Wednesday, March 07, 2007
Tuesday, March 06, 2007
Wednesday Watch
Late-Night Headlines
Bloomberg:
- The US and North Korea are on the “right track” for normalizing relations, Assistant Secretary of State Christopher Hill said after completing eight hours of talks with North Korean Vice Foreign Minister Kim Kye Gwan.
- Australia’s central bank today kept its benchmark interest rate unchanged at a six-year high amid signs inflation and the global economy are slowing.
- Rio Tinto Group(ETP), the world’s second-largest miner by market value, signaled to analysts it was in “no rush” to acquire assets, Credit Suisse Group analysts said.
- Australia’s economy grew 1% from the third quarter, when it expanded .3%. Estimates were for a .5% gain.
- The perceived risk of owning low-rated sub-prime mortgage bonds decreased for a fourth straight day. An index of credit-default swaps on 20 securities rated BBB- and created in the second half of 2006 rose about 3% to 71.14 yesterday, according to Markit Group Ltd. The index hit a low of 62.25 five days ago.
Late Buy/Sell Recommendations
Citgroup:
- Reiterated Buy on (EBAY), target $39.
- A number of homebuilders presented at out industrial manufacturing conference. Overall, the builders did in fact indicate that cancellation rates have dropped in recent months, which is an encouraging sign. Hovnanian(HOV), Beazer(BZH) and MDC Holdings(MDC) indicated that they have started to see signs of stabilization in their home prices net of all incentives. Intriguingly, Beazer also indicated that it was attempting to implement modest price increases in several locations and was finding that doing so helped to create a sense of urgency on the part of home buyers. Finally, Meritage Homes(MTH) expects cancellation rates to drop “dramatically” in 1Q07, based on data from the first two months of the year.
Night Trading
Asian Indices are +1.0% to +1.50% on average.
S&P 500 indicated -.10%.
NASDAQ 100 indicated -.06%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Conference Calendar
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
- (AEOS)/.66
- (BJ)/.66
- (FLML)/-.38
- (FL)/.68
- (GCO)/1.31
- (HDL)/.64
- (MATK)/.12
- (MW)/.77
- (MIK)/1.10
- (SKS)/.22
- (TLB)/.00
- (TIVO)/-.36
Upcoming Splits
- None of note
Economic Releases
8:15 am EST
- ADP Employment Change for December is estimated at 100,000 versus 126K in January.
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil build of 1,800,000 barrels versus a 1,421,000 barrel build the prior week. Gasoline supplies are expected to fall by -1,500,000 barrels versus a -1,940,000 barrel decline the prior week. Distillate inventories are estimated to fall by -2,750,000 barrels versus a -3,787,000 barrel drawdown the prior week. Finally, Refinery Utilization is expected to fall by -.30% versus a .76% increase the prior week.
2:00 pm EST
- The Fed’s Beige Book
3:00 pm EST
- Consumer Credit for January is estimated at $7.0 billion versus $6.0 billion in December.
Bloomberg:
- The US and North Korea are on the “right track” for normalizing relations, Assistant Secretary of State Christopher Hill said after completing eight hours of talks with North Korean Vice Foreign Minister Kim Kye Gwan.
- Australia’s central bank today kept its benchmark interest rate unchanged at a six-year high amid signs inflation and the global economy are slowing.
- Rio Tinto Group(ETP), the world’s second-largest miner by market value, signaled to analysts it was in “no rush” to acquire assets, Credit Suisse Group analysts said.
- Australia’s economy grew 1% from the third quarter, when it expanded .3%. Estimates were for a .5% gain.
- The perceived risk of owning low-rated sub-prime mortgage bonds decreased for a fourth straight day. An index of credit-default swaps on 20 securities rated BBB- and created in the second half of 2006 rose about 3% to 71.14 yesterday, according to Markit Group Ltd. The index hit a low of 62.25 five days ago.
Late Buy/Sell Recommendations
Citgroup:
- Reiterated Buy on (EBAY), target $39.
- A number of homebuilders presented at out industrial manufacturing conference. Overall, the builders did in fact indicate that cancellation rates have dropped in recent months, which is an encouraging sign. Hovnanian(HOV), Beazer(BZH) and MDC Holdings(MDC) indicated that they have started to see signs of stabilization in their home prices net of all incentives. Intriguingly, Beazer also indicated that it was attempting to implement modest price increases in several locations and was finding that doing so helped to create a sense of urgency on the part of home buyers. Finally, Meritage Homes(MTH) expects cancellation rates to drop “dramatically” in 1Q07, based on data from the first two months of the year.
Night Trading
Asian Indices are +1.0% to +1.50% on average.
S&P 500 indicated -.10%.
NASDAQ 100 indicated -.06%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Conference Calendar
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
- (AEOS)/.66
- (BJ)/.66
- (FLML)/-.38
- (FL)/.68
- (GCO)/1.31
- (HDL)/.64
- (MATK)/.12
- (MW)/.77
- (MIK)/1.10
- (SKS)/.22
- (TLB)/.00
- (TIVO)/-.36
Upcoming Splits
- None of note
Economic Releases
8:15 am EST
- ADP Employment Change for December is estimated at 100,000 versus 126K in January.
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil build of 1,800,000 barrels versus a 1,421,000 barrel build the prior week. Gasoline supplies are expected to fall by -1,500,000 barrels versus a -1,940,000 barrel decline the prior week. Distillate inventories are estimated to fall by -2,750,000 barrels versus a -3,787,000 barrel drawdown the prior week. Finally, Refinery Utilization is expected to fall by -.30% versus a .76% increase the prior week.
2:00 pm EST
- The Fed’s Beige Book
3:00 pm EST
- Consumer Credit for January is estimated at $7.0 billion versus $6.0 billion in December.
BOTTOM LINE: Asian indices are higher, boosted by technology and metal 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.
Stocks Rise Most Since July on Heavy Volume
Indices
S&P 500 1,395.41 +1.55%
DJIA 12,207.59 +1.30%
NASDAQ 2,385.14 +1.90%
Russell 2000 778.88 +2.48%
Wilshire 5000 14,067.03 +1.63%
Russell 1000 Growth 550.68 +1.51%
Russell 1000 Value 804.08 +1.62%
Morgan Stanley Consumer 687.59 +1.05%
Morgan Stanley Cyclical 929.77 +1.55%
Morgan Stanley Technology 557.87 +1.94%
Transports 4,768.37 +.97%
Utilities 474.77 +1.29%
MSCI Emerging Markets 108.94 +2.40%
Sentiment/Internals
Total Put/Call 1.22 -27.38%
NYSE Arms .32 -85.70%
Volatility(VIX) 15.96 -18.70%
ISE Sentiment 95.0 +4.40
Futures Spot Prices
Crude Oil 60.69 +1.03%
Reformulated Gasoline 185.03 +.30%
Natural Gas 7.47 +2.98%
Heating Oil 174.80 +1.35%
Gold 649.20 +1.56%
Base Metals 234.16 +2.63%
Copper 274.40 +2.75%
Economy
10-year US Treasury Yield 4.52% + 2 basis points
US Dollar 84.03 -.17%
CRB Index 306.90 +.69%
Leading Sectors
Steel +3.84%
REITs +3.49%
I-Banks +2.59%
Lagging Sectors
Insurance +.88%
Foods +.71%
Hospitals +.49%
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
- None of note
Afternoon/Evening Headlines
Bloomberg:
- US stocks broke a weeklong slump and posted their biggest gains since July after Treasury Secretary Henry Paulson eased concern that rising mortgage defaults will undermine the economy.
- Comerica Inc.(CMA), a financial services company with roots stretching back more than 150 years in Detroit and strong ties to the city’s slumping auto industry, will move its headquarters and about 200 jobs to Dallas.
- Soybean and corn prices in Chicago fell, erasing earlier gains, on speculation record crops in South America will reduce overseas demand for supplies in the US, the world’s largest grower and exporter.
Financial Times:
- Google Inc.(GOOG) said rivals’ criticism of it over copyright are being made “in the context of a business negotiation,” citing CEO Eric Schmidt. “I have learned that as part of being a player in the media industry, the way one negotiates is everything is leaked and you’re sued to death,” Schmidt said. So lawsuits “appear to be in the course of doing normal business.”
Nikkei English News:
- Sony Corp.(SNE) will delay reporting its earnings for the fiscal year ending March 31 because tougher US accounting rules require non-US companies to complete more paperwork.
S&P 500 1,395.41 +1.55%
DJIA 12,207.59 +1.30%
NASDAQ 2,385.14 +1.90%
Russell 2000 778.88 +2.48%
Wilshire 5000 14,067.03 +1.63%
Russell 1000 Growth 550.68 +1.51%
Russell 1000 Value 804.08 +1.62%
Morgan Stanley Consumer 687.59 +1.05%
Morgan Stanley Cyclical 929.77 +1.55%
Morgan Stanley Technology 557.87 +1.94%
Transports 4,768.37 +.97%
Utilities 474.77 +1.29%
MSCI Emerging Markets 108.94 +2.40%
Sentiment/Internals
Total Put/Call 1.22 -27.38%
NYSE Arms .32 -85.70%
Volatility(VIX) 15.96 -18.70%
ISE Sentiment 95.0 +4.40
Futures Spot Prices
Crude Oil 60.69 +1.03%
Reformulated Gasoline 185.03 +.30%
Natural Gas 7.47 +2.98%
Heating Oil 174.80 +1.35%
Gold 649.20 +1.56%
Base Metals 234.16 +2.63%
Copper 274.40 +2.75%
Economy
10-year US Treasury Yield 4.52% + 2 basis points
US Dollar 84.03 -.17%
CRB Index 306.90 +.69%
Leading Sectors
Steel +3.84%
REITs +3.49%
I-Banks +2.59%
Lagging Sectors
Insurance +.88%
Foods +.71%
Hospitals +.49%
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
- None of note
Afternoon/Evening Headlines
Bloomberg:
- US stocks broke a weeklong slump and posted their biggest gains since July after Treasury Secretary Henry Paulson eased concern that rising mortgage defaults will undermine the economy.
- Comerica Inc.(CMA), a financial services company with roots stretching back more than 150 years in Detroit and strong ties to the city’s slumping auto industry, will move its headquarters and about 200 jobs to Dallas.
- Soybean and corn prices in Chicago fell, erasing earlier gains, on speculation record crops in South America will reduce overseas demand for supplies in the US, the world’s largest grower and exporter.
Financial Times:
- Google Inc.(GOOG) said rivals’ criticism of it over copyright are being made “in the context of a business negotiation,” citing CEO Eric Schmidt. “I have learned that as part of being a player in the media industry, the way one negotiates is everything is leaked and you’re sued to death,” Schmidt said. So lawsuits “appear to be in the course of doing normal business.”
Nikkei English News:
- Sony Corp.(SNE) will delay reporting its earnings for the fiscal year ending March 31 because tougher US accounting rules require non-US companies to complete more paperwork.
BOTTOM LINE: The Portfolio finished higher today on gains in my Medical longs, Internet longs, Retail longs and Telecom longs. I covered the remainder of my (IWM)/(QQQQ) hedges and took some profits in my (EEM) short in the final hour, thus leaving the Portfolio 100% net long. The tone of the market was very positive as the advance/decline line finished substantially higher, every sector rose and volume was heavy. Measures of investor anxiety were mixed into the close. Today's overall market action was very bullish. The Fed's Plosser spoke to reporters after his speech. He said that he doesn't see sub-prime problems spilling over to the rest of the economy. He reiterated that the Fed is monitoring the situation carefully. Finally, he said he doesn't see the signs of a liquidity crisis developing. My intraday gauge of investor angst finished at relatively high levels given today’s sharp rally. Nikkei futures are indicating about an 81-point move higher on the open in Japan. The gains in the Broker/Dealer Index today were a big positive, given their exposure to sub-prime and emerging markets, as the stocks finished near session highs. Moreover, the upside trading collars were in effect for most of the final hour of trading. I suspect we could see more strength in the U.S. tomorrow morning from further gains in Asia and short-covering.
Stocks Sharply Higher into Final Hour on Heavy Volume
BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Retail longs, Medical longs and Telecom longs. I covered some of my (IWM) and (QQQQ) hedges today, thus leaving the Portfolio 75% net long. The tone of the market is very positive as the advance/decline line is substantially higher, every sector is higher and volume is heavy. The EIA just revised second- and third-quarter world oil demand growth lower by 400,000 barrels per day, according to Reuters. As well, total output by OPEC in February rose to 29.945 million barrels per day vs. January's 29.880 million barrels per day. I expect global oil demand growth to be revised even lower later this year. Oil is only $0.38 higher today despite the rebound in global equity stock markets. Take a look at this chart of odd lot short sales, a contrary indicator, which have soared the last four days. This indicator is just another example of the many showings of extreme anxiety by the herd. I continue to believe that the market has cleansed itself of weak hands at a very rapid rate and that the current pullback will be milder and less damaging than the vast majority expect. I expect US stocks to trade modestly higher into the close from current levels on short-covering and bargain-hunting.
Today's Headlines
Bloomberg:
- Chinese markets are too big and complicated for China to be able to fix a market drop, so the government should concentrate instead on making them more flexible and independent, said Fang Xinghai, former deputy chief executive of the Shanghai Stock Exchange.
- JPMorgan Chase(JPM) plans to invest $1 billion to expand its investment-banking unit this year.
- Fannie Mae(FNM) and Freddie Mac(FRE) should sell most of their $1.4 trillion in assets to refocus on homeownership among low-income Americans, Fed Chairman Benanke said.
- Shares of New Century Financial(NEW) and rival mortgage lenders snapped back sharply today.
- Russian reporter Ivan Safronov was investigating state plans to sell advanced weapons to Iran and Syria when he fell to his death from a window in his Moscow apartment building March 2, his newspaper Kommersant said.
- US Treasury Secretary Henry Paulson moved to cool concern about the sub-prime mortgage market, saying the woes won’t spill over to banks that make less risky loans.
- Monsanto and DuPont, the world’s leading developers of genetically modified seeds, may win faster approval to sell their products in Brazil under new biotech regulations, analysts said.
Wall Street Journal:
- Honeywell Intl.(HON) is venturing into consumer electronics for the first time with a branding deal for a new flat-panel tv.
- UAL Corp. is using computerized flight mapping to cut navigational fees, citing Anthony Concil, a spokesman for the International Air Transport Association.
- US makers of orthopedic implants, such as Stryker(SYK) and Zimmer(ZMH), are a safe long-term investment as people live longer and more knees and hips wear out.
- The US government should lower tax rates and regulatory burdens to allow automakers to remain competitive in the global market, said Jack Kemp, former secretary of Housing and Urban Development.
NY Times:
- No solid evidence exists to prove the effectiveness of a common treatment to reform sexual offenders in the US. A California study conducted from 1985 to 2001 on the relapse prevention treatment found people were slightly more likely to have another sexual offense after going through the treatment than those who didn’t receive it.
La Tribune:
- France no longer opposes setting a fixed target for the use of renewable energies such as solar and wind power within the European Union.
- Chinese markets are too big and complicated for China to be able to fix a market drop, so the government should concentrate instead on making them more flexible and independent, said Fang Xinghai, former deputy chief executive of the Shanghai Stock Exchange.
- JPMorgan Chase(JPM) plans to invest $1 billion to expand its investment-banking unit this year.
- Fannie Mae(FNM) and Freddie Mac(FRE) should sell most of their $1.4 trillion in assets to refocus on homeownership among low-income Americans, Fed Chairman Benanke said.
- Shares of New Century Financial(NEW) and rival mortgage lenders snapped back sharply today.
- Russian reporter Ivan Safronov was investigating state plans to sell advanced weapons to Iran and Syria when he fell to his death from a window in his Moscow apartment building March 2, his newspaper Kommersant said.
- US Treasury Secretary Henry Paulson moved to cool concern about the sub-prime mortgage market, saying the woes won’t spill over to banks that make less risky loans.
- Monsanto and DuPont, the world’s leading developers of genetically modified seeds, may win faster approval to sell their products in Brazil under new biotech regulations, analysts said.
Wall Street Journal:
- Honeywell Intl.(HON) is venturing into consumer electronics for the first time with a branding deal for a new flat-panel tv.
- UAL Corp. is using computerized flight mapping to cut navigational fees, citing Anthony Concil, a spokesman for the International Air Transport Association.
- US makers of orthopedic implants, such as Stryker(SYK) and Zimmer(ZMH), are a safe long-term investment as people live longer and more knees and hips wear out.
- The US government should lower tax rates and regulatory burdens to allow automakers to remain competitive in the global market, said Jack Kemp, former secretary of Housing and Urban Development.
NY Times:
- No solid evidence exists to prove the effectiveness of a common treatment to reform sexual offenders in the US. A California study conducted from 1985 to 2001 on the relapse prevention treatment found people were slightly more likely to have another sexual offense after going through the treatment than those who didn’t receive it.
La Tribune:
- France no longer opposes setting a fixed target for the use of renewable energies such as solar and wind power within the European Union.
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