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Tuesday, February 13, 2007
Stocks Modestly Higher into Final Hour on Buyout Speculation
BOTTOM LINE: The Portfolio is about even into the final hour as gains in my Medical longs and Telecom longs are offsetting my Commodity shorts. I have not traded today, thus leaving the Portfolio 75% net long. The tone of the market is modestly positive as the advance/decline line is slightly higher, most sectors are rising and volume is above-average. Despite KB Home's (KBH) weak report, the Housing Index is rising 1.6% and KB Home is up 2.7%. As well, the May housing futures have ticked up again and are projecting a 1.8% decline in the average home price, up from projections of a 5.2% decline a few months ago. Illumina (ILMN) is 5.3% higher on a report that researchers using their BeadChips discovered four key gene variations that raise the risk of developing type-2 diabetes, the most common form of the disease. I remain long the stock. I expect US stocks to trade mixed-to-lower into the close from current levels on rising energy prices and more profit-taking.
Today's Headlines
Bloomberg:
- President Bush said he’s “pleased” with an agreement that requires North Korea to dismantle its nuclear program in exchange for energy assistance and his spokesman said the pact differs from a failed 1994 accord because it involves other nations in the region.
- Applebee’s Intl.(APPB) said it may sell the company after its third-biggest shareholder criticized management for failing to boost sales and cut costs.
- KB Home(KBH) reported a quarterly loss that was less than analysts’ estimates. KB said quarter-to-date cancellations were more normal and that is modestly good news. The stock is rising 3% on the report.
- CVS Corp.(CVS) raised its offer for Caremark Rx Inc(CMX) to $25.7 billion to stave off a hostile bid for the benefits manager from Express Scripts(ESRX).
- General Motors(GM) was upgraded at Merrill Lynch(MER) on optimism that an expected $17 billion pension surplus boosted prospects for a favorable labor agreement this year.
- Ceridian Corp.(CEN) hired advisors to help consider alternatives to boost its value for shareholders.
- France faces an “alarming” terrorist threat ahead of the presidential election this year, said Jean-Louis Bruguiere, the country’s leading anti-terrorist investigator.
- Ample rainfall will help boost soybean yield by 14% in Brazil, the world’s biggest grower of the oilseed after the US, according to an agricultural analyst at the Univ. of Sao Paulo.
- Crude oil is rising $1/bbl. after an IEA report said global demand growth for oil will reverse its recent downward trend.
Wall Street Journal:
- Bank of America(BAC) has started offering credit cards to customers without US Social Security numbers or a credit history, who are typically illegal immigrants.
- Crocs(CROX), which makes the colored plastic clogs that became fashionable last summer, plans to diversify into clothes and women’s fashion footwear, to avoid the danger of being a one-hit wonder.
- Jewelry made from palladium, a rare silver-white metal of the platinum group, is increasing in popularity, compared with the more expensive platinum, citing jewelry makers.
NY Times:
- US governors and state legislators are taking action to reduce the increasing number of people without health insurance, now at 47 million, by tapping into the Fed budget, while President Bush’s latest plans present an obstacle.
Washington Post:
- A blogger who worked on Democrat John Edwards’ presidential campaign resigned over complaints that her writings were anti-Catholic. Edwards chose not to fire Amanda Marcotte or Melissa McEwan last week after Bill Donohoe, president of the Catholic League for Religious and Civil Rights, criticized his campaign for hiring “two anti-Catholic vulgar trash-talking bigots.” McEwan is still working for Edwards.
USA Today:
- Fatal overdoses in the US involving the pain killer methadone rose faster from 1999 to 2004 than for any other narcotic, citing a National Center for Health Statistics study.
AP:
- Air America, the liberal talk radio station, was given bankruptcy court approval to sell its assets at an auction on Feb. 16, starting with a $4.25 million bid from a group of purchasers formed by the chairman of SL Green Realty(SLG).
Reuters:
- BHP Billiton(BHP) denied a report in The Times of London that it plans to bid for Alcoa Inc.(AA).
NY Post:
- Firefighters and paramedics are among thousands of World Trade Center rescue workers who will get free prescription medicines, citing NYC Fire Dept. officials.
El Watan:
- OPEC wants to keep crude oil prices between $50 and $60/bbl. OPEC will meet March 15 at its Vienna headquarters to discuss second-quarter production.
- President Bush said he’s “pleased” with an agreement that requires North Korea to dismantle its nuclear program in exchange for energy assistance and his spokesman said the pact differs from a failed 1994 accord because it involves other nations in the region.
- Applebee’s Intl.(APPB) said it may sell the company after its third-biggest shareholder criticized management for failing to boost sales and cut costs.
- KB Home(KBH) reported a quarterly loss that was less than analysts’ estimates. KB said quarter-to-date cancellations were more normal and that is modestly good news. The stock is rising 3% on the report.
- CVS Corp.(CVS) raised its offer for Caremark Rx Inc(CMX) to $25.7 billion to stave off a hostile bid for the benefits manager from Express Scripts(ESRX).
- General Motors(GM) was upgraded at Merrill Lynch(MER) on optimism that an expected $17 billion pension surplus boosted prospects for a favorable labor agreement this year.
- Ceridian Corp.(CEN) hired advisors to help consider alternatives to boost its value for shareholders.
- France faces an “alarming” terrorist threat ahead of the presidential election this year, said Jean-Louis Bruguiere, the country’s leading anti-terrorist investigator.
- Ample rainfall will help boost soybean yield by 14% in Brazil, the world’s biggest grower of the oilseed after the US, according to an agricultural analyst at the Univ. of Sao Paulo.
- Crude oil is rising $1/bbl. after an IEA report said global demand growth for oil will reverse its recent downward trend.
Wall Street Journal:
- Bank of America(BAC) has started offering credit cards to customers without US Social Security numbers or a credit history, who are typically illegal immigrants.
- Crocs(CROX), which makes the colored plastic clogs that became fashionable last summer, plans to diversify into clothes and women’s fashion footwear, to avoid the danger of being a one-hit wonder.
- Jewelry made from palladium, a rare silver-white metal of the platinum group, is increasing in popularity, compared with the more expensive platinum, citing jewelry makers.
NY Times:
- US governors and state legislators are taking action to reduce the increasing number of people without health insurance, now at 47 million, by tapping into the Fed budget, while President Bush’s latest plans present an obstacle.
Washington Post:
- A blogger who worked on Democrat John Edwards’ presidential campaign resigned over complaints that her writings were anti-Catholic. Edwards chose not to fire Amanda Marcotte or Melissa McEwan last week after Bill Donohoe, president of the Catholic League for Religious and Civil Rights, criticized his campaign for hiring “two anti-Catholic vulgar trash-talking bigots.” McEwan is still working for Edwards.
USA Today:
- Fatal overdoses in the US involving the pain killer methadone rose faster from 1999 to 2004 than for any other narcotic, citing a National Center for Health Statistics study.
AP:
- Air America, the liberal talk radio station, was given bankruptcy court approval to sell its assets at an auction on Feb. 16, starting with a $4.25 million bid from a group of purchasers formed by the chairman of SL Green Realty(SLG).
Reuters:
- BHP Billiton(BHP) denied a report in The Times of London that it plans to bid for Alcoa Inc.(AA).
NY Post:
- Firefighters and paramedics are among thousands of World Trade Center rescue workers who will get free prescription medicines, citing NYC Fire Dept. officials.
El Watan:
- OPEC wants to keep crude oil prices between $50 and $60/bbl. OPEC will meet March 15 at its Vienna headquarters to discuss second-quarter production.
Trade Deficit Widens Slightly More Than Estimates
- The Trade Deficit for December widened to -$61.2 billion versus estimates of -$59.7 billion in November.
BOTTOM LINE: The US trade deficit increased more than forecast in December as the price of imported petroleum rose and purchases of foreign cars and consumer goods reached records, Bloomberg said. Oil has since declined 7%. The trade deficit with China shrank to $19 billion versus $22.9 billion in November. I expect the trade deficit to only improve modestly over the intermediate-term as commodities fall further, the dollar firms and US growth remains relatively strong versus other developed economies.
Monday, February 12, 2007
Tuesday Watch
Late-Night Headlines
Bloomberg:
- 3M(MMM) will buy back up to $7 billion of its shares over the next two years.
- Japan’s producer prices rose at the slowest pace in more than a year in January as oil costs fell, easing pressure on companies to pass expenses on to consumers.
- Goldman Sachs(GS) and Kelso & Co. plan to sell up to $300 million of shares in CVR Energy, a Kansas oil refiner.
- Scientists, aiming to spur the search for new therapies for diabetes, finished a map of differences in human genes related to the most common form of the disease.
- Copper futures in Shanghai fell as global inventories of the metal remain near their highest since June 2004, fueling concern that supplies are still outpacing demand.
- A Palestinian unity government formed by the Hamas and Fatah organizations must recognize Israel and commit itself to non-violence, said UN Secretary-General Ban Ki-moon.
Wall Street Journal:
- Liberty Media Corp. is close to buying the Atlanta Braves baseball team from Time Warner(TWX).
Financial Times:
- Investors such as KBC Alpha Asset Management are shunning China-focused hedge funds over concerns they may be engaged in unlicensed trading in the country. KBC and Tokyo-based Sparx Asset Management have decided not to invest in several top-performing “Greater China” funds based on their in-house analysis and external legal advice.
London-based Times:
- BHP Billiton Ltd.(BHP) and Rio Tinto Plc(RTP) have each drawn up plans for a $40 billion takeover of Alcoa Inc.(AA), the world’s largest aluminum producer.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (QCOM), target $55.
- Upgraded (SPH) to Buy, raised target to $45.50.
Night Trading
Asian Indices are -.25% to +.25% on average.
S&P 500 indicated +.06%.
NASDAQ 100 indicated +.07%.
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
- (ACS)/.79
- (MDRX)/.13
- (ALTR)/.24
- (AMAT)/.28
- (CEN)/.33
- (CCE)/.16
- (EXPD)/.31
- (IVGN)/.74
- (KBH)/-1.01
- (MRD)/.58
- (MMC)/.36
- (MET)/1.18
- (NDAQ)/.25
- (NVDA)/.41
- (OMC)/1.61
- (WYN)/.41
- (XTO)/1.12
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- The Trade Deficit for December is estimated to widen to -$59.7 billion versus -$58.2 billion in November.
Bloomberg:
- 3M(MMM) will buy back up to $7 billion of its shares over the next two years.
- Japan’s producer prices rose at the slowest pace in more than a year in January as oil costs fell, easing pressure on companies to pass expenses on to consumers.
- Goldman Sachs(GS) and Kelso & Co. plan to sell up to $300 million of shares in CVR Energy, a Kansas oil refiner.
- Scientists, aiming to spur the search for new therapies for diabetes, finished a map of differences in human genes related to the most common form of the disease.
- Copper futures in Shanghai fell as global inventories of the metal remain near their highest since June 2004, fueling concern that supplies are still outpacing demand.
- A Palestinian unity government formed by the Hamas and Fatah organizations must recognize Israel and commit itself to non-violence, said UN Secretary-General Ban Ki-moon.
Wall Street Journal:
- Liberty Media Corp. is close to buying the Atlanta Braves baseball team from Time Warner(TWX).
Financial Times:
- Investors such as KBC Alpha Asset Management are shunning China-focused hedge funds over concerns they may be engaged in unlicensed trading in the country. KBC and Tokyo-based Sparx Asset Management have decided not to invest in several top-performing “Greater China” funds based on their in-house analysis and external legal advice.
London-based Times:
- BHP Billiton Ltd.(BHP) and Rio Tinto Plc(RTP) have each drawn up plans for a $40 billion takeover of Alcoa Inc.(AA), the world’s largest aluminum producer.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (QCOM), target $55.
- Upgraded (SPH) to Buy, raised target to $45.50.
Night Trading
Asian Indices are -.25% to +.25% on average.
S&P 500 indicated +.06%.
NASDAQ 100 indicated +.07%.
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
- (ACS)/.79
- (MDRX)/.13
- (ALTR)/.24
- (AMAT)/.28
- (CEN)/.33
- (CCE)/.16
- (EXPD)/.31
- (IVGN)/.74
- (KBH)/-1.01
- (MRD)/.58
- (MMC)/.36
- (MET)/1.18
- (NDAQ)/.25
- (NVDA)/.41
- (OMC)/1.61
- (WYN)/.41
- (XTO)/1.12
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- The Trade Deficit for December is estimated to widen to -$59.7 billion versus -$58.2 billion in November.
BOTTOM LINE: Asian indices are mostly higher, boosted by financial shares in the region. I expect US equities to open modestly higher and to weaken into the afternoon, finishing modestly mixed. The Portfolio is 75% net long heading into the day.
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