BETWEEN THE HEDGES

Tuesday, August 21, 2007

Wednesday Watch

Posted by Gary .....at 7:42 PM

Late-Night Headlines
Bloomberg:
- Google Inc.(GOOG) will show advertising clips on YouTube to capitalize on the surging popularity of online video.
- China, the world’s second-biggest energy user, increase imports of liquefied natural gas more than 500% last month.
- Yahoo Japan Corp., operator of the nation’s most visited Web site, headed for its biggest gain in four months on the Tokyo exchange after Goldman Sachs Group Inc.(GS) raised the stock’s rating, citing advertisement earnings.
- Ahmadinejad Fails Tehran Youth, ‘Impatient’ for Jobs, Own Homes.

Wall Street Journal:
- The online brokerage industry, which underwent a wave of consolidation after the bursting of the dot-com bubble, may be headed for another shakeout, with giants TD Ameritrade Holding Corp.(AMTD) and E*Trade Financial Corp.(ETFC) holding merger discussions.
- Insurance stocks have been hit hard by the mortgage-market tumult, and that has created opportunities for investors willing to overlook some dings and scratches in companies that should generate healthy profits over the long term.
- Sohu.com(SOHU) won the exclusive right to run advertisements by Olympic sponsors that use the games’ official logo of a running man.
- As the subprime mortgage crisis ripples through the broader housing market, the Bush administration is eyeing an often overlooked federal mortgage insurer to help low- and middle-income homeowners avoid foreclosure.
- Lawyers Gear Up Grand New Fees. Hourly Rates Increasingly Hit $1,000, Breaching a Level Once Seen as Taboo.

MarketWatch.com:
- People too quick on the draw may have shot themselves in the foot by selling when the stock market looked like it was in a free fall.
- Robotics startups make mark in medicine.

IBD:
- Strong sales of robots to the US military propelled iRobot(IRBT) in the first half of the year, but the company is counting on sales of home robots to lead its way in the second half.
- Board-Sport Retailer Catches a Wave While Competitors Wipe Out.

CNNMoney.com:
- Gasoline demand growth in slowing, not long after prices hit a record $3.23 a gallon, but it may be too early to call it a trend.
- Hudson City Bancorp(HCBK) is the biggest winner in the S&P 500 the last month, up 21% and it’s a mortgage bank.
- 20 timeless money rules.
- 15 companies that will change the world.

USA Today:
- More states harness power of renewable energy.
- Gallup: Approval rating for Congress matches lowest ever recorded.

Financial Times:
- Apple Inc.(AAPL) has succeeded in committing European mobile phone operators that want exclusively to sell its new iPhone to share parts of their revenues with the technology group.

Reuters:
- Experts are reassuring investors that US money market mutual funds, which have gathered about $165 billion in new assets over an eight-week period, are safe from the subprime mortgage problems that have caused steep losses at several hedge funds.
- Apartment landlord Archstone-Smith(ASN) said on Tuesday it shareholders approved a roughly $15.3 billion takeover offer from an entity controlled by Tishman Speyer fund and Lehman Brothers(LEH).
- Nymex Holdings(NMX) said on Tuesday it has held preliminary discussions about a potential merger, but there is no guarantee of a deal.
- GM(GM) sees steady growth in emerging markets revenue.

Chosun Ilboi:
- CJ Corp. plans to acquire a US food companhy, citing Kim Jin Soo, CEO of South Korea’s largest grocer.

China Business News:
- China’s currency regulator may add Shanghai to a pilot program that allows Chinese citizens to buy Hong Kong-traded stocks directly.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (WLP), target $98.
- Reiterated Buy on (BJ), target $43.
- Reiterated Buy on (GPN), target $51.
- Reiterated By on (SPLS), target $31.

Raymond James:
- Raised (DRI) to Strong Buy, target $48.50.

Night Trading
Asian Indices are unch. to +1.25% on average.
S&P 500 futures +.18%.
NASDAQ 100 futures unch.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Pre-market Stock Quote/Chart
Before the Bell CNBC Video(bottom right)
Global Commentary
WSJ Intl Markets Performance
Commodity Movers
Top 25 Stories
Top 20 Business Stories
Today in IBD
In Play
Bond Ticker
Economic Preview/Calendar
Daily Stock Events
Macro Calls
Upgrades/Downgrades
Rasmussen Business/Economy Polling
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
- (ANF)/.84
- (BCSI)/.34
- (CHRS)/.12
- (DBD)/.36
- (EV)/.42
- (FL)/-.18
- (GYMB)/.15
- (HOTT)/-.03
- (INTU)/-.05
- (JDSU)/.05
- (LTD)/.20
- (MW)/.94
- (PVH)/.62
- (RGS)/.57
- (ROST)/.37
- (SFL)/.33
- (SNPS)/.31
- (TLB)/-.26
- (TECD)/.30
- (TOL)/.02
- (TWB)/.15
- (VRGY)/.49
- (WCI)/-.99
- (ZUMZ)/.08

Upcoming Splits
- (TXT) 2-for-1

Economic Releases
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil drawdown of -2,750,000 barrels versus a -5,167,000 barrel decline the prior week. Gasoline supplies are expected to fall -800,000 barrels versus a -1,057,000 barrel decline the prior week. Distillate supplies are estimated to rise by 850,000 barrels versus a 153,000 barrel increase the prior week. Finally, refinery utilization is expected to rise .28% versus a .58% increase the prior week.

Other Potential Market Movers
- The EnerCom Oil & Gas Conference, (DE) Analyst Meeting and weekly MBA Mortgage Applications report could also impact trading today.

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

Stocks Finish Slightly Higher, Led by "Growth" Shares

Posted by Gary .....at 5:25 PM

Indices
S&P 500 1,447.12 +.11%
DJIA 13,090.86%
NASDAQ 2,521.30 +.51%
Russell 2000 788.38 +.12%
Wilshire 5000 14,534.04 +.16%
Russell 1000 Growth 576.49 +.21%
Russell 1000 Value 816.82 +.14%
Morgan Stanley Consumer 707.28 -.03%
Morgan Stanley Cyclical 1,005.96 +.24%
Morgan Stanley Technology 615.29 +.73%
Transports 4,822.43 -.68%
Utilities 491.45 +.68%
MSCI Emerging Markets 122.40 +.13%

Sentiment/Internals
Total Put/Call .89 -3.26%
NYSE Arms 1.07 -17.75%
Volatility(VIX) 25.25 -4.10%
ISE Sentiment 135.0 +17.39%

Futures Spot Prices
Crude Oil 69.47 -2.32%
Reformulated Gasoline 187.25 -3.30%
Natural Gas 5.86 -2.95%
Heating Oil 195.50 -1.31%
Gold 667.20 +.11%
Base Metals 226.28 -1.81%
Copper 317.0 +.22%

Economy
10-year US Treasury Yield 4.59% -4 basis points
US Dollar 81.50 +.12%
CRB Index 299.77 -.74%

Leading Sectors
Airlines +4.53%
Engineering & Construction +2.22%
Gaming +1.72%

Lagging Sectors
Oil Service -1.36%
Energy -1.42%
Coal -1.51%

Evening Review
Market Performance Summary
WSJ Data Center
Sector Performance
ETF Performance
Style Performance
Commodity Movers
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Commentary
After-hours Movers
After-hours Stock Quote
In Play

Afternoon Recommendations
CSFB:
- Upgraded (CP) to Outperform.

Afternoon/Evening Headlines
Bloomberg:
- Robert Olstein, who oversees $2.1 billion as chief investment officer at Olstein Capital Management, said the “worst is over” for US stocks.
- Tribune Co.(TRB) shareholders approved an $8.2 billion buyout led by billionaire Sam Zell and must now wait to see if his purchase of the second-largest US newspaper publisher can be completed as planned.
- Whole Foods Market’s(WFMI) proposed takeover of Wild Oats(OATS) doesn’t break antitrust laws because the two largest natural-foods grocers compete against other chains, a judge ruled in allowing the purchase to proceed.
- Gasoline futures in NY fell to the lowest in more than five months as Hurricane Dean weakened over the Yucatan Peninsula and moved toward southern Mexico, well away from US oil platforms in the Gulf of Mexico.

Wall Street Journal:
- Delta Air Lines Inc.(DAL) is expected today to name Richard Anderson, a former CEO of Northwest Airlines Corp., as its new CEO.

Hitwise:
- Google(GOOG) got 64% of US searches in July, Yahoo!(YHOO) got 22.1% and MSN 8.8%.

Financial Times:
- Wilbur Ross, the US financier who specializes in distressed businesses, is planning a push into subprime mortgages in a sign the credit turmoil is opening up opportunities for bargain-hunting, risk-taking investors.

Financial Times Deutschland:
- Deutsche Telekom AG’s T-Mobile unit agreed to cede a 10^th of revenue earned from iPhone sales in Germany to Apple Inc.(AAPL).

Handelsblatt:
- Infineon Technologies AG, Europe’s second-biggest maker of semiconductors, plans additional acquisitions, citing CEO Wolfgang Ziebart.
- Germany’s banking system is “stable” and lenders have no liquidity shortages, chief economist at Allianz AG said.

BOTTOM LINE: The Portfolio finished higher today on gains in my Retail longs, Computer longs, Internet longs, Medical longs and Energy-related shorts. I added to my Energy-related shorts and added a new long in (ILMN) in the final hour, thus leaving the Portfolio 100% net long. The tone of the market was slightly positive today as the advance/decline line finished mildly higher, most sectors rose and volume was about average. Measures of investor anxiety were above-average into the close. Today's overall market action was modestly bullish. I-banks traded pretty well throughout the day, which always helps. Moreover, I think the accelerated decline in oil that I forecast during the many $100-per-barrel calls has begun, which should greatly help the broad market over the intermediate-term. It also gives the Fed more leeway to act without having to worry as much about inflation. Oil would likely bounce on any new hurricane threats to energy infrastructure in the Gulf, however, traders would likely use any short-term strength to unload near-record long positions. Growth stock leaders were especially strong again today. There are many more companies than are generally recognized, in my opinion, that have strong growth with reasonable valuations. Hundreds of growth stocks that I monitor with good fundamentals and low valuations jumped 2%-4% today with the S&P 500 barely higher. The market dipped this afternoon on comments by the Fed's Lacker. He said that the predominant concern is the market's impact on consumer spending and that he sees a small likelihood of a market rout hurting spending. He said that there is still a risk that inflation won't moderate but that recent inflation figures are encouraging. He also said that Fed policy must be guided by the economic outlook and that the prospects for business investment are still quite positive. Let's also not forget that Poole made some hawkish statements right before the Fed cut the discount rate. I think it is very important to focus intensely on what the Fed is actually doing rather than what various members say.

Stocks Mostly Higher into Final Hour, Led by "Growth" Stocks

Posted by Gary .....at 3:02 PM

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Computer longs, Medical longs, Internet longs, Retail longs and Energy-related shorts. I have not traded today, thus leaving the Portfolio 100% net long. The overall tone of the market is slightly positive today as the advance/decline line is mildly higher, most sectors are rising and volume is about average. My intraday gauge of investor angst is still above average. Homebuilders are under pressure again, falling 0.72%, after Bank of America downgrades and target cuts. I continue to believe homebuilders should only be used as trading vehicles over the intermediate term. Johnson Redbook weekly retail sales rose 2.2% vs. a 2.3% gain the prior week. This is still modestly below the long-term average, but up from 1.4% in early July. Moreover, Target (TGT) reported healthy results after the close yesterday and this morning. While retail sales have been modestly below average, I still see little evidence of the significant consumer-spending slowdown that is being priced into the market. The 10-year yield is falling another 5 basis points and is very near the 5.5% that I think would prompt an immediate Fed rate cut. Countrywide Financial (CFC), the source of much recent angst, is rising 8.9% on speculation that Warren Buffett is looking at the company. The CFC credit default swap is falling another 63 basis points on the news, as well. Once again, today growth stock leaders are massively outperforming the broad market. Apple (AAPL) is jumping 4.5% on positive comments from UBS. I went to a large Apple store this past weekend, and it was absolutely packed, more crowded than during the iPhone launch. There were about the same amount of people around the iPhone table but many more around the computers. As I have said for the last year, I continue to believe even the most optimistic forward estimates are too low as a result of rising market share for the Mac. I still think the stock can hit $180 before year-end, and it remains my second-largest long position, behind Google (GOOG). I expect US stocks to trade modestly higher into the close from current levels on short-covering, rate cut speculation, lower energy prices and bargain hunting.

Today's Headlines

Posted by Gary .....at 2:32 PM

Bloomberg:
- Senate Banking Committee Chairman Christopher Dodd said Federal Reserve Chairman Ben Bernanke agreed to use “all of the tools at his disposal” to restore stability to markets roiled by the subprime mortgage crisis.
- Apple Inc.(AAPL) may sell more than 800,000 iPhones this quarter, beating the company’s goal of 730,000, as consumer demand for the device stays strong, UBS AG analyst Benjamin Reitzes said.
- Harvard University’s endowment grew 23% for the fiscal year ended June 30.
- Countrywide Financial(CFC), the biggest US mortgage lender, rose as much as 12% on the NYSE on speculation Warren Buffett may be interested in buying some of its units.
- Target(TGT) and Saks Inc.(SKS), at opposite ends of the retail spectrum, said sales will rise this year on the success of higher-margin designer goods.
- The SEC said it is monitoring US investment banks closely and does not see any signs of financial weakness.
- China raised interest rates for the fourth time since March to cool the world’s fastest-growing major economy after inflation surged to a 10-year high.
- Uranium tumbled 14% last week, the most ever, as supply exceeded demand and the US Dept. of Energy prepared to sell inventories of the metal used to fuel nuclear reactors, said industry pricing service Ux Consulting.
- Crude oil is falling below $70 a barrel in NY for the first time since July 2 after Hurricane Dean missed US oil fields and was downgraded to a Category 1 storm by the US National Hurricane Center.
- US 3-month Treasury bills rose for the first time in six trading days as demand fell for the safest government securities.
- Moody’s(MCO) says global bank crisis fears are overstated.
- Moody’s Cailleteau Says Banking Crisis Concern Is Exaggerated.

Wall Street Journal:
- When Special Education Goes Too Easy on Students.
- After the Tumult, Is it Buffett Time?

Economic Releases

Posted by Gary .....at 11:18 AM

- None of note