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Friday, June 08, 2007
Thursday, June 07, 2007
Friday Watch
Late-Night Headlines
Bloomberg:
- BNP Paribas SA,
- Crude oil may fall next week on rising fuel stockpiles and reduced concern about disruption of oil shipments from the
- National Semi(NSM) said profit dropped less that expected as it recovered from an industry glut. The shares jumped 10.3% in after-hours trading.
- Broadcom(BRCM) won a trade agency ruling that would ban imports of mobile phones run on the newest types of chips made by Qualcomm Inc.(QCOM), a decision that could alter the
- The benchmark 10-year US Treasury note fell the most in more than three years after
- The Senate’s proposed overhaul of
- Bill Gross, manager of the world’s biggest bond fund, said he continues to expect a “mild bull market” for the next year. “We do like bond markets from this point forward for the next six months,” Gross said on PIMCO’s web site. “But we do suggest in 2008, 2009 and 2010 that interest rates will be moving mildly higher.” Gross reiterated that housing would slow the US economy and the Federal Reserve will cut interest rates in the “latter part of 2007.” Pimco’s $103 billion Total Return fund had trailed the performance of about 75% of comparable funds in the past year.
- North American steel producers including Ipsco Inc. filed petitions with US regulators alleging China is unfairly subsidizing and dumping steel products worth as much as $500 million a year.
- The judge in Representative William Jefferson’s bribery case issued an order freezing millions of shares of stock and hundreds of thousands of dollars in cash belonging to the Louisiana Democrat.
- The Bank of England, which left interest rates unchanged yesterday, may have to move faster to curb the UK’s worst bout of inflation in a decade.
- The yen is falling for the first day this week after
- Edison Intl(EIX), the Rosemead California-based power producer, said it agreed to purchase $698 million worth of wind power turbines from
- Ethanol in
- A Goldman Sachs Group(GS) unit and the buyout firm Kelso & Co. raised their estimate for a share sale in a Kansas refinery by 25% as surging gasoline profits spur demand for oil-processing plants.
- Nickel fell to a 10-week low, erasing its leading position this year on the London Metal Exchange, as stockpiles rose and the bourse imposed new rules to curb what one analyst described as “collusive” trading. Two or more companies, each holding 25% or more of LME-monitored nickel stockpiles, now need to make more metal available to other buyers.
- Copper prices fell for a third day in Shanghai on concern that buying by China, the world’s biggest consumer of the metal, may slow following a surge in imports this year and on expectations of weaker demand.
- China Petroleum,
- Tata Motors Ltd.,
-
London-based Times:
- Sysco Corp.(SYY), the largest
-
Late Buy/Sell Recommendations
Citigroup:
- We view (CIEN), (JDSU), (ECIL), and (FNSR) as best positioned to benefit from our bullish view on optical spending. Other beneficiaries include (SCMR) and (TLAB). (CSCO) will also benefit from a healthy optical market, but with limited financial impact as optical accounts for less than 2% of total revenues.
Morgan Stanley:
- Reiterated Overweight on (EBAY).
Business Week:
- Inventors can capitalize on growth in southeastern
- MCF Corp.(MEM), an investment banking firm that provides financial services for small public companies, could have its sales almost double to $100 million in a year or two.
Night Trading
Asian Indices are -1.75% to -1.0% on average.
S&P 500 indicated +.09%.
NASDAQ 100 indicated +.08%.
Morning Preview
US AM Market Call
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Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
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Top 20 Business Stories
In Play
Bond Ticker
Conference Calendar
Daily Stock Events
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Rasmussen Business/Economy Polling
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
- (KWD)/.20
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- The trade deficit for April is estimated to shrink to -$63.5 billion versus -$63.9 billion in March.
Other Potential Market Movers
- The Citi Power/Gas/Utilities Conference and Sandler O’Neil eBrokerage/Global Exchange Conference could also impact trading today.
Stocks Lower into Final Hour on Weakness in Europe, Higher Oil and Rising Rates
BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Biotech longs, Medical longs and I-Banking longs. I added to my (TLT) long and to a steel short today, thus leaving the Portfolio 100% net long. The tone of the market is very negative as the advance/decline line is substantially lower, every sector is declining and volume is above average. A number of market-leading growth stocks are substantially outperforming today with some posting sharp gains. This is especially significant considering the recent rise in rates. I sense the long-term trend is in the initial stages of switching away from expensive value stocks and toward cheap growth stocks. (According to value stock guru Jeremy Grantham, value is expensive, and a recent CSFB report said that growth was cheaper than value for first time in over 30 years.) The days of shorts throwing darts at stocks with P/Es above 20, regardless of the underlying fundamentals, and making money on the multiple contraction are likely over. The 10-year yield is beginning to stabilize. It is down to 5.09% now. It is interesting to note that the iShares Lehman TIPS Bond Fund (TIP) continues to decline, and gold trades very poorly as the U.S. dollar firms. This indicates inflation worries aren't the cause of the rise in yields, in my opinion. I continue to believe that the recent rise in yields is more related to the "recession is imminent" trade being taken off by large macro funds. I still believe that, after 3% growth this quarter, U.S. GDP growth will move back toward 2% as inventory rebuilding subsides and the effects of the recent rise in rates takes hold. Long-term yields are likely very near a peak for the year, in my opinion. I plan to add meaningfully to my iShares Lehman 20+ Year Treasury Bond (TLT) long on any unexpected move in the 10-year yield to around 5.15%-5.25%. Today's trading feels like a mini panic. The NYSE Arms is soaring to a high 1.48. The VIX is surging 13%. The CBOE total put/call is an above average 1.15, and the ISE Sentiment Index is plunging 34%, to a depressed 78.0. I expect US stocks to trade modestly higher into the close from current levels on bargain hunting and short-covering.
Job Market Still Healthy, Inventories Match Record Low
- Initial Jobless Claims for last week fell to 309K versus estimates of 312K and 310K the prior week.
- Continuing Claims rose to 2535K versus estimates of 2500K and 2463K prior.
- Wholesale Inventories for April rose .3% versus estimates of a .3% increase and an upwardly revised .4% gain in March.
BOTTOM LINE: The number of Americans filing first-time claims for state unemployment benefits fell unexpectedly last week, pointing to a resilient labor market, Bloomberg reported. The unemployment rate among those eligible for benefits, which tracks the
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