BOTTOM LINE: Service industries in the US expanded at a slower pace in February, Bloomberg reported. However, the employment component of the index rose to 52.2 from 51.7 the prior month. As well, the inventories component rose to 50.5 from 47 in January. Finally, the prices paid component fell to 54.8 from 55.4 in January. Consumer spending, which comprises more than two-thirds of the economy, remains healthy. Spending increased more than forecast in January and incomes rose by the most in a year, reports showed last week. I continue to believe the service sector will remain healthy over the intermediate-term as stocks resume their uptrend, weather becomes more seasonal, housing stabilizes at relatively high levels, interest rates remain low, inflation decelerates and the job market remains healthy.
Monday, March 05, 2007
ISM Non-Manufacturing Decelerates, Still Expanding
- ISM Non-Manufacturing for February fell to 54.3 versus estimates of 57.1 and a reading of 59.0 in January.
Sunday, March 04, 2007
Monday Watch
Weekend Headlines
Bloomberg:
- Fed Chairman Bernanke said late Friday evening that the tie between slack in the economy and prices has eased and that “there is still some overstatement of inflation.” He also said the prime mortgage market still seems “strong” and that there is no spillover of sub-prime to prime problems. Bernanke said the Fed is monitoring the mortgage market carefully.
- Crude oil is falling for the second day in NY on concerns that global economic growth will slow and investment funds are reducing risk in commodities.
- Copper futures in Shanghai fell for a second day amid concern that demand in China, the world’s biggest user of the metal, will slow if the government takes further steps to slow economic growth.
- President Bush asked American to contribute to the Red Cross and other relief agencies to aid tornado-stricken southern states during a visit to Alabama and Georgia to view storm damage.
- Hundreds of Russian policeman, many in riot gear, clashed with demonstrators in St. Petersburg led by former chess champion Garry Kasparov who rallied against what they say is a crackdown on democracy by President Vladimir Putin.
- The SEC froze more than $5.3 million in profits from suspected insider trading of TXU Corp.(TXU) stock options that were bought days before a $45 billion takeover of the company.
- Asian currencies posted a weekly loss, led by the Philippines peso and Indonesia’s rupiah, on concern a slump in stock prices will prompt investors to withdraw funds from the region.
- Moody’s Investors Service gave its highest bond ratings to certain debt of JPMorgan Chase(JPM), State Street Bank & Trust(STT) and Bank of New York(BK).
- Treasury benchmark 10-year notes posted their biggest weekly gains in five months as global investors sought the safety of US government debt amid declines in stocks.
- Petroleo Brasileiro SA, Brazil’s state-controlled oil company, found a light grade of crude oil off the coast of Espirito Santo state, raising expectations there are large new oil reserves below existing offshore deposits. The new well, shows signs of producing about 10,000 barrels a day, may be part of a field with reserves of as much as 570 million barrels. It may also extend the size of similar finds beneath a salt layer that lays below existing oil fields in the nearby Campos Basin, Petrobras said.
- Technology analyst Rick Shurlund, who covered software companies such as Microsoft Corp.(MSFT) for more than two decades at Goldman Sachs Group(GS), will join the Galleon Group hedge fund next month.
- China will boost its 2007 defense budget 17.8% to $45 billion, the most in five years, as an expanding economy gives the world’s largest regular army the means to upgrade its equipment.
- Treasury Secretary Henry Paulson said foreign holdings of US government debt pose no threat to the economy, countering comments made by leading Democrats including Senator Hillary Clinton.
- OPEC will probably keep its production quotas unchanged when ministers meet March 15, Algerian Oil Minister Chakib Khelil said. “Prices are expected to stabilize between $50 and $60” a barrel, he said.
- China’s investment in factories and plants must support the nation’s goals of reducing energy demand, the head of the country’s top economic planning body said. “We will follow an energy saving evaluation and examination system for fixed-asset investment projects and make energy efficiency a mandatory criterion in project examination, approval and development,” Ma Kai, chairman of the National Development and Reform Commission, said.
- Cnooc Ltd., China’s largest offshore oil producer, will increase its oil and gas production by at least 18% next year, Chairman Fu Chengyu said. China’s 2007 output of oil products will be enough to cover demand.
Marketwatch.com:
- One day’s sell-off does not a bear market make. That is the message from the top-performing market-timing newsletters tracked by the Hulbert Financial Digest.
NY Times:
- An Environmental Protection Agency study, titled United States Climate Action Report, predicts emissions will decelerate to 11% from 2002-2012, compared with 11.6% the prior decade.
- Cisco Systems(CSCO) is buying the technology assets of social-networking Web site Tribe.net. The purchase of Tribe.net, along with its recent acquisition of social-network design firm Five Across, will give Cisco the technology to create video services for corporate clients.
- Soaring crop prices, strong export markets and growing demand for biofuels are adding up to good times for many American farmers. So it’s not surprising that farmland, particularly in the upper Midwest, has begun to reflect that good fortune with rapidly rising prices.
Business Week:
- The outlook for US stocks is surprisingly upbeat despite recent volatility..
San Jose Mercury News:
- The Silicon Valley job market is sizzling. Employers in California’s Silicon Valley hired 2.9% more workers in January compared with a year earlier. It was the fastest rate of jobs growth since a 3.8% rise in the year to March 2001, near the end of the dot-com bubble.
Detroit News:
- Blackstone Group LP, a private equity company, may be the leading contender to buy the US unit of Germany’s DaimlerChrysler AG(DCX).
AP:
- NAACP President Bruce Gordon is quitting as chief of the civil rights organization 19 months after taking over, citing strained relations with the board.
- Diebold Inc.(DBD), a US maker of safes and automatic teller machines, may sell its electronic voting machine unit, citing analysts.
InfoWorld:
- Despite its CEO’s claims that Microsoft eventually will trump Google(GOOG) to be number one in online search revenue, the company’s online business is “massively underperforming” against the competition, according to a leading financial analyst.
Financial Times:
- Alcatel-Lucent(ALU), the world’s biggest maker of telecommunications equipment, will “resume growth as we move through the year,” citing and interview with CEO Patricia Russo.
- Four banks and a real estate data association are prepared to open the first US commercial property derivatives market as early as this week.
- The issue of Europe is the “big forgotten issue” of the French presidential campaign at a time when the country should reassess its “arrogant” and isolated position, citing an interview with European Union Transport Commissioner Jacques Barrot. Both French presidential candidates use the EU as a scapegoat for France’s problems, Barrot said.
London-based Times:
- Google Inc.(GOOG) posted an 83% gain in revenue from UK advertising last year. Google is the UK’s second-biggest advertising earner behind ITV Plc.
Globe and Mail:
- “It’s even worse than a casino,” complained Li Daqing, one of the investors at this trading hall, who has been investing in the Chinese market since 1996. “At least a casino has some rules. The Chinese stock market has no rules. I hate this market. It’s controlled by the government. It can’t be a fair game if the referee is also one of the players.”
WirtschaftsWoche:
- SAP AG(SAP) has attracted interest from US buyout firm Silver Lake Partners and Hewlett-Packard(HPQ).
China Daily:
- China’s Premier Wen Jiabao today will announce measures to slow economic growth to 8% this year. Wen will propose stronger measures to control fixed-asset investment and credit growth. The Chinese government’s primary mission this year will be to restrain economic growth, and it may focus on stabilizing prices and reducing unemployment.
Nikkei:
- Advantest Corp.(ATE) expects a 23% increase in operating profit next fiscal year, as the release of Microsoft’s Windows Vista operating system drives sales of its chip testers.
- Kyocera Corp., the world’s third-largest maker of solar cells, plans to spend as much as $428 million to double its output of solar cells by March 2011.
China Securities Journal:
- China must restrain energy consumption to prevent a rebound in fixed-asset investment, citing Zhang Zhuoyuan, an economist at the Chinese Academy of Social Sciences. Tighter energy use and emission standards should be imposed to restrict investment growth in low-efficiency industries. China’s energy consumption growth has already declined to 9.3% last year from 15.3% in 2003.
Shanghai Securities News:
- China’s stock market lacks hedging tools and the index is distorted by heavily weighted financial stocks, citing Ba Shusong, a senior State Council researcher. The combination of lack of stock market diversity and insufficient hedging tools is likely to amplify market fluctuations, and the limited number of investment channels means too much money is concentrated in stocks, Ba said.
Iran:
- Iran plans to issue a new banknote featuring a nuclear motif, citing the government press office.
Weekend Recommendations
Barron's:
- Made positive comments on (WFMI), (WFR), (FEIC), (VRTX), (GILD), (GOOG) and (AAP).
- Made negative comments on (AVB).
Citigroup:
- Retailers with heavy seasonal exposure and inventory leftover from winter's mild start were probably the big winners in February. We favor (AAP), (AZO), (ODP) and (TSCO) as our best new money ideas.
Night Trading
Asian indices are -2.25% to -1.5% on average.
S&P 500 indicated -.40%.
NASDAQ 100 indicated -.48%.
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/Estimate
- (ADCT)/.05
- (FNSR)/.03
- (MIR)/.18
Upcoming Splits
- None of note
Economic Releases
10:00 am EST
- ISM Non-Manufacturing for February is estimated to fall to 57.0 versus a reading of 59.0 in January.
Bloomberg:
- Fed Chairman Bernanke said late Friday evening that the tie between slack in the economy and prices has eased and that “there is still some overstatement of inflation.” He also said the prime mortgage market still seems “strong” and that there is no spillover of sub-prime to prime problems. Bernanke said the Fed is monitoring the mortgage market carefully.
- Crude oil is falling for the second day in NY on concerns that global economic growth will slow and investment funds are reducing risk in commodities.
- Copper futures in Shanghai fell for a second day amid concern that demand in China, the world’s biggest user of the metal, will slow if the government takes further steps to slow economic growth.
- President Bush asked American to contribute to the Red Cross and other relief agencies to aid tornado-stricken southern states during a visit to Alabama and Georgia to view storm damage.
- Hundreds of Russian policeman, many in riot gear, clashed with demonstrators in St. Petersburg led by former chess champion Garry Kasparov who rallied against what they say is a crackdown on democracy by President Vladimir Putin.
- The SEC froze more than $5.3 million in profits from suspected insider trading of TXU Corp.(TXU) stock options that were bought days before a $45 billion takeover of the company.
- Asian currencies posted a weekly loss, led by the Philippines peso and Indonesia’s rupiah, on concern a slump in stock prices will prompt investors to withdraw funds from the region.
- Moody’s Investors Service gave its highest bond ratings to certain debt of JPMorgan Chase(JPM), State Street Bank & Trust(STT) and Bank of New York(BK).
- Treasury benchmark 10-year notes posted their biggest weekly gains in five months as global investors sought the safety of US government debt amid declines in stocks.
- Petroleo Brasileiro SA, Brazil’s state-controlled oil company, found a light grade of crude oil off the coast of Espirito Santo state, raising expectations there are large new oil reserves below existing offshore deposits. The new well, shows signs of producing about 10,000 barrels a day, may be part of a field with reserves of as much as 570 million barrels. It may also extend the size of similar finds beneath a salt layer that lays below existing oil fields in the nearby Campos Basin, Petrobras said.
- Technology analyst Rick Shurlund, who covered software companies such as Microsoft Corp.(MSFT) for more than two decades at Goldman Sachs Group(GS), will join the Galleon Group hedge fund next month.
- China will boost its 2007 defense budget 17.8% to $45 billion, the most in five years, as an expanding economy gives the world’s largest regular army the means to upgrade its equipment.
- Treasury Secretary Henry Paulson said foreign holdings of US government debt pose no threat to the economy, countering comments made by leading Democrats including Senator Hillary Clinton.
- OPEC will probably keep its production quotas unchanged when ministers meet March 15, Algerian Oil Minister Chakib Khelil said. “Prices are expected to stabilize between $50 and $60” a barrel, he said.
- China’s investment in factories and plants must support the nation’s goals of reducing energy demand, the head of the country’s top economic planning body said. “We will follow an energy saving evaluation and examination system for fixed-asset investment projects and make energy efficiency a mandatory criterion in project examination, approval and development,” Ma Kai, chairman of the National Development and Reform Commission, said.
- Cnooc Ltd., China’s largest offshore oil producer, will increase its oil and gas production by at least 18% next year, Chairman Fu Chengyu said. China’s 2007 output of oil products will be enough to cover demand.
Marketwatch.com:
- One day’s sell-off does not a bear market make. That is the message from the top-performing market-timing newsletters tracked by the Hulbert Financial Digest.
NY Times:
- An Environmental Protection Agency study, titled United States Climate Action Report, predicts emissions will decelerate to 11% from 2002-2012, compared with 11.6% the prior decade.
- Cisco Systems(CSCO) is buying the technology assets of social-networking Web site Tribe.net. The purchase of Tribe.net, along with its recent acquisition of social-network design firm Five Across, will give Cisco the technology to create video services for corporate clients.
- Soaring crop prices, strong export markets and growing demand for biofuels are adding up to good times for many American farmers. So it’s not surprising that farmland, particularly in the upper Midwest, has begun to reflect that good fortune with rapidly rising prices.
Business Week:
- The outlook for US stocks is surprisingly upbeat despite recent volatility..
San Jose Mercury News:
- The Silicon Valley job market is sizzling. Employers in California’s Silicon Valley hired 2.9% more workers in January compared with a year earlier. It was the fastest rate of jobs growth since a 3.8% rise in the year to March 2001, near the end of the dot-com bubble.
Detroit News:
- Blackstone Group LP, a private equity company, may be the leading contender to buy the US unit of Germany’s DaimlerChrysler AG(DCX).
AP:
- NAACP President Bruce Gordon is quitting as chief of the civil rights organization 19 months after taking over, citing strained relations with the board.
- Diebold Inc.(DBD), a US maker of safes and automatic teller machines, may sell its electronic voting machine unit, citing analysts.
InfoWorld:
- Despite its CEO’s claims that Microsoft eventually will trump Google(GOOG) to be number one in online search revenue, the company’s online business is “massively underperforming” against the competition, according to a leading financial analyst.
Financial Times:
- Alcatel-Lucent(ALU), the world’s biggest maker of telecommunications equipment, will “resume growth as we move through the year,” citing and interview with CEO Patricia Russo.
- Four banks and a real estate data association are prepared to open the first US commercial property derivatives market as early as this week.
- The issue of Europe is the “big forgotten issue” of the French presidential campaign at a time when the country should reassess its “arrogant” and isolated position, citing an interview with European Union Transport Commissioner Jacques Barrot. Both French presidential candidates use the EU as a scapegoat for France’s problems, Barrot said.
London-based Times:
- Google Inc.(GOOG) posted an 83% gain in revenue from UK advertising last year. Google is the UK’s second-biggest advertising earner behind ITV Plc.
Globe and Mail:
- “It’s even worse than a casino,” complained Li Daqing, one of the investors at this trading hall, who has been investing in the Chinese market since 1996. “At least a casino has some rules. The Chinese stock market has no rules. I hate this market. It’s controlled by the government. It can’t be a fair game if the referee is also one of the players.”
WirtschaftsWoche:
- SAP AG(SAP) has attracted interest from US buyout firm Silver Lake Partners and Hewlett-Packard(HPQ).
China Daily:
- China’s Premier Wen Jiabao today will announce measures to slow economic growth to 8% this year. Wen will propose stronger measures to control fixed-asset investment and credit growth. The Chinese government’s primary mission this year will be to restrain economic growth, and it may focus on stabilizing prices and reducing unemployment.
Nikkei:
- Advantest Corp.(ATE) expects a 23% increase in operating profit next fiscal year, as the release of Microsoft’s Windows Vista operating system drives sales of its chip testers.
- Kyocera Corp., the world’s third-largest maker of solar cells, plans to spend as much as $428 million to double its output of solar cells by March 2011.
China Securities Journal:
- China must restrain energy consumption to prevent a rebound in fixed-asset investment, citing Zhang Zhuoyuan, an economist at the Chinese Academy of Social Sciences. Tighter energy use and emission standards should be imposed to restrict investment growth in low-efficiency industries. China’s energy consumption growth has already declined to 9.3% last year from 15.3% in 2003.
Shanghai Securities News:
- China’s stock market lacks hedging tools and the index is distorted by heavily weighted financial stocks, citing Ba Shusong, a senior State Council researcher. The combination of lack of stock market diversity and insufficient hedging tools is likely to amplify market fluctuations, and the limited number of investment channels means too much money is concentrated in stocks, Ba said.
Iran:
- Iran plans to issue a new banknote featuring a nuclear motif, citing the government press office.
Weekend Recommendations
Barron's:
- Made positive comments on (WFMI), (WFR), (FEIC), (VRTX), (GILD), (GOOG) and (AAP).
- Made negative comments on (AVB).
Citigroup:
- Retailers with heavy seasonal exposure and inventory leftover from winter's mild start were probably the big winners in February. We favor (AAP), (AZO), (ODP) and (TSCO) as our best new money ideas.
Night Trading
Asian indices are -2.25% to -1.5% on average.
S&P 500 indicated -.40%.
NASDAQ 100 indicated -.48%.
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/Estimate
- (ADCT)/.05
- (FNSR)/.03
- (MIR)/.18
Upcoming Splits
- None of note
Economic Releases
10:00 am EST
- ISM Non-Manufacturing for February is estimated to fall to 57.0 versus a reading of 59.0 in January.
BOTTOM LINE: Asian Indices are sharply lower, weighed down by commodity and automaker shares in the region. I expect US stocks to open lower and to trim losses into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the week.
Weekly Outlook
Click here for The Week Ahead by Reuters
Click here for Stocks in Focus for Monday by MarketWatch
There are several economic reports of note and some significant corporate earnings reports scheduled for release this week.
Economic reports for the week include:
Mon. - ISM Non-Manufacturing
Tues. - Final 4Q Non-farm Productivity, Final 4Q Unit Labor Costs, Pending Home Sales, Factory Orders, weekly retail sales
Wed. - MBA Mortgage Applications, ADP Employment Change, Fed’s Beige Book, Consumer Credit
Thur. - Initial Jobless Claims
Fri. - Trade Balance, Change in Non-farm Payrolls, Unemployment Rate, Average Hourly Earnings, Wholesale Inventories
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - ADC Telecom(ADCT), Mirant(MIR)
Tues. - 1-800 Contacts(CTAC), Brown-Forman(BF/B), Chico’s FAS(CHS), Conseco(CNO), Copart(CPRT), John Wiley & Sons(JW/A), Payless Shoesource(PSS)
Wed. - American Eagle Outfitters(AEOS), BJ’s Wholesale Club(BJ), Coldwater Creek(CWTR), Dick’s Sporting Goods(DKS), Foot Locker(FL), Genesco(GCO), Men’s Wearhouse(MW), Michaels Stores(MW), Saks Inc.(SKS), Talbots(TLB), Westwood One(WON)
Thur. - Anworth Mortgage(ANH), Cooper Cos(COO), Costco Wholesale(COST), Georgia Gulf(GGC), Hovnanian Enterprises, Korn/Ferry(KFY), National Semi(NSM), Neiman Marcus(NMG/A), Tech Data(TECD), Veritas DGC(VTS)
Fri. - Big Lots(BLI), Hibbett Sports(HIBB), Quiksilver(ZQK), Stage Stores(SSI), Urban Outfitters(URBN)
Other events that have market-moving potential this week include:
Mon. - Morgan Stanley Tech Conference, Merrill Lynch Global Auto Conference, Bear Stearns Media Conference, Citigroup Global Property Conference, (XLNX) analyst meeting, the Fed’s Poole speaking, the Fed’s Warsh speaking
Tue. - Thomas Weisel Internet & Digital Media Conference, Citigroup Global Property Conference, Raymond James Institutional Investors Conference, Morgan Stanley Tech Conference, Citigroup Global Industrial Conference, Bear Stearns Media Conference, (JPM) analyst meeting, the Fed’s Plosser speaking
Wed. - Raymond James Institutional Investors Conference, Morgan Stanley Tech Conference, CIBC Retail Conference, Bear Stearns Media Conference, Citigroup Global Property Conference, Citigroup Global Industrial Conference, Thomas Weisel Internet and Digital Media Conference, the Fed’s Moskow speaking
Thur. - Morgan Stanley Tech Conference, Pacific Crest On-Demand Conference, monthly retail sales reports
Fri. - None of note
Click here for Stocks in Focus for Monday by MarketWatch
There are several economic reports of note and some significant corporate earnings reports scheduled for release this week.
Economic reports for the week include:
Mon. - ISM Non-Manufacturing
Tues. - Final 4Q Non-farm Productivity, Final 4Q Unit Labor Costs, Pending Home Sales, Factory Orders, weekly retail sales
Wed. - MBA Mortgage Applications, ADP Employment Change, Fed’s Beige Book, Consumer Credit
Thur. - Initial Jobless Claims
Fri. - Trade Balance, Change in Non-farm Payrolls, Unemployment Rate, Average Hourly Earnings, Wholesale Inventories
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - ADC Telecom(ADCT), Mirant(MIR)
Tues. - 1-800 Contacts(CTAC), Brown-Forman(BF/B), Chico’s FAS(CHS), Conseco(CNO), Copart(CPRT), John Wiley & Sons(JW/A), Payless Shoesource(PSS)
Wed. - American Eagle Outfitters(AEOS), BJ’s Wholesale Club(BJ), Coldwater Creek(CWTR), Dick’s Sporting Goods(DKS), Foot Locker(FL), Genesco(GCO), Men’s Wearhouse(MW), Michaels Stores(MW), Saks Inc.(SKS), Talbots(TLB), Westwood One(WON)
Thur. - Anworth Mortgage(ANH), Cooper Cos(COO), Costco Wholesale(COST), Georgia Gulf(GGC), Hovnanian Enterprises, Korn/Ferry(KFY), National Semi(NSM), Neiman Marcus(NMG/A), Tech Data(TECD), Veritas DGC(VTS)
Fri. - Big Lots(BLI), Hibbett Sports(HIBB), Quiksilver(ZQK), Stage Stores(SSI), Urban Outfitters(URBN)
Other events that have market-moving potential this week include:
Mon. - Morgan Stanley Tech Conference, Merrill Lynch Global Auto Conference, Bear Stearns Media Conference, Citigroup Global Property Conference, (XLNX) analyst meeting, the Fed’s Poole speaking, the Fed’s Warsh speaking
Tue. - Thomas Weisel Internet & Digital Media Conference, Citigroup Global Property Conference, Raymond James Institutional Investors Conference, Morgan Stanley Tech Conference, Citigroup Global Industrial Conference, Bear Stearns Media Conference, (JPM) analyst meeting, the Fed’s Plosser speaking
Wed. - Raymond James Institutional Investors Conference, Morgan Stanley Tech Conference, CIBC Retail Conference, Bear Stearns Media Conference, Citigroup Global Property Conference, Citigroup Global Industrial Conference, Thomas Weisel Internet and Digital Media Conference, the Fed’s Moskow speaking
Thur. - Morgan Stanley Tech Conference, Pacific Crest On-Demand Conference, monthly retail sales reports
Fri. - None of note
BOTTOM LINE: I expect US stocks to finish the week mixed as mostly positive earnings reports, constructive Fed commentary, buyout speculation, lower energy prices, short-covering and bargain-hunting offset lingering sub-prime mortgage and emerging market concerns. My trading indicators are giving mostly bearish signals and the Portfolio is 50% net long heading into the week.
Saturday, March 03, 2007
Market Week in Review
S&P 500 1,387.17 -4.41%*
Click here for the Weekly Wrap by Briefing.com.
*5-day % Change
Click here for the Weekly Wrap by Briefing.com.
BOTTOM LINE: Overall, last week's market performance was very bearish. The cumulative advance/decline line fell, every sector declined and volume was heavy on the week. Measures of investor anxiety rose sharply. The AAII percentage of bulls plunged to 36.63% this week from 53.85% the prior week. This reading is now below average levels. The AAII percentage of bears soared to 39.60% this week from 22.31% the prior week. This reading is above average levels. The 10-week moving average of the percentage of bears is currently 31.4%, an above-average level. The 10-week moving average of the percentage of bears peaked at 43.0% at the major bear market low during 2002. Moreover, the 50-week moving average of the percentage of bears is currently 36.8%, a very high level seen during only two other periods since tracking began in the 1980s. Those periods were October 1990-July 1991 and March-May 2003, both being at major market bottoms.
Notwithstanding the recent pullback, I continue to believe that steadfastly high bearish sentiment in many quarters is mind-boggling, considering the 14.9% rise in the S&P 500 in less than nine months, the 87.8% gain for the S&P 500 since the 2002 major bear market lows, the cumulative advance/decline line recently hit a new record high, one of the best August/September/October runs in U.S. history, the fact that the Dow made another all-time high just nine days ago and that we are in the early stages of what is historically a very strong period for U.S. equities after a midterm election. As well, despite recent gains, the forward P/E on the S&P 500 is a very reasonable 14.9, falling from 16.2 at the beginning of the year, due to the historic run of double-digit profit growth increases and recent stock pullback. The S&P P/E multiple has contracted for three consecutive years. It has only contracted four consecutive years two times since 1905. Each point of multiple expansion is equivalent to a 6.6% gain in the S&P 500. Bears still remain stunningly complacent, in my opinion. As I have said many times over the last few months, every pullback is seen as a major top and every move higher is just another shorting/selling opportunity. I see few signs of capitulation by the many bears and their crowded ranks are swelling by the day on sub-prime and emerging market worries. Even most bulls have raised substantial cash of late, anticipating a meaningful correction.
As well, there are many other indicators registering high levels of investor anxiety. The 50-day moving average of the ISE Sentiment Index just recently crossed above the 200-day moving average for the first time since November 2005 and is already rolling over. The ISE Sentiment Index plunged to depressed levels in the low 90s three days this week. The NYSE Arms Index hit 15.98 on Tuesday, the highest level since record-keeping began in the 1960s. It also hit 7.99 on Thur., higher than at anytime during the major bear market bottom of 2002/2003. The four-day moving average of the NYSE Arms is an amazing 4.68, also the highest on record. The VIX had its largest one-day percentage increase in history on Tuesday. The CBOE total put/call ratio four-day moving average is 1.37, the highest since at least 1995 when Bloomberg began tracking the number. Nasdaq and NYSE short interests rose again last month and are very close to record highs. Moreover, public short interest continues to soar to record levels, and U.S. stock mutual funds have seen outflows for most of the last year, according to AMG Data Services. The percentage of U.S. mutual fund assets in domestic stocks is still the lowest since at least 1984, when record-keeping began.
There has been an historic explosion of hedge funds created with absolute return, low correlation or negative correlation U.S. stock strategies that directly benefit from the perception of a stagnant or declining U.S. stock market. Commodity funds, which typically have a low or negative correlation with stocks, have been created in record numbers. Research boutiques with a negative bias have sprung up to cater to these many new funds that help pump air into the current US "negativity bubble." Wall Street analysts have made the fewest "buy" calls on stocks this year since Bloomberg began tracking in 1997. "Buy" calls have been trending lower for eight months.
Many of the most widely read stories on financial sites are written with a pessimistic slant to gain readers regardless of their accuracy. Investment blogger bullish sentiment just recently turned a little bullish for the first time in months and is now at 32.4% Bulls, 29.7% Bears. Finally, the UltraShort QQQQ ProShares (QID) continues to see soaring volume. There is a high wall of worry for stocks to climb substantially from current levels as the public and many professionals remain very skeptical of this bull market and continue to trade with "one foot out the door."
I continue to believe this is a direct result of the strong belief by the herd that the U.S. is in a long-term trading range or secular bear environment. There is still overwhelming evidence that investment sentiment by the general public regarding U.S. stocks has never been this poor in history, with the Dow registering all-time highs almost weekly. This is serving to further widen the so-called "wealth gap." I still expect the herd to finally embrace the current bull market this year, which should result in another substantial move higher in the major averages as the S&P 500 breaks out to an all-time high to join the Dow and Russell 2000.
It is hard to believe, after the recent bombardment of pessimism and "crash" calls, that the average U.S. stock is still higher for the year. Based on the action so far this year, even more cash has piled up on the sidelines. I continue to believe that a significant portion of this cash will be deployed into true "growth" companies as their outperformance vs. “value” stocks gains steam throughout the year. Finally, I still believe the coming bullish shift in long-term sentiment with respect to U.S. stocks will result in the "mother of all short-covering rallies."
The average 30-year mortgage rate fell 4 basis points this week to 6.18%, which is 62 basis points below July 2006 highs. There is still mounting evidence that the worst of the housing downturn is over, despite recent worries over sub-prime lending, and that activity is stabilizing at relatively high levels. About 12% of total mortgage loans are sub-prime. Of those 12%, another 12.6% are delinquent. Thus, only about 2% of total mortgage loans outstanding are currently problematic. I do not believe sub-prime woes are nearly large enough or will become large enough to meaningfully impact the prime market and bring down the U.S. economy. The Fed’s Bernanke said late Friday night that the prime market is still strong and that he sees no spillover from the sub-prime problems. As well, the Fed’s Poole said recently that, “there is no danger to the economy from sub-prime loan defaults.” There are just too many other positives that outweigh this negative. Moreover, the Fed’s Hoenig, Lacker, Fisher and Bies all made positive comments recently regarding the prospects for the US housing market.
Mortgage applications rose 3.2% this week and continue to trend higher with the decline in mortgage rates and healthy job market. Existing Home Sales, which make up around 85% of the US housing market, rose 3.0% in January, the largest gain since January 2005. The NAHB Housing Market Index came in at 40 in February vs. estimates of 35 and a reading of 35 in January. This is the largest jump since September 2002, notwithstanding colder weather during the month and rising sub-prime worries. Within the NAHB Housing Index for February, the future sales component jumped to 55 vs. 48 in January. The future sales component is now up 49% since its cycle low of 37 in September 2006. It is now only 9 points away from the long-term average of 64. The Mortgage Bankers Association said at year-end that the US housing market will “fully regain its footing” by the middle of this year. Moreover, the California Building Industry Association recently gave an upbeat forecast for housing, saying production would be near last year’s brisk levels. Finally, the House Price Index, which was reported this week, rose 1.1% in the fourth quarter of last year versus a 1.0% gain in the third quarter.
Housing inventories have been trending lower and homebuilding stocks have been moving higher. The Housing Index(HGX) has risen 25.8% from July lows. The Case-Schiller housing futures have improved substantially and are now projecting only a 2.1% decline in the average home price through August, up from projections of a 5.0% decline 6 months ago. Considering the median house has appreciated over 50% during the last few years with record high US home ownership, this would be considered a “soft landing.” The overall negative effects of housing on the US economy and the potential for significant price drops are still being exaggerated by the many stock market bears in hopes of dissuading buyers from stepping up, in my opinion. Housing activity and home equity extractions had been slowing substantially for almost 2 years and the negative effects were mostly offset by many other very positive aspects of the US economy.
Home values are more important than stock prices to the average American, but the median home has barely declined in value after a historic run-up, while the S&P 500 has risen 14.9% in about eight months and 87.8% since the Oct. 4, 2002 major bear market low. Americans’ median net worth is still very close to or at record high levels as a result, a fact that is generally unrecognized or minimized by the record number of stock market participants that feel it is in their financial and/or political interests to paint a bleak picture of America.
Moreover, energy prices are down significantly, consumer spending remains healthy, unemployment is low by historic standards, interest rates are low, inflation is below average rates and wages are rising at above-average rates. The economy has created 1.23 million jobs in the last seven months. Challenger, Gray & Christmas reported that February job cuts fell -3.9% from year-ago levels. As well, the Monster Employment Index is just off record highs. The 50-week moving average of initial jobless claims has been lower during only two other periods since the 70s. Finally, the unemployment rate is a historically low 4.6%, down from 5.1% in September 2005, notwithstanding fewer real estate-related jobs and significant auto production cutbacks. The unemployment rate’s current 12-month average is 4.6%. It has only been lower during two other periods since the mid-50s.
The Consumer Price Index for January rose 2.1% year-over-year, down from a 4.7% increase in September of 2005. This is meaningfully below the 20-year average of 3.1%. Moreover, the CPI has only been lower during four other periods since the mid-1960s. Many other measures of inflation have recently shown substantial deceleration to below-average rates. The Producer Price Index for January rose a historically low .2% year-over-year versus the 20-year average of a 2.2% rise. The Import Price Index for January fell -1.2% month-over-month. Moreover, the five-month average of month-over-month import price declines is -0.86%. It has only been lower during three other periods since tracking began in the 1980s. Furthermore, most measures of Americans’ income growth are now almost twice the rate of inflation. Americans’ Average Hourly Earnings rose 4.0% year-over-year in January, substantially above the 3.2% 20-year average. The 10-month moving-average of Americans’ Average Hourly Earnings is currently 4.0%. 1998 was the only year during the 90s expansion that it exceeded current levels. Finally, personal incomes rose 1.0% in January, substantially above estimates of a .3% gain. This rate of income growth has only been exceeded during 13 months over the last two decades.
The benchmark 10-year T-note yield plunged 17 basis points for the week on heightened concerns that weakness in housing and emerging markets will send the US economy into contraction. In my opinion, many investors’ lingering fears over an economic “hard landing” still seem misplaced. The housing slowdown and auto-production cutbacks impacted manufacturing greatly over the last six months, but those drags on growth are starting to subside. 4Q GDP came in at a downwardly revised 2.2%. However, for all of 2006, US GDP growth was a healthy 3.1%. While the drag from housing is subsiding, housing activity will not add to economic growth in any meaningful way this year as homebuilders continue to reduce inventories. As well, recent substantial manufacturing inventory de-stocking will produce below-average growth again this quarter. However, I still expect a smaller GDP deflator, inventory rebuilding, rising auto production and a still healthy service sector to help produce US economic growth of around 3% for the year.
Manufacturing accounts for roughly 12% of US economic growth, while consumer spending accounts for about 70% of growth. U.S. GDP growth came in at a sluggish 1.1% and 0.7% during the first two quarters of 1995. During May 1995, the ISM Manufacturing Index fell below 50, which signals a contraction in activity. It stayed below 50, reaching a low of 45.5, until August 1996. During that period, the S&P 500 soared 31% as its P/E multiple expanded from 16.0 to 17.2. This was well before the stock market bubble began to inflate. As well, manufacturing was more important to overall US economic growth at that time. Stocks can and will rise as P/E multiples expand, even with more average economic and earnings growth.
Weekly retail sales rose 2.8% for the week. However, retail sales are poised to accelerate. Energy prices are down from this time last year, the job market remains healthy, housing has improved, wage growth has accelerated, stocks are higher and inflation has decelerated to below average rates. Many consumers are chomping at the bit to buy new spring clothing after such a warm fall muted holiday clothing sales. Moreover, automakers reported this week that February auto sales substantially exceeded estimates and analysts said Apple Inc.’s(AAPL) Mac computer sales growth exploded to over 100% in January versus 55% in December. The Conference Board’s Consumer Confidence reading surged to a new cycle high in February. I expect a new cycle high for the Univ. of Mich. Consumer Sentiment Index later this year.
Just take a look at commodity charts, gauges of commodity sentiment and inflows into commodity-related funds over the last couple of years. Net assets invested in the Goldman Sachs Commodity Index rose to almost $70 billion in 2006 from $15 billion in 2003. There has been a historic mania for commodities by investment funds that has pushed prices significantly higher than where the fundamentals dictate. That mania is now in the stages of unwinding. The CRB Commodities Index, the main source of inflation fears has declined -5.8% over the last 12 months and -15.1% from May highs despite a historic flood of capital into commodity-related funds and numerous potential upside catalysts. Oil has declined $17/bbl from July highs. Last year, oil rose $2.05/bbl. on the first trading day of the year and $7.40/bbl. through the first three weeks of trading as commodity funds, flush with new capital, drove futures prices higher. I suspect, given the average commodity hedge fund fell around double-digits last year as the CRB Index dropped 7.4%, that many energy-related funds saw outflows at year-end. The commodity mania has also pumped air into the current US “negativity bubble.” Talk of runaway inflation, drought, world wars, global warming, a US dollar collapse, recession/depression and global pandemics, to name a few, has been fueled by the mania in commodities. In my opinion, that is why it is so easy for most to believe that US housing was in a bubble, but then act shocked when commodities plunge. I continue to believe inflation fears have peaked for this cycle as global economic growth slows to average levels, unit labor costs remain subdued and the mania for commodities continues to reverse course.
The EIA reported this week that gasoline supplies fell slightly more than expectations even as refinery utilization rose. U.S. gasoline supplies are still at high levels for this time of the year, notwithstanding declining refinery utilization. Gasoline futures rose for the week, but have plunged 34.8% from September 2005 highs even as some Gulf of Mexico oil production remains shut-in and fears over future production disruptions persist. The still very elevated level of gas prices will further dampen global fuel demand, sending gas prices still lower over the intermediate-term.
The 10-week moving-average of US oil inventories is still approaching 8-year highs. Global demand destruction is pervasive. Oil consumption in the 30 OECD countries fell last year for the first time in over two decades. Since January 2004, global oil demand is only up 1.9%, despite the strongest global growth in almost three decades, while global supplies have increased 4.5%, according to the Energy Intelligence Group. The EIA recently forecast that bio-fuels should rise to the equivalent of more than five million barrels of crude oil production a day within four years. Recently, Energy Secretary Bodman said the US will likely remove tariffs to boost bio-fuel imports, which should reduce fears over a potential corn shortage. As well, OPEC said recently that global crude oil supply would exceed demand by 100 million barrels by the second quarter of this year. Worldwide oil inventories are poised to begin increasing at an accelerated rate over the next year. There is a very fine line in the crude oil market between perceptions of "significantly supply constrained" and "massive oversupply." One of the main reasons I believe OPEC has been slow to actually meet their pledged cuts has been the fear of losing market share to non-OPEC countries. Moreover, OPEC actually needs lower prices to prevent any further long-term demand destruction. I continue to believe oil is priced at elevated levels on record speculation by investment funds, not fundamentals.
The Amaranth Advisors hedge fund blow-up last year was a prime example of the extent to which many investment funds have been speculating on ever higher energy prices through futures contracts, thus driving the price of the underlying commodity to absurd levels for consumers and businesses. Amaranth, a multi-strategy hedge fund, lost about $6.5 billion of its $9.5 billion under management in less than two months speculating mostly on higher natural gas prices. I continue to believe a number of other funds will experience similar fates over the coming months after managers “pressed their bets” in hopes of making up for recent poor performance, which will further pressure energy prices as these funds unwind their leveraged long positions to meet rising investor redemptions. Moreover, the same rampant speculation that has driven the commodity mania will work against energy as downside speculation increases and drives down prices even further than the fundamentals would otherwise dictate.
Cambridge Energy Research, one of the most respected energy research firms in the world, put out a report late last year that drills gaping holes in the belief by most investors of imminent "peak oil" production. Cambridge said that its analysis indicates that the remaining global oil base is actually 3.74 trillion barrels, three times greater than "peak oil" theory proponents say and that the "peak oil" theory is based on faulty analysis. I suspect the substantial contango that still exists in energy futures, which encourages hoarding, will begin to reverse over the coming months as more investors come to the realization that the "peak oil" theory is hugely flawed, global storage tanks fill and Chinese/US demand slows further.
Global crude oil storage capacity utilization is running around 98%. Recent OPEC production cuts have resulted in a complete technical breakdown in crude futures, notwithstanding the recent bounce higher. Spare production capacity, which had been one of the main sources of angst among the many oil bulls, rises with each OPEC cut. As well, demand destruction which is already pervasive globally will only intensify over the coming years as many more alternative energy projects come to the fore. Moreover, many Americans feel as though they are helping fund terrorism or hurting the environment every time they fill up their gas tanks. I do not believe we will ever again see the demand for gas-guzzling vehicles that we saw in recent years, even if gas prices plunge further from current levels, as I expect. If OPEC actually implements all their announced production cuts, with oil still at very high levels and weakening global growth, it will only further deepen resentment towards the cartel and result in even greater long-term demand destruction.
I continue to believe oil made a major top last year during the period of historic euphoria surrounding the commodity with prices above $70/bbl. Falling demand growth for oil in emerging market economies, an explosion in alternatives, rising spare production capacity, increasing global refining capacity, the complete debunking of the hugely flawed "peak oil" theory, a firmer U.S. dollar, less demand for gas guzzling vehicles, accelerating non-OPEC production, a reversal of the "contango" in the futures market, a smaller risk premium and essentially full global storage should provide the catalysts for oil to fall to $35 per barrel to $40 per barrel this year. I fully expect oil to test $20 per barrel to $25 per barrel within the next three years.
Natural gas inventories fell slightly less than expectations this week. Prices for the commodity declined as historic investment fund speculation subsided with supplies now 11.5% above the 5-year average and near all-time high levels for this time of year as winter winds down, even as some daily Gulf of Mexico production remains shut-in. Moreover, inventories are still around 75% of their pre-season capacity. Usually natural gas supplies are down to 58% at this point in the year. Furthermore, the EIA recently projected global liquefied natural gas production to soar this year, with the US poised to see a 34.5% surge in imports and another 38.5% increase in 2008. Natural gas prices have collapsed 54.4% since December 2005 highs. Notwithstanding this severe decline, natural gas anywhere near current prices is still ridiculous with absolute inventories poised to hit new records this year. The long-term average price of natural gas is $4.63 with inventories much lower than current levels.
Gold fell substantially on the week as historic investment fund speculation subsided on worries over demand from emerging market economies. Copper fell this week on worries over global demand and increased downside speculation. Copper is now 33.7% lower from euphoric highs set last year. Natural gas, oil, gold and copper all look both fundamentally and technically weak. The US dollar fell on economic worries and a recent rate hike in Japan. The monthly US budget surplus for January was large once again. The US budget deficit is now 1.4% of GDP, well below the 40-year average of 2.3% of GDP.
I continue to believe there is very little chance of another Fed rate hike anytime soon. An eventual rate cut is more likely this year as inflation continues to decelerate substantially. An eventual Fed rate cut should actually boost the dollar as currency speculators anticipate faster US economic activity relative to other developed economies. I expect foreign investors’ demand for US securities to remain strong despite last year’s dollar weakness. Utility stocks outperformed for the week on buyout speculation and lower long-term interest rates. Gold & Silver shares underperformed substantially, despite their status as a “safe haven,” on a decline in the underlying commodity.
Current US stock prices are providing longer-term investors very attractive opportunities, in my opinion. In my entire investment career, I have never seen the best “growth” companies in the world priced as cheaply as they are now relative to the broad market. By contrast, “value” stocks are quite expensive in many cases. A CSFB report late last year confirmed this view. The report concluded that on a price-to-cash flow basis growth stocks are cheaper than value stocks for the first time since at least 1977. The entire decline in the S&P 500’s p/e, since the bubble burst in 2000, is attributable to growth stock multiple contraction. Many “value” investors point to the still “low” price/earnings ratios of commodity stocks, notwithstanding their historic price runs over the last few years. However, commodity equities always appear the “cheapest” right before significant price declines. I still expect the most overvalued economically sensitive and emerging market stocks to continue underperforming over the intermediate-term as the manias for those shares subside as global growth slows to more average rates.
The emerging markets’ mania, which has mainly been the by-product of the commodity mania, is likely nearing an end, as well. I am keeping a close eye on the Vietnam Stock Index(VNINDEX), which has recently dwarfed the Nasdaq’s meteoric rise in the late 90s, rocketing 181.3% higher over the last 12 months. Moreover, it is already 52.9% higher this year. Vietnam said recently that it may impose capital controls to curb gains in the dong this month. The country may require overseas investors to hold investments in stocks and bonds for a minimum of 12 months, and withdrawal of funds after the 12-month holding period may require 30-days written notice. The bursting of this bubble in Vietnam, which I suspect will begin very soon, may well signal the end of the mania for emerging market stocks. The much-hyped BRIC emerging markets(Brazil, Russia, India and China) are already beginning to come under significant pressure. From their highs, Brazil is down -9.4%, Russia is -8.9% lower, India has declined -12.5% and Chinese shares have dropped -7.2%. I continue to believe a chain reaction of events has already begun that will result in a substantial increase in demand for US equities.
S&P 500 profits have risen at double-digit rates for 18 consecutive quarters, the best streak since recording keeping began in 1936. Notwithstanding a 87.8% total return(which is equivalent to a 15.4% average annual return) for the S&P 500 since the October 2002 bottom, its forward p/e has contracted relentlessly and now stands at a very reasonable 14.9. The 20-year average p/e for the S&P 500 is 23.0.
In my opinion, the US stock market continues to factor in way too much bad news at current levels. One of the characteristics of the current US “negativity bubble” is that most potential positives are undermined, downplayed or completely ignored, while almost every potential negative is exaggerated, trumpeted and promptly priced in to stock prices. “Irrational pessimism” by investors has resulted in a dramatic decrease in the supply of stock. Booming merger and acquisition activity is also greatly constricting supply. Many commodity funds, which have received a historic flood of capital inflows over the last few years are likely now seeing redemptions as the CRB Index continues to languish near bear market territory. Some of this capital will likely find its way back to US stocks. As well, money market funds are brimming with cash. There is massive bull firepower available on the sidelines for US equities at a time when the supply of stock has contracted.
A recent Citigroup report said that the total value of U.S. shares dropped last year, despite rising stock prices, by the most in 22 years. Last year, supply contracted, but demand for U.S. equities was muted. While overall US public sentiment is still depressed given the macro backdrop, I am seeing some signs that irrational pessimism is lifting a bit. US stock mutual funds have seen cash inflows for four consecutive weeks. This should make the many bears very nervous as keeping the public excessively pessimistic on U.S. stocks has been one of their main weapons. I suspect accelerating demand for U.S. stocks, combined with shrinking supply, will make for a lethally bullish combination this year.
Considering the overwhelming majority of investment funds failed to meet the S&P 500's 15.8% return last year, I suspect most portfolio managers have a very low threshold of pain this year for falling substantially behind their benchmark once again. The fact that last year the US economy withstood one of the sharpest downturns in the housing market in history and economic growth never dipped below 2% illustrates the underlying strength of the economy as a whole. While significant inventory de-stocking has led to a mid-cycle slowdown, I expect inventory rebuilding to begin adding to economic growth next quarter.
While more near-term stock weakness is likely, the historically extreme readings in many gauges of investor angst last week shows the US market is cleansing itself of “weak hands” at a extraordinarily rapid rate. I suspect the current healthy pullback will end much sooner than most expect. A stronger US dollar, lower commodity prices, election cycle strength, decelerating inflation readings, a pick-up in consumer spending, lower long-term rates, increased consumer/investor confidence, short-covering, investment manager performance anxiety, rising demand for US stocks and the realization that economic growth is poised to rise around average rates should provide the catalysts for another substantial push higher in the major averages this year as p/e multiples expand significantly. I expect the S&P 500 to return a total of about 17% for the year. "Growth" stocks will likely lead the broad market higher, with the Russell 1000 Growth iShares(IWF) rising a total of 25%. Finally, the ECRI Weekly Leading Index rose slightly again this week and is forecasting healthy US economic activity.
*5-day % Change
Friday, March 02, 2007
Weekly Scoreboard*
Indices
S&P 500 1,387.17 -4.41%
DJIA 12,114.10 -4.22%
NASDAQ 2,368.00 -5.85%
Russell 2000 775.44 -6.19%
Wilshire 5000 14,000.78 -4.55%
Russell 1000 Growth 547.36 -4.76%
Russell 1000 Value 801.04 -4.14%
Morgan Stanley Consumer 684.34 -3.51%
Morgan Stanley Cyclical 923.55 -4.86%
Morgan Stanley Technology 552.62 -6.14%
Transports 4,782.25 -7.30%
Utilities 474.07 -1.45%
MSCI Emerging Markets 109.13 -7.51%
Sentiment/Internals
NYSE Cumulative A/D Line 64,673 -4.0%
Bloomberg New Highs-Lows Index -166 -124%
Bloomberg Crude Oil % Bulls 40.0 -8.2%
CFTC Oil Large Speculative Longs 178,043 +6.0%
Total Put/Call 1.32 -7.04%
NYSE Arms 2.33 +77.86%
Volatility(VIX) 18.61 +75.90%
ISE Sentiment 91.0 -9.9%
AAII % Bulls 36.63 -31.98%
AAII % Bears 39.60 +77.50%
Futures Spot Prices
Crude Oil 61.48 +1.03%
Reformulated Gasoline 189.29 +4.59%
Natural Gas 7.20 -7.14%
Heating Oil 176.47 +1.57%
Gold 645.0 -6.03%
Base Metals 236.16 -2.17%
Copper 270.0 -4.89%
Economy
10-year US Treasury Yield 4.50% -17 basis points
4-Wk MA of Jobless Claims 335,300 +2.3%
Average 30-year Mortgage Rate 6.18% -4 basis points
Weekly Mortgage Applications 626.10 +3.2%
Weekly Retail Sales +2.8%
Nationwide Gas $2.43/gallon +.13/gallon
US Heating Demand Next 7 Days 1.0% below normal
ECRI Weekly Leading Economic Index 140.0 +.50%
US Dollar Index 83.73 -.38%
CRB Index 310.11 -1.44%
Leading Sectors
Utilities -1.45%
Steel -1.95%
Telecom -2.18%
Insurance -2.18%
HMOs -2.51%
Lagging Sectors
Coal -7.38%
Airlines -7.70%
Biotech -7.81%
Networking -8.31%
Gold & Silver -9.24%
One-Week High-Volume Gainers
One-Week High-Volume Losers
*5-Day Change
S&P 500 1,387.17 -4.41%
DJIA 12,114.10 -4.22%
NASDAQ 2,368.00 -5.85%
Russell 2000 775.44 -6.19%
Wilshire 5000 14,000.78 -4.55%
Russell 1000 Growth 547.36 -4.76%
Russell 1000 Value 801.04 -4.14%
Morgan Stanley Consumer 684.34 -3.51%
Morgan Stanley Cyclical 923.55 -4.86%
Morgan Stanley Technology 552.62 -6.14%
Transports 4,782.25 -7.30%
Utilities 474.07 -1.45%
MSCI Emerging Markets 109.13 -7.51%
Sentiment/Internals
NYSE Cumulative A/D Line 64,673 -4.0%
Bloomberg New Highs-Lows Index -166 -124%
Bloomberg Crude Oil % Bulls 40.0 -8.2%
CFTC Oil Large Speculative Longs 178,043 +6.0%
Total Put/Call 1.32 -7.04%
NYSE Arms 2.33 +77.86%
Volatility(VIX) 18.61 +75.90%
ISE Sentiment 91.0 -9.9%
AAII % Bulls 36.63 -31.98%
AAII % Bears 39.60 +77.50%
Futures Spot Prices
Crude Oil 61.48 +1.03%
Reformulated Gasoline 189.29 +4.59%
Natural Gas 7.20 -7.14%
Heating Oil 176.47 +1.57%
Gold 645.0 -6.03%
Base Metals 236.16 -2.17%
Copper 270.0 -4.89%
Economy
10-year US Treasury Yield 4.50% -17 basis points
4-Wk MA of Jobless Claims 335,300 +2.3%
Average 30-year Mortgage Rate 6.18% -4 basis points
Weekly Mortgage Applications 626.10 +3.2%
Weekly Retail Sales +2.8%
Nationwide Gas $2.43/gallon +.13/gallon
US Heating Demand Next 7 Days 1.0% below normal
ECRI Weekly Leading Economic Index 140.0 +.50%
US Dollar Index 83.73 -.38%
CRB Index 310.11 -1.44%
Leading Sectors
Utilities -1.45%
Steel -1.95%
Telecom -2.18%
Insurance -2.18%
HMOs -2.51%
Lagging Sectors
Coal -7.38%
Airlines -7.70%
Biotech -7.81%
Networking -8.31%
Gold & Silver -9.24%
One-Week High-Volume Gainers
One-Week High-Volume Losers
*5-Day Change
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