Index 140.00 -.07%
US Dollar Index 84.88 -.09%
CRB Index 305.19 +1.28%
Leading Sectors
Utilities +2.62%
Hospitals +2.55%
Gold & Silver +2.0%
Networking +1.71%
REITs +1.65%
Lagging Sectors
Gaming -1.92%
Airlines -2.11%
I-Banks -2.19%
Steel -3.54%
Homebuilders -4.47%
One-Week High-Volume Gainers
One-Week High-Volume Losers
*5-Day Change
Friday, February 09, 2007
Stocks Lower into Final Hour on Profit-taking, Micron Tech Comments
BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Computer longs, Medical longs and Internet longs. I added (IWM) and (QQQQ) hedges today, thus leaving the Portfolio 75% net long. The tone of the market is negative as the advance/decline line is lower, most sectors are declining and volume is above-average. About 12% of total mortgage loans are subprime. Of those 12%, another 12.6% are delinquent. Thus, only about 1.5% of total mortgage loans outstanding are currently problematic. I think the fact that bonds didn't rally, the dollar remains firm and stocks barely fell on yesterday's news was telling. I do not believe subprime woes are nearly large enough or will become large enough to bring down the bulletproof U.S. economy. There are just too many other positives that outweigh this negative. In fact, in the big picture, housing is a positive. If housing had continued booming we would be facing numerous Fed rate hikes and the very high probability of an economic hard landing. The Fed's Poole said this morning that inflation is likely to fall to a reasonable range and that U.S. growth should average about 3% this year. A headline on the front page of the Money Section of USA Today read, "Stocks May be Overdue for a Pullback." As well, CNBC had a portfolio manager on this morning talking about a global bird flu pandemic that leads to a global depression. I continue to believe the many bears remain stunningly complacent given recent gains and improving macro backdrop. I also still believe most bulls have raised cash of late. I continue to believe the next meaningful move in the currently "dull" major averages will be higher. I expect US stocks to trade mixed-to-higher into the close from current levels on stable energy prices, bargain hunting and short-covering.
Today's Headlines
Bloomberg:
- Susan Bies, Federal Reserve Chairman Ben Bernanke’s point person on banking, resigned after five years.
- Crude oil rose above $60/bbl. briefly for the first time in five weeks after an explosion shut down a California field owned by Occidental Petroleum boosted speculation by investment funds on the commodity.
- Natural gas is falling in NY as speculators said record inventories were adequate to handle a bout of below-average temperatures across the northern US.
- European bio-fuels production is expanding fast enough to absorb the continent’s grains and sugar surpluses, softening the impact on farmers of declining subsides, the European Union said.
- Shares of Fortress Investment Group LLC, the first US manager of private-equity and hedge funds to go public, soared almost 70% in their initial day of trading.
- Micron Technology(MU) said a fall in the price of its products has created a “horrible situation” for the company. The shares are falling .37 to $12.53.
- The UN nuclear agency is set to suspend up to 40% of the projects it’s sponsoring in Iran after deciding that the work may violate a Security Council resolution to stop assistance that may help the Islamic Republic develop atomic weapons.
- US Treasuries fell as a Federal Reserve official reinforced expectations the central bank won’t lower interest rates during the first half of the year.
- General Motors(GM) and Ford Motor(F) shares surged after Deutsche Bank AG upgraded the two biggest US carmakers on optimism they will reach a union agreement to reduce health-care costs.
- The perceived risk of owning US corporate bonds fell to a record low today as a survey showed economists are more optimistic about US growth, according to an index of credit-default swaps.
- Hedge funds charge too much in fees for performance that frequently mimics major stock indexes, said Russell Read, chief investment officer of the $225 billion California Public Employees Retirement System.
- China’s economy may expand at a slower 8% rate this year, according to the Chinese central bank’s quarterly monetary policy report, issued today.
- The US Dollar strengthened against the euro, snapping a three-day slide, on speculation Asian investors will increase buying of US Treasuries.
Wall Street Journal:
- Goldman Sachs Group(GS) may have raised as much as $19 billion for its new private-equity fund, the biggest such sum raised by a Wall Street investment bank.
- AutoNation Inc. CEO Jackson, head of the largest US auto retailer, has called on US automakers to build cars that suit consumer preferences rather than their own.
- American Greetings(AM) plans to make over the Care Bears designs that have been the company’s most successful licensing property.
- Exchange Traded Funds have been a bonanza for fund managers who get about $950 million in annual fees and less so for investors who foot the bill in commissions and bid-asked spreads every time ETF shares trade, John Bogle wrote.
- Blackstone Group LP(BLK) is close to a $6.5 billion agreement with Beacon Capital Partners to sell office building in Seattle and Washington, DC.
NY Times:
- Sadr City, Iraq, the once volatile and slum-filled area half the geographic size of Manhattan, has begun to thrive. The Shiite dominated area owes its recovery to both $41 million in funds from the Shiite-led government, and from protection from the Mahdi Army. The militia may even disarm if the US army attempts to secure Baghdad, citing Sadr officials.
- NYC will become an experimental location where the US Dept. of Homeland Security will test detection devices for nuclear explosions and so-called dirty bombs.
Independent:
- One of Iraq’s main Sunni insurgent groups set out for the first time terms for a ceasefire that would enable US and British troops to leave the country.
Die Welt:
- Almost 10% of Germany’s citizens are so deep in debt that they can no longer pay their bills, citing a study by Creditform, a credit-risk assessing company.
- The Russian ruble would not weaken much if oil prices fall in world markets, Russian Finance Minister Alexei Kudrin said in an interview.
- Susan Bies, Federal Reserve Chairman Ben Bernanke’s point person on banking, resigned after five years.
- Crude oil rose above $60/bbl. briefly for the first time in five weeks after an explosion shut down a California field owned by Occidental Petroleum boosted speculation by investment funds on the commodity.
- Natural gas is falling in NY as speculators said record inventories were adequate to handle a bout of below-average temperatures across the northern US.
- European bio-fuels production is expanding fast enough to absorb the continent’s grains and sugar surpluses, softening the impact on farmers of declining subsides, the European Union said.
- Shares of Fortress Investment Group LLC, the first US manager of private-equity and hedge funds to go public, soared almost 70% in their initial day of trading.
- Micron Technology(MU) said a fall in the price of its products has created a “horrible situation” for the company. The shares are falling .37 to $12.53.
- The UN nuclear agency is set to suspend up to 40% of the projects it’s sponsoring in Iran after deciding that the work may violate a Security Council resolution to stop assistance that may help the Islamic Republic develop atomic weapons.
- US Treasuries fell as a Federal Reserve official reinforced expectations the central bank won’t lower interest rates during the first half of the year.
- General Motors(GM) and Ford Motor(F) shares surged after Deutsche Bank AG upgraded the two biggest US carmakers on optimism they will reach a union agreement to reduce health-care costs.
- The perceived risk of owning US corporate bonds fell to a record low today as a survey showed economists are more optimistic about US growth, according to an index of credit-default swaps.
- Hedge funds charge too much in fees for performance that frequently mimics major stock indexes, said Russell Read, chief investment officer of the $225 billion California Public Employees Retirement System.
- China’s economy may expand at a slower 8% rate this year, according to the Chinese central bank’s quarterly monetary policy report, issued today.
- The US Dollar strengthened against the euro, snapping a three-day slide, on speculation Asian investors will increase buying of US Treasuries.
Wall Street Journal:
- Goldman Sachs Group(GS) may have raised as much as $19 billion for its new private-equity fund, the biggest such sum raised by a Wall Street investment bank.
- AutoNation Inc. CEO Jackson, head of the largest US auto retailer, has called on US automakers to build cars that suit consumer preferences rather than their own.
- American Greetings(AM) plans to make over the Care Bears designs that have been the company’s most successful licensing property.
- Exchange Traded Funds have been a bonanza for fund managers who get about $950 million in annual fees and less so for investors who foot the bill in commissions and bid-asked spreads every time ETF shares trade, John Bogle wrote.
- Blackstone Group LP(BLK) is close to a $6.5 billion agreement with Beacon Capital Partners to sell office building in Seattle and Washington, DC.
NY Times:
- Sadr City, Iraq, the once volatile and slum-filled area half the geographic size of Manhattan, has begun to thrive. The Shiite dominated area owes its recovery to both $41 million in funds from the Shiite-led government, and from protection from the Mahdi Army. The militia may even disarm if the US army attempts to secure Baghdad, citing Sadr officials.
- NYC will become an experimental location where the US Dept. of Homeland Security will test detection devices for nuclear explosions and so-called dirty bombs.
Independent:
- One of Iraq’s main Sunni insurgent groups set out for the first time terms for a ceasefire that would enable US and British troops to leave the country.
Die Welt:
- Almost 10% of Germany’s citizens are so deep in debt that they can no longer pay their bills, citing a study by Creditform, a credit-risk assessing company.
- The Russian ruble would not weaken much if oil prices fall in world markets, Russian Finance Minister Alexei Kudrin said in an interview.
Thursday, February 08, 2007
Friday Watch
Late-Night Headlines
Bloomberg:
- The yen, near a four-year low against the dollar, will decline further as the G-7 nations meeting this weekend may stop short of criticizing the Japanese currency’s weakness, according to Lehman Brothers Holdings(LEH).
- Princeton University, Brown University and the University of Pennsylvania each had record applications for admission, while Ivy League rival Yale University’s applications declined by 9.7%.
- The Palestinian Hamas and Fatah movements agreed to form a national unity government in a move aimed at ending internecine fighting and easing international financial sanctions.
- Fortress Investment Group LLC raised $634.3 million in the first initial offering by a manager of US hedge funds and buyout funds.
- The UN is trying to block the execution of a co-defendant of former Iraqi dictator Saddam Hussein for crimes against humanity, saying his death sentence breaches international law.
- Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, and Korea National Oil Corp. agreed to start exploring for oil off South Korea’s east coast this year.
- Japan’s machinery orders fell in December, signaling economic growth may slow this year as companies scale back spending on factories and equipment.
Wall Street Journal:
- Economists said the US government should place additional taxes on gasoline to promote the use of alternative energy, according to a survey.
South China Morning Post:
- China’s propaganda department has set up a points system for the nation’s newspapers in efforts to tighten its control over the media, citing sources from the Communist Party.
Late Buy/Sell Recommendations
Business Week:
- Cell Genesys Inc.(CEGE) has clinical trials under way for vaccines for prostate and pancreatic cancer that could reverse a stock downturn since September, citing Pamela Bassett, an analyst with Cantor Fitzgerald.
- Hartford Financial Services Group Inc.(HIG) could see its stock price increase 57% in the next year, citing Greenhaven Assoc. Pres. Edgar Wachenheim.
Morgan Stanley:
- Reiterated Overweight on (GILD).
Night Trading
Asian Indices are -.25% to +.50% 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
- (AG)/.31
- (CVH)/.97
- (HAS)/.67
- (MA)/.17
- (STN)/.45
- (WY)/.75
Upcoming Splits
- None of note
Economic Releases
- None of note
Bloomberg:
- The yen, near a four-year low against the dollar, will decline further as the G-7 nations meeting this weekend may stop short of criticizing the Japanese currency’s weakness, according to Lehman Brothers Holdings(LEH).
- Princeton University, Brown University and the University of Pennsylvania each had record applications for admission, while Ivy League rival Yale University’s applications declined by 9.7%.
- The Palestinian Hamas and Fatah movements agreed to form a national unity government in a move aimed at ending internecine fighting and easing international financial sanctions.
- Fortress Investment Group LLC raised $634.3 million in the first initial offering by a manager of US hedge funds and buyout funds.
- The UN is trying to block the execution of a co-defendant of former Iraqi dictator Saddam Hussein for crimes against humanity, saying his death sentence breaches international law.
- Woodside Petroleum Ltd., Australia’s second-largest oil and gas producer, and Korea National Oil Corp. agreed to start exploring for oil off South Korea’s east coast this year.
- Japan’s machinery orders fell in December, signaling economic growth may slow this year as companies scale back spending on factories and equipment.
Wall Street Journal:
- Economists said the US government should place additional taxes on gasoline to promote the use of alternative energy, according to a survey.
South China Morning Post:
- China’s propaganda department has set up a points system for the nation’s newspapers in efforts to tighten its control over the media, citing sources from the Communist Party.
Late Buy/Sell Recommendations
Business Week:
- Cell Genesys Inc.(CEGE) has clinical trials under way for vaccines for prostate and pancreatic cancer that could reverse a stock downturn since September, citing Pamela Bassett, an analyst with Cantor Fitzgerald.
- Hartford Financial Services Group Inc.(HIG) could see its stock price increase 57% in the next year, citing Greenhaven Assoc. Pres. Edgar Wachenheim.
Morgan Stanley:
- Reiterated Overweight on (GILD).
Night Trading
Asian Indices are -.25% to +.50% 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
- (AG)/.31
- (CVH)/.97
- (HAS)/.67
- (MA)/.17
- (STN)/.45
- (WY)/.75
Upcoming Splits
- None of note
Economic Releases
- None of note
BOTTOM LINE: Asian indices are mostly higher, boosted by commodity and financial 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.
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