Bloomberg:
- US stocks rallied as Federal Reserve Chairman Bernanke’s testimony that inflation may be slowing lifted banking shares, while rising orders for semiconductor equipment boosted the Nasdaq Composite Index the most in a month.
- Oil will drop more than 30% to $40/bbl. in March and may drop to $30 as rising prices for storing crude lead to a “breaking point” that forces speculators to sell, Sanford C. Bernstein said.
- President Bush said the Iraqi government is keeping its promise to deploy more of its forces in Baghdad and his strategy to help secure the Iraqi capital is “beginning to take shape.”
- Increased acreage will stabilize corn prices as use of ethanol increases over the next few years.
- Venezuelan President Hugo Chavez said he may nationalize supermarkets that sell meat above the government-set price.
- Crude oil fell on forecasts for warmer weather in the eastern US and an EIA Dept. report that showed some fuel supplies dropped less than expected.
- Treasuries are rising, pushing yields on benchmark 10-year notes down the most since September, after Fed Chairman Bernanke said “inflation pressures are beginning to diminish.”
- The world’s hedge fund industry must better disclose practices and move toward self-regulation, or it will find itself restricted by government action, said Jonathan Spalter, chairman and chief executive of Public Insight investment research and regulatory advisory firm.
- China National Coal Group, the nation’s second-biggest coal supplier by sales, said it produced 25% more of the fuel in January.
Wall Street Journal:
- Merrill Lynch(MER) hired former Tennessee Democrat representative Harold Ford as a vice chairman and senior policy adviser.
- Telstra Corp., AT&T Inc.(T) and other phone companies are boosting capacity to profit from a surge in spending for online Internet-based services.
- The demand by billionaire investor Carl Icahn that Motorola(MOT) should repurchase more of its shares is likely to put other makers of telecom equipment under pressure to do likewise.
- Investors’ returns from ETFs are being eroded by a tendency towards less liquid areas of the market and less well known proprietary indices.
- The FAA is expected to ask Congress for approval of a new $5 billion air traffic control system.
- US lawmakers from both parties will join President Bush today to back proposed legislation which will require securities brokers and mutual funds to report the original purchase price paid for stocks, bonds and other securities.
- Venture lenders, as distinct from venture capitalists that buy slices of equity, are playing a growing role in financing high-tech US start-ups.
NY Times:
- Dollar Thrifty Automotive Group is in early talks to merge with Vanguard Car Rental, the owner of National and Alamo, in a deal valued at more than $3 billion.
Washington Post:
- Senate Democrats including Christopher Dodd of Connecticut introduced a bill that would give all detainees in US custody more rights and provide a more narrow definition of who can be deemed an “enemy combatant.”
Manager Magazine:
- DaimlerChrysler(DCX) CEO Zetsche is in negotiations with General Motors’(GM) Wagoner about selling the Chrysler division to the world’s largest carmaker.
Financial Times:
- Nicolas Sarkozy, the French governing party’s presidential candidate, will press for a European Union tax on “speculative movements” by investors such as hedge funds.
Arab Oil and Gas:
- Total SA, Europe’s third-largest energy company, may spend $4 billion to $7 billion developing potential petroleum reserves in an area of southern Sudan.
Vancouver Sun:
- Al-Qaeda called on strikes on oil and natural gas installations in Canada as part of a campaign to target some of the major energy suppliers to the US, citing an online message from the group.
Haaretz:
- Oracle Corp.(ORCL) expects to triple its spending in Israeli technology start-ups in 2007.
Arab News:
- Iraq reopened its embassy in Saudi Arabia, as both countries move to strengthen diplomatic ties after Iraqi forces invaded Kuwait in 1990, leading to a break in ties.
Wednesday, February 14, 2007
Retail Sales Ex Autos Rise, Inventories Unchanged
- Advance Retail Sales for January were unch. versus estimates of a .3% gain and an upwardly revised 1.2% increase in December.
- Retail Sales Less Autos for January rose .3% versus estimates of a .4% increase and an upwardly revised 1.3% gain in December.
- Business Inventories for December were unch. versus estimates of unch. and a downwardly revised .2% gain in November.
- Retail Sales Less Autos for January rose .3% versus estimates of a .4% increase and an upwardly revised 1.3% gain in December.
- Business Inventories for December were unch. versus estimates of unch. and a downwardly revised .2% gain in November.
BOTTOM LINE: Retail sales in the US stalled last month as cheaper gasoline limited service station receipts and dealerships sold few cars, Bloomberg reported. Consumers redeemed gift cards and used the savings from lower gas prices to buy winter clothing and home furnishings. Sales at department stores rose 1.4% in January, the most since Oct. 2005. Nationwide gas prices fell to $2.17/gallon the week ended Jan. 29, the lowest in more than a year. I continue to believe retail sales will accelerate back to above-average levels over the intermediate-term as energy prices fall further, long-term rates remain low, inflation decelerates more, housing stabilizes at relatively robust levels, stocks continue to rise and the job market remains very healthy.
Inventories at US businesses were unch. as sales rose and companies maintained efforts to keep goods from piling up on shelves, Bloomberg said. Sales surged 1.4%, the largest gain since May. The inventory-to-sales ratio fell to 1.28 months’ supply of goods, the lowest since August, versus 1.3 months’ worth in November. I suspect a larger-than-expected trade deficit and inventory de-stocking will result in 4Q GDP growth being revised down to about 3.0% from 3.5%. As well, substantial inventory de-stocking in the first part of the year will likely lead to growth of around 2.5% for 1Q. I still expect growth to average around 3% for the year.
Tuesday, February 13, 2007
Wednesday Watch
Late-Night Headlines
Bloomberg:
- The deterioration of the subprime mortgage market will have limited impact on Lehman Brothers(LEH), Bear Stearns(BSC), Citigroup(C) and JPMorgan Chase(JPM), according to Merrill Lynch(MER). “We just don’t think the losses in these will really create any systemic risk at all,” said Scott Simon, head of mortgage- and asset-backed securities investments at Pacific Investment Management.
- JPMorgan Securities Japan, the most bearish among Japan’s primary bond dealers in December, trimmed its forecast for declines as the chance of a central bank interest-rate increase next week faded.
- Moqtada al-Sadr, the anti-US Shiite Muslim cleric, has fled Iraq for Iran. Bush administration officials said there were fractures within al-Sadr’s militia and that he feared for his life.
- Nine US-built vehicles made by General Motors(GM), Ford Motor(F) and DaimlerChrysler AG(DCX) topped US government crash safety tests this year.
- Applied Materials(AMAT), the world’s largest maker of semiconductor equipment, said first-quarter profit more than doubled after it delivered more machines to memory-chip companies. The shares surged 4.6% after-hours.
- Shares of Sony Corp.(SNE) rose after the company said it will scale back spending on semiconductors to help the chip business turn profitable next fiscal year.
- Ilaria Capua, a virologist, and other health experts say the alarmist headlines on bird flu killing some turkeys in the UK last week was just a lot of gobble. “Many more people have been struck by lighting” than killed by the deadly H5N1 strain of avian influenza, say Capua, whose laboratory in Padua, Italy, handles some flu screening for the Paris-based World Organization for Animal Health. “The public should be well informed but not prepared for the worst.”
- Hindustan Copper Ltd., the biggest state-owned producer of the metal in India, may spend as much as $300 million extending a mine underground to take advantage elevated copper prices.
- Oil refiners including Chevron Corp.(CVX) and Marathon Oil Corp.(MRO) share a common vision with DaimlerChrysler AG(DCX), one of increasing US demand for diesel as drivers opt for more fuel-efficient vehicles.
- Consumer inflation in China slowed to 2.2% in January versus estimates of a 2.6% rise and a 2.8% gain in December.
Wall Street Journal:
- Jones Lang LaSalle Inc.(JLL) is closing its residential agency business in Shanghai after 12 years of operations because of intense competition in China, citing Managing Director Anthony Couse.
Financial Times:
- China regulations introduced in September on takeovers of domestic firms by overseas investors may hinder venture capital investment, citing accountant Ernst & Young.
Korea Economic Daily:
- Matsushita Electric Industrial may buy new or existing shares in LG.Philips LCD to seek an alliance in production of liquid-crystal displays.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (BBY), target $63. BBY is likely seeing better than expected sales of Vista-based PC’s since their introduction on January 31st. Due to the overwhelming demand for the Nintendo Wii, BBY is struggling to keep them in stock.
Night Trading
Asian Indices are +.50% to +1.25% on average.
S&P 500 indicated +.01%.
NASDAQ 100 indicated +.06%.
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
- (AGP)/.34
- (APPB)/.23
- (BIDU)/.35
- (CMG)/.27
- (KO)/.50
- (DE)/.81
- (ESLR)/-.08
- (GRMN)/.58
- (GENZ)/.75
- (GES)/.90
- (JNY)/.46
- (MAS)/.37
- (MDCO)/.09
- (MGM)/.48
- (NTAP)/.28
- (NTRI)/.51
- (ODP)/.52
- (OSI)/.29
- (PFCB)/.26
- (PGN)/.53
- (RIG)/1.18
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- Advance Retail Sales for January are estimated to rise .3% versus a .9% gain in December.
- Retail Sales Less Autos for January are estimated to rise .4% versus a 1.0% gain in December.
10:00 am EST
- Business Inventories for December are estimated to remain unch. versus a .4% gain in November.
10:30 am EST
- Bloomberg consensus estimates call for a crude oil build of 1,000,000 barrels versus a -449,000 barrel drawdown the prior week. Gasoline supplies are expected to rise by 2,000,000 barrels versus a 2,600,000 barrel increase the prior week. Distillate Inventories are expected fall by -4,000,000 barrels versus a -3,632,000 barrel decline the prior week. Refinery Utilization is estimated to rise .25% versus a .28% increase the prior week.
Bloomberg:
- The deterioration of the subprime mortgage market will have limited impact on Lehman Brothers(LEH), Bear Stearns(BSC), Citigroup(C) and JPMorgan Chase(JPM), according to Merrill Lynch(MER). “We just don’t think the losses in these will really create any systemic risk at all,” said Scott Simon, head of mortgage- and asset-backed securities investments at Pacific Investment Management.
- JPMorgan Securities Japan, the most bearish among Japan’s primary bond dealers in December, trimmed its forecast for declines as the chance of a central bank interest-rate increase next week faded.
- Moqtada al-Sadr, the anti-US Shiite Muslim cleric, has fled Iraq for Iran. Bush administration officials said there were fractures within al-Sadr’s militia and that he feared for his life.
- Nine US-built vehicles made by General Motors(GM), Ford Motor(F) and DaimlerChrysler AG(DCX) topped US government crash safety tests this year.
- Applied Materials(AMAT), the world’s largest maker of semiconductor equipment, said first-quarter profit more than doubled after it delivered more machines to memory-chip companies. The shares surged 4.6% after-hours.
- Shares of Sony Corp.(SNE) rose after the company said it will scale back spending on semiconductors to help the chip business turn profitable next fiscal year.
- Ilaria Capua, a virologist, and other health experts say the alarmist headlines on bird flu killing some turkeys in the UK last week was just a lot of gobble. “Many more people have been struck by lighting” than killed by the deadly H5N1 strain of avian influenza, say Capua, whose laboratory in Padua, Italy, handles some flu screening for the Paris-based World Organization for Animal Health. “The public should be well informed but not prepared for the worst.”
- Hindustan Copper Ltd., the biggest state-owned producer of the metal in India, may spend as much as $300 million extending a mine underground to take advantage elevated copper prices.
- Oil refiners including Chevron Corp.(CVX) and Marathon Oil Corp.(MRO) share a common vision with DaimlerChrysler AG(DCX), one of increasing US demand for diesel as drivers opt for more fuel-efficient vehicles.
- Consumer inflation in China slowed to 2.2% in January versus estimates of a 2.6% rise and a 2.8% gain in December.
Wall Street Journal:
- Jones Lang LaSalle Inc.(JLL) is closing its residential agency business in Shanghai after 12 years of operations because of intense competition in China, citing Managing Director Anthony Couse.
Financial Times:
- China regulations introduced in September on takeovers of domestic firms by overseas investors may hinder venture capital investment, citing accountant Ernst & Young.
Korea Economic Daily:
- Matsushita Electric Industrial may buy new or existing shares in LG.Philips LCD to seek an alliance in production of liquid-crystal displays.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (BBY), target $63. BBY is likely seeing better than expected sales of Vista-based PC’s since their introduction on January 31st. Due to the overwhelming demand for the Nintendo Wii, BBY is struggling to keep them in stock.
Night Trading
Asian Indices are +.50% to +1.25% on average.
S&P 500 indicated +.01%.
NASDAQ 100 indicated +.06%.
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
- (AGP)/.34
- (APPB)/.23
- (BIDU)/.35
- (CMG)/.27
- (KO)/.50
- (DE)/.81
- (ESLR)/-.08
- (GRMN)/.58
- (GENZ)/.75
- (GES)/.90
- (JNY)/.46
- (MAS)/.37
- (MDCO)/.09
- (MGM)/.48
- (NTAP)/.28
- (NTRI)/.51
- (ODP)/.52
- (OSI)/.29
- (PFCB)/.26
- (PGN)/.53
- (RIG)/1.18
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- Advance Retail Sales for January are estimated to rise .3% versus a .9% gain in December.
- Retail Sales Less Autos for January are estimated to rise .4% versus a 1.0% gain in December.
10:00 am EST
- Business Inventories for December are estimated to remain unch. versus a .4% gain in November.
10:30 am EST
- Bloomberg consensus estimates call for a crude oil build of 1,000,000 barrels versus a -449,000 barrel drawdown the prior week. Gasoline supplies are expected to rise by 2,000,000 barrels versus a 2,600,000 barrel increase the prior week. Distillate Inventories are expected fall by -4,000,000 barrels versus a -3,632,000 barrel decline the prior week. Refinery Utilization is estimated to rise .25% versus a .28% increase the prior week.
BOTTOM LINE: Asian indices are higher, boosted by technology and commodity 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 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.
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