Style Underperformer:
Mid-cap Value -.07%
Sector Underperformers:
Airlines (-4.01%), Restaurants (-1.94%) and Homebuilders (-1,39%)
Stocks Falling on Unusual Volume:
STP, MRVL,
Stocks With Unusual Put Option Activity:
1) GT 2) TMA 3) AEO 4) WYE 5) BIG
- Consumer Confidence for August rose to 56.9 versus estimates of 53.0 and a reading of 51.9 in July.
- New Home Sales for July rose to 515K versus estimates of 525K and a downwardly revised 503K in June.
- The 2Q House Price Index fell 1.4% versus estimates of a 1.5% decline and a 1.7% fall in 1Q.
BOTTOM LINE: Consumer confidence in August increased more than forecast in August as cheaper gasoline improved Americans’ moods, Bloomberg said. The Present Situation component fell to 63.2 from 65.8 in July. The Expectations component jumped to 52.8 from 42.7 in July. The percentage of Americans that said they expected fewer jobs six months from now fell to 30.6% versus 37.3% the prior month. The proportion of people expecting their incomes to rise over the next six months rose to 14.7% from 14.3% in July. Those Americans planning to purchase a home rose to 3.3%, which is back to the five-year average, from 2.8% in July. Those planning to purchase an automobile rose to 5.3% from 5.0% in July. The average cost of a gallon of regular gas peaked at $4.11 on July 16 versus $3.67/gallon yesterday. I expect confidence to continue to improve through year-end on an end to the election uncertainty, lower food/energy prices, a higher US dollar, rising stock prices, diminishing housing market fear, a modestly improving labor market, low interest rates and decelerating inflation.
Style Outperformer:
Large-cap Value (+.83%)
Sector Outperformers:
Gaming (+1.78%), HMOs (+1.63%) and Homebuilders (+1.55%)
Stocks Rising on Unusual Volume:
RRC, TIE, LFC, SRVY, DAKT, CLNE, TTWO, NDSN, ENG, IART, DGII, GYDX, SQNM, CYBX, AMLN, GSIC, PTEN and RMBS
Stocks With Unusual Call Option Activity:
1) DRI 2) TTWO 3) BIG 4) WCG 5) AXL
Late-Night Headlines
Bloomberg:
- The US dollar's rally over the past month is ``close to unprecedented'' in the 35 years since the currency was decoupled from gold and will have room to rise on bets the European Central Bank will begin cutting borrowing costs, according to Lehman Brothers Holdings Inc. The four-week rate of change in the Federal Reserve's trade-weighted U.S. dollar index as of Aug. 15 was 6.3%, the second-largest increase since 1973. ``The ECB is going to start cutting early next year -- in January,'' said Steven Englander, a currency strategist at Lehman in New York. ``Right now, the first ECB cut isn't priced in to the market until July. We are significantly more aggressive in terms of thinking how the ECB is going to respond to weaker growth and lower inflation.''
- The euro traded near a six-month low against the dollar before a report forecast to show business confidence in Germany declined this month to the lowest level in almost three years. The euro was also near a three-month low versus the yen as traders pared bets the European Central Bank will raise interest rates this year. ``There's a good chance for the euro to go lower,'' said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. ``People are giving up on bets for euro gains as the chance of an ECB rate hike fades away.''
- Investors should sell the New Zealand dollar as the drop in global commodity prices slows the nation's economic growth, according to Standard Chartered Plc. The New Zealand dollar is likely to fall 1 percent to 69 U.S. cents by year-end, compared with a previous estimate of 71 cents, as the slowdown intensifies, according to Standard Chartered. ``The recent correction in global commodities is the straw that has broken the camel's back,'' New York-based currency strategist Mike Moran and Singapore-based Callum Henderson wrote in a research note yesterday. Fund managers should reduce their New Zealand dollar-denominated holdings to ``underweight'' from ``neutral,'' they wrote.
- Symantec Corp.(SYMC), the biggest maker of security software, may meet or surpass its forecast this quarter as customers buy more information-protection products from fewer suppliers, Chief Executive Officer John Thompson said.
- Walt Disney Co.'s(DIS) ESPN cable network bought the rights to air basketball and football games of the Southeastern Conference until 2024, seizing on the popularity of one of the most successful U.S. collegiate sports leagues. ESPN will pay $2.25 billion, or about $150 million a year, the Sports Business Journal reported today. Starting next year, the ``SEC on ESPN'' brand of programming will be broadcast on ESPN, ABC, ESPNU and other channels and will include baseball, Bristol, Connecticut-based ESPN said today in a statement.
- Empresas ICA SAB,
- Corn fell for a second day on speculation demand for the grain will fall from livestock producers because of increased production of feed grains in Russia. Russia, the world's fifth-largest wheat exporter, said today its output of grains and legumes will rise to 95 million tons, up from a prior projection of 85 million tons, according to a report from RIA Novosti, citing Agriculture Minister Alexei Gordeyev.
- Crude oil was little changed after rising yesterday as Tropical Storm Gustav formed in the Caribbean Sea, raising concern it may threaten oil fields in the Gulf of Mexico.
Wall Street Journal:
- The last two Democratic presidents, Jimmy Carter and Bill Clinton, were hamstrung by rising deficits, feuds with Congress and antigovernment sentiment in Washington. Sen. Obama's advisers argue that he would be largely free from those constraints, easing the way for him to put in place big government programs, tax increases on the wealthy and trade restraints. An Obama victory would be nearly certain to usher in a larger Democratic majority, which could give his proposals smoother sailing through Congress.
- With Speech, Michelle Obama Seeks Reintroduction.
MarketWatch.com:
- Coach(COH) to buy back up to $1 billion in shares. The shares rose 4.1% in after-hours trading.
- Is the oil price spike over? And if the recent increase in oil prices hurt the economy, how much did the two-decade decline in oil prices help it? Adjusted for inflation, the price of oil shows long periods of decline as well as short periods of surge. This pattern goes back to the Civil War, when oil in real terms spiked to $109.64a barrel in 1864. Besides the Civil War peak, oil prices also spiked in 1980, to $92.49.
- Growth slowdown is Europe’s main problem. Why ECB will face pressure to rescind the last rate hike.
NY Times:
- American natural gas production is rising at a clip not seen in 50 years, pushing down prices of the fuel and reversing conventional wisdom that domestic gas fields were in irreversible decline. Domestic gas production was up 8.8 percent in the first five months of this year compared with the period a year earlier, a rate of increase last seen in 1959, during the great drilling boom that followed World War II. A Deutsche Bank report, by the analyst Shannon Nome, recently estimated that production from the eight largest shale fields was likely to hit 6.6 billion cubic feet a day this year, or 11.8 percent of national gas production, and then rise to 14.5 billion cubic feet a day by 2011 — almost a quarter of domestic production. The new drilling boom uses advanced technology to release gas trapped in huge shale beds found throughout North America — gas long believed to be out of reach. Rising production of natural gas has significant long-range implications for American consumers and businesses. A sustained increase in gas supplies over the next decade could slow the rise of utility bills, obviate the need to import gas and make energy-intensive industries more competitive. “You can have a transition with natural gas that is cheap, abundant and clean,” the House speaker, Nancy Pelosi of California, said Sunday on “Meet the Press” on NBC. She also said that an investment she and her husband had made in a company that produces natural gas for use in automobiles, revealed last week by The Wall Street Journal, was not a conflict of interest because “I’m investing in something I believe in.”
- Saudi Arabia and other Persian Gulf countries are keeping their currencies pegged to the US dollar even as it falls in value, signaling they’re willing to accept higher inflation.
- Automakers tweak existing models to boost mileage.
BusinessWeek.com:
- Demand for PCs is holding up even as the US economy slumps, says S&P analyst Tom Smith.
Reuters:
- U.S. mortgage finance company Freddie Mac(FRE) easily sold $2 billion of short-term debt on Monday, helping to reassure investors that both Freddie Mac and Fannie Mae(FNM) can fund operations without a government bailout. Freddie Mac stock gained 17 percent and Fannie Mae shares rose 3.8 percent, while the benchmark U.S. S&P500 stock index ended down nearly 2.0 percent.
Financial Times:
- Japan could introduce new dividend and capital gains tax breaks in an effort to shift savings into the stock market, under a plan being finalized by the financial services minister. The proposal - modeled on Britain's individual savings account, or Isa, introduced by Gordon Brown shortly after he became chancellor in 1997 - is part of wide-ranging reforms aimed at boosting the competitiveness of Japan's markets.
Late Buy/Sell Recommendations
Citigroup:
- Rated Buy on (LBTYA), target $44.
- Upgraded (CRM) to Buy, target $70.
- Reiterated Buy on (PSYS), target $41.
William Blair:
- Rated (MA) and (V) Outperform.
Night Trading
Asian Indices are -1.25% to -.75% on average.
S&P 500 futures +.18%.
NASDAQ 100 futures +.18%.
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Today in IBD
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Company/EPS Estimate
- (BIG)/.27
- (DAKT)/.17
- (
- (SFD)/-.02
- (TUES)/-.07
- (CHS)/.03
- (AEO)/.28
- (SAFM)/.22
- (DY)/.21
- (BGP)/-.29
- (JCG)/.32
Economic Releases
10:00 am EST
- Consumer Confidence for August is estimated to rise to 53.0 versus 51.9 in July.
- New Home Sales for July are estimated to fall to 525K versus 530K in June.
- The 2Q House Price Purchase Index is estimated to decline 1.5% versus a 1.7% fall in 1Q.
2:00 pm EST
- Minutes of Aug. 5 FOMC Meeting
Upcoming Splits
- (SYNA) 3-for-2
Other Potential Market Movers
- The weekly retail sales reports, S&P/CaseShiller Home Price Index, Richmond Fed Manufacturing Index, (ANSS) analyst meeting, (PERY) investor conference and Morgan Stanley Semiconductor Conference could also impact trading today.