Sunday, June 24, 2007

Monday Watch

Weekend Headlines
Bloomberg:
- Istithmar PJSC, the Dubai-owned investment company that last week agreed to buy Jones Apparel Group’s Barneys New York chain for $825 million, plans to buy 3% of London-based hedge fund manager GLG Partners LP.
- US gasoline at the pump fell 11 cents during the past two weeks to an average $3 a gallon, Trilby Lundberg said, citing her survey of 7,000 filling stations nationwide.

- European government bonds rallied this week after a report showed business confidence in Germany, the region’s largest economy, fell more than expected in June.
- Chinese central bank Governor Zhou Xiaochuan said he can’t rule out further interest rate increases after inflation accelerated.
- Merck’s(MRK) drug Januvia significantly improves diabetes control when given in combination with the older drug metformin, researchers said.
- Venezuelan President Hugo Chavez dismissed European press reports that he would sign an agreement with Iran to develop nuclear weapons when he visits the Central Asian country next week.
- Bristol-Myers Squibb’s(BMY) experimental diabetes drug controls blood sugar whether combined with an older medicine or take alone, researchers said.
- Crude oil is falling in NY after a strike in Nigeria was settled, easing concerns about supply disruptions from Africa’s biggest oil producer.
- The unexpected surge in US government tax receipts may pare the budget deficit by 39% to $150 billion this fiscal year, causing a relative scarcity of four-week, three-month and six-month treasury bills.
- France and the US agreed today there is no reason to restore contacts with Syria because of its continued interference in Lebanon and its failure to show signs of wanting to make peace with Israel.
- Ali Hassan al-Majid, known as “Chemical Ali” for this role in using chemical weapons to murder 180,000 Iraqi Kurds in the Anfal campaign, was sentenced to death by Iraq’s High Tribunal yesterday.
- Is the five-year stock market rally threatened by the highest bond yields since 2002? Some of the world’s biggest investors say no.
- Renault SA and Nissan Motor will push for “clean” vehicles that use the most cost-effective technologies to meet new emission standards, CEO Ghosn said.
- Shares of ethanol producers gained Friday, after the US Senate passed legislation that would quadruple the use of alternative fuels, such as the grain-based additive.
- Nintendo Co. surpassed Sony Corp.(SNE) in market value as its Wii home console outsells the rival PlayStation 3.

Wall Street Journal:
- The US Commodity Futures Trading Commission plans to improve a rule to ensure that records are kept by those holding or controlling a futures or option position in energy markets.
- Banks backing Cerberus Capital Management’s purchase of Chrysler Group and Chrysler Financial will begin a “roadshow” next week to raise funds.
- Clear Channel Communications(CCU) will use Arbitron’s new electronic radio-ratings system as part of a multiyear agreement.
- Haggling 2.0. With more Web retailers willing to bargain, clothing shoppers are leaning to wheel and deal.

NY Times:
- The International Code Council approved recommendations for new high-rise buildings taller than 420 feet that would require a third stairwell and a strengthened elevator for firefighters.
- Rupert Murdoch’s News Corp.(NWS/A) and advisers representing Dow Jones(DJ) and its controlling Bancroft family are near an agreement to protect the Wall Street Journal’s editorial independence in the even Murdoch buys the financial news organization.
- The Iranian government has focused on labor leaders, universities, the media and Iranian-Americans in a recent crackdown on dissent inside the country. Young men were paraded through the capital of Tehran’s streets by uniformed police officers for wearing T-shirts that were too tight or sporting haircuts deemed to be too Western.
- Florsheim shoes, a unit of Weyco Group Inc.(WEYS), is profiting from younger consumers who have shown a preference for older brand names in the $25 billion domestic footwear industry.

San Jose Mercury News:
- The Silicon Valley’s wealthiest residents made the most since 2000 in 2005.

Business Week:
- Private Equity Squeezes the Shorts. Short-sellers once profited off troubled companies, but private equity’s expansion is crimping investment opportunities and boosting risks.

Rocky Mountain News:
- Moosehead Breweries, Canada’s third-largest brewer, will build its new US headquarters in Boulder, Colorado.

AP:
- North Korea agreed to close down its Yongbyon atomic reactor within three weeks, citing US nuclear negotiator.
- A 35-year-old Oklahoma woman died from a combination of cocaine and a high level of stress, and not from chocks delivered by a Taser(TASR) stun gun, citing the state medical examiner’s office.

Financial Times:
- News Corp.(NWS/A) CEO Rupert Murdoch wants to buy Internet-related companies.
- Sweden hired US investment bank Morgan Stanley(MS) to advise it on the planned $6 billion sale of Absolut vodka maker Vin & Sprit AB.
- A US congressional report to be issued today claims that Amaranth Advisors LLC and energy trader Brian Hunter accumulated such big positions in the US natural gas derivatives markets last year that they caused “abnormally” high gas prices for consumers across the US.

Observer:
- Pearson Plc should sell the Financial Times for $1.4 billion and avoid competing with a Rupert Murdoch-owned Wall Street Journal, citing analyst Lorna Tilbian and unidentified investors.

Nikkei:
- Toyota Motor Corp.(TM) will start selling a new hybrid car that is larger than its Prius model from 2009.
- Hino Motors Ltd. will build a new assembly plant in West Virginia this year as North American sales rise.

Commercial Times:
- Taiwan Semiconductor Manufacturing may report record sales in June and the third quarter because of demand for chips used in mobile phones with more advanced features.

Sing Tao Daily:
- Lee Shau-kee, billionaire chairman of Henderson Land Development Co., said it’s time to sell Hong Kong stocks, because valuations are too high. Lee is the second-richest man in China, Hong Kong and Taiwan with a net worth of $17 billion.

Yediot Aharonot:
- Israeli Prime Minister Ehud Olmert is preparing a package of peace incentives to offer Palestinian Authority President Mahmoud Abbas when they meet in Egypt tomorrow.

Weekend Recommendations
Barron's:
- Made positive comments on (LUM), (YHOO), (STT) and (CFC).
- Made negative comments on (BX), (CROX) and (CRM).

Citigroup:
- Reiterated Buy (GPN), target $50.

Night Trading
Asian indices are -.75% to +.50% on average.
S&P 500 indicated +.09%.
NASDAQ 100 indicated +.18%.

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 Business/Economy Polling
CNBC Guest Schedule

Earnings of Note
Company/Estimate
- (SNX)/.44
- (WAG)/.53

Upcoming Splits
- (YUM) 2-for-1
- (CCF) 2-for-1
- (SPAR) 3-for-2
- (VSEC) 2-for-1
- (FLO) 3-for-2

Economic Releases
10:00 am EST
- Existing Home Sales for May are estimated to fall to 5.97M versus 5.99M in April.

Other Potential Market Movers
- The Wachovia CEO Summit could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by financial and real estate shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon finishing modestly higher. The Portfolio is 100% net long heading into the week.

Friday, June 22, 2007

***Alert***

Blogging will remain light through the weekend due to a scheduling conflict.

Stocks Lower into Final Hour on Weakness in Asia and Profit-taking

BOTTOM LINE: The Portfolio is about even into the final hour as losses in my Networking longs and Biotech longs are offsetting gains in my Commodity shorts and Internet longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is negative as the advance/decline line is lower, sector performance is negative and volume is about average. Despite the losses in the major averages, tech shares are displaying substantial relative strength. The Morgan Stanley Tech Index is now 10.7% higher ytd versus 7.6% for the S&P 500. I continue to believe it can rise at least 20% by year-end as the cyclical tech laggards join the growth tech leaders in the second half. Moreover, Google (GOOG) is up 1.7% today as Bernstein initiated the stock with an outperform rating and said it expects 50% profit growth this year. As well, comScore data for May released yesterday showed Google with 50.7% of the U.S. search market vs. 26.4% share for Yahoo! (YHOO), its lowest since 2003. Given Google's fundamentals, the stock remains cheap relative to the broad market and especially vs. its Internet peers. I continue to believe that the company can grow at relatively high levels for much longer than analysts expect. The stock remains my single largest equity long position. Natural gas continues to weaken on little new news and is breaking down through its 200-day moving average for the first time in five months. Inventories are poised to hit all-time record highs again this year, while industrial demand continues to weaken. In my opinion, prices anywhere near current levels are absurd and purely a function of the mania for commodities by investment funds, not fundamentals. Despite the massive infusion of capital into commodity funds over the last few years, I see technical weakness in many commodities. I expect US stocks to trade modestly higher into the close from current levels on stabilizing long-term rates, buyout speculation, short-covering and bargain-hunting.

Links of Interest

Market Snapshot Commentary
Market Performance Summary
Style Performance

WSJ Data Center

Top 20 Biz Stories

Movers & Shakers

Upgrades/Downgrades

In Play

Today in IBD

NYSE Unusual Volume

NASDAQ Unusual Volume

Hot Spots

Option Dragon

NASDAQ 100 Heatmap

DJIA Quick Charts

Chart Toppers

Intraday Chart/Quote

Dow Jones Hedge Fund Indexes

Thursday, June 21, 2007

Friday Watch

Late-Night Headlines
Bloomberg:
- The yen traded near the weakest level in more than four years against the US dollar on speculation Japan’s lowest interest rate among major economies spurred investment funded by loans in the currency.
- Nelson Peltz, the investor who waged successful battles to raise share prices at HJ Heinz(HNZ) and Wendy’s Intl.(WEN), bought a 3% stake in Kraft Foods.
- Blackstone Group LP, the buyout firm that made almost $200 billion of acquisitions in the past two decades, raised $4.13 billion in the largest US IPO in five years.
- Chinese and Russian sovereign wealth funds intend to invest primarily in corporate bonds and stocks, said Clay Lowery, the US Treasury’s top international official, citing feedback from the government of both countries.
- Bear Stearns(BSC) may take over about $3.2 billion of loans that banks and securities firms made to one of its money-losing hedge funds to prevent creditors from seizing more assets.

Wall Street Journal:
- Kohlberg Kravis Roberts may go public after rival buyout firm Blackstone Group LP’s offering priced at the high end of its range, citing an unidentified person close to KKR.

Financial Times:
- Moves to change the taxation of private equity firms could be “very dangerous” and prompt the industry to move to more favorable tax locations, citing an interview with Lloyd Blankfein, CEO of Goldman Sachs(GS).
- The creation of the world’s first derivatives contracts linked to diamond prices is at the center of two initiatives by bankers and diamond experts in the coming days.

Late Buy/Sell Recommendations
Citigroup:

- comScore released its US May internet search query data today. Google(GOOG) continued to gain share. Google’s query share increased 100 basis points M/M to a record high 50.7% of the US market. This market share gain continues a very consistent trend for Google and highlights a potential gating factor to Yahoo!(YHOO)’s attempts to gain search revenue share. Yahoo!’s(YHOO) share dropped 40 basis points M/M to 26.4%, its lowest share since at least 2003.

Business Week:
- Cleveland Biolabs(CBLI), the maker of a radiation protection compound, could secure a $200 million US Defense Dept. contract by the end of the summer. Based on that possibility, Stephen Brozak of WBB Securities rated the stock a “buy” and said no other product protects as much from radiation exposure.
- Shares of Deere & Co.(DE) will continue to rise even after increasing almost 80% since August. William Harnisch of the hedge fund Peconic Partners said global demand for human and animal food and corn-derived ethanol will send the shares to $150 each in a year to 15 months.
- Document Security Systems(DSC) is attracting investors as counterfeiting rises. The company has the top technology against counterfeiting and should have sales of $200 million in five years, citing Vincent Carrino, president of Brookhaven Capital Management.

Night Trading
Asian Indices are -.75% to unch. on average.
S&P 500 indicated -.10%.
NASDAQ 100 indicated -.09%.

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 Business/Economy Polling
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
- None of note

Upcoming Splits
- (GILD) 2-for-1
- (OMC) 2-for-1
- (YUM) 2-for-1
- (CCF) 2-for-1

Economic Releases
- None of note

Other Potential Market Movers
- The Fed’s Pianalto speaking
could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by financial stocks in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.

Stocks Finish at Session Highs on More Economic Optimism

Market Performance Summary
Market Gauges
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
After-hours Stock Quote
In Play