BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Telecom long and Retail longs. I covered my(IWM) and (QQQQ) hedges into afternoon weakness, thus leaving the Portfolio 100% net long. The tone of the market is negative as the advance/decline line is lower, sector performance is mixed and volume is about average. Overall, economic data has improved modestly of late, notwithstanding fears by many over an economic hard landing. Oil is $5 higher since the Iranian/UK situation began, which is a rather muted reaction, and commercials continue to build their net short position into recent strength. Moreover, the price of gold has a very high correlation with oil. However, the two have diverged in price of late. Natural gas inventories fell -22 bcf this week versus estimates of a -19 bcf withdrawal. Supplies are now 21.5% above the five-year average for this time of year and poised to hit record highs barring any significant disruptions. I expect US stocks to trade modestly higher into the close on short-covering and bargain-hunting ahead of quarter’s end.
Thursday, March 29, 2007
Stocks Mixed into Final Hour Ahead of Quarter's End
Today's Headlines
Bloomberg:
- China, the world’s biggest nickel user, produced 15.1% more of the industrial metal, used in stainless steel, in February compared with the year ago month. Output in the first two months rose 16.8% to 20,400 tons.
- Crude oil is rising above $66/bbl. in NY, approaching a six-month high, as investment fund speculation is increasing on Iran concerns.
- The Senate approved a spending measure with a deadline for withdrawing US troops from Iraq, setting up a showdown with President Bush.
- Hedge funds opened last year at the slowest pace since 2000 as returns trailed those of the S&P 500, according to Hedge Fund Research.
- AT&T(T), Verizon Communications(VZ) and Qwest Communications(Q) won the right to bid on orders under a government telecom contract worth at least $20 billion, the biggest-ever federal award.
- Apple Inc.(AAPL) started a service that lets customers buy full albums from its iTunes music store at a discount when they’ve already bought a single from the same album.
- US Steel(X) agreed to buy Lone Star Technologies(LSS) for $2.1 billion in cash to become North America’s largest supplier of pipes to crude-oil and natural gas producers.
- Gold is falling $5/oz., diverging from oil, after a government report signaled growth in the US economy, which eroded demand for the metal as an alternative asset.
- Petroleo Brasileiro SA(PBR), Brazil’s state-controlled oil company, may have found 10 billion barrels of crude oil reserves in a new field off the coast of Rio de Janeiro.
NY Times:
- More than half of the legal immigrants living in the US are naturalized, the highest in two decades. The last time more than half of legal immigrants were naturalized was in 1980.
- NYC is averaging one homicide a day so far this year, which is the lowest point since at least 1962, when the Police Dept. started tracking crime using current record-keeping techniques.
Market News International:
- Outgoing European Central Bank council member Mitja Gaspari said he would be surprised if the benchmark interest rate climbed to 4.25% this year. The current rate of 3.75% “is okay for now,” he said.
Washington Post:
- The Shiite militia of Moqtada al-Sadr is fragmenting. At the same time, the anti-US cleric, who may now be in Iran, is facing new challenges to his leadership in Iraq.
Het Financieele Dagblad:
- Fortis is looking to make more acquisitions in the US, citing the company’s head in the region.
- China, the world’s biggest nickel user, produced 15.1% more of the industrial metal, used in stainless steel, in February compared with the year ago month. Output in the first two months rose 16.8% to 20,400 tons.
- Crude oil is rising above $66/bbl. in NY, approaching a six-month high, as investment fund speculation is increasing on Iran concerns.
- The Senate approved a spending measure with a deadline for withdrawing US troops from Iraq, setting up a showdown with President Bush.
- Hedge funds opened last year at the slowest pace since 2000 as returns trailed those of the S&P 500, according to Hedge Fund Research.
- AT&T(T), Verizon Communications(VZ) and Qwest Communications(Q) won the right to bid on orders under a government telecom contract worth at least $20 billion, the biggest-ever federal award.
- Apple Inc.(AAPL) started a service that lets customers buy full albums from its iTunes music store at a discount when they’ve already bought a single from the same album.
- US Steel(X) agreed to buy Lone Star Technologies(LSS) for $2.1 billion in cash to become North America’s largest supplier of pipes to crude-oil and natural gas producers.
- Gold is falling $5/oz., diverging from oil, after a government report signaled growth in the US economy, which eroded demand for the metal as an alternative asset.
- Petroleo Brasileiro SA(PBR), Brazil’s state-controlled oil company, may have found 10 billion barrels of crude oil reserves in a new field off the coast of Rio de Janeiro.
NY Times:
- More than half of the legal immigrants living in the US are naturalized, the highest in two decades. The last time more than half of legal immigrants were naturalized was in 1980.
- NYC is averaging one homicide a day so far this year, which is the lowest point since at least 1962, when the Police Dept. started tracking crime using current record-keeping techniques.
Market News International:
- Outgoing European Central Bank council member Mitja Gaspari said he would be surprised if the benchmark interest rate climbed to 4.25% this year. The current rate of 3.75% “is okay for now,” he said.
Washington Post:
- The Shiite militia of Moqtada al-Sadr is fragmenting. At the same time, the anti-US cleric, who may now be in Iran, is facing new challenges to his leadership in Iraq.
Het Financieele Dagblad:
- Fortis is looking to make more acquisitions in the US, citing the company’s head in the region.
GDP Revised Higher, Measure of Inflation Revised Lower, Jobless Claims Fall Again
- Final 4Q GDP rose 2.5% versus estimates of a 2.2% gain and a prior estimate of 2.2%.
- Final 4Q Personal Consumption rose 4.2% versus estimates of a 4.2% gain and a prior estimate of a 4.2% increase.
- Final 4Q GDP Price Index rose 1.7% versus estimates of a 1.7% gain and a prior estimate of a 1.7% increase.
- Final 4Q Core PCE rose 1.8% versus estimates of a 1.9% gain and a prior estimate of a 1.9% increase.
- Initial Jobless Claims for last week fell to 308K versus estimates of 320K and 318K the prior week.
- Continuing Claims rose to 2527K versus estimates of 2518K and 2495K prior.
- Final 4Q Personal Consumption rose 4.2% versus estimates of a 4.2% gain and a prior estimate of a 4.2% increase.
- Final 4Q GDP Price Index rose 1.7% versus estimates of a 1.7% gain and a prior estimate of a 1.7% increase.
- Final 4Q Core PCE rose 1.8% versus estimates of a 1.9% gain and a prior estimate of a 1.9% increase.
- Initial Jobless Claims for last week fell to 308K versus estimates of 320K and 318K the prior week.
- Continuing Claims rose to 2527K versus estimates of 2518K and 2495K prior.
BOTTOM LINE: The US economy grew at an annual rate of 2.5% in the fourth quarter, faster than previously thought, Bloomberg reported. As well, a measure of inflation closely watched by the Fed rose less than forecasts. For all of last year, the US economy rose 3.3% versus 3.2% in 2005 and the long-term average of 3.1%. Growth will likely come in around 2% this quarter before bouncing back to more average rates through year-end.
The number of Americans filing first-time claims for unemployment benefits unexpectedly fell last week to the lowest since January, suggesting the labor market remains very healthy, Bloomberg reported. The four-week average of jobless claims fell to 316,750 from 324,000 the prior week. The unemployment rate among those eligible to collect benefits, which tracks the US unemployment rate, remained steady at 1.9%. I continue to believe the labor market will remain healthy over the intermediate-term without generating significant unit labor cost increases.
Wednesday, March 28, 2007
Thursday Watch
Late-Night Headlines
Bloomberg:
- Exxon Mobil(XOM) and four other US gas retailers must face a lawsuit accusing them of conspiring to drive up the price of gasoline, a federal judge ruled. Exxon(XOM), Marathon Oil(MRO), Citgo Petroleum and US affiliates of Royal Dutch Shell and BP Plc(BP) are accused in the complaint of intentionally limiting the available gasoline supply, driving up prices and boosting profits.
- DoubleClick’s(DCLK) owners put the Internet advertising company up for sale and may seek about $2 billion.
- Democratic Senator Chuck Schumer plans to introduce subprime home loan legislation in the next few weeks that would establish a national system for regulating mortgage brokers.
- A New Jersey state senator wants to crate a program to help homeowners refinance mortgages they can’t afford, mirroring a similar plan in Ohio.
- US Treasury Secretary Paulson said the subprime market turmoil is “largely contained.”
- UN Secretary-General Ban Ki-moon said he will ask Iran to free 15 UK sailors and Marines detained March 23 for allegedly entering Iranian territorial waters.
- The yen fell after a government report showed Japan’s retail sales unexpectedly fell for a fourth month in February.
Late Buy/Sell Recommendations
CIBC:
- Rated (MCK) and (CAH) Sector Outperform.
Night Trading
Asian Indices are +.25% to +.75% on average.
S&P 500 indicated +.52%.
NASDAQ 100 indicated +.57%.
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
- (AGE)/1.06
- (KMX)/.21
- (CKR)/.18
- (CLE)/.83
- (DSW)/.30
- (FDO)/.60
- (FINL)/.51
- (MOV)/.37
- (RHT)/.14
- (SLR)/.05
- (SCS)/.17
- (SRR)/.32
- (TXI)/.57
- (TIBX)/.07
- (UTIW)/.26
- (WOR)/.06
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- Final 4Q GDP is estimated to rise 2.2% versus prior estimates of a 2.2% gain.
- Final 4Q Personal Consumption is estimated to rise 4.2% versus prior estimates of a 4.2% increase.
- The 4Q GDP Price Index is estimated to rise 1.7% versus prior estimates of a 1.7% increase.
- The Final 4Q Core PCE is estimated to rise 1.9% versus prior estimates of a 1.9% gain.
- Initial Jobless Claims for last week are estimated to rise to 320K versus 316K the prior week.
- Continuing Claims for last week are estimated to rise to 2518K versus 2501K prior.
Bloomberg:
- Exxon Mobil(XOM) and four other US gas retailers must face a lawsuit accusing them of conspiring to drive up the price of gasoline, a federal judge ruled. Exxon(XOM), Marathon Oil(MRO), Citgo Petroleum and US affiliates of Royal Dutch Shell and BP Plc(BP) are accused in the complaint of intentionally limiting the available gasoline supply, driving up prices and boosting profits.
- DoubleClick’s(DCLK) owners put the Internet advertising company up for sale and may seek about $2 billion.
- Democratic Senator Chuck Schumer plans to introduce subprime home loan legislation in the next few weeks that would establish a national system for regulating mortgage brokers.
- A New Jersey state senator wants to crate a program to help homeowners refinance mortgages they can’t afford, mirroring a similar plan in Ohio.
- US Treasury Secretary Paulson said the subprime market turmoil is “largely contained.”
- UN Secretary-General Ban Ki-moon said he will ask Iran to free 15 UK sailors and Marines detained March 23 for allegedly entering Iranian territorial waters.
- The yen fell after a government report showed Japan’s retail sales unexpectedly fell for a fourth month in February.
Late Buy/Sell Recommendations
CIBC:
- Rated (MCK) and (CAH) Sector Outperform.
Night Trading
Asian Indices are +.25% to +.75% on average.
S&P 500 indicated +.52%.
NASDAQ 100 indicated +.57%.
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
- (AGE)/1.06
- (KMX)/.21
- (CKR)/.18
- (CLE)/.83
- (DSW)/.30
- (FDO)/.60
- (FINL)/.51
- (MOV)/.37
- (RHT)/.14
- (SLR)/.05
- (SCS)/.17
- (SRR)/.32
- (TXI)/.57
- (TIBX)/.07
- (UTIW)/.26
- (WOR)/.06
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- Final 4Q GDP is estimated to rise 2.2% versus prior estimates of a 2.2% gain.
- Final 4Q Personal Consumption is estimated to rise 4.2% versus prior estimates of a 4.2% increase.
- The 4Q GDP Price Index is estimated to rise 1.7% versus prior estimates of a 1.7% increase.
- The Final 4Q Core PCE is estimated to rise 1.9% versus prior estimates of a 1.9% gain.
- Initial Jobless Claims for last week are estimated to rise to 320K versus 316K the prior week.
- Continuing Claims for last week are estimated to rise to 2518K versus 2501K prior.
BOTTOM LINE: Asian indices are higher, boosted by technology and automaker shares in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.
Stocks Finish Lower on Iran Concerns, Housing
Indices
S&P 500 1,417.23 -.80%
DJIA 12,300.36 -.78%
NASDAQ 2,417.10 -.83%
Russell 2000 797.40 -.62%
Wilshire 5000 14,314.84 -.73%
Russell 1000 Growth 557.49 -.76%
Russell 1000 Value 820.44 -.75%
Morgan Stanley Consumer 698.67 -.51%
Morgan Stanley Cyclical 949.40 -.93%
Morgan Stanley Technology 556.88 -1.03%
Transports 4,793.65 -1.21%
Utilities 501.46 -.03%
MSCI Emerging Markets 114.55 -.93%
Sentiment/Internals
Total Put/Call 1.33 +40.0%
NYSE Arms 1.56 +30.4%
Volatility(VIX) 14.98 +11.1%
ISE Sentiment 104.0 -18.75%
Futures Spot Prices
Crude Oil 63.97 +1.65%
Reformulated Gasoline 206.30 -.48%
Natural Gas 7.55 +.73%
Heating Oil 182.0 +1.88%
Gold 672.70 +.60%
Base Metals 244.88 -.75%
Copper 306.60 +.28%
Economy
10-year US Treasury Yield 4.62% +1 basis point
US Dollar 83.09 +.10%
CRB Index 314.37 +.81%
Leading Sectors
Tobacco +.24%
Computer Services -.10%
Medical Supplies -.16%
Lagging Sectors
Steel -1.50%
Computer Hardware -1.66%
Homebuilders -2.24%
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
Oppenheimer:
- Rated (HLS) Sell, target $18.
Afternoon/Evening Headlines
Bloomberg:
- Time Warner Cable(TWX) will add to last year’s purchase of cable systems from Adelphia Communications Corp. with more takeovers if they “make sense,” Chief Financial Officer John Martin said.
- The United Auto Workers union rejected wage concessions proposed by Delphi Corp. and a group of private equity firms, jeopardizing a $3.4 billion investment aimed at pulling the auto-parts maker out of bankruptcy.
- Corn futures in Chicago fell to the lowest in more than two months on speculation that livestock producers are using less of the biggest US crop as feed.
- Gasoline futures fell after the government showed a small-than-expected decline in US inventories.
- PetroChina Co. made a discovery in an offshore oil field in eastern Bohai Bay that may be the largest in East Asia in 33 years. The field may hold as much as 2.2 billion barrels of oil. The field may produce 200,800 barrels of oil per day within 3 years, enough to meet 95% of the needs of PetroChina’s largest refinery in Dalian. That would put the field on par with Chevron’s(CVX) $3.5 billion Tahiti field in the Gulf of Mexico, which is scheduled to begin production next year.
S&P 500 1,417.23 -.80%
DJIA 12,300.36 -.78%
NASDAQ 2,417.10 -.83%
Russell 2000 797.40 -.62%
Wilshire 5000 14,314.84 -.73%
Russell 1000 Growth 557.49 -.76%
Russell 1000 Value 820.44 -.75%
Morgan Stanley Consumer 698.67 -.51%
Morgan Stanley Cyclical 949.40 -.93%
Morgan Stanley Technology 556.88 -1.03%
Transports 4,793.65 -1.21%
Utilities 501.46 -.03%
MSCI Emerging Markets 114.55 -.93%
Sentiment/Internals
Total Put/Call 1.33 +40.0%
NYSE Arms 1.56 +30.4%
Volatility(VIX) 14.98 +11.1%
ISE Sentiment 104.0 -18.75%
Futures Spot Prices
Crude Oil 63.97 +1.65%
Reformulated Gasoline 206.30 -.48%
Natural Gas 7.55 +.73%
Heating Oil 182.0 +1.88%
Gold 672.70 +.60%
Base Metals 244.88 -.75%
Copper 306.60 +.28%
Economy
10-year US Treasury Yield 4.62% +1 basis point
US Dollar 83.09 +.10%
CRB Index 314.37 +.81%
Leading Sectors
Tobacco +.24%
Computer Services -.10%
Medical Supplies -.16%
Lagging Sectors
Steel -1.50%
Computer Hardware -1.66%
Homebuilders -2.24%
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
Oppenheimer:
- Rated (HLS) Sell, target $18.
Afternoon/Evening Headlines
Bloomberg:
- Time Warner Cable(TWX) will add to last year’s purchase of cable systems from Adelphia Communications Corp. with more takeovers if they “make sense,” Chief Financial Officer John Martin said.
- The United Auto Workers union rejected wage concessions proposed by Delphi Corp. and a group of private equity firms, jeopardizing a $3.4 billion investment aimed at pulling the auto-parts maker out of bankruptcy.
- Corn futures in Chicago fell to the lowest in more than two months on speculation that livestock producers are using less of the biggest US crop as feed.
- Gasoline futures fell after the government showed a small-than-expected decline in US inventories.
- PetroChina Co. made a discovery in an offshore oil field in eastern Bohai Bay that may be the largest in East Asia in 33 years. The field may hold as much as 2.2 billion barrels of oil. The field may produce 200,800 barrels of oil per day within 3 years, enough to meet 95% of the needs of PetroChina’s largest refinery in Dalian. That would put the field on par with Chevron’s(CVX) $3.5 billion Tahiti field in the Gulf of Mexico, which is scheduled to begin production next year.
BOTTOM LINE: The Portfolio finished lower today on losses in my Technology longs. I added (IWM) and (QQQQ) hedges in the final hour, thus leaving the Portfolio 75% net long. The tone of the market was negative today as the advance/decline line finished lower, almost every sector fell and volume was above average. Measures of investor anxiety were elevated into the close. Today's overall market action was bearish as the major averages and breadth finished near session lows. Homebuilders and financials bore the brunt of the selling. On the positive side, the average stock outperformed the broad market again and losses in many market-leading stocks were muted. My intraday gauge of investor angst finished at an elevated level. I wouldn't be surprised to see some more weakness on the open tomorrow as Asian equities will likely come under pressure tonight. The Nikkei is indicated down about 100 points on the open.
Subscribe to:
Comments (Atom)