Portfolio Manager's Commentary on Investing and Trading in the U.S. Financial Markets
Tuesday, May 27, 2008
Stocks Higher into Final Hour on Falling Energy Prices, Diminishing Credit Angst
Today's Headlines
Bloomberg:
- Crude oil fell almost $4/bbl. in NY on signs that US fuel consumption is dropping because of a slowing economy and record energy prices. Russia’s oil production may rise to 12 million barrels a day after Prime Minister Putin’s government eases taxes, billionaire Chalva Tchigirinski said. Putin yesterday approved a tax-cut plan to stimulate oil output that may be sent to lawmakers this week. Russian oil production fell to 9.72 million barrels a day in April, the lowest in 18 months. “The news from Russia is significant,” said Tom Bentz, a broker at BNP Paribas in NY. US motorists were forecast to make 1% fewer automobile journeys of at least 50 miles during last weekend’s holiday than a year ago, the AAA said. US fuel consumption averaged 20.3 million barrels a day in the four weeks ended May 16, down 1.3% from a year earlier.
- Rice futures tumbled by their daily limit for the second session as producers eased export bans, alleviating concerns that global supplies will fail to meet demand.
- Nickel extended a decline into its fifth week in London as high oil costs threaten to damp world economic growth, further weakening demand for the metal used to make stainless steel.
- Housing demand in
- Wheat prices, at their lowest in almost nine months, may tumble further as farmers start to bring in a forecast record crop, US Wheat Assoc. IP Vincent Peterson said.
Wall Street Journal:
- Investors last year craved international exposure thanks to the double-digit gains of many overseas markets. Now, it looks like the sweet spot may be in the US as domestic stocks, if not the broader economy, show signs of recovery.
- Bush’s Shift in Rhetoric Almost Lost War, Feith Says. On television and radio, in print and on the Internet, day after day they repeated the claim that the undiscovered stockpiles were the sum and substance of why the U.S. went to war against Saddam.
- Agriculture’s Last Frontier. African Farmers, US Companies Try to Create Another Breadbasket With Hybrids.
- Violence in
NY Times:
- US Truckers Sell Vehicles as Fuel Prices Rise.
Women’s Wear Daily:
- Sears Holdings Corp.(SHLD) signed rap singer LL Cool J to start an apparel brand for the retailer.
- Baosteel Group and Taiyuan Iron & Steel Group will cut stainless steel output 30% each next month because of a decline in prices. Four stainless steel producers in
Frankfurter Allgemeine Zeitung:
- Google Inc.(GOOG) said within a few years mobile advertising will generate more sales than ads addressing personal-computer users via the Internet, citing CEO Eric Schmidt. There are no limits for search engine marketing and the mobile Internet is “the next big wave,” he said.
Xinhua:
- China aftershocks may continue for months.
- Petrobras(PBR),
Bear Radar
Style Underperformer:
Large-cap Value -.31%
Sector Underperformers:
Goldirlind (-2.95%), Coal (-1.73%) and Steel (-1.42%)
Stocks Falling on Unusual Volume:
WBD, ADM, UBS, CHL,
Stocks With Unusual Put Option Activity:
1) LRCX 2) PXP 3) RHT 4) JCG 5) UPS
Consumer Confidence Depressed, New Home Sales Rise
- Consumer Confidence for May fell to 57.2 versus estimates of 60.0 and a reading of 62.8 in April.
- New Home Sales for April rose to 526K versus estimates of 520K and 509K in March.
BOTTOM LINE: Confidence among US consumers fell to the lowest level in more than 15 years, Bloomberg reported. The Present Conditions component fell to 74.4 from 81.9 in April. The Expectations component fell to 45.7 from 50.0 the prior month. The average price of regular unleaded gasoline rose to a record $3.94 a gallon yesterday, according to data from AAA. Those planning to purchase a large appliance remained at 32.10, the same as April. Confidence in the northern part of the country continues to skew the overall gauge. Confidence in the Northeast Central region, where most media outlets and hedge funds are headquartered, fell another 16% to an extraordinarily depressed 34.80. I still think the current “US negativity bubble” will lose some air over the coming months as energy prices fall, credit turmoil ends, housing fears subside, the job market improves, stocks rise, election uncertainty ends, fiscal/monetary stimuli take hold, the US dollar rises, inflation decelerates and interest rates remain low.
Bull Radar
Style Outperformer:
Small-cap Growth (-.89%)
Sector Outperformers:
Semis (+2.67%), Airlines (+2.16%) and Networking (+1.52%)
Stocks Rising on Unusual Volume:
TZOO, CNSL, KTC, WNR, IXYS, VLCCF, CEDC, ASIA, HIBB, NDSN, LRCX, SNHY, KELYA, EXBD, DDUP, CAKE, CBRL, AMSC, UTHR, ALGT, LQDT, PWRD, PENN, SR, SXI, TGI, BCE and FLO
Stocks With Unusual Call Option Activity:
1) BIIB 2) SFD 3) NSM 4) SPF 5) IMCL
Links of Interest
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