Indices
S&P 500 1,228.81 +2.88%
DJIA 10,568.70 +2.57%
NASDAQ 2,151.69 +4.58%
Russell 2000 667.80 +3.85%
DJ Wilshire 5000 12,282.87 +3.25%
S&P Equity Long/Short Index 1,071.99 +4.49%
S&P Barra Growth 587.08 +3.16%
S&P Barra Value 637.50 +2.61%
Morgan Stanley Consumer 587.31 +2.97%
Morgan Stanley Cyclical 730.42 +2.18%
Morgan Stanley Technology 506.56 +7.18%
Transports 3,740.55 +6.61%
Utilities 432.38 +10.76%
S&P 500 Cum A/D Line 7,509.00 +2.48%
Bloomberg Crude Oil % Bulls 35.0 +23.67%
Put/Call .82 unch.
NYSE Arms .85 -55.26%
Volatility(VIX) 11.92 -1.0%
ISE Sentiment 170.00 +3.66%
AAII % Bulls 31.88 -31.57%
US Dollar 89.52 +.48%
CRB 332.97 +9.58%
Futures Spot Prices
Crude Oil 66.24 +13.23%
Unleaded Gasoline 209.68 +38.04%
Natural Gas 13.92 +80.79%
Heating Oil 212.96 +25.27%
Gold 471.60 +8.39%
Base Metals 129.51 +6.93%
Copper 172.70 +25.14%
10-year US Treasury Yield 4.32% +10.48%
Average 30-year Mortgage Rate 5.91% +6.10%
Leading Sectors
Energy +21.11%
Oil Service +20.54%
Biotech +13.69%
Semis +13.54%
I-Banks +13.25%
Lagging Sectors
Broadcasting -2.53%
Hospitals -2.94%
Gaming -4.65%
Retail -6.05%
Airlines -11.81%
This Year’s Winners
This Year’s Losers
*3-Month % Change
Friday, September 30, 2005
Stocks Mixed Mid-day as Rising Long-term Rates Offset Lower Energy Prices
Indices
S&P 500 1,226.08 -.13%
DJIA 10,535.33 -.17%
NASDAQ 2,142.72 +.06%
Russell 2000 665.07 +.01%
DJ Wilshire 5000 12,253.87 -.01%
S&P Barra Growth 585.31 -.14%
S&P Barra Value 636.51 -.13%
Morgan Stanley Consumer 584.77 +.06%
Morgan Stanley Cyclical 728.39 +.38%
Morgan Stanley Technology 504.68 +.53%
Transports 3,731.65 +.36%
Utilities 431.25 -.40%
Put/Call .74 -5.13%
NYSE Arms .76 -2.35%
Volatility(VIX) 12.24 unch.
ISE Sentiment 206.00 +21.89%
US Dollar 89.41 +.01%
CRB 333.04 -.54%
Futures Spot Prices
Crude Oil 66.00 -1.03%
Unleaded Gasoline 208.00 -7.62%
Natural Gas 14.20 +.03%
Heating Oil 206.50 -2.81%
Gold 472.00 -.80%
Base Metals 129.51 -1.24%
Copper 172.90 -.60%
10-year US Treasury Yield 4.33% +.87%
Leading Sectors %
Airlines +2.36%
Semis +1.74%
Nanotechnology +1.62%
Lagging Sectors
Oil Service -.73%
Energy -.79%
Gold & Silver -1.10%
S&P 500 1,226.08 -.13%
DJIA 10,535.33 -.17%
NASDAQ 2,142.72 +.06%
Russell 2000 665.07 +.01%
DJ Wilshire 5000 12,253.87 -.01%
S&P Barra Growth 585.31 -.14%
S&P Barra Value 636.51 -.13%
Morgan Stanley Consumer 584.77 +.06%
Morgan Stanley Cyclical 728.39 +.38%
Morgan Stanley Technology 504.68 +.53%
Transports 3,731.65 +.36%
Utilities 431.25 -.40%
Put/Call .74 -5.13%
NYSE Arms .76 -2.35%
Volatility(VIX) 12.24 unch.
ISE Sentiment 206.00 +21.89%
US Dollar 89.41 +.01%
CRB 333.04 -.54%
Futures Spot Prices
Crude Oil 66.00 -1.03%
Unleaded Gasoline 208.00 -7.62%
Natural Gas 14.20 +.03%
Heating Oil 206.50 -2.81%
Gold 472.00 -.80%
Base Metals 129.51 -1.24%
Copper 172.90 -.60%
10-year US Treasury Yield 4.33% +.87%
Leading Sectors %
Airlines +2.36%
Semis +1.74%
Nanotechnology +1.62%
Lagging Sectors
Oil Service -.73%
Energy -.79%
Gold & Silver -1.10%
BOTTOM LINE: The Portfolio is substantially higher mid-day on gains in my Internet longs, Semiconductor longs and Airline longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is neutral as the advance/decline line is slightly lower, most sectors are higher and volume is slightly below average. Measures of investor anxiety are lower. Today’s overall market action is neutral given the bounce in long-term rates, decline in energy prices and mixed economic data. I am seeing a number of leading indicators that point to a deceleration in unit labor costs, which comprise two-thirds of inflation. The Fed has stated numerous times that this is their chief focus with respect to inflation. I believe the net effects of the hurricanes will further dampen labor costs. I will be very surprised if the yield on the 10-year Treasury note breaches the high of 4.92% seen in June of last year any time soon. I expect US stocks to trade modestly higher from current levels into the close on short-covering and quarter-end window dressing.
Today's Headlines
Bloomberg:
- Procter & Gamble won approval from the US Federal Trade Commission for its $57 billion purchase of Gillette after agreeing to divest Gillette’s Right Guard deodorant and Rembrandt tooth-whitening brands.
- Gasoline futures in NY fell for a second day on signs that high prices are cutting demand from motorists.
- US Treasuries are falling after a manufacturing report for the Chicago region was much stronger than expected.
Wall Street Journal:
- Referrals by doctors in the more than $40 billion US medical laboratory testing business have come under scrutiny over whether physicians are profiting by sending work to outside labs that offer discounts.
- New Jersey, Michigan, Oklahoma and 10 other states have agreed to participate in a computer program that would add local taxes to residents’ purchases over the Internet.
NY Times:
- The cost of using natural gas to heat homes in the US may rise about $400 per household to an average $1,130 this winter because of tight supplies.
Financial Times:
- Philadelphia Federal Reserve Bank President Anthony Santomero said he expects US economic growth to rebound from a second-half slowdown caused by Hurricanes Katrina and Rita.
- Procter & Gamble won approval from the US Federal Trade Commission for its $57 billion purchase of Gillette after agreeing to divest Gillette’s Right Guard deodorant and Rembrandt tooth-whitening brands.
- Gasoline futures in NY fell for a second day on signs that high prices are cutting demand from motorists.
- US Treasuries are falling after a manufacturing report for the Chicago region was much stronger than expected.
Wall Street Journal:
- Referrals by doctors in the more than $40 billion US medical laboratory testing business have come under scrutiny over whether physicians are profiting by sending work to outside labs that offer discounts.
- New Jersey, Michigan, Oklahoma and 10 other states have agreed to participate in a computer program that would add local taxes to residents’ purchases over the Internet.
NY Times:
- The cost of using natural gas to heat homes in the US may rise about $400 per household to an average $1,130 this winter because of tight supplies.
Financial Times:
- Philadelphia Federal Reserve Bank President Anthony Santomero said he expects US economic growth to rebound from a second-half slowdown caused by Hurricanes Katrina and Rita.
Incomes/Spending Decline, Confidence Depressed by Hurricanes, Chicago Manufacturing Soars
- Personal Income for August is estimated to fall .1% versus estimates of a .1% decline and a .3% increase in July.
- Personal Spending for August is estimated to fall .5% versus estimates of a .2% fall and an upwardly revised 1.2% increase in July.
- PCE Core(MoM) for August rose .2% versus estimates of a .1% increase and a .1% gain in July.
- Final Univ. of Mich. Consumer Confidence for September fell to 76.9 versus estimates of 78.0 and a reading of 76.9 in August.
- Chicago Purchasing Manager for September rose to 60.5 versus estimates of 52.0 and a reading of 49.2 in August.
- Personal Spending for August is estimated to fall .5% versus estimates of a .2% fall and an upwardly revised 1.2% increase in July.
- PCE Core(MoM) for August rose .2% versus estimates of a .1% increase and a .1% gain in July.
- Final Univ. of Mich. Consumer Confidence for September fell to 76.9 versus estimates of 78.0 and a reading of 76.9 in August.
- Chicago Purchasing Manager for September rose to 60.5 versus estimates of 52.0 and a reading of 49.2 in August.
BOTTOM LINE: US personal spending fell in August by the most in three years and incomes unexpectedly dropped, Bloomberg reported. Uninsured property losses from hurricane Katrina reduced personal income by about $100 billion. The savings rate gained to -.7% from -1.1% in July. Incomes rose 5.6% in August from the same month last year, paced by a 6.6% gain in wages and salaries, Bloomberg reported. The year-over-year gain in incomes is almost twice the rate of inflation. Spending and incomes will likely take a larger hit in September as more of the effects of the hurricanes are felt.
US consumer confidence plunged by the most in 25 years after Hurricanes Katrina and Rita ravaged the Gulf Coast and pushed gasoline prices to record highs, Bloomberg reported. The expectations index, based on optimism about the next one to five years, dropped to 63.3 from 76.9. I expect consumer sentiment to bounce back sharply in October.
Chicago-area manufacturing expanded more than expected in September, signaling that firms are able to cope with higher energy prices after Hurricane Katrina and Rita, Bloomberg said. The prices paid component of the index rose to 76.3 from 62.9. The new orders component soared to 63.4 from 46.5 the month before. The employment component of the index fell to 48.4 from 51.7. This was a very impressive report given the headwinds from the hurricanes. I expect manufacturing to continue to contribute to economic growth through year-end.
Friday Watch
Late-Night Headlines
Bloomberg:
- China, producer of a third of the world’s steel, may increase output of the alloy by 25% this year, pushing down prices and increasing demand for steelmaking raw materials including iron ore and coking coal.
- The US dollar gained against the yen, heading for a third winning week, on speculation of further interest-rate increases by the Federal Reserve, which will lure funds from overseas.
- Japan’s consumer prices fell in August for a third month, suggesting more than seven years of deflation lingers and the central bank won’t rush to end its policy of flooding the world’s second-largest economy with cash.
- Crude oil is falling in NY amid concern high fuel prices after hurricanes Katrina and Rita are eroding energy demand.
Wall Street Journal:
- Delphi Corp. may have breached a loan agreement with bank lenders.
AFP:
- France’s jobless rate was unchanged for a second month in August at 9.9%, almost twice the rate in the United States.
Financial Times:
- Morgan Stanley plans to spend as much as $3 billion to quadruple its investment in Japan’s hotel sector.
- Liz Claiborne, the maker of the Mexx and Juicy Couture clothing brands, is considering re-establishing a presence in China after closing stores there in the 1990s.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on ENH, CAH, DO and RE.
- Reiterated Underperform on MU.
Business Week:
- Medis Technologies’(MDTL) shares may climb as the fuel-cell maker’s disposable, portable Power Packs used to recharge cellular telephones, are more widely adopted.
- NuVasive’s(NUVA) shares may benefit from growing sales at the make of tools and implants used to treat spinal problems.
Night Trading
Asian Indices are -.25% to +.50% on average.
S&P 500 indicated +.11%.
NASDAQ 100 indicated +.19%.
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
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
NDN/.11
DRL/.41
IPG/.15
SKS/-.20
TOM/-.06
Upcoming Splits
- RMD 2-for-1
Economic Releases
8:30 am EST
- Personal Income for August is estimated to rise .3% versus a .3% gain in July.
- Personal Spending for August is estimated to fall .2% versus a 1.0% increase in July.
- PCE Core(MoM) for August is estimated to rise .1% versus a .1% increase in July.
9:45 am EST
- Final Univ. of Mich. Confidence for September is estimated to rise to 78.0 versus a prior estimate of 76.9.
10:00 am EST
- Chicago Purchasing Manager for September is estimated to rise to 52.0 versus a reading of 49.2 in August.
Bloomberg:
- China, producer of a third of the world’s steel, may increase output of the alloy by 25% this year, pushing down prices and increasing demand for steelmaking raw materials including iron ore and coking coal.
- The US dollar gained against the yen, heading for a third winning week, on speculation of further interest-rate increases by the Federal Reserve, which will lure funds from overseas.
- Japan’s consumer prices fell in August for a third month, suggesting more than seven years of deflation lingers and the central bank won’t rush to end its policy of flooding the world’s second-largest economy with cash.
- Crude oil is falling in NY amid concern high fuel prices after hurricanes Katrina and Rita are eroding energy demand.
Wall Street Journal:
- Delphi Corp. may have breached a loan agreement with bank lenders.
AFP:
- France’s jobless rate was unchanged for a second month in August at 9.9%, almost twice the rate in the United States.
Financial Times:
- Morgan Stanley plans to spend as much as $3 billion to quadruple its investment in Japan’s hotel sector.
- Liz Claiborne, the maker of the Mexx and Juicy Couture clothing brands, is considering re-establishing a presence in China after closing stores there in the 1990s.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on ENH, CAH, DO and RE.
- Reiterated Underperform on MU.
Business Week:
- Medis Technologies’(MDTL) shares may climb as the fuel-cell maker’s disposable, portable Power Packs used to recharge cellular telephones, are more widely adopted.
- NuVasive’s(NUVA) shares may benefit from growing sales at the make of tools and implants used to treat spinal problems.
Night Trading
Asian Indices are -.25% to +.50% on average.
S&P 500 indicated +.11%.
NASDAQ 100 indicated +.19%.
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
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
NDN/.11
DRL/.41
IPG/.15
SKS/-.20
TOM/-.06
Upcoming Splits
- RMD 2-for-1
Economic Releases
8:30 am EST
- Personal Income for August is estimated to rise .3% versus a .3% gain in July.
- Personal Spending for August is estimated to fall .2% versus a 1.0% increase in July.
- PCE Core(MoM) for August is estimated to rise .1% versus a .1% increase in July.
9:45 am EST
- Final Univ. of Mich. Confidence for September is estimated to rise to 78.0 versus a prior estimate of 76.9.
10:00 am EST
- Chicago Purchasing Manager for September is estimated to rise to 52.0 versus a reading of 49.2 in August.
BOTTOM LINE: Asian indices are mostly higher, boosted by technology companies in the region after Micro Technology of the US reported a much better-than-expected quarter. I expect US equities to open modestly higher and to build on gains throughout the day. I am seeing evidence all over the globe of a substantial increase in energy demand destruction. While the effects of the hurricanes are propping up energy prices in the short-run, they greatly increased the odds of an outright collapse in oil over the intermediate-term. I can not stress enough how flawed I believe the peak oil theory is. These types of doomsday predictions were commonly accepted in the early 80s. It has taken over 20 years for oil to approach those inflation-adjusted prices. Is it really different this time? If anything the collapse may be even more breathtaking this go around as technological innovation is accelerating at a far more rapid pace. The Portfolio is 100% net long heading into the day.
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