Wednesday, February 20, 2008

Today's Headlines

Bloomberg:
- Credit Suisse’s Parker Says Subprime Writedowns Ending: Video.
- Federal Reserve officials judged that low interest rates “were appropriate for a time,” as they enacted the fastest easing of monetary policy in two decades last month.
- Fewer elderly Americans have memory loss or other symptoms of dementia today than their counterparts did a decade ago, a nationwide survey found.

- Advanced Micro(AMD) rose the most in almost three weeks in NY after American Technology Research said a merger with rival Nvidia Corp.(NVDA) would benefit both companies.
- The US Supreme Court put new limits on lawsuits against Medtronic(MDT) and other medical-device makers, saying patients generally can’t sue over products cleared for sale under the most intensive federal review process.
- MBIA’s(MBI) Brown Sees Decision This Week to Retain AAA Rating.

Wall Street Journal:
- Exile Group Claims Iran Is Developing Nuclear Warheads.

NY Times:
- Mexico Attracts Gold Prospectors as Prices Soar.
- Muscular Dystrophy Research Seeks to Ease Illness.
- Cinemark Holdings Inc.(CNK), Regal Entertainment Group(RGC) and National Amusements Inc. are spending millions to renovate and build more elaborate movie theaters to fight declining attendance.

MIT Technology Review:
- 10 Emerging Technologies 2008.

Conference Board:
- Recession Unlikely, Housing Sector Correction Nearly Over.

LA Times:
- US Farmers Want Trade with Post-Castro Cuba.

The American:
- US Markets Hurt by Regulation, Wallison Says.

Detroit Free Press:
- Ford Motor(F) is preparing to once again give bonuses to its executives, salaried workers and hourly employees.

San Francisco Chronicle:
- Stanford University will cease charging tuition to students whose families earn less than $100,000 a year, citing university Provost John Etchemendy.

Market News Intl.:
- The European Central Bank is not “ready to lower interest rates” yet, citing unidentified officials.

The Peninsula:
- Iraq announced that it will buy 40 new aircraft from US manufacturer Boeing(BA) plus another six from Canadian firm Bombadier to revitalize an ailing fleet depleted by UN sanctions.

Bear Radar

Style Underperformer:

Small-cap Growth +.07%

Sector Underperformers:

Telecom (-2.95%), Biotech (-1.23%) and Defense (-.95%)

Stocks Falling on Unusual Volume:

ANW, NDAQ, IMA, USM, SWC, NTRI, TRAK, ONXX, GRMN, CROX, EEFT, ALXN, AUXL, STP, T, HCC and TWB

CPI Rises More Than Estimates, Housing Starts Rise Slightly

- The Consumer Price Index for January rose .4% versus estimates of a .3% gain and an upwardly revised .4% increase in December.

- The CPI Ex Food & Energy for January rose .3% versus estimates of a .2% gain and a .2% gain in December.

- Housing Starts for January rose to 1012K versus estimates of 1010K and 1004K in December.

- Building Permits for January fell to 1048K versus estimates of 1050K and an upwardly revised 1080K in December.

BOTTOM LINE: The CPI for January exceeded forecasts, Bloomberg reported. Energy prices rose .7% versus a 1.7% gain the prior month. The CPI core rose 2.5% year-over-year versus a 2.4% gain the prior month. The 10-year yield is unch. on the report and gold is falling .7%. The 10-year TIPS spread, a good gauge of inflation expectations, is rising 2 basis points to 2.38% today, but is still down from 2.48% in November. Fed fund futures now imply a 100% probability of a 50 basis point rate cut at the upcoming March 18 meeting. The recent acceleration in inflation measures is almost exclusively a function of the historic speculation for commodities by investment funds. I still expect inflation measures to decelerate meaningfully over the intermediate-term as speculation diminishes on decelerating global demand, rising production and a firmer US dollar.

Housing starts in the US remained near their lowest level since 1991 in January, Bloomberg reported. For all of last year, construction began on 1.35 million housing units, the fewest since 1993, and down 25% from the prior year. Housing starts jumped 19% in the Northeast and 12% in the Midwest last month. Starts fell 3% in the South and 6% in the West. New home construction will remain muted over the intermediate-term as homebuilders continue to work down inventories.

Bull Radar

Style Outperformer:

Small-cap Value (-.11%)

Sector Outperformers:

Retail (+1.7%), Semis (+1.36%) and Computer Hardware (+1.29%)

Stocks Rising on Unusual Volume:

HPQ, XEC, TJX, PQ, IM, AKS, PGI, KALU, BCS, AXYS, TRMA, HURN, WINN, JAKK, KALU, CYBX, RCRC, LBTYK, IRBT, EXBD, SPLS, KLAC, CENX, DWSN, CEC, KOP, WLT, PMR and OIS

Links of Interest

Market Snapshot Commentary
Market Performance Summary
Style Performance
Sector Performance
WSJ Data Center
Top 20 Biz Stories

IBD Breaking News

Movers & Shakers

Upgrades/Downgrades

In Play

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

Tuesday, February 19, 2008

Wednesday Watch

Late-Night Headlines
Bloomberg:
- Hewlett-Packard(HPQ), the world’s largest personal-computer maker, posted first-quarter profit and sales that beat estimates and raised its annual forecast on demand overseas, spurring a 6.5% gain in the stock.

Wall Street Journal:
- The next chapter of the increasingly combative Democratic primary race ended this evening with Sen. Barack Obama landing his ninth straight victory in his nomination battle against Sen. Hillary Clinton with a decisive win in Wisconsin’s Democratic primary. Sen. John McCain sailed to victory in Wisconsin’s Republican primary Tuesday night, beating former Arkansas Gov. Mike Huckabee and edging closer to the 1,191 delegates he needs to clinch the nomination.
- Musharraf Insists He’ll Stay in Job After Defeat.
- Crude-oil prices finished just above $100 a barrel for the first time yesterday despite signs the world’s petroleum thirst may be subsiding.

BusinessWeek.com:
- Health Care Equipment’s Quickening Pulse. S&P says the group’s strong stock-price performance and positive fundamentals point to the potential for further gains.
- Priceline.com(PCLN) Flies High.

CNNMoney.com:
- How to profit from Castro’s resignation.

SmartMoney.com:
- Good Near-Term Visibility Favors Two Small Caps.

Forbes.com:
- Democratic presidential hopeful Barack Obamaq accused rival Hillary Clinton Tuesday of rewarding the rich and hurting future mortgage seekers with her plan to end the US housing crisis.
- The Next VMware.

Chicagotribune.com:
- Lufthansa is mulling investing in a United-Continental merger.

USA Today.com:
- A railroad based smack in the center of the country isn’t the most obvious play on globalization. But tiny Kansas City Southern(KSU) is emerging as a major beneficiary of surging trade between the USA and an increasingly prosperous Mexico.

Financial Times:
- Barack Obama’s campaign on Tuesday accused Hillary Clinton of planning to “subvert the will of the voters” following reports that she would be prepared to lobby elected delegates to change their vote if the battle for the nomination went to the Democratic convention in August.
- Investors in two Bear Stearns(BSC) hedge funds began legal action in the Cayman Islands yesterday in an attempt to seize control of the funds, which they hope to use as a platform to demand compensation from the bank.

TimesOnline:
- London’s position as an international financial center is threatened, citing the Global Financial Centres Index. Two developments are cited in the index, due out next month, as affecting the city’s popularity as a business hub: the government’s handling of the Northern Rock Plc crisis and the proposal to levy the offshore income of wealthy foreigners living in the UK.
- Wal-Mart(WMT), the world’s biggest retailer, achieved another milestone yesterday by reporting sales of more than $100 billion for a three-month period for the first time.
- Forget biofuel, forget hydrogen cells, how about a car that runs on air?

Handelsblatt:
- The US economy is expected to grow 1.7% this year, citing a report from the European Economic Advisory Group. Germany’s GDP is forecast to increase by 1.6% this year, citing the report.

China Daily:
- China Diabetes Suffers Rise to 40 Million. Diabetes is fast becoming a major health problem in the country with close to 40 million currently suffering from the disease, a health expert said.

Late Buy/Sell Recommendations
Citigroup:

- Reiterated Buy on (JCP), target $53.
- Maintained Buy on (AMAT), target $26.
- Reiterated Buy on (WMB), target raised to $45.

Night Trading
Asian Indices are -1.50% to -.50% on average.
S&P 500 futures -.47%.
NASDAQ 100 futures -.21%.

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
- (GRMN)/1.12
- (STP)/.37
- (XEC)/1.20
- (JBX)/.56
- (TJX)/.62
- (ADI)/.40
- (OII)/.81
- (CECO)/.31
- (TEX)/1.39
- (HTZ)/.26
- (SINA)/.32
- (SNPS)/.38
- (HMA)/.08
- (NTES)/.32
- (WCG)/1.62
- (RIG)/2.52

Upcoming Splits
- None of note

Economic Releases
8:30 am EST

- The Consumer Price Index for January is estimated to rise .3% versus a .4% gain in December.
- The CPI Ex Food & Energy for January is estimated to rise .2% versus a .2% gain in December.
- Housing Starts for January are estimated to rise to 1010K versus 1006K in December.
- Building Permits for January are estimated to fall to 1050K versus 1068K in December.

2:00 pm EST
- Minutes of Jan. 29-30 FOMC Meeting

Other Potential Market Movers
- The Fed’s Poole speaking, weekly MBA Mortgage Applications report, (KMT) analyst meeting, (FFIN) analyst meeting, (TKR) analyst day, (SFY) analyst meeting, (NSR) analyst meeting, Morgan Stanley Basic Materials Conference, Piper Jaffray Clean Tech & Renewables Conference and Roth Capital Growth Conference could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down by automaker and utility stocks in the region. I expect US equities to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 75% net long heading into the day.