BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Internet longs and Medical longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is mixed as the advance/decline line is modestly higher, sector performance is mixed and volume is above-average. Mohawk Industries (MHK), a well-known short play on housing, surged 10% today on the largest volume since 2002. This explosive move comes after the company lowered forward guidance meaningfully. The stock is now less than $2 from an all-time high. This is amazing considering what has transpired over the last year in housing. About 10% of the float is still short. This has to be very disturbing to the many "U.S. housing collapse will lead to a market collapse" bears. Recent action in the dollar, bond market, cyclicals and housing-related stocks suggests that investors continue to overestimate the negative impact of housing on the broad U.S. economy. I continue to believe that no major market moving sub-prime blow-up will occur and that the Fed will remain on hold. The latest 13F filing by Tudor Investment Corp. shows the hedge fund firm bought a $363 million stake in Apple (AAPL) during the fourth quarter, making the stock the firm's second-largest long equity position. Tudor also purchased a $253 million stake in shares of Novellus Systems (NVLS), making it their sixth largest position. They also added shares of Yahoo! (YHOO) and Google (GOOG). Moreover, six of their ten largest buys during the quarter were tech stocks. I continue to believe that today's short-sited day-trading pessimistic environment is providing excellent entry points on the long side in both Google and Apple. I still expect both to trade substantially higher from current levels by year-end. I expect US stocks to trade modestly higher into the close from current levels on declining long-term rates and short-covering.
Friday, February 16, 2007
Stocks Mixed into Final Hour as Mild Profit-taking Offsets Short-Covering
Today's Headlines
Bloomberg:
- Federal Reserve Bank of Chicago President Michael Moskow said further interest-rate increases “may yet be necessary” as the economy appears set to continue expanding. Moscow also said “I think homebuilding will stabilize as we move through the year.”
- DaimlerChrysler AG’s(DCX) US shares rose as much as 6.1% after Automotive News reported that the German automaker is negotiating to sell its Chrysler unit to General Motors(GM). GM shares rose .6% on the report.
- Motorola(MOT) said the president of its handset unit resigned.
- Mills Corp.(MLS) agreed to be acquired for $1.64 billion by Simon Property Group and Farallon Capital Management LLC, rejecting an offer from Brookfield Asset Management.
- US Treasuries rose, pushing the 10-year note to its biggest weekly gain since December, as inflation continues to show meaningful deceleration and economic data were mixed.
- Banco Bilbao Vizcaya Argentaria SA, Spain’s second biggest bank, agreed to buy Compass Bancshares for $9.6 billion to add more than 400 branches in six southern US states.
- Shares of AMR Corp.(AMR) rose as much as 4.4% after Business Week reported that the company may be a buyout target.
- Longer-term stock investors are better off enduring market sell-offs than using protection strategies or buying derivatives as a hedge, according to a study by ABN Amro Holding NV and the London Business School. An investor hold US shares consistently since 1900 would have gained 9.8% annually. Using an order to sell shares when they fell 10%, a so-called stop-loss, would have resulted in an 8.8% rise.
- China ordered banks to set aside more money as reserves for the fifth time in eight months to cool inflation and investment.
- Tudor Investment Corp., the hedge fund firm run by Paul Tudor Jones, sold shares of Virgin Media(VMED) and Gap Inc.(GPS) in the fourth quarter and bought a $363 million stake in Apple Inc.(AAPL). Six of Tudor’s 10 largest new buys in the quarter were technology companies, which make up the biggest piece of his portfolio.
- Crude oil rose above $59/bbl. in NY after the US warned that militant attacks in Nigeria may expand to new areas.
- US ethanol prices increased to the highest in a month on stepped-up consumption f the grain-based gasoline additive.
- Russia and Oman may compete to set up a new benchmark for crude oil that will determine the price for most oil pumped in the world, analysts said.
- Copper supplies from mines and scrap yards outpaced demand by 14,000 metric tons in November, the Intl. Copper Study Group said.
Wall Street Journal:
- General Electric(GE), Siemens AG and Bombardier Inc. are riding high on the Chinese government’s plans to invest billions of dollars into the Asian nation’s transport network.
- Nokia Oyj(NOK) plans to introduce this year a mobile-phone model for players of video-games, as it tries to move into phone-related businesses.
- Boeing Co.(BA) wants to revitalize its commercial satellite-manufacturing business by debuting a smaller, more-versatile line of space vehicles.
Handelsblatt:
- Several US buyout firms have expressed an interest in DaimlerChrysler AG’s(DCX) money-losing Chrysler unit that may be up for sale.
JANA:
- Libya sold crude oil this week at an average price of $54.22/bbl., compared with an average of $55.77/bbl. last week.
Uptream:
- Norsk Hydro ASA, Norway’s second-largest oil producer, found oil in an exploration well at the Nucula prospect in the Barents Sea.
CCTV:
- China’s President Hu Jintao told President Bush the two nations should strengthen cooperation during a phone call last night.
- Federal Reserve Bank of Chicago President Michael Moskow said further interest-rate increases “may yet be necessary” as the economy appears set to continue expanding. Moscow also said “I think homebuilding will stabilize as we move through the year.”
- DaimlerChrysler AG’s(DCX) US shares rose as much as 6.1% after Automotive News reported that the German automaker is negotiating to sell its Chrysler unit to General Motors(GM). GM shares rose .6% on the report.
- Motorola(MOT) said the president of its handset unit resigned.
- Mills Corp.(MLS) agreed to be acquired for $1.64 billion by Simon Property Group and Farallon Capital Management LLC, rejecting an offer from Brookfield Asset Management.
- US Treasuries rose, pushing the 10-year note to its biggest weekly gain since December, as inflation continues to show meaningful deceleration and economic data were mixed.
- Banco Bilbao Vizcaya Argentaria SA, Spain’s second biggest bank, agreed to buy Compass Bancshares for $9.6 billion to add more than 400 branches in six southern US states.
- Shares of AMR Corp.(AMR) rose as much as 4.4% after Business Week reported that the company may be a buyout target.
- Longer-term stock investors are better off enduring market sell-offs than using protection strategies or buying derivatives as a hedge, according to a study by ABN Amro Holding NV and the London Business School. An investor hold US shares consistently since 1900 would have gained 9.8% annually. Using an order to sell shares when they fell 10%, a so-called stop-loss, would have resulted in an 8.8% rise.
- China ordered banks to set aside more money as reserves for the fifth time in eight months to cool inflation and investment.
- Tudor Investment Corp., the hedge fund firm run by Paul Tudor Jones, sold shares of Virgin Media(VMED) and Gap Inc.(GPS) in the fourth quarter and bought a $363 million stake in Apple Inc.(AAPL). Six of Tudor’s 10 largest new buys in the quarter were technology companies, which make up the biggest piece of his portfolio.
- Crude oil rose above $59/bbl. in NY after the US warned that militant attacks in Nigeria may expand to new areas.
- US ethanol prices increased to the highest in a month on stepped-up consumption f the grain-based gasoline additive.
- Russia and Oman may compete to set up a new benchmark for crude oil that will determine the price for most oil pumped in the world, analysts said.
- Copper supplies from mines and scrap yards outpaced demand by 14,000 metric tons in November, the Intl. Copper Study Group said.
Wall Street Journal:
- General Electric(GE), Siemens AG and Bombardier Inc. are riding high on the Chinese government’s plans to invest billions of dollars into the Asian nation’s transport network.
- Nokia Oyj(NOK) plans to introduce this year a mobile-phone model for players of video-games, as it tries to move into phone-related businesses.
- Boeing Co.(BA) wants to revitalize its commercial satellite-manufacturing business by debuting a smaller, more-versatile line of space vehicles.
Handelsblatt:
- Several US buyout firms have expressed an interest in DaimlerChrysler AG’s(DCX) money-losing Chrysler unit that may be up for sale.
JANA:
- Libya sold crude oil this week at an average price of $54.22/bbl., compared with an average of $55.77/bbl. last week.
Uptream:
- Norsk Hydro ASA, Norway’s second-largest oil producer, found oil in an exploration well at the Nucula prospect in the Barents Sea.
CCTV:
- China’s President Hu Jintao told President Bush the two nations should strengthen cooperation during a phone call last night.
Producer Price Index Historically Low, Housing Starts Fall, Confidence Declines
- The Producer Price Index for January fell -.6% versus estimates of a -.6% decline and a .9% increase in December.
- The PPI Ex Food & Energy for January rose .2% versus estimates of a .2% gain and a .2% rise in December.
- Housing Starts for January fell to 1408K versus estimates of 1600K and 1643K in December.
- Building Permits for January fell to 1568K versus estimates of 1590K and 1613K in December.
- Preliminary Univ. of Mich. Consumer Confidence for February fell to 93.3 versus estimates of 96.5 and 96.9 in January.
- The PPI Ex Food & Energy for January rose .2% versus estimates of a .2% gain and a .2% rise in December.
- Housing Starts for January fell to 1408K versus estimates of 1600K and 1643K in December.
- Building Permits for January fell to 1568K versus estimates of 1590K and 1613K in December.
- Preliminary Univ. of Mich. Consumer Confidence for February fell to 93.3 versus estimates of 96.5 and 96.9 in January.
BOTTOM LINE: Prices paid to US producers declined in January, held down by lower petroleum costs and cheaper cars and trucks, Bloomberg said. Energy prices fell 4.6% for producers in January as the price of gasoline dropped 13% and natural gas fell 1.9%. As well, prices of light trucks declined 1.4%. Prices of intermediate goods, used in the early stages of production, fell .7%. Raw materials prices declined 6.3%. The PPI year-over-year rose a historically low .2%. I continue to believe inflation fears have peaked for this cycle and inflation will mostly decelerate throughout the year.
Homebuilders in the US started work last month on the smallest number of new houses since August 1997, Bloomberg reported. Some of January’s building weakness was related to the fact that December was so unseasonably warm. I continue to believe housing construction will remain muted throughout the year as builders dramatically cut inventory as sales remain relatively healthy.
Confidence among US consumers retreated from a two-year peak this month as unusually cold weather drove energy prices higher, Bloomberg reported. Gasoline prices are still 27% lower than last year’s peak of $3.04/gallon. Gas prices should head lower again as oil has since dipped. The Expectations component fell to 83.7 versus 87.6 in January. The Current Conditions component fell to 108.3 versus 111.3 in January. I continue to believe consumer confidence will make new cycle highs over the coming months as gas prices fall further, housing stabilizes at relatively high levels, stocks rise further, interest rates remain low, the job market remains healthy and wages continue to outpace inflation.
Thursday, February 15, 2007
Friday Watch
Late-Night Headlines
Bloomberg:
- Secretary of State Condoleezza Rice, having just clinched a six-nation agreement aimed at scrapping North Korea’s nuclear-bomb program, heads to Israel today to try to make progress on an even more intractable issue: the dispute between Israel and the Palestinians.
- The US and North Korea will discuss ending the communist country’s designation as a state sponsor of terrorism, as they build links after reaching an accord on dismantling North Korea’s nuclear program.
- Japan’s fastest economic growth in almost three years last quarter may help the central bank justify raising interest rates, the lowest among major economies, according to economists.
- Crude oil may fall next week as warmer weather moves into the eastern half of the US, curbing demand for heating oil and natural gas, according to a Bloomberg News survey of 42 analysts, traders sand brokers.
- Japan said it will impose sanctions on Iran for its refusal to abandon its nuclear program in line with measures taken by the UN in December.
- Pacific Hydro Ltd., an Australian-based renewable energy producer, plans to invest more than $392 million in “the coming years” to build plants in Brazil after acquiring SES Ltda., a wind energy company.
- Aluminum may fall 11% in 2007 as global demand slows and output gains in China, said Minmetals StarFutures Co., a unit of China’s largest metals trader. The market may have a surplus of as much as 300,000 tons. Prices of the metal have already declined 15% from May 2006 highs.
New York Times:
- Television watchers with digital video recorders such as those made by TiVo Inc.(TIVO) aren’t skipping commercials as much as advertisers feared, citing new data from Nielsen.
Business Week:
- Companies are trying to bring down medical insurance costs by implementing health wellness programs that encourage employees to get fit.
AMR Corp.(AMR) could be a buyout target for a group including Goldman Sachs(GS) and British Airways Plc. The proposed bid for the world’s largest carrier is between $46 a share and $52 a share, or $9.8 billion to $11.1 billion.
Kyodo News:
- President Bush congratulated Chinese President Hu Jintao on China’s role in the six-nation agreement on dismantling North Korea’s nuclear weapons program.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (GOOG), target $600, No.1 Internet stock pick. Current valuation implies a very attractive risk-reward outlook. Recent industry datapoints continue to indicate a very robust profile for search advertising. Review of underlying drivers of Google’s search revenue demonstrates growth that is more sustainable than the market realizes. Tracking suggests that Google continues to gain market share. Google’s option value is underappreciated, with updated worldwide traffic analysis as support. ROIC analysis highlights materially very high value creation by Google. The potential loss of the Ask affiliate deal is a manageable risk.
- Reiterated Buy on (NFLX), target $30.
- Reiterated Sell on (TBL), target $23.
Business Week:
- Microvision(MVIS), which in January showed a prototype high-resolution video projector small enough to put into a mobile phone, is attracting investor inerest. Joel Achramowicz, analyst at MDB Capital, rates the stock “buy” and said he expects the stock to double in a year.
- Shares of CytRx Corp.(CYTR), which rose to a six-year high today, may triple in two years, citing Rodman Renshaw analyst Elemer Piros. The company is scheduled in 12 to 18 months to test for humans its so-called RNAi technology that shuts down genes that cause diabetes, obesity and Lou Gehrig’s disease.
Night Trading
Asian Indices are -.25% to unch. on average.
S&P 500 indicated -.22%.
NASDAQ 100 indicated -.30%.
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
- (CPB)/.63
- (GT)/.20
- (HRL)/.54
- (SJM)/.69
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- The Producer Price Index for January is estimated to decline -.6% versus a .9% gain in December.
- The PPI Ex Food & Energy for January is estimated to rise .2% versus a .2% gain in December.
- Housing Starts for January are estimated to fall to 1600K versus 1642K in December.
- Building Permits for January are estimated to fall to 1590K versus 1613K in December.
10:00 am EST
- The preliminary Univ. of Mich. Consumer Confidence for February is estimated to fall to 96.5 versus 96.9 in January.
Bloomberg:
- Secretary of State Condoleezza Rice, having just clinched a six-nation agreement aimed at scrapping North Korea’s nuclear-bomb program, heads to Israel today to try to make progress on an even more intractable issue: the dispute between Israel and the Palestinians.
- The US and North Korea will discuss ending the communist country’s designation as a state sponsor of terrorism, as they build links after reaching an accord on dismantling North Korea’s nuclear program.
- Japan’s fastest economic growth in almost three years last quarter may help the central bank justify raising interest rates, the lowest among major economies, according to economists.
- Crude oil may fall next week as warmer weather moves into the eastern half of the US, curbing demand for heating oil and natural gas, according to a Bloomberg News survey of 42 analysts, traders sand brokers.
- Japan said it will impose sanctions on Iran for its refusal to abandon its nuclear program in line with measures taken by the UN in December.
- Pacific Hydro Ltd., an Australian-based renewable energy producer, plans to invest more than $392 million in “the coming years” to build plants in Brazil after acquiring SES Ltda., a wind energy company.
- Aluminum may fall 11% in 2007 as global demand slows and output gains in China, said Minmetals StarFutures Co., a unit of China’s largest metals trader. The market may have a surplus of as much as 300,000 tons. Prices of the metal have already declined 15% from May 2006 highs.
New York Times:
- Television watchers with digital video recorders such as those made by TiVo Inc.(TIVO) aren’t skipping commercials as much as advertisers feared, citing new data from Nielsen.
Business Week:
- Companies are trying to bring down medical insurance costs by implementing health wellness programs that encourage employees to get fit.
AMR Corp.(AMR) could be a buyout target for a group including Goldman Sachs(GS) and British Airways Plc. The proposed bid for the world’s largest carrier is between $46 a share and $52 a share, or $9.8 billion to $11.1 billion.
Kyodo News:
- President Bush congratulated Chinese President Hu Jintao on China’s role in the six-nation agreement on dismantling North Korea’s nuclear weapons program.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (GOOG), target $600, No.1 Internet stock pick. Current valuation implies a very attractive risk-reward outlook. Recent industry datapoints continue to indicate a very robust profile for search advertising. Review of underlying drivers of Google’s search revenue demonstrates growth that is more sustainable than the market realizes. Tracking suggests that Google continues to gain market share. Google’s option value is underappreciated, with updated worldwide traffic analysis as support. ROIC analysis highlights materially very high value creation by Google. The potential loss of the Ask affiliate deal is a manageable risk.
- Reiterated Buy on (NFLX), target $30.
- Reiterated Sell on (TBL), target $23.
Business Week:
- Microvision(MVIS), which in January showed a prototype high-resolution video projector small enough to put into a mobile phone, is attracting investor inerest. Joel Achramowicz, analyst at MDB Capital, rates the stock “buy” and said he expects the stock to double in a year.
- Shares of CytRx Corp.(CYTR), which rose to a six-year high today, may triple in two years, citing Rodman Renshaw analyst Elemer Piros. The company is scheduled in 12 to 18 months to test for humans its so-called RNAi technology that shuts down genes that cause diabetes, obesity and Lou Gehrig’s disease.
Night Trading
Asian Indices are -.25% to unch. on average.
S&P 500 indicated -.22%.
NASDAQ 100 indicated -.30%.
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
- (CPB)/.63
- (GT)/.20
- (HRL)/.54
- (SJM)/.69
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- The Producer Price Index for January is estimated to decline -.6% versus a .9% gain in December.
- The PPI Ex Food & Energy for January is estimated to rise .2% versus a .2% gain in December.
- Housing Starts for January are estimated to fall to 1600K versus 1642K in December.
- Building Permits for January are estimated to fall to 1590K versus 1613K in December.
10:00 am EST
- The preliminary Univ. of Mich. Consumer Confidence for February is estimated to fall to 96.5 versus 96.9 in January.
BOTTOM LINE: Asian indices are slightly lower, weighed down by technology and automaker shares in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.
DJIA Hits Another All-Time High on Positive Housing Report, Lower Long-Term Rates
Indices
S&P 500 1,456.81 +.10%
DJIA 12,765.01 +.18%
NASDAQ 2,497.10 +.35%
Russell 2000 815.43 +.18%
Wilshire 5000 14,677.58 +.13%
Russell 1000 Growth 575.0 +.31%
Russell 1000 Value 839.63 -.05%
Morgan Stanley Consumer 714.27 +.20%
Morgan Stanley Cyclical 965.18 +.54%
Morgan Stanley Technology 586.86 +.57%
Transports 5,099.65 -.34%
Utilities 475.04 -.43%
MSCI Emerging Markets 117.27 +.51%
Sentiment/Internals
Total Put/Call .76 -21.65%
NYSE Arms 1.09 +63.59%
Volatility(VIX) 10.22 -.10%
ISE Sentiment 135.0 +21.62%
Futures Spot Prices
Crude Oil 57.91 -.16%
Reformulated Gasoline 159.67 -1.21%
Natural Gas 7.36 +1.70%
Heating Oil 162.80 -.63%
Gold 673.90 +.28%
Base Metals 233.56 +2.58%
Copper 267.20 +3.11%
Economy
10-year US Treasury Yield 4.70% -3 basis points
US Dollar 84.03 -.18%
CRB Index 303.80 +.62%
Leading Sectors
Steel +2.88%
HMOs +1.92%
Hospitals +1.88%
Lagging Sectors
Utilities -.43%
Energy -1.11%
Oil Service -1.68%
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
- Goldman Sachs:
- Downgraded (ABB) to Sell.
Afternoon/Evening Headlines
Bloomberg:
- The Dow Jones Industrial Average hit another all-time high on decelerating inflation readings and a positive housing report.
- Shares of InBev NV, the brewer of Beck’s and Stella Artois, surged the most ever and Anheuser-Busch(BUD) stock had its biggest gain in 10 months on merger rumors.
- Microsoft Corp.(MSFT) expects a “small drop” in the growth in operating expenses in the year that starts in July.
- Northwest Airlines said it will be valued at $7 billion when it leaves bankruptcy and proposed repaying as much as 83% of creditors’ claims.
- Chipotle Mexican Grill(CMG) said fourth-quarter profit more than doubled as it opened new restaurants. The stock is 5.5% higher after-hours.
- Baker Hughes(BHI), the world’s third-largest oilfield contractor, said profit rose less than predicted in the fourth quarter and will miss analyst estimates in the current quarter on slowing sales growth. The shares plunged 9.4%, the biggest single day decline since 2001.
- Shares of Palm Inc.(PALM) had their biggest jump in eight months on speculation the company will be acquired.
- General Electric(GE) agreed to pay $270 million for a stake in wind farms owned by Babcock & Brown in California, Illinois, New Mexico and Pennsylvania.
- Exxon Mobil(XOM) said its reserves of oil and natural gas rose by the equivalent of 2 billion barrels in 2006 on new fields in West Africa and the Middle East. Exxon replace 125% of the oil and gas it produced during the year.
- Chevron Corp.(CVX) and closely held Gulf LNG Energy LLC won approval by US regulators today to build liquefied natural-gas import terminals at Pascagoula, Mississippi.
S&P 500 1,456.81 +.10%
DJIA 12,765.01 +.18%
NASDAQ 2,497.10 +.35%
Russell 2000 815.43 +.18%
Wilshire 5000 14,677.58 +.13%
Russell 1000 Growth 575.0 +.31%
Russell 1000 Value 839.63 -.05%
Morgan Stanley Consumer 714.27 +.20%
Morgan Stanley Cyclical 965.18 +.54%
Morgan Stanley Technology 586.86 +.57%
Transports 5,099.65 -.34%
Utilities 475.04 -.43%
MSCI Emerging Markets 117.27 +.51%
Sentiment/Internals
Total Put/Call .76 -21.65%
NYSE Arms 1.09 +63.59%
Volatility(VIX) 10.22 -.10%
ISE Sentiment 135.0 +21.62%
Futures Spot Prices
Crude Oil 57.91 -.16%
Reformulated Gasoline 159.67 -1.21%
Natural Gas 7.36 +1.70%
Heating Oil 162.80 -.63%
Gold 673.90 +.28%
Base Metals 233.56 +2.58%
Copper 267.20 +3.11%
Economy
10-year US Treasury Yield 4.70% -3 basis points
US Dollar 84.03 -.18%
CRB Index 303.80 +.62%
Leading Sectors
Steel +2.88%
HMOs +1.92%
Hospitals +1.88%
Lagging Sectors
Utilities -.43%
Energy -1.11%
Oil Service -1.68%
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
- Goldman Sachs:
- Downgraded (ABB) to Sell.
Afternoon/Evening Headlines
Bloomberg:
- The Dow Jones Industrial Average hit another all-time high on decelerating inflation readings and a positive housing report.
- Shares of InBev NV, the brewer of Beck’s and Stella Artois, surged the most ever and Anheuser-Busch(BUD) stock had its biggest gain in 10 months on merger rumors.
- Microsoft Corp.(MSFT) expects a “small drop” in the growth in operating expenses in the year that starts in July.
- Northwest Airlines said it will be valued at $7 billion when it leaves bankruptcy and proposed repaying as much as 83% of creditors’ claims.
- Chipotle Mexican Grill(CMG) said fourth-quarter profit more than doubled as it opened new restaurants. The stock is 5.5% higher after-hours.
- Baker Hughes(BHI), the world’s third-largest oilfield contractor, said profit rose less than predicted in the fourth quarter and will miss analyst estimates in the current quarter on slowing sales growth. The shares plunged 9.4%, the biggest single day decline since 2001.
- Shares of Palm Inc.(PALM) had their biggest jump in eight months on speculation the company will be acquired.
- General Electric(GE) agreed to pay $270 million for a stake in wind farms owned by Babcock & Brown in California, Illinois, New Mexico and Pennsylvania.
- Exxon Mobil(XOM) said its reserves of oil and natural gas rose by the equivalent of 2 billion barrels in 2006 on new fields in West Africa and the Middle East. Exxon replace 125% of the oil and gas it produced during the year.
- Chevron Corp.(CVX) and closely held Gulf LNG Energy LLC won approval by US regulators today to build liquefied natural-gas import terminals at Pascagoula, Mississippi.
BOTTOM LINE: The Portfolio finished higher today on gains in my Semi longs, Telecom longs and Energy-related shorts. I did not trade in the final hour, thus leaving the Portfolio 100% net long. The tone of the market was slightly positive today as the advance/decline line finished about even, almost every sector gained and volume was above average. Measures of investor anxiety were mostly lower into the close. Today's overall market action was mildly bullish as the major averages finished near session highs. Energy-related shares saw the only meaningful weakness. It is interesting that for the first time in a very long time energy stocks are finishing near session lows despite oil finishing near session highs. I see few signs that the recent substantial hedges that have been put out are being taken off. I still expect a more meaningful surge higher over the coming weeks as shorts scramble and underinvested bulls grow impatient. I have heard or read 5 different pundits talk about U.S. economic collapse and depression in the last 24 hours, which bodes well for a continuation of stocks “climbing the wall of worry.”
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