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Monday, April 16, 2007
Sunday, April 15, 2007
Monday Watch
Weekend Headlines
Bloomberg:
- The yen may weaken to a record low against the euro after officials from the Group of Seven industrial nations stopped short of saying that the Japanese currency’s weakness is a threat to the global economy.
- Russian police arrested opposition leader and former world chess champion Gary Kasparov along with more than 100 supporters and several journalists at an unsanctioned protest against President Vladimir Putin in Moscow.
- President Bush, looking ahead to a meeting with lawmakers next week about a standoff on emergency funds for the troops in Iraq, said the inability to resolve differences on the issue is putting an unnecessary strain on the military.
- Google Inc.(GOOG) agreed to buy DoubleClick for $3.1 billion in its biggest-ever acquisition, gaining software for creating and measuring Internet advertising campaigns.
- European officials said that their economies can withstand the effects of the advancing euro and that a strong currency brings benefits.
- Finance ministers and central bankers from the Group of Seven nations said they are confident disparities in global trade and growth are starting to narrow, a trend that will extend the strongest expansion since the 1970s.
- Israeli Prime Minister Ehud Olmert said today that his government is prepared to hold talks with any Arab countries that want to discuss a comprehensive Middle East peace plan approved by the Arab League last month.
- DeCode Genetics(DCGN), an Icelandic biotechnology company, will sell the first genetic test for type 2 diabetes risk in the US.
- Brazil’s surging currency is eroding exports for manufacturers of goods ranging from cars to teddy bears and undermining President Luiz Inacio Lula da Silva’s efforts to lower unemployment.
- Apple’s announcement that it has delayed the release of its new Macintosh system software didn’t garner much negative reaction from major investment firms including Merrill Lynch(MER), Goldman Sachs(GS) and Deutsche Bank.
- European governments, led by Germany, continued to push the Group of Seven industrial nations to tighten oversight of hedge funds, against US opposition.
- Jay Brinkmann, vice president of research and economics for the Mortgage Bankers Association sees a housing turnaround in 2008.
- Saudi Arabia, the world’s largest oil producer, plans to increase production and will work to achieve “fair” prices, the Saudi Press Agency reported, citing a speech by King Abdullah. Saudi Arabia “works for achieving fair oil prices, taking into considering the interests of both producers and consumers,” the king said. The kingdom “also seeks to enhance its production capacity of oil.” Saudi aims to increase overall production to 12.5 million barrels a day within 21 months from 9.1 million barrels a day currently.
- China, the world’s biggest producer of aluminum, may further lower or remove tax benefits for export of the metal and copper to help rein in a record trade surplus. Tax rebates on exports of copper and aluminum products may be further reduced or cancels, while tax on exports of refined copper could be raised to as much as 30%, said Wang Gongmin, vice chairman of the China Nonferrous Metals Industry Assoc.
- Shares of Semiconductor Manufacturing Intl., China’s largest chipmaker, surged 12% after a report said US buyout firms may seek to buy as much as a 25% stake for about $600 million.
Wall Street Journal:
- A partnership including JC Flowers & Co. LLC and JPMorgan Chase(JPM) are in talks to acquire Sallie Mae(SLM), competing with Blackstone Group for a deal that could reach $20 billion.
- Why Investors Should Consider Real Estate.
- The New York Mercantile Exchange(NMX) plans to launch a uranium futures contract.
- Microsoft Corp.(MSFT), AT&T(T) and Time Warner(TWX) want US regulators to review whether Google’s(GOOG) $3.1 billion purchase of DoubleClick Inc. gives the company too much control over the online advertising market.
NY Times:
- Senator Hillary Rodham Clinton proposed cutting 500,000 private contractors from the federal payroll. Some contractors cost more than federal workers and aren’t as competent or accountable, citing a speech given by Clinton last night at the New Hampshire Institute of Politics.
- The number of available hotel rooms in Lower Manhattan may more than double in the next few years as more than 3,000 rooms are under construction or in planning stages.
- For four days last December, America’s dome in the desert, Las Vegas, played host to a convention dedicated to the proposition that growing old is “a treatable medical condition.”
- Thomas H. Lee Partners LP and Bain Capital Partners LP have proposed raising their $26 billion offer for broadcaster Clear Channel Communications(CCU).
Washington Post:
- Some of Iraq’s main Sunni militant groups are splitting from al-Qaeda in Iraq because they want to negotiate with US troops to hasten their withdrawal. The Islamic Army last week on its Web site called on bin Laden to stop groups killing in his name.
- Central Intelligence Agency Director Michael Hayden said absorbing the new employees who joined after the Sept. 11, 2001, terrorist attacks is the most challenging part of his job. Hayden said 50% of the CIA’s employees have been hired since Sept. 11 and one-fifth of the analysts were hired in the last year.
Inquirer:
- The Philadelphia Inquirer will print ads on its front page starting tomorrow, joining a handful of US newspapers running ads on a page once dedicated solely to news.
- The Pennsylvania Supreme Court granted a preliminary injunction to stop Philadelphia from putting an anti-casino referendum question on a May 15 primary-election ballot.
Advertising Age:
- Google’s acquisition of Doubleclick gives the company something it couldn’t build on its own – a significant presence in the online display-ad market. The $3.1 billion price tag was a small price to pay to keep Microsoft(MSFT) or any other rival from getting it.
Financial Times:
- Billionaire Kirk Kerkorian’s Tracinda Corp. will have to raise its bid for Chrysler or drop its demand for exclusive negotiations with the automaker’s German parent.
Observer:
- Royal Bank of Scotland Group Plc and its partners are prepared to make a hostile bid for ABN Amro Holding NV if they aren’t able to secure an agreed deal for the Dutch bank.
El Pais:
- Eastman Kodak(EK) will post a profit in 2008, Chairman Antonio Perez said.
Automotive News Europe:
- Continental AG, the world’s fourth-largest tiremaker, is unable to serve all customer requests on hybrid technology because of a shortage of skilled staff. Hannover, Germany-based Continental would need to double its 160-member team dealing with hybrid systems to satisfy an increase of as much as 60% in customer demand. The company has raised investment in hybrid systems as higher gasoline prices spur demand for more fuel-efficient vehicles.
El Naqcional:
- Corruption in Venezuela, where President Hugo Chavez is implementing a socialist state, is widespread and oversight agencies are failing to root it out, citing lawmaker Pastora Medina.
Economic Daily News:
- Toshiba Corp. may raise orders from its chip-packaging and testing partner, Powertech Technology Inc. by 40%.
South China Morning Post:
- Best Buy(BBY) bought an additional 20% stake in Nanjing, China-based Jiangsu Five Star Appliance to expand to second and third-tier cities.
Shanghai Securities News:
- China’s lending growth will slow further as the government continues to tighten liquidity, citing central bank vice governor Wu Xiaoling. The central bank’s “preemptive” measures to curb loan growth and soak up excess liquidity has started to slow bank lending, as shown by the March money supply data, Wu said.
Gulf Times:
- Emaar Properties PJSC is among companies from the United Arab Emirates that may invest billions of dollars in northern Iraq, citing the Kurdish trade minister.
Weekend Recommendations
Barron's:
- Made positive comments on (DOW), (ADBE), (KSWS) and (ODP).
- Made negative comments on emerging markets.
Citigroup:
- Google’s(GOOG) acquisition of DoubleClick 1) will substantially improve GOOG’s position in the online display segment(30% of total net advertising 2)will broadly strengthen GOOG’s competitive position vs. Yahoo!(YHOO) and Microsoft(MSFT) and 3) an all-cash deal vs. the all-stock YouTube deal & still leaves GOOG with $9.2 billion in cash.
Morgan Stanley:
- Reiterated Overweight on (AUO).
Night Trading
Asian indices are +.50% to +1.0% on average.
S&P 500 indicated +.10%.
NASDAQ 100 indicated +.08%.
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
- (AMLN)/-.04
- (CHP)/-.05
- (C)/1.09
- (ETN)/1.41
- (LLY)/.79
- (EXBD)/.27
- (MAT)/-.05
- (WB)/1.16
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- Advance Retail Sales for March are estimated to rise .6% versus a .1% gain in February.
- Retail Sales Less Autos for March are estimated to rise .9% versus a -.1% gain in February.
- Empire Manufacturing for April is estimated to rise to 7.5 versus 1.9 in March.
9:00 am EST
- Net Long-term TIC Flows for February are estimated to fall to $75.0 billion versus $97.4 billion in January.
10:00 am EST
- Business Inventories for February are estimated to rise .3% versus a .2% gain in January.
1:00 pm EST
- The NAHB Housing Market Index for April is estimated to fall to 35 versus 36 in March.
Bloomberg:
- The yen may weaken to a record low against the euro after officials from the Group of Seven industrial nations stopped short of saying that the Japanese currency’s weakness is a threat to the global economy.
- Russian police arrested opposition leader and former world chess champion Gary Kasparov along with more than 100 supporters and several journalists at an unsanctioned protest against President Vladimir Putin in Moscow.
- President Bush, looking ahead to a meeting with lawmakers next week about a standoff on emergency funds for the troops in Iraq, said the inability to resolve differences on the issue is putting an unnecessary strain on the military.
- Google Inc.(GOOG) agreed to buy DoubleClick for $3.1 billion in its biggest-ever acquisition, gaining software for creating and measuring Internet advertising campaigns.
- European officials said that their economies can withstand the effects of the advancing euro and that a strong currency brings benefits.
- Finance ministers and central bankers from the Group of Seven nations said they are confident disparities in global trade and growth are starting to narrow, a trend that will extend the strongest expansion since the 1970s.
- Israeli Prime Minister Ehud Olmert said today that his government is prepared to hold talks with any Arab countries that want to discuss a comprehensive Middle East peace plan approved by the Arab League last month.
- DeCode Genetics(DCGN), an Icelandic biotechnology company, will sell the first genetic test for type 2 diabetes risk in the US.
- Brazil’s surging currency is eroding exports for manufacturers of goods ranging from cars to teddy bears and undermining President Luiz Inacio Lula da Silva’s efforts to lower unemployment.
- Apple’s announcement that it has delayed the release of its new Macintosh system software didn’t garner much negative reaction from major investment firms including Merrill Lynch(MER), Goldman Sachs(GS) and Deutsche Bank.
- European governments, led by Germany, continued to push the Group of Seven industrial nations to tighten oversight of hedge funds, against US opposition.
- Jay Brinkmann, vice president of research and economics for the Mortgage Bankers Association sees a housing turnaround in 2008.
- Saudi Arabia, the world’s largest oil producer, plans to increase production and will work to achieve “fair” prices, the Saudi Press Agency reported, citing a speech by King Abdullah. Saudi Arabia “works for achieving fair oil prices, taking into considering the interests of both producers and consumers,” the king said. The kingdom “also seeks to enhance its production capacity of oil.” Saudi aims to increase overall production to 12.5 million barrels a day within 21 months from 9.1 million barrels a day currently.
- China, the world’s biggest producer of aluminum, may further lower or remove tax benefits for export of the metal and copper to help rein in a record trade surplus. Tax rebates on exports of copper and aluminum products may be further reduced or cancels, while tax on exports of refined copper could be raised to as much as 30%, said Wang Gongmin, vice chairman of the China Nonferrous Metals Industry Assoc.
- Shares of Semiconductor Manufacturing Intl., China’s largest chipmaker, surged 12% after a report said US buyout firms may seek to buy as much as a 25% stake for about $600 million.
Wall Street Journal:
- A partnership including JC Flowers & Co. LLC and JPMorgan Chase(JPM) are in talks to acquire Sallie Mae(SLM), competing with Blackstone Group for a deal that could reach $20 billion.
- Why Investors Should Consider Real Estate.
- The New York Mercantile Exchange(NMX) plans to launch a uranium futures contract.
- Microsoft Corp.(MSFT), AT&T(T) and Time Warner(TWX) want US regulators to review whether Google’s(GOOG) $3.1 billion purchase of DoubleClick Inc. gives the company too much control over the online advertising market.
NY Times:
- Senator Hillary Rodham Clinton proposed cutting 500,000 private contractors from the federal payroll. Some contractors cost more than federal workers and aren’t as competent or accountable, citing a speech given by Clinton last night at the New Hampshire Institute of Politics.
- The number of available hotel rooms in Lower Manhattan may more than double in the next few years as more than 3,000 rooms are under construction or in planning stages.
- For four days last December, America’s dome in the desert, Las Vegas, played host to a convention dedicated to the proposition that growing old is “a treatable medical condition.”
- Thomas H. Lee Partners LP and Bain Capital Partners LP have proposed raising their $26 billion offer for broadcaster Clear Channel Communications(CCU).
Washington Post:
- Some of Iraq’s main Sunni militant groups are splitting from al-Qaeda in Iraq because they want to negotiate with US troops to hasten their withdrawal. The Islamic Army last week on its Web site called on bin Laden to stop groups killing in his name.
- Central Intelligence Agency Director Michael Hayden said absorbing the new employees who joined after the Sept. 11, 2001, terrorist attacks is the most challenging part of his job. Hayden said 50% of the CIA’s employees have been hired since Sept. 11 and one-fifth of the analysts were hired in the last year.
Inquirer:
- The Philadelphia Inquirer will print ads on its front page starting tomorrow, joining a handful of US newspapers running ads on a page once dedicated solely to news.
- The Pennsylvania Supreme Court granted a preliminary injunction to stop Philadelphia from putting an anti-casino referendum question on a May 15 primary-election ballot.
Advertising Age:
- Google’s acquisition of Doubleclick gives the company something it couldn’t build on its own – a significant presence in the online display-ad market. The $3.1 billion price tag was a small price to pay to keep Microsoft(MSFT) or any other rival from getting it.
Financial Times:
- Billionaire Kirk Kerkorian’s Tracinda Corp. will have to raise its bid for Chrysler or drop its demand for exclusive negotiations with the automaker’s German parent.
Observer:
- Royal Bank of Scotland Group Plc and its partners are prepared to make a hostile bid for ABN Amro Holding NV if they aren’t able to secure an agreed deal for the Dutch bank.
El Pais:
- Eastman Kodak(EK) will post a profit in 2008, Chairman Antonio Perez said.
Automotive News Europe:
- Continental AG, the world’s fourth-largest tiremaker, is unable to serve all customer requests on hybrid technology because of a shortage of skilled staff. Hannover, Germany-based Continental would need to double its 160-member team dealing with hybrid systems to satisfy an increase of as much as 60% in customer demand. The company has raised investment in hybrid systems as higher gasoline prices spur demand for more fuel-efficient vehicles.
El Naqcional:
- Corruption in Venezuela, where President Hugo Chavez is implementing a socialist state, is widespread and oversight agencies are failing to root it out, citing lawmaker Pastora Medina.
Economic Daily News:
- Toshiba Corp. may raise orders from its chip-packaging and testing partner, Powertech Technology Inc. by 40%.
South China Morning Post:
- Best Buy(BBY) bought an additional 20% stake in Nanjing, China-based Jiangsu Five Star Appliance to expand to second and third-tier cities.
Shanghai Securities News:
- China’s lending growth will slow further as the government continues to tighten liquidity, citing central bank vice governor Wu Xiaoling. The central bank’s “preemptive” measures to curb loan growth and soak up excess liquidity has started to slow bank lending, as shown by the March money supply data, Wu said.
Gulf Times:
- Emaar Properties PJSC is among companies from the United Arab Emirates that may invest billions of dollars in northern Iraq, citing the Kurdish trade minister.
Weekend Recommendations
Barron's:
- Made positive comments on (DOW), (ADBE), (KSWS) and (ODP).
- Made negative comments on emerging markets.
Citigroup:
- Google’s(GOOG) acquisition of DoubleClick 1) will substantially improve GOOG’s position in the online display segment(30% of total net advertising 2)will broadly strengthen GOOG’s competitive position vs. Yahoo!(YHOO) and Microsoft(MSFT) and 3) an all-cash deal vs. the all-stock YouTube deal & still leaves GOOG with $9.2 billion in cash.
Morgan Stanley:
- Reiterated Overweight on (AUO).
Night Trading
Asian indices are +.50% to +1.0% on average.
S&P 500 indicated +.10%.
NASDAQ 100 indicated +.08%.
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
- (AMLN)/-.04
- (CHP)/-.05
- (C)/1.09
- (ETN)/1.41
- (LLY)/.79
- (EXBD)/.27
- (MAT)/-.05
- (WB)/1.16
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- Advance Retail Sales for March are estimated to rise .6% versus a .1% gain in February.
- Retail Sales Less Autos for March are estimated to rise .9% versus a -.1% gain in February.
- Empire Manufacturing for April is estimated to rise to 7.5 versus 1.9 in March.
9:00 am EST
- Net Long-term TIC Flows for February are estimated to fall to $75.0 billion versus $97.4 billion in January.
10:00 am EST
- Business Inventories for February are estimated to rise .3% versus a .2% gain in January.
1:00 pm EST
- The NAHB Housing Market Index for April is estimated to fall to 35 versus 36 in March.
BOTTOM LINE: Asian Indices are higher, boosted by automaker and technology shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% 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 a number of economic reports of note and some significant corporate earnings reports scheduled for release this week.
Economic reports for the week include:
Mon. - Advance Retail Sales, Empire Manufacturing, Net Long-term TIC Flows, Business Inventories, NAHB Housing Market Index
Tues. - Consumer Price Index, Housing Starts, Building Permits, Industrial Production, Capacity Utilization, weekly retail sales reports
Wed. - weekly MBA Mortgage Applications report, weekly EIA energy inventory report
Thur. - Initial Jobless Claims, Leading Indicators, Philly Fed.
Fri. - None of note
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - Amylin Pharmaceuticals(AMLN), Citigroup(C), Eaton Corp.(ETN), Eli Lilly(LLY), Expeditors Intl(EXPD), Mattel(MAT), Wachovia Corp.(WB)
Tues. - Adtran Inc.(ADTN), American Greetings(AM), Coca-Cola(KO), Comerica Inc.(CMA), CSX Corp.(CSX), Dow Jones(DJ), EMC Corp.(EMC), Intel Corp.(INTC), International Business Machines(IBM), JB Hunt(JBHT), Johnson & Johnson(JNJ), JOS A Banks(JOSB), Keycorp(KEY), Linear Technology(LLTC), M&T Bank(MTB), Marshall & Iisley(MI), Mellon Financial(MEL), Regions Financial(RF), Seagate Technology(STX), State Street(STT), SunTrust Banks(STI), TD Ameritrade(AMTD), Trustmark(TRMK), US Bancorp(USB), Washington Mutual(WM), Wells Fargo(WFC), Yahoo!(YHOO)
Wed. - Abbott Labs(ABT), Alliance Data(ADS), Allstate Corp.(ALL), Bank of NY(BK), CIT Group(CIT), Commerce Bancorp(CBA), CR Bard(BCR), Cymer Inc.(CYMI), E*Trade Financial(ETRD), Gilead Sciences(GILD), Illinois Tools Works(ITW), Illumina(ILMN), JPMorgan(JPM), Motorola(MOT), Novellus Systems(NVLS), Piper Jaffray(PJC), PNC Financial(PNC), Stryker Corp.(SYK), Teradyne Inc.(TER), Tribune Co.(TRB), United Technologies(UTX)
Thur. - Advanced Micro Devices(AMD), American Express(AXP), American Standard(ASD), Amphenol Corp.(APH), AMR Corp.(AMR), Bank of America(BAC), Baxter Intl.(BAX), BB&T(BBT), Capital One Financial(COF), Continental Air(CAL), DR Horton(DHI), eBay Inc.(EBAY), Fairchild Semi(FCS), Fifth Third Bancorp(FITB), First Data(FDC), Gannett Co(GCI), Genuine Parts(GPC), Harley-Davidson(HOG), International Game Tech(IGT), Intuitive Surgical(ISRG), Johnson Controls(JCI), Kinder Morgan(KMI), Kraft Foods(KFT), MDC Holdings(MDC), Merck & Co.(MRK), Merrill Lynch(MER), Mohawk Industries(MHK), Noble Corp.(NE), Nucor Corp.(NUE), OSI Restaurant Partners(OSI), Owens & Minor(OMI), Peabody Energy(BTU), Schering-Plough Corp.(SGP), Sherwin-Williams(SHW), SiRF Tech(SIRF), Southwest Air(LUV), St Jude Medical(STJ), Taubman Centers(TCO), Textron(TXT), Thornburg Mortgage(TMA), Total System Services(TSS), Union Pacific(UNP), UnitedHealth Group(UNH), Wyeth(WYE)
Fri. - Altria Group(MO), Armor Holdings(AH), Bandag(BDG), Briggs & Stratton(BGG), Capstead Mortgage(CMO), Caterpillar Inc.(CAT), Cerner Corp.(CERN), Charles Schwab(SCHW), ChoicePoint(CPS), Comverse Tech(CMVT), Equifax(EFX), Ford Motor(F), Freddie Mac(FRE), General Motors(GM), Google Inc.(GOOG), Hershey Co(HSY), Honeywell International(HON), Hutchinson Tech(HTCH), Leggett & Platt(LEG), Manpower(MAN), Marriott Intl.(MAR), McDonald’s Corp.(MCD), Medimmune(MEDI), Nasdaq Stock Market(NDAQ), Pfizer Inc.(PFE), PMC-Sierra(PMCS), PPG Industries(PPG), Quest Diagnostics(DGX), Reliance Steel(RS), Robert Half(RHI), Rogers Corp.(ROG), Royal Caribbean(RCL), Schlumberger Ltd.(SLB), SLM Corp.(SLM), Sunpower Corp.(SPWR), XTO Energy(XTO)
Other events that have market-moving potential this week include:
Mon. - AG Edwards Media & Entertainment Conference, Fed’s Poole speaking, Fed’s Plosser speaking, Fed’s Fisher speaking
Tue. - CIBC Real Estate Conference, AG Edwards Media & Entertainment Conference, (JCP) analyst meeting, Fed’s Plosser speaking
Wed. - CIBC Energy Conference, AG Edwards Media & Entertainment Conference, (JCP) analyst meeting, (EK) conference call
Thur. - CIBC Energy Conference, AG Edwards Media & Entertainment Conference
Fri. - (PFE) analyst meeting
Click here for Stocks in Focus for Monday by MarketWatch
There are a number of economic reports of note and some significant corporate earnings reports scheduled for release this week.
Economic reports for the week include:
Mon. - Advance Retail Sales, Empire Manufacturing, Net Long-term TIC Flows, Business Inventories, NAHB Housing Market Index
Tues. - Consumer Price Index, Housing Starts, Building Permits, Industrial Production, Capacity Utilization, weekly retail sales reports
Wed. - weekly MBA Mortgage Applications report, weekly EIA energy inventory report
Thur. - Initial Jobless Claims, Leading Indicators, Philly Fed.
Fri. - None of note
Some of the more noteworthy companies that release quarterly earnings this week are:
Mon. - Amylin Pharmaceuticals(AMLN), Citigroup(C), Eaton Corp.(ETN), Eli Lilly(LLY), Expeditors Intl(EXPD), Mattel(MAT), Wachovia Corp.(WB)
Tues. - Adtran Inc.(ADTN), American Greetings(AM), Coca-Cola(KO), Comerica Inc.(CMA), CSX Corp.(CSX), Dow Jones(DJ), EMC Corp.(EMC), Intel Corp.(INTC), International Business Machines(IBM), JB Hunt(JBHT), Johnson & Johnson(JNJ), JOS A Banks(JOSB), Keycorp(KEY), Linear Technology(LLTC), M&T Bank(MTB), Marshall & Iisley(MI), Mellon Financial(MEL), Regions Financial(RF), Seagate Technology(STX), State Street(STT), SunTrust Banks(STI), TD Ameritrade(AMTD), Trustmark(TRMK), US Bancorp(USB), Washington Mutual(WM), Wells Fargo(WFC), Yahoo!(YHOO)
Wed. - Abbott Labs(ABT), Alliance Data(ADS), Allstate Corp.(ALL), Bank of NY(BK), CIT Group(CIT), Commerce Bancorp(CBA), CR Bard(BCR), Cymer Inc.(CYMI), E*Trade Financial(ETRD), Gilead Sciences(GILD), Illinois Tools Works(ITW), Illumina(ILMN), JPMorgan(JPM), Motorola(MOT), Novellus Systems(NVLS), Piper Jaffray(PJC), PNC Financial(PNC), Stryker Corp.(SYK), Teradyne Inc.(TER), Tribune Co.(TRB), United Technologies(UTX)
Thur. - Advanced Micro Devices(AMD), American Express(AXP), American Standard(ASD), Amphenol Corp.(APH), AMR Corp.(AMR), Bank of America(BAC), Baxter Intl.(BAX), BB&T(BBT), Capital One Financial(COF), Continental Air(CAL), DR Horton(DHI), eBay Inc.(EBAY), Fairchild Semi(FCS), Fifth Third Bancorp(FITB), First Data(FDC), Gannett Co(GCI), Genuine Parts(GPC), Harley-Davidson(HOG), International Game Tech(IGT), Intuitive Surgical(ISRG), Johnson Controls(JCI), Kinder Morgan(KMI), Kraft Foods(KFT), MDC Holdings(MDC), Merck & Co.(MRK), Merrill Lynch(MER), Mohawk Industries(MHK), Noble Corp.(NE), Nucor Corp.(NUE), OSI Restaurant Partners(OSI), Owens & Minor(OMI), Peabody Energy(BTU), Schering-Plough Corp.(SGP), Sherwin-Williams(SHW), SiRF Tech(SIRF), Southwest Air(LUV), St Jude Medical(STJ), Taubman Centers(TCO), Textron(TXT), Thornburg Mortgage(TMA), Total System Services(TSS), Union Pacific(UNP), UnitedHealth Group(UNH), Wyeth(WYE)
Fri. - Altria Group(MO), Armor Holdings(AH), Bandag(BDG), Briggs & Stratton(BGG), Capstead Mortgage(CMO), Caterpillar Inc.(CAT), Cerner Corp.(CERN), Charles Schwab(SCHW), ChoicePoint(CPS), Comverse Tech(CMVT), Equifax(EFX), Ford Motor(F), Freddie Mac(FRE), General Motors(GM), Google Inc.(GOOG), Hershey Co(HSY), Honeywell International(HON), Hutchinson Tech(HTCH), Leggett & Platt(LEG), Manpower(MAN), Marriott Intl.(MAR), McDonald’s Corp.(MCD), Medimmune(MEDI), Nasdaq Stock Market(NDAQ), Pfizer Inc.(PFE), PMC-Sierra(PMCS), PPG Industries(PPG), Quest Diagnostics(DGX), Reliance Steel(RS), Robert Half(RHI), Rogers Corp.(ROG), Royal Caribbean(RCL), Schlumberger Ltd.(SLB), SLM Corp.(SLM), Sunpower Corp.(SPWR), XTO Energy(XTO)
Other events that have market-moving potential this week include:
Mon. - AG Edwards Media & Entertainment Conference, Fed’s Poole speaking, Fed’s Plosser speaking, Fed’s Fisher speaking
Tue. - CIBC Real Estate Conference, AG Edwards Media & Entertainment Conference, (JCP) analyst meeting, Fed’s Plosser speaking
Wed. - CIBC Energy Conference, AG Edwards Media & Entertainment Conference, (JCP) analyst meeting, (EK) conference call
Thur. - CIBC Energy Conference, AG Edwards Media & Entertainment Conference
Fri. - (PFE) analyst meeting
BOTTOM LINE: I expect US stocks to finish the week modestly higher on better economic data, a firmer US dollar, buyout speculation, better-than-expected earnings reports, lower energy prices, short-covering and bargain-hunting. My trading indicators are now giving bullish signals and the Portfolio is 100% net long heading into the week.
Friday, April 13, 2007
Weekly Scoreboard*
Indices
S&P 500 1,452.85 +.60%
DJIA 12,612.13 +.34%
NASDAQ 2,491.94 +.80%
Russell 2000 819.38 +.52%
Wilshire 5000 14,683.35 +.62%
Russell 1000 Growth 573.32 +.60%
Russell 1000 Value 838.36 +.21%
Morgan Stanley Consumer 717.87 +.91%
Morgan Stanley Cyclical 977.50 +.78%
Morgan Stanley Technology 576.45 +.69%
Transports 5,035.00 +2.31%
Utilities 510.22 +.04%
MSCI Emerging Markets 122.17 +2.01%
Sentiment/Internals
NYSE Cumulative A/D Line 73,123 +1.6%
Bloomberg New Highs-Lows Index +296 -30.5%
Bloomberg Crude Oil % Bulls 48.0 -45.1%
CFTC Oil Large Speculative Longs 202,367 +3.1%
Total Put/Call .95 +26.7%
NYSE Arms .80 -7.4%
Volatility(VIX) 12.2 -7.2%
ISE Sentiment 122.0 -5.6%
AAII % Bulls 40.9 +26.6%
AAII % Bears 38.0 -4.4%
Futures Spot Prices
Crude Oil 63.49 -.61%
Reformulated Gasoline 217.14 +2.67%
Natural Gas 7.77 +2.50%
Heating Oil 189.60 +2.2%
Gold 688.90 +1.58%
Base Metals 268.41 +.95%
Copper 354.55 +4.62%
Economy
10-year US Treasury Yield 4.76% +1 basis point
4-Wk MA of Jobless Claims 323,300 +2.2%
Average 30-year Mortgage Rate 6.22% +5 basis points
Weekly Mortgage Applications 646.60 -.45%
Weekly Retail Sales +4.2%
Nationwide Gas $2.80/gallon +.01/gallon
US Heating Demand Next 7 Days 44.0% above normal
ECRI Weekly Leading Economic Index 140.60 +.29%
US Dollar Index 82.15 -.66%
CRB Index 317.93 +.10%
Leading Sectors
Drugs +3.45%
Oil Service +2.98%
Engineering & Construction +2.85%
Biotech +2.39%
Steel +2.35%
Lagging Sectors
Tobacco -.47%
Oil Tankers -.47%
Telecom -.53%
Computer Hardware -.62%
REITs -.77%
One-Week High-Volume Gainers
One-Week High-Volume Losers
*5-Day Change
S&P 500 1,452.85 +.60%
DJIA 12,612.13 +.34%
NASDAQ 2,491.94 +.80%
Russell 2000 819.38 +.52%
Wilshire 5000 14,683.35 +.62%
Russell 1000 Growth 573.32 +.60%
Russell 1000 Value 838.36 +.21%
Morgan Stanley Consumer 717.87 +.91%
Morgan Stanley Cyclical 977.50 +.78%
Morgan Stanley Technology 576.45 +.69%
Transports 5,035.00 +2.31%
Utilities 510.22 +.04%
MSCI Emerging Markets 122.17 +2.01%
Sentiment/Internals
NYSE Cumulative A/D Line 73,123 +1.6%
Bloomberg New Highs-Lows Index +296 -30.5%
Bloomberg Crude Oil % Bulls 48.0 -45.1%
CFTC Oil Large Speculative Longs 202,367 +3.1%
Total Put/Call .95 +26.7%
NYSE Arms .80 -7.4%
Volatility(VIX) 12.2 -7.2%
ISE Sentiment 122.0 -5.6%
AAII % Bulls 40.9 +26.6%
AAII % Bears 38.0 -4.4%
Futures Spot Prices
Crude Oil 63.49 -.61%
Reformulated Gasoline 217.14 +2.67%
Natural Gas 7.77 +2.50%
Heating Oil 189.60 +2.2%
Gold 688.90 +1.58%
Base Metals 268.41 +.95%
Copper 354.55 +4.62%
Economy
10-year US Treasury Yield 4.76% +1 basis point
4-Wk MA of Jobless Claims 323,300 +2.2%
Average 30-year Mortgage Rate 6.22% +5 basis points
Weekly Mortgage Applications 646.60 -.45%
Weekly Retail Sales +4.2%
Nationwide Gas $2.80/gallon +.01/gallon
US Heating Demand Next 7 Days 44.0% above normal
ECRI Weekly Leading Economic Index 140.60 +.29%
US Dollar Index 82.15 -.66%
CRB Index 317.93 +.10%
Leading Sectors
Drugs +3.45%
Oil Service +2.98%
Engineering & Construction +2.85%
Biotech +2.39%
Steel +2.35%
Lagging Sectors
Tobacco -.47%
Oil Tankers -.47%
Telecom -.53%
Computer Hardware -.62%
REITs -.77%
One-Week High-Volume Gainers
One-Week High-Volume Losers
*5-Day Change
Stocks Surging into Final Hour on Rising Earnings Optimism
BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Telecom longs, Semi longs and Medical longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is mildly positive as the advance/decline line is mildly higher, almost every sector is rising and volume is about average. The chance of a U.S. recession beginning this year on Intrade.com has plunged to 16.5% from a high of 35% in January. It is also down from 28% during the spike in subprime fears and Greenspan's recession talk in March. Moreover, the ECRI Weekly Leading Index rose again and is just off cycle highs. The 10-week moving-average is just off highs, as well. The growth rate of this index is currently 3.8%, while the growth rate of the future inflation gauge is falling at a -3.1% rate. I continue to believe that the 10-year yield will average around 4.75% this year and the Fed will remain on hold, while making both dovish and hawkish comments depending on current market perceptions. After a likely sluggish first quarter, I still expect U.S. economic growth to re-accelerate and begin moving back to more average levels this quarter, which should help companies beat lowered earnings' expectations. I suspect diminishing recession fears are the main reason for the recent modest rise in long-term rates. Considering the historically extreme readings in many gauges of investor angst over the last six weeks, the fact that earnings expectations have been lowered dramatically, that short interest is at record highs and that even most bulls hate earnings season and have raised cash, I wonder if upcoming earnings reports will provide another upside catalyst for stocks. As well, the large "sell in May" crowd has likely already sold ahead of these reports. Hmmm ...I expect US stocks to trade mixed-to-higher into the close on short-covering, rising earnings optimism and bargain-hunting.
Today's Headlines
Bloomberg:
- Crude oil in NY is falling .30/bbl. after Valero Energy, the nation’s largest refiner, said it will restart a facility that had been closed due to “fire damage.” Refiner “outages” across the country have resulted in low production of gasoline and a decline in supplies, which has boosted gasoline prices to record highs for this time of the year. US oil inventories are still near eight year highs.
- Cisco Systems(CSCO) is at the high end of its long-term sales forecast for growth of 10-15%, said Chief Development Officer Charlie Giancarlo. The company is seeing “very strong demand,” Giancarlo said.
- Blackstone Group LP is considering a $20 billion takeover offer for SLM Corp.(SLM), the largest US student loan provider.
- General Electric(GE) said first-quarter profit rose 8% as CEO Immelt’s strategy of selling more power-plant and aviation equipment overseas paid off.
- McDonald’s(MCD) said first quarter profit rose, topping analyst estimates, on the biggest European sales gain since 1994.
- Genentech(DNA) is testing a breast-cancer treatment that may add $1.5 billion in annual sales to its Herceptin drug business.
- The dollar fell to a two-year low against the euro and weakened versus the yen, despite a better trade deficit report, as core producer prices came in below estimates.
- Merck’s(MRK) share jumped the most in more than two years after the drugmaker said profit rose 13%, beating estimates, as sales of its newer products offset losses to generic competition.
Wall Street Journal:
- China has renamed the 50-year-old Chinese Export Commodities Fair as an import-export exposition and for the first time set aside 315 stands for foreign companies out of a total of 31,000.
- US automakers, including General Motors(GM), are looking for an American alternative to the next generation of hybrid-car batteries coming out of Japan.
NY Post:
- Jones Apparel Group(JNY) may sell the Barneys NY apparel and accessories chain to Istithmar, the private equity firm owned by Dubai, for about $950 million.
Boston Global:
- Boston Mayor Thomas Menino has implemented a plan to reduce greenhouse-gas emissions throughout the city. Menino plans to reduce fuel consumption by city-owned vehicles 5% within 5 years. The city also plans to buy at least 15% of its electricity from renewable energy sources and recycle 10% more material within five years.
Washington Post:
- The SEC will change its process for settling with companies, which could reduce penalties that businesses pay, citing officials.
Euro am Sonntag:
- SAP AG(SAP) expects sales to grow significantly more than the overall market for business-management software in 2007, helped by new products for mid-sized companies, deputy CEO Leo Apotheker said.
Energy News Today:
- Valero Energy(VLO) restarted a crude unit capable of processing 104,000 barrels of oil a day at its “fire-damaged” refinery near Sunray, Texas.
Xinhua News Agency:
- China’s stock transaction tax revenue surged six-fold in the first quarter as its stock markets rose, citing Shu Qiming, a State Administration of Taxation official.
- Crude oil in NY is falling .30/bbl. after Valero Energy, the nation’s largest refiner, said it will restart a facility that had been closed due to “fire damage.” Refiner “outages” across the country have resulted in low production of gasoline and a decline in supplies, which has boosted gasoline prices to record highs for this time of the year. US oil inventories are still near eight year highs.
- Cisco Systems(CSCO) is at the high end of its long-term sales forecast for growth of 10-15%, said Chief Development Officer Charlie Giancarlo. The company is seeing “very strong demand,” Giancarlo said.
- Blackstone Group LP is considering a $20 billion takeover offer for SLM Corp.(SLM), the largest US student loan provider.
- General Electric(GE) said first-quarter profit rose 8% as CEO Immelt’s strategy of selling more power-plant and aviation equipment overseas paid off.
- McDonald’s(MCD) said first quarter profit rose, topping analyst estimates, on the biggest European sales gain since 1994.
- Genentech(DNA) is testing a breast-cancer treatment that may add $1.5 billion in annual sales to its Herceptin drug business.
- The dollar fell to a two-year low against the euro and weakened versus the yen, despite a better trade deficit report, as core producer prices came in below estimates.
- Merck’s(MRK) share jumped the most in more than two years after the drugmaker said profit rose 13%, beating estimates, as sales of its newer products offset losses to generic competition.
Wall Street Journal:
- China has renamed the 50-year-old Chinese Export Commodities Fair as an import-export exposition and for the first time set aside 315 stands for foreign companies out of a total of 31,000.
- US automakers, including General Motors(GM), are looking for an American alternative to the next generation of hybrid-car batteries coming out of Japan.
NY Post:
- Jones Apparel Group(JNY) may sell the Barneys NY apparel and accessories chain to Istithmar, the private equity firm owned by Dubai, for about $950 million.
Boston Global:
- Boston Mayor Thomas Menino has implemented a plan to reduce greenhouse-gas emissions throughout the city. Menino plans to reduce fuel consumption by city-owned vehicles 5% within 5 years. The city also plans to buy at least 15% of its electricity from renewable energy sources and recycle 10% more material within five years.
Washington Post:
- The SEC will change its process for settling with companies, which could reduce penalties that businesses pay, citing officials.
Euro am Sonntag:
- SAP AG(SAP) expects sales to grow significantly more than the overall market for business-management software in 2007, helped by new products for mid-sized companies, deputy CEO Leo Apotheker said.
Energy News Today:
- Valero Energy(VLO) restarted a crude unit capable of processing 104,000 barrels of oil a day at its “fire-damaged” refinery near Sunray, Texas.
Xinhua News Agency:
- China’s stock transaction tax revenue surged six-fold in the first quarter as its stock markets rose, citing Shu Qiming, a State Administration of Taxation official.
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