BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Retail longs, Computer longs and Telecom longs. I have not traded today, thus leaving the Portfolio 50% net long. The tone of the market is modestly positive as the advance/decline line is modestly higher, most sectors are rising and volume is heavy. Much has been made over the Shanghai Composite's almost 10% plunge two days ago. However, India's Sensex Index is the BRIC that began to crack before shanghai. It began rolling over a couple of weeks ago. The Sensex is down 9% over the last five days, finishing last night down 4% at session lows. It is now down 11% in about three weeks and down 6.1% year to date, which is the worst performance of any major country index I follow. I continue to believe the mania for emerging market stocks is in the process of ending and that developed markets will substantially outperform them this year. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering and bargain-hunting.
Wednesday, February 28, 2007
Stocks Higher into Final Hour on Bargain-Hunting and Short-Covering
Today's Headlines
Bloomberg:
- Treasuries are declining for the first time in four days as Federal Reserve Chairman Ben Bernanke said the economy may strengthen by mid-year.
- Shares of Fremont General Corp., the third-largest provider of sub-prime US mortgages through brokers, slumped to a three-year low after the company postponed the release of fourth-quarter earnings.
- Pfizer Inc.(PFE) and Merck & Co.(MRK) reported positive findings on experimental drugs that promise to spur a change in HIV treatment, helping thousands of patients who have stopped responding to older medicines.
- The perceived risk of owning low-rated sub-prime mortgage bonds lessons for the first time in nine days, derivatives suggest, after Fed Reserve Chairman Ben S. Bernanke said the overall home loan market is healthy.
- Yesterday’s sell-off in US equities presents a “good buying opportunity” given the outlook for economic and earnings growth, according to UBS AG strategists.
- Copper prices fell the most in more than three weeks on the London Metal Exchange and zinc posted the largest drop since Feb. 2, on concerns over a further slowing of demand.
- Gold is falling another $14.50/oz. as speculators anticipate slowing demand from emerging economies and lower inflation.
Wall Street Journal:
- American Family Mutual Insurance Co., the nation’s 10th largest car insurer, plans to offer some of its customers camera that can record driving by teenagers.
- Exchange-traded funds following stocks in Asia were hurt yesterday after Chinese markets lost about 9% on concerns about slower economic growth.
- The US FDA advisory panel may approve a heart monitor capable of being checked by the Internet, the first in a coming wave of implantable sensors.
NY Times:
- A scientific study on stem cells that concluded cells taken from an adult could change into any of the body’s major tissue types is being re-evaluated after inconsistent data was discovered.
News-Press of Fort Myers:
- A Florida legislator has proposed a bill that would prohibit government agencies and officials from using the phrase “illegal alien” when referring to a person that broke the law to gain entrance into the US. Senator Frederica Wilson, a Democrat who represents Miami, said she considers an alien to be from outer space.
Etemaad:
- Several Iranian parliamentary members criticized a recent comment by President Mahmoud Ahmadinejad comparing the country’s nuclear program to a “train with no brakes,” citing lawmakers.
El Universal:
- Shortages in Venezuela of antibiotics and medicines for diabetes and high blood pressure are growing because of government delays in approving requests for dollars to pay for imports, citing Edgard Salas, president of the Venezuelan Pharmaceutical Assoc.
- Treasuries are declining for the first time in four days as Federal Reserve Chairman Ben Bernanke said the economy may strengthen by mid-year.
- Shares of Fremont General Corp., the third-largest provider of sub-prime US mortgages through brokers, slumped to a three-year low after the company postponed the release of fourth-quarter earnings.
- Pfizer Inc.(PFE) and Merck & Co.(MRK) reported positive findings on experimental drugs that promise to spur a change in HIV treatment, helping thousands of patients who have stopped responding to older medicines.
- The perceived risk of owning low-rated sub-prime mortgage bonds lessons for the first time in nine days, derivatives suggest, after Fed Reserve Chairman Ben S. Bernanke said the overall home loan market is healthy.
- Yesterday’s sell-off in US equities presents a “good buying opportunity” given the outlook for economic and earnings growth, according to UBS AG strategists.
- Copper prices fell the most in more than three weeks on the London Metal Exchange and zinc posted the largest drop since Feb. 2, on concerns over a further slowing of demand.
- Gold is falling another $14.50/oz. as speculators anticipate slowing demand from emerging economies and lower inflation.
Wall Street Journal:
- American Family Mutual Insurance Co., the nation’s 10th largest car insurer, plans to offer some of its customers camera that can record driving by teenagers.
- Exchange-traded funds following stocks in Asia were hurt yesterday after Chinese markets lost about 9% on concerns about slower economic growth.
- The US FDA advisory panel may approve a heart monitor capable of being checked by the Internet, the first in a coming wave of implantable sensors.
NY Times:
- A scientific study on stem cells that concluded cells taken from an adult could change into any of the body’s major tissue types is being re-evaluated after inconsistent data was discovered.
News-Press of Fort Myers:
- A Florida legislator has proposed a bill that would prohibit government agencies and officials from using the phrase “illegal alien” when referring to a person that broke the law to gain entrance into the US. Senator Frederica Wilson, a Democrat who represents Miami, said she considers an alien to be from outer space.
Etemaad:
- Several Iranian parliamentary members criticized a recent comment by President Mahmoud Ahmadinejad comparing the country’s nuclear program to a “train with no brakes,” citing lawmakers.
El Universal:
- Shortages in Venezuela of antibiotics and medicines for diabetes and high blood pressure are growing because of government delays in approving requests for dollars to pay for imports, citing Edgard Salas, president of the Venezuelan Pharmaceutical Assoc.
4Q GDP Revised Down on Inventory De-Stocking, Inflation Measure Decelerates, Chicago PMI Declines, New Home Sales Fall
- Preliminary 4Q GDP rose 2.2% versus estimates of a 2.3% gain and a prior estimate of a 3.5% increase.
- Preliminary 4Q Personal Consumption rose 4.2% versus estimates of a 4.2% increase and prior estimates of a 4.4% gain.
- Preliminary 4Q GDP Price Index rose 1.7% versus estimates of a 1.5% gain and prior estimates of a 1.5% increase.
- Preliminary 4Q Core PCE rose 1.9% versus estimates of 2.1% and prior estimates of a 2.1% increase.
- The Chicago Purchasing Manager for February fell to 47.9 versus estimates of 50.0 and a reading of 48.8 in January.
- New Home Sales for January fell to 937K versus estimates of 1080K and 1123K in December.
- Preliminary 4Q Personal Consumption rose 4.2% versus estimates of a 4.2% increase and prior estimates of a 4.4% gain.
- Preliminary 4Q GDP Price Index rose 1.7% versus estimates of a 1.5% gain and prior estimates of a 1.5% increase.
- Preliminary 4Q Core PCE rose 1.9% versus estimates of 2.1% and prior estimates of a 2.1% increase.
- The Chicago Purchasing Manager for February fell to 47.9 versus estimates of 50.0 and a reading of 48.8 in January.
- New Home Sales for January fell to 937K versus estimates of 1080K and 1123K in December.
BOTTOM LINE: The US economy grew at an annual rate of 2.2% in the fourth quarter, slower than first estimated, as companies stepped up efforts to curb inventories, Bloomberg reported. For all of last year, the US economy grew at an above-average 3.3% versus a 3.2% gain in 2005. Inventory de-stocking was the main reason for last quarter’s reduced growth rate. Companies added to inventories at an annual rate of $17.3 billion versus a $35.3 billion pace reported Jan. 31 and a $55.4 billion rate reported in 3Q. The decline took away 1.35 percentage points from GDP. The core pce, the Fed’s favorite inflation gauge, rose 1.9% y-o-y last quarter versus a 2.1% prior estimate. Incomes grew at a 4.8% annual pace during 4Q, more than twice most measures of inflation. I continue to expect significant inventory de-stocking to result in below trend 1Q GDP growth. However, subsequent quarters should see a boost from inventory rebuilding as companies gain confidence in the sustainability of the current expansion as demand remains relatively robust.
A gauge of US business activity unexpectedly fell for a second month as companies curbed production, Bloomberg reported. However, the New Orders component of the index rose to 48.7 from 46.3 the prior month. The Prices Paid component rose to 63.2 versus 54.9 the prior month. The Employment Component of the index surged to 50.6 versus 42.8 the prior month. I expect this gauge to show expansion next month.
New-home sales in the US fell last month more than expectations, Bloomberg reported. The median price of a new home fell to $239,800 from $244,900 a year earlier. The supply of new homes at the currents sales pace rose to 6.8 months’ worth versus 5.7 months the prior month. New Home sales fell 37.4% in the West, 18.7% in the Northeast, 9.7% in the South and 8.1% in the Mid-west. The NAR reported yesterday that Existing Home Sales, which account for about 85% of the market, unexpectedly rose 3% last month. As well, weekly mortgage applications rose 3.2% this week. While I continue to believe housing is stabilizing at relatively high levels, construction will remain muted throughout the year as homebuilders continue to work down inventories.
Wednesday Watch
Late-Night Headlines
Bloomberg:
- Mark Mobius, who oversees about $30 billion in emerging-market equities at Templeton Asset Management says Chinese shares will decline further.
- Shares in Nikko Cordial Corp., Japan’s third-largest brokerage, plunged 15% after the Nikkei English News reported the Tokyo Stock Exchange is preparing to de-list the stock.
- Japan’s industrial production declined 1.5%, the most in almost three years, in January, signaling growth may slow in the world’s second-largest economy.
- Centro Properties Group, Australia’s second-largest shopping center owner, agreed to buy New Plan Excel Realty Trust(NXL) for $3.7 billion in cash to become the fifth-biggest mall owner in the US.
- Crude oil is falling $1.12/bbl. in NY as speculators pare bets on worries over slower Chinese and US demand.
- Singapore’s stocks are dropping 5.4%, sending the Straits Times Index to its biggest drop in 5 ½ years.
- Toyota Motor’s(TM) plan to build a $1.3 billion assembly plant in Mississippi brings it a step closer to a goal of building more vehicles in North America and cutting down on imports from Japan.
- China, the world’s largest coal producer and consumer, suspended the granting of coal exploration rights to avoid excess production capacity.
- Japan, the world’s largest consumer of oil after the US and China, said crude oil imports fell .6% in January.
- India’s copper production surged 26% to 521,953 tons in the ten months ended Jan. 31, from 414,731 tons a year earlier, the Ministry of Mines said.
- India, the world’s second largest producer of wheat and rice, banned futures trading in the two commodities to curb the fastest inflation in two years.
- Indonesia’s rupiah and the Philippine peso led declines in Asian currencies as fund managers dumped emerging market assets.
Shanghai Securities News:
- China’s stock sell-off yesterday shows that the country’s market is entering a phase of “painful” transformation, Hou Ning wrote. China’s equity investors were speculating on liquidity and sentiments, while often downplaying earnings.
Financial News:
- China needs to prevent its stock market from surging “too rapidly” and should stop funds from flowing into the market “too fast.” Most Chinese listed companies have become “overpriced” over the past year as funds “crazily” speculated on the market to gain profits, said the official newspaper, an affiliate of the People’s Bank of China.
South China Morning Post:
- Three Chinese carmakers including Shanghai Automotive Industry Corp. have started talks with DaimlerChrysler AG to buy its US-based Chrysler unit.
China Securities Journal:
- China’s stock market decline yesterday was a “rational revaluation,” and shares remain overvalued, citing analysts. China’s stocks had their biggest one-day plunge in a decade yesterday on concern that a government crackdown on investments made with borrowed money will end a rally that drove benchmark indexes to records.
Late Buy/Sell Recommendations
Citigroup:
- Various indicators suggest that things should calm down in the future such as the VIX, the ARMS index near record levels, a plunge in bullishness readings, and a rise in put/call ratios. Declines in the major averages of greater than 3% in a day have generated an impressive record of market recovery with a near 80% investment success rate within three months. Adding (KLAC) and (COH) to the Recommended List, increasing our exposure to tech and consumer discretionary.
Night Trading
Asian Indices are -6.0% to -3.0% on average.
S&P 500 indicated +.19%.
NASDAQ 100 indicated -.03%.
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
- (BRL)/.74
- (DLTR)/.93
- (DBRN)/.24
- (EV)/.29
- (IPG)/.23
- (IRM)/.17
- (JOYG)/.62
- (LINTA)/.31
- (LIZ)/.96
- (LTD)/1.09
- (MSO)/.25
- (MRX)/.21
- (NRG)/.45
- (PSUN)/.39
- (PETM)/.56
- (S)/.29
- (SPW)/1.18
- (STN)/.45
- (VSE)/.20
- (WPO)/10.48
Upcoming Splits
- (ALB) 2-for-1
Economic Releases
8:30 am EST
- Preliminary 4Q GDP is estimated at 2.3% versus a prior estimate of 3.5% growth.
- Preliminary 4Q Personal Consumption is estimated at 4.2% versus a prior estimate of 4.4%.
- Preliminary 4Q GDP Price Index is estimated to rise 1.5% versus a prior estimate of a 1.5% gain.
- Preliminary 4Q Core PCE is estimated to rise 2.1% versus a prior estimate of a 2.1% gain.
9:45 am EST
- The Chicago Purchasing Manager for February is estimated to rise to 50.0 versus a reading of 48.8 in January.
10:00 am EST
- New Home Sales for January are estimated to fall to 1080K versus 1120K in December.
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil build of 2,000,000 barrels versus a 3,694,000 barrel increase the prior week. Gasoline supplies are expected to fall by -1,500,000 barrels versus a -3,041,000 barrel decline the prior week. Distillate inventories are expected to fall by -2,600,000 barrels versus a -5,037,000 barrel decline the prior week. Finally, Refinery Utilization is expected to rise by .23% versus a -1.42% fall the prior week.
Bloomberg:
- Mark Mobius, who oversees about $30 billion in emerging-market equities at Templeton Asset Management says Chinese shares will decline further.
- Shares in Nikko Cordial Corp., Japan’s third-largest brokerage, plunged 15% after the Nikkei English News reported the Tokyo Stock Exchange is preparing to de-list the stock.
- Japan’s industrial production declined 1.5%, the most in almost three years, in January, signaling growth may slow in the world’s second-largest economy.
- Centro Properties Group, Australia’s second-largest shopping center owner, agreed to buy New Plan Excel Realty Trust(NXL) for $3.7 billion in cash to become the fifth-biggest mall owner in the US.
- Crude oil is falling $1.12/bbl. in NY as speculators pare bets on worries over slower Chinese and US demand.
- Singapore’s stocks are dropping 5.4%, sending the Straits Times Index to its biggest drop in 5 ½ years.
- Toyota Motor’s(TM) plan to build a $1.3 billion assembly plant in Mississippi brings it a step closer to a goal of building more vehicles in North America and cutting down on imports from Japan.
- China, the world’s largest coal producer and consumer, suspended the granting of coal exploration rights to avoid excess production capacity.
- Japan, the world’s largest consumer of oil after the US and China, said crude oil imports fell .6% in January.
- India’s copper production surged 26% to 521,953 tons in the ten months ended Jan. 31, from 414,731 tons a year earlier, the Ministry of Mines said.
- India, the world’s second largest producer of wheat and rice, banned futures trading in the two commodities to curb the fastest inflation in two years.
- Indonesia’s rupiah and the Philippine peso led declines in Asian currencies as fund managers dumped emerging market assets.
Shanghai Securities News:
- China’s stock sell-off yesterday shows that the country’s market is entering a phase of “painful” transformation, Hou Ning wrote. China’s equity investors were speculating on liquidity and sentiments, while often downplaying earnings.
Financial News:
- China needs to prevent its stock market from surging “too rapidly” and should stop funds from flowing into the market “too fast.” Most Chinese listed companies have become “overpriced” over the past year as funds “crazily” speculated on the market to gain profits, said the official newspaper, an affiliate of the People’s Bank of China.
South China Morning Post:
- Three Chinese carmakers including Shanghai Automotive Industry Corp. have started talks with DaimlerChrysler AG to buy its US-based Chrysler unit.
China Securities Journal:
- China’s stock market decline yesterday was a “rational revaluation,” and shares remain overvalued, citing analysts. China’s stocks had their biggest one-day plunge in a decade yesterday on concern that a government crackdown on investments made with borrowed money will end a rally that drove benchmark indexes to records.
Late Buy/Sell Recommendations
Citigroup:
- Various indicators suggest that things should calm down in the future such as the VIX, the ARMS index near record levels, a plunge in bullishness readings, and a rise in put/call ratios. Declines in the major averages of greater than 3% in a day have generated an impressive record of market recovery with a near 80% investment success rate within three months. Adding (KLAC) and (COH) to the Recommended List, increasing our exposure to tech and consumer discretionary.
Night Trading
Asian Indices are -6.0% to -3.0% on average.
S&P 500 indicated +.19%.
NASDAQ 100 indicated -.03%.
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
- (BRL)/.74
- (DLTR)/.93
- (DBRN)/.24
- (EV)/.29
- (IPG)/.23
- (IRM)/.17
- (JOYG)/.62
- (LINTA)/.31
- (LIZ)/.96
- (LTD)/1.09
- (MSO)/.25
- (MRX)/.21
- (NRG)/.45
- (PSUN)/.39
- (PETM)/.56
- (S)/.29
- (SPW)/1.18
- (STN)/.45
- (VSE)/.20
- (WPO)/10.48
Upcoming Splits
- (ALB) 2-for-1
Economic Releases
8:30 am EST
- Preliminary 4Q GDP is estimated at 2.3% versus a prior estimate of 3.5% growth.
- Preliminary 4Q Personal Consumption is estimated at 4.2% versus a prior estimate of 4.4%.
- Preliminary 4Q GDP Price Index is estimated to rise 1.5% versus a prior estimate of a 1.5% gain.
- Preliminary 4Q Core PCE is estimated to rise 2.1% versus a prior estimate of a 2.1% gain.
9:45 am EST
- The Chicago Purchasing Manager for February is estimated to rise to 50.0 versus a reading of 48.8 in January.
10:00 am EST
- New Home Sales for January are estimated to fall to 1080K versus 1120K in December.
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil build of 2,000,000 barrels versus a 3,694,000 barrel increase the prior week. Gasoline supplies are expected to fall by -1,500,000 barrels versus a -3,041,000 barrel decline the prior week. Distillate inventories are expected to fall by -2,600,000 barrels versus a -5,037,000 barrel decline the prior week. Finally, Refinery Utilization is expected to rise by .23% versus a -1.42% fall the prior week.
BOTTOM LINE: Asian indices are sharply lower, weighed down by commodity and technology shares in the region. I expect US equities to open lower and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.
Tuesday, February 27, 2007
Stocks Finish Sharply Lower on Emerging Market and Economic Worries
Indices
S&P 500 1,399.04 -3.47%
DJIA 12,216.24 -3.29%
NASDAQ 2,487.07 -3.86%
Russell 2000 792.67 -3.77%
Wilshire 5000 14,189.97 -3.10%
Russell 1000 Growth 553.39 -3.42%
Russell 1000 Value 806.90 -3.41%
Morgan Stanley Consumer 689.50 -2.82%
Morgan Stanley Cyclical 934.38 -3.86%
Morgan Stanley Technology 562.03 -3.94%
Transports 4,863.76 -3.43%
Utilities 479.48 -2.88%
MSCI Emerging Markets 112.0 -4.67%
Sentiment/Internals
Total Put/Call 1.69 +65.69%
NYSE Arms 14.22 +1,432%
Volatility(VIX) 18.31 +64.22%
ISE Sentiment 111.0 +15.63%
Futures Spot Prices
Crude Oil 60.34 -1.69%
Reformulated Gasoline 179.30 +.86%
Natural Gas 7.43 -3.53%
Heating Oil 175.20 -.24%
Gold 664.30 -3.70%
Base Metals 242.76 +1.00%
Copper 275.50 -4.01%
Economy
10-year US Treasury Yield 4.51% -11 basis points
US Dollar 83.49 -.52%
CRB Index 313.26 -.58%
Leading Sectors
Defense -2.45%
Drugs -2.47%
Homebuilders -2.73%
Lagging Sectors
Alternative Energy -5.80%
Steel -6.85%
Gold & Silver -6.96%
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
AG Edwards:
- Rated (BKC) Buy.
Afternoon/Evening Headlines
Bloomberg:
- The price of gold plunged 4% today despite its status as an investment safe haven.
- Great Atlantic & Pacific Tea, the owner of A&P and Food Emporium supermarket chains, is in talks to acquire Pathmark Stores(PTMK) for $652.5 million.
- Asian stocks may slide for a second day after a plunge in Chinese shares sparked a global sell-off. New Zealand NZX 50 Index, Asia’s first market to open, tumbled the most in more than four years. The Nikkei 225 futures are trading down 4.25%.
- Dow Jones(DJ) said its Dow Jones Industrial Average failed to keep up with stock trades for part of the day, making it appear as though the market plunged suddenly once computer problems were fixed about an hour before the close.
- Emerging-market bonds and currencies fell as a tumble in Chinese stocks curbed investor demand for riskier assets.
- Federated Dept. Stores(FD) reported higher fourth-quarter profit as customers shopped at Macy’s stores, and Target Corp.’s(TGT) net income rose on sales of consumer electronics and groceries.
- Treasuries posted the biggest gains since June 2005 as a rout in global stocks and bonds bolstered demand for the safest debt.
- Latin stocks fell the most since Sept. 11, 2001, as a plunge in Chinese shares prompted foreign investors to shed emerging market equities.
- Copper dropped 4% today as speculators cut long bets on concerns that demand from the US and China will slow further.
Financial Times:
- TXU Corp.(TXU), the Texas power producer being acquired fro $45 billion by KKR and Texas Pacific Group, is gauging interest from private equity groups and energy companies in a rival bid.
Vedomosti:
- Polo Ralph Lauren Corp.(RL) will open its first three stores in Moscow this year under a franchise agreement with Russia’s Mercury Group.
S&P 500 1,399.04 -3.47%
DJIA 12,216.24 -3.29%
NASDAQ 2,487.07 -3.86%
Russell 2000 792.67 -3.77%
Wilshire 5000 14,189.97 -3.10%
Russell 1000 Growth 553.39 -3.42%
Russell 1000 Value 806.90 -3.41%
Morgan Stanley Consumer 689.50 -2.82%
Morgan Stanley Cyclical 934.38 -3.86%
Morgan Stanley Technology 562.03 -3.94%
Transports 4,863.76 -3.43%
Utilities 479.48 -2.88%
MSCI Emerging Markets 112.0 -4.67%
Sentiment/Internals
Total Put/Call 1.69 +65.69%
NYSE Arms 14.22 +1,432%
Volatility(VIX) 18.31 +64.22%
ISE Sentiment 111.0 +15.63%
Futures Spot Prices
Crude Oil 60.34 -1.69%
Reformulated Gasoline 179.30 +.86%
Natural Gas 7.43 -3.53%
Heating Oil 175.20 -.24%
Gold 664.30 -3.70%
Base Metals 242.76 +1.00%
Copper 275.50 -4.01%
Economy
10-year US Treasury Yield 4.51% -11 basis points
US Dollar 83.49 -.52%
CRB Index 313.26 -.58%
Leading Sectors
Defense -2.45%
Drugs -2.47%
Homebuilders -2.73%
Lagging Sectors
Alternative Energy -5.80%
Steel -6.85%
Gold & Silver -6.96%
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
AG Edwards:
- Rated (BKC) Buy.
Afternoon/Evening Headlines
Bloomberg:
- The price of gold plunged 4% today despite its status as an investment safe haven.
- Great Atlantic & Pacific Tea, the owner of A&P and Food Emporium supermarket chains, is in talks to acquire Pathmark Stores(PTMK) for $652.5 million.
- Asian stocks may slide for a second day after a plunge in Chinese shares sparked a global sell-off. New Zealand NZX 50 Index, Asia’s first market to open, tumbled the most in more than four years. The Nikkei 225 futures are trading down 4.25%.
- Dow Jones(DJ) said its Dow Jones Industrial Average failed to keep up with stock trades for part of the day, making it appear as though the market plunged suddenly once computer problems were fixed about an hour before the close.
- Emerging-market bonds and currencies fell as a tumble in Chinese stocks curbed investor demand for riskier assets.
- Federated Dept. Stores(FD) reported higher fourth-quarter profit as customers shopped at Macy’s stores, and Target Corp.’s(TGT) net income rose on sales of consumer electronics and groceries.
- Treasuries posted the biggest gains since June 2005 as a rout in global stocks and bonds bolstered demand for the safest debt.
- Latin stocks fell the most since Sept. 11, 2001, as a plunge in Chinese shares prompted foreign investors to shed emerging market equities.
- Copper dropped 4% today as speculators cut long bets on concerns that demand from the US and China will slow further.
Financial Times:
- TXU Corp.(TXU), the Texas power producer being acquired fro $45 billion by KKR and Texas Pacific Group, is gauging interest from private equity groups and energy companies in a rival bid.
Vedomosti:
- Polo Ralph Lauren Corp.(RL) will open its first three stores in Moscow this year under a franchise agreement with Russia’s Mercury Group.
BOTTOM LINE: The Portfolio finished lower today on losses in my Retail longs, Computer longs, Biotech longs and Telecom longs. I added to my (EEM) short and added large (IWM)/(QQQQ) hedges today, thus leaving the Portfolio 50% net long. The tone of the market was extraordinarily negative as the advance/decline line finished substantially lower, every sector fell and volume was very heavy. Measures of investor anxiety were very elevated into the close. Today's overall market action was very bearish. Panicky trading was prevalent throughout the day. The VIX soared the most ever in a day, rising 64%. The NYSE Arms hit 15.95 today, the highest since Bloomberg began tracking it in 1998. As well, the CBOE total put/call was elevated throughout the day. My proprietary gauge of investor angst finished at a very elevated level. Today's losses were the most extreme in emerging market and commodity stocks. Chinese commodity stocks were hit the hardest. If in fact the bubble in Shanghai shares is bursting, U.S. stocks will likely see further downside in the near-term. However, longer-term, an end to the emerging market and commodity manias has hugely positive implications for U.S. stocks, specifically growth stocks. While today's losses were substantial, the Value Line Geometric Index, the best gauge of the broad market, is still 2% higher year-to-date, which is still a very good start to the year. Moreover, the average mid-cap stock is still about 3% higher ytd.
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