BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Medical longs, Computer longs and Semi longs. I have not traded today, thus leaving the Portfolio 75% net long. The tone of the market is negative as the advance/decline line is lower, most sectors are falling and volume is below average. I am seeing some encouraging action in growth stocks recently despite today's market losses. I expect this is just the beginning of a period of growth stock outperformance. Google (GOOG), Apple (AAPL), Intuitive Surgical (ISRG) and SanDisk (SNDK) are four of my favorites at current levels. I am long all four. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering and bargain hunting.
Thursday, June 22, 2006
Stocks Lower into Final Hour on Rise in Long-Rates and Geopolitical Concerns
Today's Headlines
Bloomberg:
- The US and other major powers that pay most of the United Nations’ budget are on a collision course with developing nations over selecting a successor to Secretary-General Kofi Annan.
- Fed Bank of Atlanta President Guynn announced he will retire on Oct.1.
- The US Senate rejected two measures proposed by Democrats calling on President Bush to withdraw US troops from Iraq.
- Three-time champion Italy and Ghana reached the second round of soccer’s World Cup, as the US and the Czech Republic failed to get the wins that would have kept them in the tournament.
- US Treasuries fell a seventh day, the longest losing streak since March 2002, as traders push yields to where they expect the Fed will lift its benchmark lending rate.
Wall Street Journal:
- Iranian President Mahmoud Ahmadinejad is enjoying popularity at home, even as he is denounced abroad, because of his stance of economic populism.
- Stock market volatility of the last two months has resulted in a handful of hedge funds closing down, prompting some concern that a rough period could cause havoc on a scale comparable to that seen when Long-term Capital collapsed in 1998.
- An arrangement by Mount Sinai hospital in NY to have staff visit patients at home helps the state cut Medicaid bills and could serve as a model for the rest of the country.
- The SEC unveiled new rules for hedge “fund of funds” aimed at giving investors clearer information on fees.
- Federated Dept. Stores(FD) is close to agreeing to sell its Lord & Taylor department-store chain to private equity firm Apollo Real Estate Advisers and shopping mall developer NRDC Real Estate Advisors LLC for about $1.2 billion.
- Teenagers are increasingly choosing sports drinks, bottled teas and energy drinks over carbonated soft-drinks.
SparkSpread:
- Citadel Investment Group’s chief operating officer for energy trading resigned.
NY Post:
- Sales of higher octane gasoline have declined 46% in volume in recent months as US drivers shift to cheaper grades, citing EIA data released in March.
- Michael’s Stores(MIK) has received two bids at about $40 a share, or $5 billion.
NY Times:
- Gannett(GCI) and Tribune(TRB) have spoken to newspaper publishers about the possible sale of a stake in the job recruitment site CareerBuilder.
- Wal-Mart Stores is developing a program to teach its 1.3 million US workers to take better care of the environment and their health.
Financial Times:
- The hedge-fund practice of negotiating “side letters” with some clients could favor those customers at the expense of others.
Nihon Keizai:
- Sanyo Electric will cancel plans to set up a mobile phone venture with Nodia Oyj(NOK) of Finland after failing to agree on the details of the venture.
Financial Mail:
- Gold exploration companies seeking to revive idled gold mines in South Africa sell shares in Johannesburg and London.
- The US and other major powers that pay most of the United Nations’ budget are on a collision course with developing nations over selecting a successor to Secretary-General Kofi Annan.
- Fed Bank of Atlanta President Guynn announced he will retire on Oct.1.
- The US Senate rejected two measures proposed by Democrats calling on President Bush to withdraw US troops from Iraq.
- Three-time champion Italy and Ghana reached the second round of soccer’s World Cup, as the US and the Czech Republic failed to get the wins that would have kept them in the tournament.
- US Treasuries fell a seventh day, the longest losing streak since March 2002, as traders push yields to where they expect the Fed will lift its benchmark lending rate.
Wall Street Journal:
- Iranian President Mahmoud Ahmadinejad is enjoying popularity at home, even as he is denounced abroad, because of his stance of economic populism.
- Stock market volatility of the last two months has resulted in a handful of hedge funds closing down, prompting some concern that a rough period could cause havoc on a scale comparable to that seen when Long-term Capital collapsed in 1998.
- An arrangement by Mount Sinai hospital in NY to have staff visit patients at home helps the state cut Medicaid bills and could serve as a model for the rest of the country.
- The SEC unveiled new rules for hedge “fund of funds” aimed at giving investors clearer information on fees.
- Federated Dept. Stores(FD) is close to agreeing to sell its Lord & Taylor department-store chain to private equity firm Apollo Real Estate Advisers and shopping mall developer NRDC Real Estate Advisors LLC for about $1.2 billion.
- Teenagers are increasingly choosing sports drinks, bottled teas and energy drinks over carbonated soft-drinks.
SparkSpread:
- Citadel Investment Group’s chief operating officer for energy trading resigned.
NY Post:
- Sales of higher octane gasoline have declined 46% in volume in recent months as US drivers shift to cheaper grades, citing EIA data released in March.
- Michael’s Stores(MIK) has received two bids at about $40 a share, or $5 billion.
NY Times:
- Gannett(GCI) and Tribune(TRB) have spoken to newspaper publishers about the possible sale of a stake in the job recruitment site CareerBuilder.
- Wal-Mart Stores is developing a program to teach its 1.3 million US workers to take better care of the environment and their health.
Financial Times:
- The hedge-fund practice of negotiating “side letters” with some clients could favor those customers at the expense of others.
Nihon Keizai:
- Sanyo Electric will cancel plans to set up a mobile phone venture with Nodia Oyj(NOK) of Finland after failing to agree on the details of the venture.
Financial Mail:
- Gold exploration companies seeking to revive idled gold mines in South Africa sell shares in Johannesburg and London.
Job Market Still Healthy, Leading Indicators Fall Again
- Initial Jobless Claims for last week rose to 308K versus estimates of 306K and 297K the prior week.
- Continuing Claims rose to 2439K versus estimates of 2415K and 2421K prior.
- Leading Indicators for May fell .6% versus estimates of a .5% decline and a .1% fall in April.
- Continuing Claims rose to 2439K versus estimates of 2415K and 2421K prior.
- Leading Indicators for May fell .6% versus estimates of a .5% decline and a .1% fall in April.
BOTTOM LINE: First-time claims for unemployment benefits in the US rose last week from a four-month low to a level that suggests strength in the labor market, Bloomberg said. The four-week moving average of claims fell to 311,250 from 316,250 the prior week. The unemployment rate among those eligible for benefits, which tracks the US unemployment rate, held at 1.9%. I continue to believe the labor market will remain relatively healthy over the intermediate-term without generating substantial unit labor cost increases, which account for two-thirds of inflation.
An index of US leading economic indicators fell in May by the most in nine months, signaling the robust pace of growth earlier this year will give way to a slower expansion, Bloomberg said. According to a recent survey by Bloomberg, economists expect US growth to average about 3% from this quarter through the first quarter of 2007. Building permits subtracted .06 percentage points from the index. I continue to expect US growth to slow to around average levels through year-end. Another period of concern that the economy is slowing too much is likely over the next 6 weeks. I continue to expect the Fed to hike rates only one more time before a “pause.”
Thursday Watch
Late-Night Headlines
Bloomberg:
- China may announce rules his month aimed at curbing foreign investment in real estate.
- While steel shares are among the US stock market’s best performer’s this year, the total number of shares sold with borrowed money, or short interest, for companies in the S&P Steel Index rose 20% from February through May.
Reuters:
- Hewlett-Packard’s(HPQ) notebook-computer sales will rise during the next back-to-school season as consumers haven’t cut back on computer spending.
Late Buy/Sell Recommendations
- None of note
Night Trading
Asian Indices are +1.0% to +2.50% 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
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
- (CMVT)/.19
- (DLM)/.20
- (FDO)/.35
- (FINL)/.09
- (GTK)/.42
- (ISLE)/.56
- (ORCL)/.28
- (RAD)/.03
- (SLR)/.04
- (TEK)/.42
Upcoming Splits
- (DAKT) 2-for-1
- (EXPD) 2-for-1
- (TROW) 2-for-1
Economic Releases
8:30 am EST
- Initial Jobless Claims for last week are estimated to rise to 306K versus 295K the prior week.
- Continuing Claims are estimated to fall to 2415K versus 2425K prior.
10:00 am EST
- Leading Indicators for May are estimated to fall .5% versus a .1% decline in April.
Bloomberg:
- China may announce rules his month aimed at curbing foreign investment in real estate.
- While steel shares are among the US stock market’s best performer’s this year, the total number of shares sold with borrowed money, or short interest, for companies in the S&P Steel Index rose 20% from February through May.
Reuters:
- Hewlett-Packard’s(HPQ) notebook-computer sales will rise during the next back-to-school season as consumers haven’t cut back on computer spending.
Late Buy/Sell Recommendations
- None of note
Night Trading
Asian Indices are +1.0% to +2.50% 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
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
- (CMVT)/.19
- (DLM)/.20
- (FDO)/.35
- (FINL)/.09
- (GTK)/.42
- (ISLE)/.56
- (ORCL)/.28
- (RAD)/.03
- (SLR)/.04
- (TEK)/.42
Upcoming Splits
- (DAKT) 2-for-1
- (EXPD) 2-for-1
- (TROW) 2-for-1
Economic Releases
8:30 am EST
- Initial Jobless Claims for last week are estimated to rise to 306K versus 295K the prior week.
- Continuing Claims are estimated to fall to 2415K versus 2425K prior.
10:00 am EST
- Leading Indicators for May are estimated to fall .5% versus a .1% decline in April.
BOTTOM LINE: Asian indices are higher, boosted by commodity and technology stocks in the region. I expect US equities to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.
Wednesday, June 21, 2006
***Alert***
I am unable to post the Wednesday Close due to a scheduling conflict. I will post the Thursday Watch later this evening. Sorry for the inconvenience.
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