Bottom Line: The DJTA has returned 25.2% this year. With falling energy prices and continuing solid US economic growth, this index should reach an ALL-TIME high before year-end.
Sunday, December 05, 2004
Chart of the Week
The Dow Jones Transportation Average
Bottom Line: The DJTA has returned 25.2% this year. With falling energy prices and continuing solid US economic growth, this index should reach an ALL-TIME high before year-end.
Bottom Line: The DJTA has returned 25.2% this year. With falling energy prices and continuing solid US economic growth, this index should reach an ALL-TIME high before year-end.
Market Week in Review
S&P 500 1,191.17 +.72%
Click here for the Weekly Wrap by Briefing.com.
Click here for the Weekly Wrap by Briefing.com.
Bottom Line: U.S. stocks finished moderately higher last week, led once again by small-cap and technology shares. The Russell 2000 made another ALL-TIME high and the Transport Index is nearing its historic high set in May 1999. As well, volume accelerated and advances outnumbered decliners by a healthy margin. In my opinion, energy prices have peaked for the intermediate-term and should lead the CRB Index lower next year, which bodes well for future inflation readings. I suspect Intel's positive commentary on inventories and raised guidance will be echoed many times by other tech companies over the next couple of months. The recent worries over consumer spending are likely overblown. Holiday retail sales should benefit from a recent 20% plunge in the average price of gasoline, an almost 20% gain in the average stock from August lows, incomes rising at a better rate and unemployment falling. Internet commerce is probably cannibalizing traditional retail sales more than is currently realized. Overall, this holiday shopping/travel season should be a good one.
Saturday, December 04, 2004
Economic Week in Review
ECRI Weekly Leading Index 132.30 -.30%
Preliminary 3Q GDP rose 3.9% versus estimates of 3.7% and a 3.7% prior estimate. Preliminary 3Q Personal Consumption rose 5.1% versus estimates of a 4.7% increase and a 4.6% prior estimate. The Preliminary 3Q Price Deflator rose 1.3% versus estimates of a 1.3% increase and a prior estimate of a 1.3% gain. The 5.1% gain in consumer spending was the fastest in almost 3 years, Bloomberg said. "The economy had a lot more momentum and underlying strength in the third quarter," said James Glassman, a senior economist at J.P. Morgan. The Price Deflator, a measure of inflation, decelerated to 1.3% from 3.2% during the second quarter. As well, the prices of goods and services bought by consumers excluding food and energy rose at a .7% annual pace, the smallest gain since the 4th quarter of 1962. Finally, final sales to domestic purchases, a good gauge of U.S. demand, because it excludes trade and inventories, rose at a 4.9% annual rate, the strongest in a year, Bloomberg reported.
The Chicago Purchasing Manager Index for November fell to 65.2 versus estimates of 62.0 and a 16-year high reading of 68.5 in October. The employment component of the index soared to a 16-year high, suggesting the manufacturing recovery is secure and will help drive economic growth, Bloomberg reported. An index of new orders fell to 70.0 from a 20-year high of 79.4 in October. The general index "is still quite elevated, as are the new orders and production sub-indices," said Joshua Shapiro, chief U.S. economist at MFR Inc.
Consumer Confidence for November fell to 90.5 versus estimates of 96.0 and a reading of 92.9 in October. Confidence fell among those who earn less than $35,000/year as higher gas prices took their toll on sentiment. However, confidence rose for those making $35,000 or more, Bloomberg reported. Moreover, the group's overall gauge of optimism about consumer's present situation rose to 95.2 from 94 in October.
Personal Income for October rose .6% versus estimates of a .5% increase and a .2% rise in September. Personal Spending for October rose .7% versus estimates of a .4% increase and a rise of .6% in September. The Core PCE Deflator, Greenspan's favorite inflation measure, rose 1.5% at an annualized rate versus estimates of a 1.4% increase and a 1.5% gain in September. "We are starting off the fourth quarter on better footing than we expected," said Stephen Stanly, chief economist at RBS Greenwich Capital. The Fed said in its Beige Book summary "Labor markets continued to improve over the past few weeks, with numerous reports of hiring." "We are ending the year very, very strong," said Norbert Ore, chairman of the group's manufacturing committee. Finally, the Business Roundtable's outlook index signaled that businesses plan to increase capital spending over the next six months at the highest rate since the survey began in 2002, Bloomberg reported.
Construction Spending for October was unch. versus estimates of a .7% rise and a .1% gain in September. U.S. construction spending held steady in October at its highest level ever, as a decline in homebuilding was offset by increased government spending on streets and highways, Bloomberg said. Overall construction spending rose 7.1% over the same month a year earlier, Bloomberg reported. People have started to get the hurricane checks from their insurance settlements, which should benefit construction spending in the near-term, Bloomberg said.
ISM Manufacturing for November rose to 57.8 versus estimates of 57.0 and a reading of 56.8 in October. ISM Prices Paid for November fell to 74.0 versus estimates of 75.3 and a reading of 78.5 in October. U.S. manufacturing strengthened in November, with growth accelerating for the first time in four months, as orders and employment picked up. The new orders component of the index rose to 61.5 from 58.3 in October and the employment component rose to 57.6 from 54.8. Moreover, the prices paid index fell to the lowest level since December 2003. "The manufacturing sector is still growing at a healthy pace, and that's consistent with the decent growth in the overall economy," said Ethan Harris, chief U.S. economist at Lehman Brothers. Morgan Stanley economists increased their estimate for fourth-quarter US economic growth to 4.7% from 4.5%, Bloomberg reported. "A broad-based manufacturing expansion is under way," said Daniel Meckstroth, chief economist at Manufacturers Alliance.
Total Vehicle Sales for November fell to 16.4M versus estimates of 16.5M and 17.0M in October. Domestic Vehicle Sales in November fell to 12.9M versus estimates of 13.1M and 13.2M in October. U.S. automakers' market share hit a record low after declines at General Motors and Ford, Bloomberg said. DaimlerChrysler AG and Asian carmakers' share, led by Nissan's 26% gain, rose. "The domestics can't compete on just price," Argus Research analyst Kevin Tynan said. "Chrysler has done a good job of maintaining momentum with new models and Asian automakers attract buyers because customers are seeking the best value and quality for your dollar."
Factory Orders for October rose .5% versus estimates of a .2% gain and unch. in September. "The economy is on a relatively robust path" said Glenn Hubbard, dean of the Columbia Business School. Deere & Co., the world's largest maker of farm equipment, reported a pick up in new orders last quarter to the best pace since 1996. The Factory inventory-to-shipments ratio held at 1.24 months, near the record low 1.22 months reached in March, Bloomberg said.
The Unemployment Rate for November fell to 5.4% versus estimates of 5.4% and 5.5% in October. Average Hourly Earnings for November rose .1% versus estimates of a .3% rise and a .3% increase in October. The Change in Non-farm Payrolls for November was 112K versus estimates of 200K and a downwardly revised 303K in October. The Monster Employment Index, which measures demand for employees based on online recruiting, rose in November to the highest level since its inception last year. Postings for healthcare workers, business and finance professional showed the biggest increases, Bloomberg reported. The Fed should continue to raise interest rates "at a measured pace" next year as the economy expands close to a 4% rate, creating "solid but moderate gains in employment," said Philly Fed President Santomero. Job growth has averaged 185,450/month this year, the best since 1999, Bloomberg said. As well, current job growth compares favorably to the entire 1990s in which payrolls increased an average of 180,350/month. Finally, a recent survey by the Business Roundtable found that 80% of CEOs expect hiring to increase or remain the same over the next six months, Bloomberg said. Crude oil prices have declined 14% this week, the biggest weekly decline since the start of the U.S.-led liberation of Iraq, Bloomberg reported. Moreover, oil has plunged 23.1% from its high set 5 weeks ago. "As energy prices come down, there should be a reversal, and companies will hire more," said John Silvia, chief economist at Wachovia.
ISM Non-Manufacturing for November rose to 61.3 versus estimates of 58.5 and a reading of 59.8 in October. "Demand for services from consumers is quite strong," said Christopher Rupey, senior financial economist at Bank of Tokyo-Mitsubishi. The index of order backlogs rose to 54.0 from 52.5. Prices paid, a measure of costs for purchased materials and services, fell to 71.0 from 74.1, Bloomberg said.
Preliminary 3Q GDP rose 3.9% versus estimates of 3.7% and a 3.7% prior estimate. Preliminary 3Q Personal Consumption rose 5.1% versus estimates of a 4.7% increase and a 4.6% prior estimate. The Preliminary 3Q Price Deflator rose 1.3% versus estimates of a 1.3% increase and a prior estimate of a 1.3% gain. The 5.1% gain in consumer spending was the fastest in almost 3 years, Bloomberg said. "The economy had a lot more momentum and underlying strength in the third quarter," said James Glassman, a senior economist at J.P. Morgan. The Price Deflator, a measure of inflation, decelerated to 1.3% from 3.2% during the second quarter. As well, the prices of goods and services bought by consumers excluding food and energy rose at a .7% annual pace, the smallest gain since the 4th quarter of 1962. Finally, final sales to domestic purchases, a good gauge of U.S. demand, because it excludes trade and inventories, rose at a 4.9% annual rate, the strongest in a year, Bloomberg reported.
The Chicago Purchasing Manager Index for November fell to 65.2 versus estimates of 62.0 and a 16-year high reading of 68.5 in October. The employment component of the index soared to a 16-year high, suggesting the manufacturing recovery is secure and will help drive economic growth, Bloomberg reported. An index of new orders fell to 70.0 from a 20-year high of 79.4 in October. The general index "is still quite elevated, as are the new orders and production sub-indices," said Joshua Shapiro, chief U.S. economist at MFR Inc.
Consumer Confidence for November fell to 90.5 versus estimates of 96.0 and a reading of 92.9 in October. Confidence fell among those who earn less than $35,000/year as higher gas prices took their toll on sentiment. However, confidence rose for those making $35,000 or more, Bloomberg reported. Moreover, the group's overall gauge of optimism about consumer's present situation rose to 95.2 from 94 in October.
Personal Income for October rose .6% versus estimates of a .5% increase and a .2% rise in September. Personal Spending for October rose .7% versus estimates of a .4% increase and a rise of .6% in September. The Core PCE Deflator, Greenspan's favorite inflation measure, rose 1.5% at an annualized rate versus estimates of a 1.4% increase and a 1.5% gain in September. "We are starting off the fourth quarter on better footing than we expected," said Stephen Stanly, chief economist at RBS Greenwich Capital. The Fed said in its Beige Book summary "Labor markets continued to improve over the past few weeks, with numerous reports of hiring." "We are ending the year very, very strong," said Norbert Ore, chairman of the group's manufacturing committee. Finally, the Business Roundtable's outlook index signaled that businesses plan to increase capital spending over the next six months at the highest rate since the survey began in 2002, Bloomberg reported.
Construction Spending for October was unch. versus estimates of a .7% rise and a .1% gain in September. U.S. construction spending held steady in October at its highest level ever, as a decline in homebuilding was offset by increased government spending on streets and highways, Bloomberg said. Overall construction spending rose 7.1% over the same month a year earlier, Bloomberg reported. People have started to get the hurricane checks from their insurance settlements, which should benefit construction spending in the near-term, Bloomberg said.
ISM Manufacturing for November rose to 57.8 versus estimates of 57.0 and a reading of 56.8 in October. ISM Prices Paid for November fell to 74.0 versus estimates of 75.3 and a reading of 78.5 in October. U.S. manufacturing strengthened in November, with growth accelerating for the first time in four months, as orders and employment picked up. The new orders component of the index rose to 61.5 from 58.3 in October and the employment component rose to 57.6 from 54.8. Moreover, the prices paid index fell to the lowest level since December 2003. "The manufacturing sector is still growing at a healthy pace, and that's consistent with the decent growth in the overall economy," said Ethan Harris, chief U.S. economist at Lehman Brothers. Morgan Stanley economists increased their estimate for fourth-quarter US economic growth to 4.7% from 4.5%, Bloomberg reported. "A broad-based manufacturing expansion is under way," said Daniel Meckstroth, chief economist at Manufacturers Alliance.
Total Vehicle Sales for November fell to 16.4M versus estimates of 16.5M and 17.0M in October. Domestic Vehicle Sales in November fell to 12.9M versus estimates of 13.1M and 13.2M in October. U.S. automakers' market share hit a record low after declines at General Motors and Ford, Bloomberg said. DaimlerChrysler AG and Asian carmakers' share, led by Nissan's 26% gain, rose. "The domestics can't compete on just price," Argus Research analyst Kevin Tynan said. "Chrysler has done a good job of maintaining momentum with new models and Asian automakers attract buyers because customers are seeking the best value and quality for your dollar."
Factory Orders for October rose .5% versus estimates of a .2% gain and unch. in September. "The economy is on a relatively robust path" said Glenn Hubbard, dean of the Columbia Business School. Deere & Co., the world's largest maker of farm equipment, reported a pick up in new orders last quarter to the best pace since 1996. The Factory inventory-to-shipments ratio held at 1.24 months, near the record low 1.22 months reached in March, Bloomberg said.
The Unemployment Rate for November fell to 5.4% versus estimates of 5.4% and 5.5% in October. Average Hourly Earnings for November rose .1% versus estimates of a .3% rise and a .3% increase in October. The Change in Non-farm Payrolls for November was 112K versus estimates of 200K and a downwardly revised 303K in October. The Monster Employment Index, which measures demand for employees based on online recruiting, rose in November to the highest level since its inception last year. Postings for healthcare workers, business and finance professional showed the biggest increases, Bloomberg reported. The Fed should continue to raise interest rates "at a measured pace" next year as the economy expands close to a 4% rate, creating "solid but moderate gains in employment," said Philly Fed President Santomero. Job growth has averaged 185,450/month this year, the best since 1999, Bloomberg said. As well, current job growth compares favorably to the entire 1990s in which payrolls increased an average of 180,350/month. Finally, a recent survey by the Business Roundtable found that 80% of CEOs expect hiring to increase or remain the same over the next six months, Bloomberg said. Crude oil prices have declined 14% this week, the biggest weekly decline since the start of the U.S.-led liberation of Iraq, Bloomberg reported. Moreover, oil has plunged 23.1% from its high set 5 weeks ago. "As energy prices come down, there should be a reversal, and companies will hire more," said John Silvia, chief economist at Wachovia.
ISM Non-Manufacturing for November rose to 61.3 versus estimates of 58.5 and a reading of 59.8 in October. "Demand for services from consumers is quite strong," said Christopher Rupey, senior financial economist at Bank of Tokyo-Mitsubishi. The index of order backlogs rose to 54.0 from 52.5. Prices paid, a measure of costs for purchased materials and services, fell to 71.0 from 74.1, Bloomberg said.
Bottom Line: Overall, last week's economic data were positive. U.S. GDP growth has averaged a very strong 4.6% over the last 6 quarters and is projected by many economists to approach 4% in 2005. 3Q Personal Consumption was very strong and contradicts bears' claims that the consumer is "spent-up." While recent measures of consumer sentiment have dipped, last week's plunge in energy prices, continuing improvements in the job market, rising incomes and the upcoming free-elections in Iraq should boost confidence. A number of gauges of inflation showed deceleration, which is a pleasant surprise considering commodity prices were at all-time highs when these measures were taken. Measures of manufacturing continue to accelerate from the mid-year pause and should remain strong into the first quarter. Construction will likely continue to boost the economy on hurricane rebuilding, relatively low interest rates and lower commodity prices. The unemployment rate is low by historic standards and many measures show the outlook for labor is good. However, for interest rates to remain low, payroll growth needs to stay at moderate levels and not accelerate substantially. Over 70% of inflation is comprised of unit labor costs. Sustained, elevated hiring would result in an acceleration of inflation from current average rates, thus leading to a quickening of interest rate hikes by the Fed.
Weekly Scoreboard*
Indices
S&P 500 1,191.17 +.72%
Dow 10,592.21 +.66%
NASDAQ 2,147.96 +2.19%
Russell 2000 642.21 +1.75%
S&P Equity Long/Short Index 1,008.11 +.55%
Put/Call .69 unch.
NYSE Arms 1.37 +53.93%
Volatility(VIX) 12.96 +1.33%
AAII % Bulls 56.76 +14.71%
US Dollar 80.98 -.96%
CRB 284.40 -2.32%
Futures Spot Prices
Gold 457.30 +1.22%
Crude Oil 42.54 -13.75%
Unleaded Gasoline 113.49 -13.56%
Natural Gas 6.8 -20.52%
Heating Oil 123.59 -15.7%
Base Metals 117.20 -2.75%
10-year US Treasury Yield 4.26% +.09%
Average 30-year Mortgage Rate 5.81% +1.57%
Leading Sectors
Disk Drives +9.36%
Airlines +8.47%
Software +4.26%
Lagging Sectors
Utilities -4.17%
Energy -4.53%
Oil Service -5.33%
*% Gain or loss for the week
S&P 500 1,191.17 +.72%
Dow 10,592.21 +.66%
NASDAQ 2,147.96 +2.19%
Russell 2000 642.21 +1.75%
S&P Equity Long/Short Index 1,008.11 +.55%
Put/Call .69 unch.
NYSE Arms 1.37 +53.93%
Volatility(VIX) 12.96 +1.33%
AAII % Bulls 56.76 +14.71%
US Dollar 80.98 -.96%
CRB 284.40 -2.32%
Futures Spot Prices
Gold 457.30 +1.22%
Crude Oil 42.54 -13.75%
Unleaded Gasoline 113.49 -13.56%
Natural Gas 6.8 -20.52%
Heating Oil 123.59 -15.7%
Base Metals 117.20 -2.75%
10-year US Treasury Yield 4.26% +.09%
Average 30-year Mortgage Rate 5.81% +1.57%
Leading Sectors
Disk Drives +9.36%
Airlines +8.47%
Software +4.26%
Lagging Sectors
Utilities -4.17%
Energy -4.53%
Oil Service -5.33%
*% Gain or loss for the week
Friday, December 03, 2004
Mid-day Report
S&P 500 1,189.75 -.05%
NASDAQ 2,148.64 +.24%
Leading Sectors
Semis +2.45%
Homebuilders +2.18%
Iron/Steel +2.04%
Lagging Sectors
Papers -.89%
Broadcasting -1.26%
Airlines -1.62%
Other
Crude Oil 42.80 -1.04%
Natural Gas 6.80 -.09%
Gold 456.80 +1.04%
Base Metals 117.20 -.57%
U.S. Dollar 81.19 -.94%
10-Yr. T-note Yield 4.25% -3.55%
VIX 12.94 -.31%
Put/Call .71 -14.46%
NYSE Arms 1.35 +55.17%
Market Movers
INTC +6.21% after boosting 4Q outlook, reducing inventories and Needham upgrade to Buy.
AUGT +13.9% on Adams Harkness upgrade to Strong Buy, target $12.
NCR +4.2% after the State of Missouri selected its Teradata division to be its partner in the development of its new Tax Compliance System.
IMDC +6.0% after it and its partner, Genzyme, won U.S. approval to sell the Captique wrinkle gel.
SCSS -20.8% after cutting 4Q outlook.
FITB -6.1% after cutting 4Q outlook and multiple downgrades.
AAPL -3.7% on Needham downgrade to Hold.
ETM -4.6% on SunTrust downgrade to Neutral.
*Semis and equipment up across the board on INTC mid-quarter update.
*Homebuilders up across the board on a sharp decline in interest rates.
Economic Data
Unemployment Rate for November fell to 5.4% versus estimates of 5.4% and 5.5% in October.
Average Hourly Earnings for November rose .1% versus estimates of a .3% gain and a .3% increase in October.
Change in Non-farm Payrolls for November was 112K versus estimates of 200K and 303K in October.
Change in Manufacturing Payrolls for November was -5K versus estimates of 0K and -2K in October.
Average Weekly Hours for November was 33.7 versus estimates of 33.8 and 33.8 in October.
ISM Non-Manufacturing for November was 61.3 versus estimates of 58.5 and 59.8 in October.
Recommendations
-Goldman Sachs reiterated Outperform on INTC, ADP, HEW, PAYX, CEN, COH, WAG, AMGN, BSX . Goldman reiterated Underperform on ABY, PSS, RAI.
-Citi SmithBarney said to switch from TGT to WMT. Citi reiterated Buy on CNET, target $13. Citi reiterated Buy on BHI, target $57. Citi reiterated Buy on INTC, target $26.50. Citi reiterated Buy on CMCSK, target $34. Citi reiterated Buy on LYO, target $36. Citi reiterated Buy on FITB, target $58. Citi reiterated Buy on AMGN, target $90.
-UBS rated BEAV Buy, target $14.
-JP Morgan downgraded ANN to Underweight. JP Morgan downgraded CLE to Underweight.
-Merrill Lynch rated CTAS Buy, target $52. Merrill rated MAN Buy, target $63. Merrill rated KFY, target $23.50. Merrill rated RECN Sell.
-Thomas Weisel upgraded PLT and LRCX to Outperform.
Mid-day News
U.S. stocks are mixed mid-day as strength in tech and interest-rate sensitive sectors is being offset by worries over the consumer. Cell phone rings that play songs have been popular in Western Europe and Asia for the past two years and are catching on fast in the U.S., the Washington Post said. The Democratic National Committee raised more money during the past election than the Republican National Committee for the first time since the mid-1970s, and both sides broke all previous fundraising records, the Washington Post reported. Smaller computer-related companies are enjoying a strong market for IPOs after more than four years of little activity, the NY Times reported. Oregon Steel, the only maker of steel plates on the U.S. West Coast, plans to raise its prices in January, American Metal Market reported. New Jersey drugmakers, including Schering-Pough, are planning a program to allow low-income and families without health insurance better access to medicine, the Star-Ledger reported. An official of Hamas told the AP his group would be open to a Palestinian state and a lengthy truce with Israel. The LA Times will stop publishing its national edition at year-end because the Internet has made the separate newspaper irrelevant, the Washington Post reported. Ukraine's political crisis, which has driven down the price of the country's bonds and stocks, has failed to hurt the debt of other emerging-market nations, the Economist reported. A New Jersey legislative committee approved a bill that would allow casino betting on sporting events, as the state faces a $4 billion budget deficit and competition from casinos in other states, the Philadelphia Inquirer reported. Korn/Ferry Intl., the world's largest executive-search company, sees the job market for top and middle manager as robust, CEO Reilly told CNBC. Ukraine's Supreme Court threw out last month's presidential election results that showed Prime Minister Yanukovych beat rival Yushchenko, saying there is evidence the balloting was riddled with fraud, Bloomberg reported. John Henry, chairman of a $2.9 billion commodity-trading firm that bears his name, said he's betting on a drop in oil prices after profiting from their climb, Bloomberg said. U.S. Treasury notes rose the most in four months after job growth slowed in November, tempering speculation the Fed would accelerate the pace of interest rate increases, Bloomberg said. The ISM Non-manufacturing Index rose to a four-month high, surpassing expectations, Bloomberg reported. U.S. employers added 112,000 workers in November, fewer than economists expected, Bloomberg said. The unemployment rate fell to 5.4%, down from 6.3% in June of 2003, Bloomberg reported.
NASDAQ 2,148.64 +.24%
Leading Sectors
Semis +2.45%
Homebuilders +2.18%
Iron/Steel +2.04%
Lagging Sectors
Papers -.89%
Broadcasting -1.26%
Airlines -1.62%
Other
Crude Oil 42.80 -1.04%
Natural Gas 6.80 -.09%
Gold 456.80 +1.04%
Base Metals 117.20 -.57%
U.S. Dollar 81.19 -.94%
10-Yr. T-note Yield 4.25% -3.55%
VIX 12.94 -.31%
Put/Call .71 -14.46%
NYSE Arms 1.35 +55.17%
Market Movers
INTC +6.21% after boosting 4Q outlook, reducing inventories and Needham upgrade to Buy.
AUGT +13.9% on Adams Harkness upgrade to Strong Buy, target $12.
NCR +4.2% after the State of Missouri selected its Teradata division to be its partner in the development of its new Tax Compliance System.
IMDC +6.0% after it and its partner, Genzyme, won U.S. approval to sell the Captique wrinkle gel.
SCSS -20.8% after cutting 4Q outlook.
FITB -6.1% after cutting 4Q outlook and multiple downgrades.
AAPL -3.7% on Needham downgrade to Hold.
ETM -4.6% on SunTrust downgrade to Neutral.
*Semis and equipment up across the board on INTC mid-quarter update.
*Homebuilders up across the board on a sharp decline in interest rates.
Economic Data
Unemployment Rate for November fell to 5.4% versus estimates of 5.4% and 5.5% in October.
Average Hourly Earnings for November rose .1% versus estimates of a .3% gain and a .3% increase in October.
Change in Non-farm Payrolls for November was 112K versus estimates of 200K and 303K in October.
Change in Manufacturing Payrolls for November was -5K versus estimates of 0K and -2K in October.
Average Weekly Hours for November was 33.7 versus estimates of 33.8 and 33.8 in October.
ISM Non-Manufacturing for November was 61.3 versus estimates of 58.5 and 59.8 in October.
Recommendations
-Goldman Sachs reiterated Outperform on INTC, ADP, HEW, PAYX, CEN, COH, WAG, AMGN, BSX . Goldman reiterated Underperform on ABY, PSS, RAI.
-Citi SmithBarney said to switch from TGT to WMT. Citi reiterated Buy on CNET, target $13. Citi reiterated Buy on BHI, target $57. Citi reiterated Buy on INTC, target $26.50. Citi reiterated Buy on CMCSK, target $34. Citi reiterated Buy on LYO, target $36. Citi reiterated Buy on FITB, target $58. Citi reiterated Buy on AMGN, target $90.
-UBS rated BEAV Buy, target $14.
-JP Morgan downgraded ANN to Underweight. JP Morgan downgraded CLE to Underweight.
-Merrill Lynch rated CTAS Buy, target $52. Merrill rated MAN Buy, target $63. Merrill rated KFY, target $23.50. Merrill rated RECN Sell.
-Thomas Weisel upgraded PLT and LRCX to Outperform.
Mid-day News
U.S. stocks are mixed mid-day as strength in tech and interest-rate sensitive sectors is being offset by worries over the consumer. Cell phone rings that play songs have been popular in Western Europe and Asia for the past two years and are catching on fast in the U.S., the Washington Post said. The Democratic National Committee raised more money during the past election than the Republican National Committee for the first time since the mid-1970s, and both sides broke all previous fundraising records, the Washington Post reported. Smaller computer-related companies are enjoying a strong market for IPOs after more than four years of little activity, the NY Times reported. Oregon Steel, the only maker of steel plates on the U.S. West Coast, plans to raise its prices in January, American Metal Market reported. New Jersey drugmakers, including Schering-Pough, are planning a program to allow low-income and families without health insurance better access to medicine, the Star-Ledger reported. An official of Hamas told the AP his group would be open to a Palestinian state and a lengthy truce with Israel. The LA Times will stop publishing its national edition at year-end because the Internet has made the separate newspaper irrelevant, the Washington Post reported. Ukraine's political crisis, which has driven down the price of the country's bonds and stocks, has failed to hurt the debt of other emerging-market nations, the Economist reported. A New Jersey legislative committee approved a bill that would allow casino betting on sporting events, as the state faces a $4 billion budget deficit and competition from casinos in other states, the Philadelphia Inquirer reported. Korn/Ferry Intl., the world's largest executive-search company, sees the job market for top and middle manager as robust, CEO Reilly told CNBC. Ukraine's Supreme Court threw out last month's presidential election results that showed Prime Minister Yanukovych beat rival Yushchenko, saying there is evidence the balloting was riddled with fraud, Bloomberg reported. John Henry, chairman of a $2.9 billion commodity-trading firm that bears his name, said he's betting on a drop in oil prices after profiting from their climb, Bloomberg said. U.S. Treasury notes rose the most in four months after job growth slowed in November, tempering speculation the Fed would accelerate the pace of interest rate increases, Bloomberg said. The ISM Non-manufacturing Index rose to a four-month high, surpassing expectations, Bloomberg reported. U.S. employers added 112,000 workers in November, fewer than economists expected, Bloomberg said. The unemployment rate fell to 5.4%, down from 6.3% in June of 2003, Bloomberg reported.
Bottom Line: The Portfolio is unchanged mid-day as strength in my internet and semi-equipment longs is offsetting weakness in my Chinese ADR and retail longs. I exited an internet long this morning and added ELOS long, thus leaving the Portfolio 125% net long. I am using a $24.25 stop-loss on this position. While job creation was disappointing, the continuing fall in the unemployment rate is very positive. It also appears that weather effects are still significant. Over the last 3 months an ALL-TIME record number of people said they were not at work for weather-related reasons, yet an average of 178,000 jobs/month were created during this period. As I have stated before, over 70% of inflation comes from unit labor costs. Thus, a modestly improving labor market is better for stocks than robust job growth. This is why interest rates are plunging and one of the reasons stocks aren't selling off today. As well, the ISM Non-manufacturing Index shows an acceleration in services, the largest part of the U.S. economy. I expect U.S. stocks to trade mixed-to-higher into the afternoon as short-covering and optimism in the tech sector offsets worries over the consumer.
Friday Watch
Earnings of Note
Company/Estimate
None of note.
Splits
None of note.
Economic Data
Unemployment Rate for November estimated at 5.4% versus 5.5% in October.
Average Hourly Earnings for November estimated up .3% versus a .3% increase in October.
Change in Non-farm Payrolls for November estimated at 200K versus 337K in October.
Change in Manufacturing Payrolls for November estimated at 0K versus a loss of 5K in October.
Average Weekly Hours for November estimated at 33.8 versus 33.8 in October.
ISM Non-Manufacturing for November estimated at 58.5 versus 59.8 in October.
Recommendations
Goldman Sachs reiterated Outperform on AMGN, BSX, GE and INTC. Goldman reiterated Underperform on ALA and TLAB. Colgate-Palmolive(CL), whose shares have dropped 14% since Sept. 20 when the company said 2004 profits wouldn't meet forecasts, is again attracting investors, Business Week reported. Given Imaging(GIVN) shares may rise on sales of its diagnostic camera in a pill, Business Week reported. Curis(CRIS), a maker of drugs to fighter cancer and kidney disease, may become the target of a takeover because it has three big pharmaceutical companies as partners, Business Week reported.
Late-Night News
Asian indices are mostly higher on optimism for technology shares in the region after Intel's mid-quarter update. Nigeria wants to boost its oil exports to the U.S., President Obasanjo said in an interview with CNN. China faces a bigger influx of foreign currencies as investors bet the government will let the yuan appreciate, the state-run Xinhua News said. Credit-card issuers are losing business because consumers are shifting their debt to low-rate home-equity loans, Business Week reported. The number of blogs on the Internet has risen to about 4.8 million, from 100,000 two years ago, Business Week said. Dongfeng Motor of China and Cummins of the U.S. agreed to establish a $20 million research and development center for truck engines in Wuhan, central China, Chinanews agency reported. Citigroup CEO Charles Prince is considering taking steps to address investor worries that the company is too large to manage and grow, the NY Times said. President Bush will use a mid-December economic summit to begin a push for his plan to allow younger workers to invest part of their Social Security taxes, Bloomberg reported. The US dollar headed for its first weekly gain in eight against the euro in Asia on expectations a report today will show U.S. employers added enough workers to fuel consumer spending and economic growth, Bloomberg reported. Shares of NEC Electronics, Toshiba Corp. and other computer-related companies rose in Asia after Intel said fourth-quarter sales will exceed its previous forecast because of higher demand for processors used to power laptop, desktop and server computers, Bloomberg reported. Verizon raised $1.88 billion from the sale of its 20.5% stake in Canada's Telus Corp., Bloomberg reported. IBM wants to sell its pc business for between $1 billion to $2 billion, Bloomberg said.
Late-Night Trading
Asian Indices are unch. to +.50% on average.
S&P 500 indicated +.39%.
NASDAQ 100 indicated +.81%
Company/Estimate
None of note.
Splits
None of note.
Economic Data
Unemployment Rate for November estimated at 5.4% versus 5.5% in October.
Average Hourly Earnings for November estimated up .3% versus a .3% increase in October.
Change in Non-farm Payrolls for November estimated at 200K versus 337K in October.
Change in Manufacturing Payrolls for November estimated at 0K versus a loss of 5K in October.
Average Weekly Hours for November estimated at 33.8 versus 33.8 in October.
ISM Non-Manufacturing for November estimated at 58.5 versus 59.8 in October.
Recommendations
Goldman Sachs reiterated Outperform on AMGN, BSX, GE and INTC. Goldman reiterated Underperform on ALA and TLAB. Colgate-Palmolive(CL), whose shares have dropped 14% since Sept. 20 when the company said 2004 profits wouldn't meet forecasts, is again attracting investors, Business Week reported. Given Imaging(GIVN) shares may rise on sales of its diagnostic camera in a pill, Business Week reported. Curis(CRIS), a maker of drugs to fighter cancer and kidney disease, may become the target of a takeover because it has three big pharmaceutical companies as partners, Business Week reported.
Late-Night News
Asian indices are mostly higher on optimism for technology shares in the region after Intel's mid-quarter update. Nigeria wants to boost its oil exports to the U.S., President Obasanjo said in an interview with CNN. China faces a bigger influx of foreign currencies as investors bet the government will let the yuan appreciate, the state-run Xinhua News said. Credit-card issuers are losing business because consumers are shifting their debt to low-rate home-equity loans, Business Week reported. The number of blogs on the Internet has risen to about 4.8 million, from 100,000 two years ago, Business Week said. Dongfeng Motor of China and Cummins of the U.S. agreed to establish a $20 million research and development center for truck engines in Wuhan, central China, Chinanews agency reported. Citigroup CEO Charles Prince is considering taking steps to address investor worries that the company is too large to manage and grow, the NY Times said. President Bush will use a mid-December economic summit to begin a push for his plan to allow younger workers to invest part of their Social Security taxes, Bloomberg reported. The US dollar headed for its first weekly gain in eight against the euro in Asia on expectations a report today will show U.S. employers added enough workers to fuel consumer spending and economic growth, Bloomberg reported. Shares of NEC Electronics, Toshiba Corp. and other computer-related companies rose in Asia after Intel said fourth-quarter sales will exceed its previous forecast because of higher demand for processors used to power laptop, desktop and server computers, Bloomberg reported. Verizon raised $1.88 billion from the sale of its 20.5% stake in Canada's Telus Corp., Bloomberg reported. IBM wants to sell its pc business for between $1 billion to $2 billion, Bloomberg said.
Late-Night Trading
Asian Indices are unch. to +.50% on average.
S&P 500 indicated +.39%.
NASDAQ 100 indicated +.81%
BOTTOM LINE: I expect U.S. equities to open higher in the morning on optimism over Intel's mid-quarter update and a better-than-expected employment report. Interest rates will likely rise on this news which could lead to profit-taking later in the day, resulting in a modest daily gain for stocks. The Portfolio is 125% net long heading into tomorrow.
Thursday, December 02, 2004
Thursday Close
S&P 500 1,190.33 -.09%
NASDAQ 2,143.57 +.25%
Leading Sectors
Airlines +3.57%
Disk Drives +2.37%
Biotech +1.81%
Lagging Sectors
Commodity -2.42%
Energy -2.65%
Iron/Steel -3.09%
Other
Crude Oil 43.45 +.46%
Natural Gas 6.83 +.35%
Gold 451.30 -.22%
Base Metals 1117.87 -2.42%
U.S. Dollar 81.95 +.48%
10-Yr. T-note Yield 4.40% +.90%
VIX 12.98 +.08%
Put/Call .83 +3.75%
NYSE Arms .87 +42.62%
After-hours Movers
INTC +7.2% after boosting 4Q outlook and reducing inventories.
*Semiconductors and Equipment stocks up across the board on INTC report.
Recommendations
Goldman Sachs reiterated Outperform on WAG, BBY, GLW and WMT. Goldman reiterated Underperform on MAY and JDSU.
After-hours News
U.S. stocks finished quietly mixed today as investor apprehension rose in the afternoon ahead of Intel's mid-quarter update and tomorrow's employment report. Sony says 20 million European homes will have high-definition television by 2008, the Financial Times said. NY State Comptroller Hevesi, who sued Merck earlier this week over pension fund losses related to the drug Vioxx, said the company delayed its response to indications the drug caused heart trouble because it was making so much money from it, CNBC reported. A rise in steel shipments boosted traffic at the Port of Indiana-Burns Harbor to a record in October, American Metal Market reported. Crude oil's three day, 13% plunge is the steepest decline is the steepest since the U.S.-led invasion of Iraq in March 2003, Bloomberg reported. Procter & Gamble needs to conduct more research to win approval of its testosterone patch to treat sexual dysfunction in women, a FDA advisory panel said. Intel said fourth-quarter sales will exceed its previous forecasts as demand grows for laptop and desktop personal computers, Bloomberg said. President Bush said the U.S. is "very firm" that Iraq should hold elections on schedule Jan. 30, Bloomberg reported. Ukrainian opposition leader Viktor Yushchenko said the government might use force to end protests against alleged presidential election fraud, as outgoing President Kuchma reiterated his call for a new vote, Bloomberg reported.
NASDAQ 2,143.57 +.25%
Leading Sectors
Airlines +3.57%
Disk Drives +2.37%
Biotech +1.81%
Lagging Sectors
Commodity -2.42%
Energy -2.65%
Iron/Steel -3.09%
Other
Crude Oil 43.45 +.46%
Natural Gas 6.83 +.35%
Gold 451.30 -.22%
Base Metals 1117.87 -2.42%
U.S. Dollar 81.95 +.48%
10-Yr. T-note Yield 4.40% +.90%
VIX 12.98 +.08%
Put/Call .83 +3.75%
NYSE Arms .87 +42.62%
After-hours Movers
INTC +7.2% after boosting 4Q outlook and reducing inventories.
*Semiconductors and Equipment stocks up across the board on INTC report.
Recommendations
Goldman Sachs reiterated Outperform on WAG, BBY, GLW and WMT. Goldman reiterated Underperform on MAY and JDSU.
After-hours News
U.S. stocks finished quietly mixed today as investor apprehension rose in the afternoon ahead of Intel's mid-quarter update and tomorrow's employment report. Sony says 20 million European homes will have high-definition television by 2008, the Financial Times said. NY State Comptroller Hevesi, who sued Merck earlier this week over pension fund losses related to the drug Vioxx, said the company delayed its response to indications the drug caused heart trouble because it was making so much money from it, CNBC reported. A rise in steel shipments boosted traffic at the Port of Indiana-Burns Harbor to a record in October, American Metal Market reported. Crude oil's three day, 13% plunge is the steepest decline is the steepest since the U.S.-led invasion of Iraq in March 2003, Bloomberg reported. Procter & Gamble needs to conduct more research to win approval of its testosterone patch to treat sexual dysfunction in women, a FDA advisory panel said. Intel said fourth-quarter sales will exceed its previous forecasts as demand grows for laptop and desktop personal computers, Bloomberg said. President Bush said the U.S. is "very firm" that Iraq should hold elections on schedule Jan. 30, Bloomberg reported. Ukrainian opposition leader Viktor Yushchenko said the government might use force to end protests against alleged presidential election fraud, as outgoing President Kuchma reiterated his call for a new vote, Bloomberg reported.
BOTTOM LINE: The Portfolio finished lower today on losses in my Chinese ADR and steel longs. I added a few new semi equipment and wireless longs into the afternoon weakness, thus leaving the Portfolio 125% net long. One of my new longs is AMAT and I am using a $16.80 stop-loss on this new position. The tone of the market was weaker today, which was somewhat disappointing considering another substantial decline in energy prices and rise in the US dollar. However, stocks are reacting positively to Intel's report after-hours. Commodity-related stocks have likely peaked in the intermediate-term on year-end repositioning, worries over excess supply and a bounce in the US dollar. I continue to expect another push higher tomorrow on the INTC news and a better-than-expected jobs' report.
MId-day Report
S&P 500 1,191.23 -.01%
NASDAQ 2,143.09 +.23%
Leading Sectors
Airlines +3.25%
Telecom +1.82%
Biotech +1.54%
Lagging Sectors
Energy -2.68%
Commodity -2.69%
Iron/Steel -3.64%
Other
Crude Oil 43.30 -4.70%
Natural Gas 6.86 -7.19%
Gold 451.80 -.88%
Base Metals 119.78 -.84%
U.S. Dollar 81.90 +.42%
10-Yr. T-note Yield 4.38% +.45%
VIX 12.79 -1.39%
Put/Call .82 +2.50%
NYSE Arms .67 +9.84%
Market Movers
Economic Data
Initial Jobless Claims for last week were 349K versus estimates of 330K and 324K the prior week.
Continuing Claims were 2723K versus 2768K prior.
Factory Orders for October rose .5% versus estimates of a .2% gain and unch. in September.
Recommendations
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Mid-day News
NASDAQ 2,143.09 +.23%
Leading Sectors
Airlines +3.25%
Telecom +1.82%
Biotech +1.54%
Lagging Sectors
Energy -2.68%
Commodity -2.69%
Iron/Steel -3.64%
Other
Crude Oil 43.30 -4.70%
Natural Gas 6.86 -7.19%
Gold 451.80 -.88%
Base Metals 119.78 -.84%
U.S. Dollar 81.90 +.42%
10-Yr. T-note Yield 4.38% +.45%
VIX 12.79 -1.39%
Put/Call .82 +2.50%
NYSE Arms .67 +9.84%
Market Movers
Economic Data
Initial Jobless Claims for last week were 349K versus estimates of 330K and 324K the prior week.
Continuing Claims were 2723K versus 2768K prior.
Factory Orders for October rose .5% versus estimates of a .2% gain and unch. in September.
Recommendations
(Refresh your browser if this page doesn't load the first try)
Mid-day News
Bottom Line: The Portfolio is unchanged mid-day as strength in my retail and telecom equipment longs is being offset by weakness in my steel and Chinese ADR longs. I took profits in a few base metal longs this morning, bringing the Portfolio's market exposure to 100% net long. The tone of the market is weaker today as stocks consolidate yesterday's gains. I view this as healthy. I look for the major indices to rally modestly tomorrow after Intel's mid-quarter update and the jobs report.
Thursday Watch
Earnings of Note
Company/Estimate
ABS/.33
CMN/.28
DLM/.21
MBG/.88
Splits
None of note.
Economic Data
Initial Jobless Claims for last week estimated at 330K versus 323K the prior week.
Continuing Claims estimated at 2768K versus 2755K prior.
Factory Orders for October estimated to rise .2% versus a .4% decline in September.
Recommendations
Goldman Sachs reiterated Underperform on DE, EW, CMOS and PYX.
Late-Night News
Asian indices are higher on optimism over falling energy prices and exports to the U.S. Taiwan Semiconductor Manufacturing's customer orders will rebound in the first quarter on demand from graphics chip designers such as Nvidia Corp., the Commercial Times reported. General Motors is planning a joint venture with Yulon Motor to make vehicles in Taiwan, the Economic Daily News reported. Halliburton may win the contract to oversee construction of the U.K. Ministry of Defense's two new Royal Navy aircraft carriers due to enter service in 2012 and 2015, the Independent said. India may attract as much as $4 billion more in the next two months from overseas funds investing in local stocks and bonds as economic expansion and a stronger rupee help boost their returns, the Business Standard reported. Nissan Motor and Toyota Motor stocks are rising in Asia after a report showed Asian automakers are headed for a record share of the U.S. auto market, after gaining on GM and Ford in November, Bloomberg reported. Ukraine's parliamentary groups are negotiating to choose a successor to Prime Minister Viktor Yanukovych after he lost a confidence vote prompted by the crisis arising from disputed presidential elections, Bloomberg said. Nissan Motor said it may cut production next year because of a lack of steel, the second time a shortage of the metal has interrupted production, Bloomberg reported. The US dollar will rebound, halting its 3.5% drop in the past month versus the yen, as the strength of the U.S. economy increases the appeal of its assets, said Zembei Mizoguchi, a former top Japanese currency policy maker, Bloomberg reported. UN Secretary-General Annan will not resign over the massive corruption relating to the Iraqi/UN Oil-for-Food program as called for by a U.S. senator, Xinhua News reported. Viacom Chairman and CEO Sumner Redstone said there is a "total disconnect" between the company's performance and the value of its shares, which have declined 20% this year, Bloomberg reported. President Bush may have to move faster to present his proposals for a revision of the U.S. tax code to Congress if he wants to get them approved, the Wall Street Journal reported.
Late-Night Trading
Asian Indices are +1.0%. to +1.5% on average.
S&P 500 indicated -.03%.
NASDAQ 100 indicated +.09%
Company/Estimate
ABS/.33
CMN/.28
DLM/.21
MBG/.88
Splits
None of note.
Economic Data
Initial Jobless Claims for last week estimated at 330K versus 323K the prior week.
Continuing Claims estimated at 2768K versus 2755K prior.
Factory Orders for October estimated to rise .2% versus a .4% decline in September.
Recommendations
Goldman Sachs reiterated Underperform on DE, EW, CMOS and PYX.
Late-Night News
Asian indices are higher on optimism over falling energy prices and exports to the U.S. Taiwan Semiconductor Manufacturing's customer orders will rebound in the first quarter on demand from graphics chip designers such as Nvidia Corp., the Commercial Times reported. General Motors is planning a joint venture with Yulon Motor to make vehicles in Taiwan, the Economic Daily News reported. Halliburton may win the contract to oversee construction of the U.K. Ministry of Defense's two new Royal Navy aircraft carriers due to enter service in 2012 and 2015, the Independent said. India may attract as much as $4 billion more in the next two months from overseas funds investing in local stocks and bonds as economic expansion and a stronger rupee help boost their returns, the Business Standard reported. Nissan Motor and Toyota Motor stocks are rising in Asia after a report showed Asian automakers are headed for a record share of the U.S. auto market, after gaining on GM and Ford in November, Bloomberg reported. Ukraine's parliamentary groups are negotiating to choose a successor to Prime Minister Viktor Yanukovych after he lost a confidence vote prompted by the crisis arising from disputed presidential elections, Bloomberg said. Nissan Motor said it may cut production next year because of a lack of steel, the second time a shortage of the metal has interrupted production, Bloomberg reported. The US dollar will rebound, halting its 3.5% drop in the past month versus the yen, as the strength of the U.S. economy increases the appeal of its assets, said Zembei Mizoguchi, a former top Japanese currency policy maker, Bloomberg reported. UN Secretary-General Annan will not resign over the massive corruption relating to the Iraqi/UN Oil-for-Food program as called for by a U.S. senator, Xinhua News reported. Viacom Chairman and CEO Sumner Redstone said there is a "total disconnect" between the company's performance and the value of its shares, which have declined 20% this year, Bloomberg reported. President Bush may have to move faster to present his proposals for a revision of the U.S. tax code to Congress if he wants to get them approved, the Wall Street Journal reported.
Late-Night Trading
Asian Indices are +1.0%. to +1.5% on average.
S&P 500 indicated -.03%.
NASDAQ 100 indicated +.09%
BOTTOM LINE: I expect U.S. equities to open mixed in the morning on a consolidation of today's gains. However, stocks will likely rise modestly into the afternoon on continuing optimism over falling energy prices, short-covering ahead of Intel's mid-quarter update and anticipation of another good jobs report. The Portfolio is 125% net long heading into tomorrow.
Wednesday, December 01, 2004
Wednesday Close
S&P 500 1,191.37 +1.50%
NASDAQ 2,138.23 +1.98%
Leading Sectors
Airlines +5.60%
Disk Drives +5.08%
Semis +3.83%
Lagging Sectors
Utilities -1.28%
Energy -2.28%
Oil Service -3.85%
Other
Crude Oil 45.60 +.24%
Natural Gas 7.44 +.42%
Gold 456.50 +.13%
Base Metals 120.79 +.03%
U.S. Dollar 81.56 -.32%
10-Yr. T-note Yield 4.36% +.32%
VIX 12.97 -2.04%
Put/Call .80 -8.05%
NYSE Arms .61 -38.38%
After-hours Movers
CMOS +9.3% after beating 4Q estimates and raising 1Q guidance.
ARO +5.4% after reporting better-than-expected November same-store-sales.
SBUX +3.0% after reporting 13% November same-store-sales, the fastest in 9 months.
Recommendations
Goldman Sachs reiterated Outperform on GDT, VZ and JTX.
After-hours News
U.S. stocks finished sharply higher today on a substantial decline in energy prices, strong economic reports and short-covering. After the close, the Massachusetts economy grew at an annual rate of 4.6% in October, the highest since February 2000, the Boston Globe reported. The chief executives of Esmark LLC and Olympic Steel, both of which process and distribute the metal, said they expect demand for steel will keep prices rising into next year, American Metal Market reported. Japan and officials from countries that share the euro have discussed possible joint action in the currency market if the yen and the euro continue to strengthen against the dollar, the Financial Times said. Eric Topol, the chairman of cardiology at the Cleveland Clinic, served on a board of a hedge fund that was short-selling Merck shares while he was criticizing the company's Vioxx drug, Fortune magazine reported. Crude oil tumbles more than $3, its biggest decline in three years, after a government report showing an increase in U.S. heating oil inventories spurred expectations of adequate supplies this winter, Bloomberg said. Disney said its board of directors raised the annual cash dividend by 14%, Bloomberg reported. Sales at U.S. Internet retailers jumped 36% last week as people used faster online connections to shop for holiday items on Thanksgiving Day, Bloomberg reported. Neiman Marcus said first-quarter earnings rose 14%, boosted by demand for designer handbag and lizard-skin shoes, Bloomberg said. Alliant Techsystems got an Army contract worth as much as $140 billion to develop a laser-guided mortar, defeating a protest by Lockheed Martin, Bloomberg reported. A John Singer Sargent painting sold today for $23.5 million, setting a record for the U.S. artist at auction, Bloomberg said.
NASDAQ 2,138.23 +1.98%
Leading Sectors
Airlines +5.60%
Disk Drives +5.08%
Semis +3.83%
Lagging Sectors
Utilities -1.28%
Energy -2.28%
Oil Service -3.85%
Other
Crude Oil 45.60 +.24%
Natural Gas 7.44 +.42%
Gold 456.50 +.13%
Base Metals 120.79 +.03%
U.S. Dollar 81.56 -.32%
10-Yr. T-note Yield 4.36% +.32%
VIX 12.97 -2.04%
Put/Call .80 -8.05%
NYSE Arms .61 -38.38%
After-hours Movers
CMOS +9.3% after beating 4Q estimates and raising 1Q guidance.
ARO +5.4% after reporting better-than-expected November same-store-sales.
SBUX +3.0% after reporting 13% November same-store-sales, the fastest in 9 months.
Recommendations
Goldman Sachs reiterated Outperform on GDT, VZ and JTX.
After-hours News
U.S. stocks finished sharply higher today on a substantial decline in energy prices, strong economic reports and short-covering. After the close, the Massachusetts economy grew at an annual rate of 4.6% in October, the highest since February 2000, the Boston Globe reported. The chief executives of Esmark LLC and Olympic Steel, both of which process and distribute the metal, said they expect demand for steel will keep prices rising into next year, American Metal Market reported. Japan and officials from countries that share the euro have discussed possible joint action in the currency market if the yen and the euro continue to strengthen against the dollar, the Financial Times said. Eric Topol, the chairman of cardiology at the Cleveland Clinic, served on a board of a hedge fund that was short-selling Merck shares while he was criticizing the company's Vioxx drug, Fortune magazine reported. Crude oil tumbles more than $3, its biggest decline in three years, after a government report showing an increase in U.S. heating oil inventories spurred expectations of adequate supplies this winter, Bloomberg said. Disney said its board of directors raised the annual cash dividend by 14%, Bloomberg reported. Sales at U.S. Internet retailers jumped 36% last week as people used faster online connections to shop for holiday items on Thanksgiving Day, Bloomberg reported. Neiman Marcus said first-quarter earnings rose 14%, boosted by demand for designer handbag and lizard-skin shoes, Bloomberg said. Alliant Techsystems got an Army contract worth as much as $140 billion to develop a laser-guided mortar, defeating a protest by Lockheed Martin, Bloomberg reported. A John Singer Sargent painting sold today for $23.5 million, setting a record for the U.S. artist at auction, Bloomberg said.
BOTTOM LINE: The Portfolio finished substantially higher today on gains in my internet, telecom equipment, semi, Chinese ADR and retail longs. I did not trade in the afternoon, thus leaving the Portfolio 125% net long. The tone of the market was exceptional today as volume rose substantially, most sectors posted significant gains and the major US indices finished at their highs for the day. Moreover, the outsized decline in energy prices, combined with a slight drop in interest rates is also a big positive for equities. Shorts are likely seeing their substantial gains for the year wiped out in a very short period of time, which should lead to further short covering. As well, further declines in energy prices and better job prospects should boost consumer sentiment and spending into year-end which should also help propel shares higher.
Mid-day Report
S&P 500 1,187.39 +1.16%
NASDAQ 2,129.67 +1.57%
Leading Sectors
Disk Drives +3.99%
Airlines +3.74%
Semis +3.01%
Lagging Sectors
Utilities -1.20%
Energy -1.53%
Oil Service -3.30%
Other
Crude Oil 46.50 -5.35%
Natural Gas 7.48 -1.97%
Gold 456.50 +.71%
Base Metals 120.79 +.03%
U.S. Dollar 81.61 -.26%
10-Yr. T-note Yield 4.36% +.23%
VIX 12.89 -2.64%
Put/Call .80 -8.05%
NYSE Arms .66 -33.33%
Market Movers
OVTI +9.9% after beating 3Q estimates and raising 4Q outlook.
UCO -4.79% after Weatherford Intl. sold 4 million of its shares for $141.8 million.
CHS +13.2% after beating 3Q estimates.
GORX +102.7% after the FDA approved its Mucotrol medicine for the treatment of a side effect of chemotherapy and radiation.
CPRT +18.0% after better-than-expected 1Q estimates.
CI +8.5% after raising 04 and 05 guidance.
CTRP +11.7% after saying it signed a distribution agreement with Pegasus Solutions(PEGS) providing CTRP with direct access to inventory at nearly 60,000 hotels worldwide.
SYNA -7.1% after saying it intends to offer $100 million of Convertible Senior Subordinated Notes.
*Oil Services down across the board on falling energy prices.
Economic Data
Personal Income for October rose .6% versus estimates of a .5% rise and a .2% gain in September.
Personal Spending for October rose .7% versus estimates of a .4% gain and a .6% increase in September.
PCE Deflator(YoY) for October rose 2.4% versus estimates of a 2.4% increase and a 2.0% gain in September.
PCE Core(YoY) for October rose 1.5% versus estimates of a 1.4% increase and a rise of 1.5% in September.
Construction Spending for October came in unch. versus estimates of a .7% rise and a .1% gain in September.
ISM Manufacturing for November came in at 57.8 versus estimates of 57.0 and a reading of 56.8 in October.
ISM Prices Paid for November came in at 74.0 versus estimates of 75.3 and a reading of 78.5 in October.
Recommendations
-Goldman Sachs reiterated Outperform on BBY, SAP, BNS, JTX, PFE, NUE, X, AGN and IP. Goldman reiterated Underperform on CI and SAY.
-Banc of America cut PEG to Sell. BofA raised RKY to Buy, target $82.
-Citi SmithBarney sees near-term 10%+ trade in QLGC and ELX. Citi reiterated Buy on ATH, target $147. Citi reiterated Buy on MAN, target $56.
-Thomas Weisel rated IMCL Buy.
-Legg Mason rated TR Buy, target $36.
-JP Morgan rated MMR Overweight.
-Merrill Lynch downgraded IFX to Sell.
Mid-day News
U.S. stocks are sharply higher mid-day on optimism over strong economic reports and falling energy prices. EchoStar Communications and Vivendi Universal's Music Group are in talks to start a 24-hour music channel to rival MTV, the NY Post reported. Pfizer's benefit from increased sales of Celebrex and Bextra after the recall of Merck's Vioxx may be temporary because doctors are increasingly prescribing older drugs considered safer, the NY Times said. Whole Foods Market and other gourmet supermarkets plan to expand in NY City and nationwide as the market for specialty foods increases, the NY Times reported. Procter & Gamble's testosterone patch, meant to bolster post-menopausal women's sex drive, will be studied by a FDA panel tomorrow for approval amidst concerns about its clinical trial results and possible side effects, the Philadelphia Inquirer reported. Harvard Law School said yesterday it would reinstate a policy that bans military recruiters from the campus, the Boston Globe reported. Vought Aircraft Industries plans to open a $500 million plant in Charlston, SC, to build components for Boeing's new 7E7 jetliner, the Fort Worth Star-Telegram reported. Gilead Sciences' tenofovir drug, sold as Viread to treat HIV-infected adults, will be tested as a preventative treatment for AIDS in an international study later this month, the San Francisco Chronicle reported. 89% of the biggest U.S. law firms plans to raise their hourly billing rates next year, according to a new survey by the American Lawyer. IBM said it won more than $1 billion in new contracts as it completed the acquisition of two Danish businesses, Bloomberg said. Disney's ESPN network plans to branch into the mobile-phone business through the use of Sprint's network, Bloomberg reported. Nokia gained mobile-phone market share for a second straight quarter, helped by price cuts and new models, and Samsung overtook Motorola as the second-largest handset maker for the first time, Bloomberg said. Raytheon will increase its annual dividend by 10% to 88 cents and buy back as much as $700 million in stock, Bloomberg reported. Ukrainian Prime Minister Yanukovych lost a confidence vote in parliament and President Kuchma opened the door to new presidential candidates by demanding new elections after the disputed Nov. 21 vote, Bloomberg reported. U.S. home prices increased at the fastest pace in 25 years during the third quarter as the economy improved and low mortgage rates made financing more affordable, Bloomberg said. Crude oil fell more than $2/bbl. on a report showing that inventories of heating oil and other fuels rose more than expected as refineries operated at the highest rate since a hurricane hit the U.S. in September, Bloomberg reported. U.S. manufacturing strengthened in November, with growth accelerating for the first time in four months, as orders and employment picked up, the ISM survey found. U.S. consumer spending rose in October and a surge in hiring led to the biggest rise in incomes in five months, Bloomberg reported. Ford Motor said U.S. sale of cars and trucks fell 7.3% in November from a year earlier, while DaimlerChrysler said sales rose 4.4% and Nissan's sales soared 26%, Bloomberg said.
NASDAQ 2,129.67 +1.57%
Leading Sectors
Disk Drives +3.99%
Airlines +3.74%
Semis +3.01%
Lagging Sectors
Utilities -1.20%
Energy -1.53%
Oil Service -3.30%
Other
Crude Oil 46.50 -5.35%
Natural Gas 7.48 -1.97%
Gold 456.50 +.71%
Base Metals 120.79 +.03%
U.S. Dollar 81.61 -.26%
10-Yr. T-note Yield 4.36% +.23%
VIX 12.89 -2.64%
Put/Call .80 -8.05%
NYSE Arms .66 -33.33%
Market Movers
OVTI +9.9% after beating 3Q estimates and raising 4Q outlook.
UCO -4.79% after Weatherford Intl. sold 4 million of its shares for $141.8 million.
CHS +13.2% after beating 3Q estimates.
GORX +102.7% after the FDA approved its Mucotrol medicine for the treatment of a side effect of chemotherapy and radiation.
CPRT +18.0% after better-than-expected 1Q estimates.
CI +8.5% after raising 04 and 05 guidance.
CTRP +11.7% after saying it signed a distribution agreement with Pegasus Solutions(PEGS) providing CTRP with direct access to inventory at nearly 60,000 hotels worldwide.
SYNA -7.1% after saying it intends to offer $100 million of Convertible Senior Subordinated Notes.
*Oil Services down across the board on falling energy prices.
Economic Data
Personal Income for October rose .6% versus estimates of a .5% rise and a .2% gain in September.
Personal Spending for October rose .7% versus estimates of a .4% gain and a .6% increase in September.
PCE Deflator(YoY) for October rose 2.4% versus estimates of a 2.4% increase and a 2.0% gain in September.
PCE Core(YoY) for October rose 1.5% versus estimates of a 1.4% increase and a rise of 1.5% in September.
Construction Spending for October came in unch. versus estimates of a .7% rise and a .1% gain in September.
ISM Manufacturing for November came in at 57.8 versus estimates of 57.0 and a reading of 56.8 in October.
ISM Prices Paid for November came in at 74.0 versus estimates of 75.3 and a reading of 78.5 in October.
Recommendations
-Goldman Sachs reiterated Outperform on BBY, SAP, BNS, JTX, PFE, NUE, X, AGN and IP. Goldman reiterated Underperform on CI and SAY.
-Banc of America cut PEG to Sell. BofA raised RKY to Buy, target $82.
-Citi SmithBarney sees near-term 10%+ trade in QLGC and ELX. Citi reiterated Buy on ATH, target $147. Citi reiterated Buy on MAN, target $56.
-Thomas Weisel rated IMCL Buy.
-Legg Mason rated TR Buy, target $36.
-JP Morgan rated MMR Overweight.
-Merrill Lynch downgraded IFX to Sell.
Mid-day News
U.S. stocks are sharply higher mid-day on optimism over strong economic reports and falling energy prices. EchoStar Communications and Vivendi Universal's Music Group are in talks to start a 24-hour music channel to rival MTV, the NY Post reported. Pfizer's benefit from increased sales of Celebrex and Bextra after the recall of Merck's Vioxx may be temporary because doctors are increasingly prescribing older drugs considered safer, the NY Times said. Whole Foods Market and other gourmet supermarkets plan to expand in NY City and nationwide as the market for specialty foods increases, the NY Times reported. Procter & Gamble's testosterone patch, meant to bolster post-menopausal women's sex drive, will be studied by a FDA panel tomorrow for approval amidst concerns about its clinical trial results and possible side effects, the Philadelphia Inquirer reported. Harvard Law School said yesterday it would reinstate a policy that bans military recruiters from the campus, the Boston Globe reported. Vought Aircraft Industries plans to open a $500 million plant in Charlston, SC, to build components for Boeing's new 7E7 jetliner, the Fort Worth Star-Telegram reported. Gilead Sciences' tenofovir drug, sold as Viread to treat HIV-infected adults, will be tested as a preventative treatment for AIDS in an international study later this month, the San Francisco Chronicle reported. 89% of the biggest U.S. law firms plans to raise their hourly billing rates next year, according to a new survey by the American Lawyer. IBM said it won more than $1 billion in new contracts as it completed the acquisition of two Danish businesses, Bloomberg said. Disney's ESPN network plans to branch into the mobile-phone business through the use of Sprint's network, Bloomberg reported. Nokia gained mobile-phone market share for a second straight quarter, helped by price cuts and new models, and Samsung overtook Motorola as the second-largest handset maker for the first time, Bloomberg said. Raytheon will increase its annual dividend by 10% to 88 cents and buy back as much as $700 million in stock, Bloomberg reported. Ukrainian Prime Minister Yanukovych lost a confidence vote in parliament and President Kuchma opened the door to new presidential candidates by demanding new elections after the disputed Nov. 21 vote, Bloomberg reported. U.S. home prices increased at the fastest pace in 25 years during the third quarter as the economy improved and low mortgage rates made financing more affordable, Bloomberg said. Crude oil fell more than $2/bbl. on a report showing that inventories of heating oil and other fuels rose more than expected as refineries operated at the highest rate since a hurricane hit the U.S. in September, Bloomberg reported. U.S. manufacturing strengthened in November, with growth accelerating for the first time in four months, as orders and employment picked up, the ISM survey found. U.S. consumer spending rose in October and a surge in hiring led to the biggest rise in incomes in five months, Bloomberg reported. Ford Motor said U.S. sale of cars and trucks fell 7.3% in November from a year earlier, while DaimlerChrysler said sales rose 4.4% and Nissan's sales soared 26%, Bloomberg said.
Bottom Line: The Portfolio is substantially higher mid-day on strength in my Internet, Chinese ADR, semi and telecom equipment longs. I added a few new longs this morning, bringing the Portfolio's market exposure to 125% net long. One of my new longs is MNST and I am using a $27.25 stop-loss on this position. The tone of the market is very good today on a strong advance/decline line and good volume. The next up-leg of the rally has likely begun. Falling energy prices and better employment prospects should propel the major indices through year-end. I continue to expect oil to fall to the $35-$40/bbl. range over the next few months. Intel's mid-quarter update after the close Thur. and Fri.'s jobs report should provide the catalysts for further strength to end the week. I expect U.S. stocks to trade mixed into the close on a consolidation of today's gains.
Wednesday Watch
Earnings of Note
Company/Estimate
CMVT/.07
DG/.25
SNPS/.03
NMG/A/1.45
Splits
SYMC 2-for-1
RYL 2-for1
Economic Data
Personal Income for October estimated to rise .5% versus a .2% gain in September.
Personal Spending for October estimated to rose .4% versus a .6% gain in September.
PCE Deflator (YoY) for October estimated up 2.4% versus a 2.0% rise in September.
Construction Spending for October estimated up .7% versus a 0.0% change in September.
ISM Manufacturing for November estimated at 57.0 versus 56.8 in October.
ISM Prices Paid for November estimated at 75.3 versus 78.5 in October.
Total Vehicle Sales for November estimated at 16.5M versus 17.0M in October.
Domestic Vehicle Sales for November estimated at 13.1M versus 13.2M in October.
Fed's Beige Book.
Recommendations
Goldman Sachs reiterated Outperform on PFE, AGN and JTX. Goldman reiterated Underperform on CI. Banc of America upgraded RKY to Buy.
Late-Night News
Asian indices are lower on concerns China's attempts to slow growth will lead to a hard landing in the region. China will probably set the nation's economic growth target for next year at 8%, Wen Wei Po reported. United Nations Secretary General Annan should resign because the UN failed to detect and stop abuses of the oil-for-food program by former Iraqi leader Saddam Hussein, Minnesota Senator Norm Coleman said in a column to be published in tomorrow's Wall Street Journal. Disney may say it will increase its dividend following high earnings and annual cash-flow growth to $2.9 billion, the Financial Times said. British tourists are choosing to holiday in the U.S. rather than Europe due to the weakness of the dollar against the euro, the Financial Times said. Investors, including California Public Employees' Retirement System and Morgan Stanley, helped India's benchmark stock index rise to a record close yesterday, betting the expansion of Asia's fourth-biggest economy will help companies such as Infosys and Wipro, Bloomberg reported. Rudolph Giuliani, New York's former mayor, is starting an investment bank, and as part of that his consulting firm, Giuliani Partners LLC, will buy Ernst & Young's investment-banking business, the Wall Street Journal reported.
Late-Night Trading
Asian Indices are -.75%. to -.25% on average.
S&P 500 indicated +.22%.
NASDAQ 100 indicated +.45%
Company/Estimate
CMVT/.07
DG/.25
SNPS/.03
NMG/A/1.45
Splits
SYMC 2-for-1
RYL 2-for1
Economic Data
Personal Income for October estimated to rise .5% versus a .2% gain in September.
Personal Spending for October estimated to rose .4% versus a .6% gain in September.
PCE Deflator (YoY) for October estimated up 2.4% versus a 2.0% rise in September.
Construction Spending for October estimated up .7% versus a 0.0% change in September.
ISM Manufacturing for November estimated at 57.0 versus 56.8 in October.
ISM Prices Paid for November estimated at 75.3 versus 78.5 in October.
Total Vehicle Sales for November estimated at 16.5M versus 17.0M in October.
Domestic Vehicle Sales for November estimated at 13.1M versus 13.2M in October.
Fed's Beige Book.
Recommendations
Goldman Sachs reiterated Outperform on PFE, AGN and JTX. Goldman reiterated Underperform on CI. Banc of America upgraded RKY to Buy.
Late-Night News
Asian indices are lower on concerns China's attempts to slow growth will lead to a hard landing in the region. China will probably set the nation's economic growth target for next year at 8%, Wen Wei Po reported. United Nations Secretary General Annan should resign because the UN failed to detect and stop abuses of the oil-for-food program by former Iraqi leader Saddam Hussein, Minnesota Senator Norm Coleman said in a column to be published in tomorrow's Wall Street Journal. Disney may say it will increase its dividend following high earnings and annual cash-flow growth to $2.9 billion, the Financial Times said. British tourists are choosing to holiday in the U.S. rather than Europe due to the weakness of the dollar against the euro, the Financial Times said. Investors, including California Public Employees' Retirement System and Morgan Stanley, helped India's benchmark stock index rise to a record close yesterday, betting the expansion of Asia's fourth-biggest economy will help companies such as Infosys and Wipro, Bloomberg reported. Rudolph Giuliani, New York's former mayor, is starting an investment bank, and as part of that his consulting firm, Giuliani Partners LLC, will buy Ernst & Young's investment-banking business, the Wall Street Journal reported.
Late-Night Trading
Asian Indices are -.75%. to -.25% on average.
S&P 500 indicated +.22%.
NASDAQ 100 indicated +.45%
BOTTOM LINE: I expect U.S. equities to open modestly higher, led by tech shares, on better economic reports and declining energy prices. However, stocks may weaken slightly later in the day on apprehension ahead of Intel's mid-quarter update after Thur.'s close and Friday's unemployment report. The Portfolio is 100% net long heading into tomorrow.
Tuesday, November 30, 2004
Tuesday Close
S&P 500 1,173.82 -.40%
NASDAQ 2,096.81 -.48%
Leading Sectors
Iron/Steel +.93%
HMOs +.93%
Hospitals +.78%
Lagging Sectors
Semis -1.40%
Utilities -1.43%
Retail -2.45%
Other
Crude Oil 48.98 -.31%
Natural Gas 7.60 -.26%
Gold 453.20 unch.
Base Metals 120.75 -.02%
U.S. Dollar 81.82 -.13%
10-Yr. T-note Yield 4.35% +.73%
VIX 13.24 -.45%
Put/Call .87 +16.0%
NYSE Arms .99 -3.88%
After-hours Movers
CPRT +5.05% after better-than-expected 1Q estimates.
CHS +6.03% after beating 3Q estimates.
OVTI +10.9% after beating 3Q estimates and raising 4Q outlook.
SYNA -4.7% after saying it intends to offer $100 million of Convertible Senior Subordinated Notes.
ADEX -4.6% after meeting 2Q estimates and lowering 3Q guidance.
Recommendations
Goldman Sachs reiterated Outperform on SBC.
After-hours News
U.S. stocks finished modestly lower today as fears over consumer spending more than offset other strong economic reports. After the close, NTT DoCoMo, Japan's largest mobile-phone operator, plans to start selling mobile phones from Nokia Oyj and Motorola next year, to reduce its reliance on local manufacturers, the Financial Times reported. Indiana Pacers players will face criminal charges for fighting with fans during a Nov. 19 game against the Detroit Pistons, the Detroit News reported. Ken Jennings, who won more money on a game show than anyone in history, lost on "Jeopardy" in the episode that airs today, ending a streak that lasted 74 days and earned him $2,520,700, King World said. Radioactive iodine released from a plutonium-producing plant run by General Electric and DuPont in Washington state in the 1940s and 1950s didn't lead to health problems decades later, a newly published study found. Cigna Corp. said 2004 earnings excluding some items probably would be $950 million to $975 million, higher than a forecast earlier this month as medical management improves, Bloomberg reported. Analog Devices said the U.S. SEC is conduction an inquiry into the company's granting of stock options to directors and officers in the past five years, Bloomberg said. Man Group Plc, the world's largest publicly traded hedge fund manager, may have its credit rating lowered because of the company's high level of borrowing and its funds' slumping performance, Moody's Investors Service said. NY State Comptroller Hevesi sued Merck over pension fund losses related to Vioxx, Bloomberg reported. LG.Philips LCD, the world's second-largest market of liquid crystal displays, said it plans to spend $5.1 billion building the world's largest liquid crystal display plant, Bloomberg said.
NASDAQ 2,096.81 -.48%
Leading Sectors
Iron/Steel +.93%
HMOs +.93%
Hospitals +.78%
Lagging Sectors
Semis -1.40%
Utilities -1.43%
Retail -2.45%
Other
Crude Oil 48.98 -.31%
Natural Gas 7.60 -.26%
Gold 453.20 unch.
Base Metals 120.75 -.02%
U.S. Dollar 81.82 -.13%
10-Yr. T-note Yield 4.35% +.73%
VIX 13.24 -.45%
Put/Call .87 +16.0%
NYSE Arms .99 -3.88%
After-hours Movers
CPRT +5.05% after better-than-expected 1Q estimates.
CHS +6.03% after beating 3Q estimates.
OVTI +10.9% after beating 3Q estimates and raising 4Q outlook.
SYNA -4.7% after saying it intends to offer $100 million of Convertible Senior Subordinated Notes.
ADEX -4.6% after meeting 2Q estimates and lowering 3Q guidance.
Recommendations
Goldman Sachs reiterated Outperform on SBC.
After-hours News
U.S. stocks finished modestly lower today as fears over consumer spending more than offset other strong economic reports. After the close, NTT DoCoMo, Japan's largest mobile-phone operator, plans to start selling mobile phones from Nokia Oyj and Motorola next year, to reduce its reliance on local manufacturers, the Financial Times reported. Indiana Pacers players will face criminal charges for fighting with fans during a Nov. 19 game against the Detroit Pistons, the Detroit News reported. Ken Jennings, who won more money on a game show than anyone in history, lost on "Jeopardy" in the episode that airs today, ending a streak that lasted 74 days and earned him $2,520,700, King World said. Radioactive iodine released from a plutonium-producing plant run by General Electric and DuPont in Washington state in the 1940s and 1950s didn't lead to health problems decades later, a newly published study found. Cigna Corp. said 2004 earnings excluding some items probably would be $950 million to $975 million, higher than a forecast earlier this month as medical management improves, Bloomberg reported. Analog Devices said the U.S. SEC is conduction an inquiry into the company's granting of stock options to directors and officers in the past five years, Bloomberg said. Man Group Plc, the world's largest publicly traded hedge fund manager, may have its credit rating lowered because of the company's high level of borrowing and its funds' slumping performance, Moody's Investors Service said. NY State Comptroller Hevesi sued Merck over pension fund losses related to Vioxx, Bloomberg reported. LG.Philips LCD, the world's second-largest market of liquid crystal displays, said it plans to spend $5.1 billion building the world's largest liquid crystal display plant, Bloomberg said.
BOTTOM LINE: The Portfolio finished unchanged today as strength in my security, internet and telecom equipment longs offset weakness in my medical equipment, retail and wireless longs. I did not trade in the afternoon, thus leaving the Portfolio 100% net long. I continue to view recent market action as healthy and necessary for another move higher before year-end. The major U.S. indices will likely continue their recent consolidation over the next couple of days and begin advancing on Friday's jobs report.
Mid-day Report
S&P 500 1,177.35 -.11%
NASDAQ 2,104.29 -.12%
Leading Sectors
Iron/Steel +1.36%
HMOs +.73%
Defense +.39%
Lagging Sectors
I-Banks -.90%
Broadcasting -.93%
Retail -2.18%
Other
Crude Oil 49.18 -1.17%
Natural Gas 7.49 -4.43%
Gold 452.50 -.72%
Base Metals 120.75 -.02%
U.S. Dollar 81.91 -.02%
10-Yr. T-note Yield 4.35% +.73%
VIX 13.09 -1.58%
Put/Call .87 +16.0%
NYSE Arms 1.0 -2.91%
Market Movers
TASR +7.6% on short-covering after 2-for-1 split.
PACT +23.0% after announcing it signed a partnership agreement to become a designated distributor of China Netcom(CN), and to distribute Netcom's XiaoLingTone/PHS mobile phone products, prepaid calling cards, wireless broadband and internet services.
RHAT +9.7% after Prudential upgrade to Overweight.
UNFI +8.2% after beating 1Q estimates and reiterated 05 guidance.
ELOS -19.0% after the FDA refused to review its VelaSmooth device for treating cellulite.
HOTT -11.8% after lowering 4Q guidance and multiple downgrades.
XING -12.9% after disappointing 9-months earnings report.
Economic Data
Preliminary 3Q GDP rose 3.9% versus estimates of 3.7% and a prior forecast of 3.7%.
Preliminary 3Q Personal Consumption rose 5.1% versus estimates of 4.7% and a prior forecast of 4.6%.
Preliminary 3Q Price Deflator rose 1.3% versus estimates of 1.3% and a prior estimate of 1.3%.
Consumer Confidence for November fell to 90.5 versus estimates of 96.0 and a reading of 92.9 in October.
Chicago Purchasing Manager for November was 65.2 versus estimates of 62.0 and a reading of 68.5 in October.
Recommendations
-Goldman Sachs reiterated Outperform on WAG. Goldman reiterated Underperform on ABY.
-Citi SmithBarney reiterated Buy on SHO, target $22. Citi reiterated Buy on INTC, target $25.50. Citi reiterated Sell on HOTT, target $14. Citi reiterated Buy on K, target $48.
-JP Morgan rated KEA Underweight. JP Morgan rated DTPI Overweight. AMT rated Overweight at JP Moran.
-Banc of America rated AMTD Sell, target $12.
-Legg Mason rated TSA Buy, target $37. AV rated Buy at Legg Mason, target $21.
-Prudential raised OSI to Overweight, target $41. Pru raised RHAT to Overweight, target $17.
-CSFB rated MMM Outperform, target $92.
-Merrill Lynch rated SHO Buy, target $21.
-Raymond James rated ANT Outperform, target $43.
Mid-day News
U.S. stocks are slightly lower mid-day on a continuing consolidation of recent gains. IBM and Sybase plan to collaborate to market an edition of Sybase's database software for IBM Servers that use the Linux operating system, the Wall Street Journal reported. Oragenics will likely say today it has received U.S. FDA approval to test bacteria that's intended to prevent tooth decay, the NY Times reported. Helicopter companies are benefiting from increased demand for medical airlifts and other commercial services, the NY Times reported. A U.S. appeals court ruled the government can't withhold federal funds from universities that bar military recruiters from campus, the Washington Post reported. Materials for making chemical blood agents and literature on how to produce a deadly form of anthrax were found at two houses in Fallujah, Iraq, last week, the Washington Times reported. Dallas Mavericks owner Mark Cuban says he plans to create a hedge fund managed by professional gamblers in which investors could wager on sporting events, the Dallas Morning News reported. Allergan's shares fell as much as 4.5% after the company said it was investigating whether injections of its Botox wrinkle treatment may have caused two people in Florida to become ill with botulism, Bloomberg reported. OAO Yukos Oil has lost financial stability and spent all its capital, Interfax said. German Chancellor Schroeder and Russian President Putin agreed during a telephone call that the result of any rerun of the disputed Ukrainian presidential election must be "strictly respected," Bloomberg reported. The U.S. economy grew at a 3.9% annual pace from July through September, faster than the government estimated last month, as consumer spending strengthened, Bloomberg said. Priceline.com and Lowestfare.com stopped selling retail airline tickets for Northwest Airlines as the companies disagree on distribution terms, Bloomberg said. Pfizer may be the first to produce a single medication designed to reduce "bad" cholesterol and elevate "good" cholesterol, Bloomberg reported. OAO Gazprom, Russia's state-run natural gas company, will bid for OAO Yukos' biggest unit and may buy other domestic producers to created an oil business rivaling that of Exxon Mobil within six years, Bloomberg reported. NAACP President Mfume said he is resigning from the civil rights group, Bloomberg said. Crude oil in NY is falling as warm temperatures and rising inventories eased concern that demand may outpace supplies of heating oil and natural gas, Bloomberg said. The employment index component of the Chicago Purchasing Manager report rose to a 16-year high, suggesting the manufacturing recovery is secure and will help drive economic growth, Bloomberg reported.
NASDAQ 2,104.29 -.12%
Leading Sectors
Iron/Steel +1.36%
HMOs +.73%
Defense +.39%
Lagging Sectors
I-Banks -.90%
Broadcasting -.93%
Retail -2.18%
Other
Crude Oil 49.18 -1.17%
Natural Gas 7.49 -4.43%
Gold 452.50 -.72%
Base Metals 120.75 -.02%
U.S. Dollar 81.91 -.02%
10-Yr. T-note Yield 4.35% +.73%
VIX 13.09 -1.58%
Put/Call .87 +16.0%
NYSE Arms 1.0 -2.91%
Market Movers
TASR +7.6% on short-covering after 2-for-1 split.
PACT +23.0% after announcing it signed a partnership agreement to become a designated distributor of China Netcom(CN), and to distribute Netcom's XiaoLingTone/PHS mobile phone products, prepaid calling cards, wireless broadband and internet services.
RHAT +9.7% after Prudential upgrade to Overweight.
UNFI +8.2% after beating 1Q estimates and reiterated 05 guidance.
ELOS -19.0% after the FDA refused to review its VelaSmooth device for treating cellulite.
HOTT -11.8% after lowering 4Q guidance and multiple downgrades.
XING -12.9% after disappointing 9-months earnings report.
Economic Data
Preliminary 3Q GDP rose 3.9% versus estimates of 3.7% and a prior forecast of 3.7%.
Preliminary 3Q Personal Consumption rose 5.1% versus estimates of 4.7% and a prior forecast of 4.6%.
Preliminary 3Q Price Deflator rose 1.3% versus estimates of 1.3% and a prior estimate of 1.3%.
Consumer Confidence for November fell to 90.5 versus estimates of 96.0 and a reading of 92.9 in October.
Chicago Purchasing Manager for November was 65.2 versus estimates of 62.0 and a reading of 68.5 in October.
Recommendations
-Goldman Sachs reiterated Outperform on WAG. Goldman reiterated Underperform on ABY.
-Citi SmithBarney reiterated Buy on SHO, target $22. Citi reiterated Buy on INTC, target $25.50. Citi reiterated Sell on HOTT, target $14. Citi reiterated Buy on K, target $48.
-JP Morgan rated KEA Underweight. JP Morgan rated DTPI Overweight. AMT rated Overweight at JP Moran.
-Banc of America rated AMTD Sell, target $12.
-Legg Mason rated TSA Buy, target $37. AV rated Buy at Legg Mason, target $21.
-Prudential raised OSI to Overweight, target $41. Pru raised RHAT to Overweight, target $17.
-CSFB rated MMM Outperform, target $92.
-Merrill Lynch rated SHO Buy, target $21.
-Raymond James rated ANT Outperform, target $43.
Mid-day News
U.S. stocks are slightly lower mid-day on a continuing consolidation of recent gains. IBM and Sybase plan to collaborate to market an edition of Sybase's database software for IBM Servers that use the Linux operating system, the Wall Street Journal reported. Oragenics will likely say today it has received U.S. FDA approval to test bacteria that's intended to prevent tooth decay, the NY Times reported. Helicopter companies are benefiting from increased demand for medical airlifts and other commercial services, the NY Times reported. A U.S. appeals court ruled the government can't withhold federal funds from universities that bar military recruiters from campus, the Washington Post reported. Materials for making chemical blood agents and literature on how to produce a deadly form of anthrax were found at two houses in Fallujah, Iraq, last week, the Washington Times reported. Dallas Mavericks owner Mark Cuban says he plans to create a hedge fund managed by professional gamblers in which investors could wager on sporting events, the Dallas Morning News reported. Allergan's shares fell as much as 4.5% after the company said it was investigating whether injections of its Botox wrinkle treatment may have caused two people in Florida to become ill with botulism, Bloomberg reported. OAO Yukos Oil has lost financial stability and spent all its capital, Interfax said. German Chancellor Schroeder and Russian President Putin agreed during a telephone call that the result of any rerun of the disputed Ukrainian presidential election must be "strictly respected," Bloomberg reported. The U.S. economy grew at a 3.9% annual pace from July through September, faster than the government estimated last month, as consumer spending strengthened, Bloomberg said. Priceline.com and Lowestfare.com stopped selling retail airline tickets for Northwest Airlines as the companies disagree on distribution terms, Bloomberg said. Pfizer may be the first to produce a single medication designed to reduce "bad" cholesterol and elevate "good" cholesterol, Bloomberg reported. OAO Gazprom, Russia's state-run natural gas company, will bid for OAO Yukos' biggest unit and may buy other domestic producers to created an oil business rivaling that of Exxon Mobil within six years, Bloomberg reported. NAACP President Mfume said he is resigning from the civil rights group, Bloomberg said. Crude oil in NY is falling as warm temperatures and rising inventories eased concern that demand may outpace supplies of heating oil and natural gas, Bloomberg said. The employment index component of the Chicago Purchasing Manager report rose to a 16-year high, suggesting the manufacturing recovery is secure and will help drive economic growth, Bloomberg reported.
Bottom Line: The Portfolio is unchanged mid-day as strength in my security, telecom equipment and internet longs is being offset by weakness in my wireless, retail and medical equipment longs. I have not traded today and the Portfolio is still 100% net long. The major indices continue to consolidate recent gains in an orderly and healthy manner. I still expect one more substantial run higher over the next few weeks into year-end and plan to buy favorite longs aggressively on any near-term weakness. Friday's employment report should exceed expectations, thus boosting consumer confidence, and provide the catalyst for higher stock prices. I expect U.S. stocks to trade modestly higher into the close on declining energy prices.
Tuesday Watch
Earnings of Note
Company/Estimate
CHS/.38
CPRT/.21
OVTI/.24
JTX/.19
SFD/.52
Splits
TASR 2-for-1
Economic Data
Preliminary 3Q GDP estimated to rise 3.7% versus a 3.3% increase in 2Q.
Preliminary 3Q Personal Consumption estimated to rise 4.7% versus a 1.6% increase in 2Q.
Preliminary 3Q GDP Price Deflator estimated to increase 1.3% versus a 3.2% rise in 2Q.
Consumer Confidence for November estimated to rise to 96.0 versus a reading of 92.8 in October.
Chicago Purchasing Manager for November estimated at 62.0 versus 68.5 in October.
Recommendations
Goldman Sachs reiterated Outperform on GOOG and EBAY. Goldman reiterated Underperform on BSC.
Late-Night News
Asian indices are higher, led by Korean shares. Global profit forecasts have been upgraded more in 2004 than at any time in the past 15 years, the London-based Times said, citing research by Citigroup. The world is facing a "cascade of proliferation" of nuclear weapons unless the existing system to prevent their spread is improved, the Financial Times said, citing a UN report. Bank of New York is negotiating with federal prosecutors to ward off a possible criminal indictment on charges it failed to report suspicious activity at one of its branches, the Wall Street Journal reported. Ukraine's standoff over who won the Nov. 21 presidential election mustn't provoke a breakup of the country, U.S. Secretary of State Powell told Leonid Kuchma, the outgoing Ukrainian president. The Ukrainian Supreme Court may give its ruling today on charges of fraud in the Nov. 21 presidential election, as the outgoing president said he is prepared to hold fresh elections, Bloomberg said.
Late-Night Trading
Asian Indices are unch. to +1.0% on average.
S&P 500 indicated unch.
NASDAQ 100 indicated +.13%
Company/Estimate
CHS/.38
CPRT/.21
OVTI/.24
JTX/.19
SFD/.52
Splits
TASR 2-for-1
Economic Data
Preliminary 3Q GDP estimated to rise 3.7% versus a 3.3% increase in 2Q.
Preliminary 3Q Personal Consumption estimated to rise 4.7% versus a 1.6% increase in 2Q.
Preliminary 3Q GDP Price Deflator estimated to increase 1.3% versus a 3.2% rise in 2Q.
Consumer Confidence for November estimated to rise to 96.0 versus a reading of 92.8 in October.
Chicago Purchasing Manager for November estimated at 62.0 versus 68.5 in October.
Recommendations
Goldman Sachs reiterated Outperform on GOOG and EBAY. Goldman reiterated Underperform on BSC.
Late-Night News
Asian indices are higher, led by Korean shares. Global profit forecasts have been upgraded more in 2004 than at any time in the past 15 years, the London-based Times said, citing research by Citigroup. The world is facing a "cascade of proliferation" of nuclear weapons unless the existing system to prevent their spread is improved, the Financial Times said, citing a UN report. Bank of New York is negotiating with federal prosecutors to ward off a possible criminal indictment on charges it failed to report suspicious activity at one of its branches, the Wall Street Journal reported. Ukraine's standoff over who won the Nov. 21 presidential election mustn't provoke a breakup of the country, U.S. Secretary of State Powell told Leonid Kuchma, the outgoing Ukrainian president. The Ukrainian Supreme Court may give its ruling today on charges of fraud in the Nov. 21 presidential election, as the outgoing president said he is prepared to hold fresh elections, Bloomberg said.
Late-Night Trading
Asian Indices are unch. to +1.0% on average.
S&P 500 indicated unch.
NASDAQ 100 indicated +.13%
BOTTOM LINE: I expect U.S. equities to open higher on better-than-expected economic reports, lower energy prices, a stronger dollar, short-covering and more optimism. The Portfolio is 100% net long heading into tomorrow.
Monday, November 29, 2004
Monday Close
S&P 500 1,178.57 -.34%
NASDAQ 2,106.87 +.23%
Leading Sectors
Boxmakers +1.57%
HMOs +.84%
Wireless +.62%
Lagging Sectors
Oil Service -.98%
Retail -1.36%
Homebuilders -2.76%
Other
Crude Oil 49.65 -.22%
Natural Gas 7.84 unch.
Gold 455.40 -.09%
Base Metals 120.77 +.21%
U.S. Dollar 81.96 +.04%
10-Yr. T-note Yield 4.32% unch.
VIX 13.30 +3.99%
Put/Call .75 +8.70%
NYSE Arms 1.03 +15.73%
After-hours Movers
STGS +5.1% after saying it will be added to the S&P Small-cap 600 Index.
HOTT -8.3% after lowering 4Q estimates on disappointing November sales.
Recommendations
Goldman Sachs reiterated Outperform on DNA and ACN.
After-hours News
U.S. stocks finished mixed today as rising interest rates offset optimism over economic growth. After the close, Europe's population is expected to decline by 96 million between 2000 and 2050 despite projected immigration of 600,000 a year during the same period, the Financial Times said. The Arctic Ocean may have significant deposits of oil and gas in a ridge buried near the North Pole, the NY Times reported. Beijing city officials canceled a $3.5 million software order to Microsoft, bowing to complaints from domestic rivals, the Financial Times said. Perry Corp., an investment advisory firm, said it owns 26.6 million Mylan Labs shares and supports the company's acquisition of King Pharmaceuticals that billionaire financier Carl Icahn has tried to block, Bloomberg reported. Halliburton said a bankruptcy judge approved a $1.5 billion settlement of asbestos claims between two of its subsidiaries and insurers, Bloomberg said.
NASDAQ 2,106.87 +.23%
Leading Sectors
Boxmakers +1.57%
HMOs +.84%
Wireless +.62%
Lagging Sectors
Oil Service -.98%
Retail -1.36%
Homebuilders -2.76%
Other
Crude Oil 49.65 -.22%
Natural Gas 7.84 unch.
Gold 455.40 -.09%
Base Metals 120.77 +.21%
U.S. Dollar 81.96 +.04%
10-Yr. T-note Yield 4.32% unch.
VIX 13.30 +3.99%
Put/Call .75 +8.70%
NYSE Arms 1.03 +15.73%
After-hours Movers
STGS +5.1% after saying it will be added to the S&P Small-cap 600 Index.
HOTT -8.3% after lowering 4Q estimates on disappointing November sales.
Recommendations
Goldman Sachs reiterated Outperform on DNA and ACN.
After-hours News
U.S. stocks finished mixed today as rising interest rates offset optimism over economic growth. After the close, Europe's population is expected to decline by 96 million between 2000 and 2050 despite projected immigration of 600,000 a year during the same period, the Financial Times said. The Arctic Ocean may have significant deposits of oil and gas in a ridge buried near the North Pole, the NY Times reported. Beijing city officials canceled a $3.5 million software order to Microsoft, bowing to complaints from domestic rivals, the Financial Times said. Perry Corp., an investment advisory firm, said it owns 26.6 million Mylan Labs shares and supports the company's acquisition of King Pharmaceuticals that billionaire financier Carl Icahn has tried to block, Bloomberg reported. Halliburton said a bankruptcy judge approved a $1.5 billion settlement of asbestos claims between two of its subsidiaries and insurers, Bloomberg said.
BOTTOM LINE: The Portfolio finished slightly lower today as losses in my Chinese ADR, retail and telecom equipment longs more than offset gains in my security, internet and Indian ADR longs. I did not trade in the afternoon, thus leaving the Portfolio 100% net long. The market improved modestly into the afternoon as most stocks rose and technology outperformed. I continue to expect another rally in the near-term on better-than-expected economic reports, a rally in the dollar and lower energy prices.
Mid-day Report
S&P 500 1,178.23 -.37%
NASDAQ 2,103.23 +.07%
Leading Sectors
Boxmakers +1.50%
HMOs +.69%
Wireless +.51%
Lagging Sectors
Retail -1.13%
Oil Service -1.42%
Homebuilders -2.71%
Other
Crude Oil 49.80 +.73%
Natural Gas 7.92 -8.32%
Gold 455.90 +.97%
Base Metals 120.77 +.21%
U.S. Dollar 81.84 +.07%
10-Yr. T-note Yield 4.33% +1.93%
VIX 13.35 +4.38%
Put/Call .73 +5.80%
NYSE Arms .99 +11.24%
Market Movers
AAPL +4.88% after UBS/Merrill raised estimates and target on strong weekend sales.
WMT -3.5% after lowering November sales estimates.
CAAS +102.5% after being selected to supply pumps to two companies, including General Motor's joint venture in China.
KCI +5.6% after Merrill added it to Focus List saying profit may rise 25% next year and 28% in 2006 as the maker of therapeutic beds benefits from its devices to treat wounds.
NGPS +12.5% on no news.
INFY +4.5% on no news.
OSTK +4.2% after saying traffic to its web site increased 31% y-o-y over the holiday weekend and Legg Mason reiterated Buy, target $78.
IPAR +12.5% after increasing 05 outlook.
PARL +12.3% on IPAR news.
GLNG -13.5% on disappointing 3Q report.
KMRT -4.4% on WMT news.
PHM -3.8% on higher interest rates.
Economic Data
None of note.
Recommendations
-Goldman Sachs reiterated Outperform on TPX, UNH and AVP. Goldman reiterated Underperform on TWMC.
-Citi SmithBarney said RSH will show the biggest upside surprise when comp store sales are reported early next month. Citi also raised comp estimates at AEOS, PLCE and lowered them at HOTT. Citi reiterated Buy on WMT, target $65. Citi reiterated Buy on FON, target $27. Citi reiterated Buy on AMT, target $22.00. Citi reiterated Buy on SSI, target $70. Citi reiterated Buy on ALK, target $36. Citi cut MET to Sell, target $38. Citi cut TMK to Sell, target $55.
-JP Morgan cut EP to Underweight.
-Merrill reiterated Buy on AAPL, raised target to $78.
-UBS reiterated Buy on AAPL, raised target to $77. UBS downgraded BNN to Reduce, target $34.
-Prudential cut ROH to Underweight, target $42. Pru cut DD to Underweight, target $47. Pru raised BEN to Overweight, target $75. Pru raised AMG to Overweight, target $72.
-Bear Stearns rated THO Outperform, target $25.
Mid-day News
U.S. stocks are mixed mid-day as rising interest rates and profit-taking is offsetting optimism over economic growth. Many U.S. hospitals are shying away from letting doctors deliver babies vaginally if the woman has previously had a Caesarean section, partly because of fears of lawsuits if there are complications, the NY Times reported. U.S. teenagers, indulging more than ever in luxury goods, are now paying adult prices for their clothes as designer labels becoming increasingly important to them, the Washington Post reported. Liquid crystal display flat-panel tv sets will drop in price by as much as 30% starting next year, the NY Times reported. An English-language tv network specifically geared toward Muslims will begin broadcasting in North America tomorrow, the NY Times said. McDonald's, Dunkin' Donuts and other fast-food restaurant chains plan to offer so-called stored-value gift cards this holiday season to capitalize on their success with other retailers, USA Today reported. Amazon.com is focusing on routing customers to third-party Web sites to buy products rather than selling items itself, the LA Times reported. Moscow's arbitration court will hear an appeal from OAO Yukos Oil on Dec. 3 against the government's decision to sell Yuko's main oil-producing unit, Interfax reported. General-merchandise and apparel sales will increase 4% to 6% this holiday season, Diane Swonk, chief economist at Mesirow Financial, told CNBC. Saudi Arabia plans to expand output capacity by 14% to ease concern of potential shortages, said the nation's oil minister. The UN nuclear watchdog said that Iran has agreed to suspend all uranium enrichment activities, according to a draft resolution before the IAEA in Vienna, Bloomberg reported. BT Group Plc, the U.K.'s largest phone operator, created an entertainment division to offer movies and tv programs over the Internet, Bloomberg said. President Bush has picked Carlos Gutierrez, CEO of Kellogg, to replace Donald Evans as secretary of Commerce, Bloomberg reported. U.S. retail sales over the Web increased 40% y-o-y on Friday, according to ComScore Networks. UN Secretary-General Annan said he was upset to learn his son was still getting paid this year by a company under investigation for its role in the scandal-ridden UN oil-for-food program through which former Iraqi dictator Saddam Hussein illegally pocketed $21.3 billion, Bloomberg reported. The benchmark 10-year U.S. Treasury is falling, pushing its yield to a three-month high on better-than-expected holiday retail sales and recent declines in the dollar, Bloomberg said.
NASDAQ 2,103.23 +.07%
Leading Sectors
Boxmakers +1.50%
HMOs +.69%
Wireless +.51%
Lagging Sectors
Retail -1.13%
Oil Service -1.42%
Homebuilders -2.71%
Other
Crude Oil 49.80 +.73%
Natural Gas 7.92 -8.32%
Gold 455.90 +.97%
Base Metals 120.77 +.21%
U.S. Dollar 81.84 +.07%
10-Yr. T-note Yield 4.33% +1.93%
VIX 13.35 +4.38%
Put/Call .73 +5.80%
NYSE Arms .99 +11.24%
Market Movers
AAPL +4.88% after UBS/Merrill raised estimates and target on strong weekend sales.
WMT -3.5% after lowering November sales estimates.
CAAS +102.5% after being selected to supply pumps to two companies, including General Motor's joint venture in China.
KCI +5.6% after Merrill added it to Focus List saying profit may rise 25% next year and 28% in 2006 as the maker of therapeutic beds benefits from its devices to treat wounds.
NGPS +12.5% on no news.
INFY +4.5% on no news.
OSTK +4.2% after saying traffic to its web site increased 31% y-o-y over the holiday weekend and Legg Mason reiterated Buy, target $78.
IPAR +12.5% after increasing 05 outlook.
PARL +12.3% on IPAR news.
GLNG -13.5% on disappointing 3Q report.
KMRT -4.4% on WMT news.
PHM -3.8% on higher interest rates.
Economic Data
None of note.
Recommendations
-Goldman Sachs reiterated Outperform on TPX, UNH and AVP. Goldman reiterated Underperform on TWMC.
-Citi SmithBarney said RSH will show the biggest upside surprise when comp store sales are reported early next month. Citi also raised comp estimates at AEOS, PLCE and lowered them at HOTT. Citi reiterated Buy on WMT, target $65. Citi reiterated Buy on FON, target $27. Citi reiterated Buy on AMT, target $22.00. Citi reiterated Buy on SSI, target $70. Citi reiterated Buy on ALK, target $36. Citi cut MET to Sell, target $38. Citi cut TMK to Sell, target $55.
-JP Morgan cut EP to Underweight.
-Merrill reiterated Buy on AAPL, raised target to $78.
-UBS reiterated Buy on AAPL, raised target to $77. UBS downgraded BNN to Reduce, target $34.
-Prudential cut ROH to Underweight, target $42. Pru cut DD to Underweight, target $47. Pru raised BEN to Overweight, target $75. Pru raised AMG to Overweight, target $72.
-Bear Stearns rated THO Outperform, target $25.
Mid-day News
U.S. stocks are mixed mid-day as rising interest rates and profit-taking is offsetting optimism over economic growth. Many U.S. hospitals are shying away from letting doctors deliver babies vaginally if the woman has previously had a Caesarean section, partly because of fears of lawsuits if there are complications, the NY Times reported. U.S. teenagers, indulging more than ever in luxury goods, are now paying adult prices for their clothes as designer labels becoming increasingly important to them, the Washington Post reported. Liquid crystal display flat-panel tv sets will drop in price by as much as 30% starting next year, the NY Times reported. An English-language tv network specifically geared toward Muslims will begin broadcasting in North America tomorrow, the NY Times said. McDonald's, Dunkin' Donuts and other fast-food restaurant chains plan to offer so-called stored-value gift cards this holiday season to capitalize on their success with other retailers, USA Today reported. Amazon.com is focusing on routing customers to third-party Web sites to buy products rather than selling items itself, the LA Times reported. Moscow's arbitration court will hear an appeal from OAO Yukos Oil on Dec. 3 against the government's decision to sell Yuko's main oil-producing unit, Interfax reported. General-merchandise and apparel sales will increase 4% to 6% this holiday season, Diane Swonk, chief economist at Mesirow Financial, told CNBC. Saudi Arabia plans to expand output capacity by 14% to ease concern of potential shortages, said the nation's oil minister. The UN nuclear watchdog said that Iran has agreed to suspend all uranium enrichment activities, according to a draft resolution before the IAEA in Vienna, Bloomberg reported. BT Group Plc, the U.K.'s largest phone operator, created an entertainment division to offer movies and tv programs over the Internet, Bloomberg said. President Bush has picked Carlos Gutierrez, CEO of Kellogg, to replace Donald Evans as secretary of Commerce, Bloomberg reported. U.S. retail sales over the Web increased 40% y-o-y on Friday, according to ComScore Networks. UN Secretary-General Annan said he was upset to learn his son was still getting paid this year by a company under investigation for its role in the scandal-ridden UN oil-for-food program through which former Iraqi dictator Saddam Hussein illegally pocketed $21.3 billion, Bloomberg reported. The benchmark 10-year U.S. Treasury is falling, pushing its yield to a three-month high on better-than-expected holiday retail sales and recent declines in the dollar, Bloomberg said.
Bottom Line: The Portfolio is lower mid-day on losses in my Chinese ADR, retail and telecom equipment longs. I exited a few long positions as they hit stop-losses this morning, thus leaving the Portfolio 100% net long. Today's mixed performance by the major indices appears to be mostly a result of profit-taking rather than real concerns over fundamentals. The Morgan Stanley Retail Index(MVRX) has gained 21.7% since August lows. Most retailers did very well over the weekend, notwithstanding WMT's November results. Other low-end retailers such as TGT, JCP and KSS exceeded expectations. Technology and small-caps are outperforming today and breadth is healthy for the overall market. The 10-year T-note yield is still 60 basis points below the highs set in June. As well, it is good to see measures of investor anxiety rising. I expect U.S. stocks to rise modestly into the close on short-covering and bargain-hunting ahead of tomorrow's GDP, Consumer Confidence and Chicago Purchasing Manager reports.
Monday Watch
Earnings of Note
Company/Estimate
DCI/.33
OSIP/-1.17
Splits
None of note.
Economic Data
None of note.
Weekend Recommendations
Wall Street Week w/Fortune had guests that were negative on TPX and NFLX. Forbes on Fox had guests that were positive on MC, MEE, BP, mixed on SKS and negative on XRX. Cashin' In had guests that were positive on OEH, PWI, LSI, EDE, NOI and mixed on OSIP, SIRI, JPM. Bulls and Bears had guests that were positive on SNE, LEXR, AMX, TARO, MKL, QQQ, SIRI, PRAA, CRI and mixed on WTW. Barron's had negative comments on AUDC. Goldman Sachs reiterated Outperform on EBAY, DNA and Underperform on FISV. U.S. financial, health-care services and biotechnology stocks are among the favorite issues of Edward Keon Jr., chief investment strategist at Prudential Equity Group LLC, Barron's reported.
Weekend News
U.K. and German business groups will write to the U.S. SEC opposing the requirements of the Sarbanes-Oxley corporate governance law, the Financial Times reported. A two-night trip to New York from Manchester, England, to do Christmas gift shopping is cheaper than taking the train to London for a weekend to buy the same items, the Independent reported. The first stirrings of unrest have begun among the migrant workers who provide cheap labor to China's booming Pearl River Delta, which has drawn more than $50 billion in foreign investment the past five years, the Washington Post said. Colombia's largest rebel group targeted President Bush for assassination during his trip to the South American nation earlier this week, Reuters reported. The Iraqi government rejected calls for national elections to be delayed, sticking to its Jan. 30 poll date, the AP reported. Cendant Corp., the largest U.S. real estate and travel services company, will probably buy Ebookers Plc, Europe's largest online travel company, the Sunday Times reported. Researchers at the Idaho National Engineering and Environmental Laboratory and ceramics company Cerametec have found a more efficient way to produce pure hydrogen, which may be a step in weaning the U.S. off its dependence on oil, the NY Times reported. Alpaca breeding is increasing in popularity in the U.S. as a controlled market for breeding stock has caused prices for the animals to steadily rise, drawing former doctors and corporate executives to ranching, the NY Times reported. The DJIA may reach 40,000 by 2010, driven by technology and spending by people from the Baby Boom generation, author Harry Dent Jr. told Wall Street Week w/Fortune. China's inflation rate may slow to 3% next year, down from 5.3% in August, on slower growth in investment and exports, Xinhua news agency reported. E*Trade Financial will introduce a trading platform for futures contracts next year, the Financial Times reported. The decline of the dollar and the increase in oil prices haven't caused a "significant change" in the U.S. inflation outlook, the Fed's Poole said. Iraq, the fifth-largest oil producer in the Middle East, will spend more than $1 billion next year to increase oil output capacity by about 15% to 3.25 million barrels a day, Bloomberg reported. U.S. stock may build on their fourth-quarter gains in December as Microsoft's special dividend of $32 billion encourages investors to put more money into equities before year-end, Bloomberg said. Small businesses plan double-digit IT spending increases, CRN reported. Iraqi oil output was fairly steady at about 2 million barrels a day in the second and third quarters, despite frequent sabotage attempts, the Wall Street Journal reported.
Late-Night Trading
Asian indices are higher, +.25% to +1.25% on average.
S&P 500 indicated +.29%.
NASDAQ 100 indicated +.38%.
Company/Estimate
DCI/.33
OSIP/-1.17
Splits
None of note.
Economic Data
None of note.
Weekend Recommendations
Wall Street Week w/Fortune had guests that were negative on TPX and NFLX. Forbes on Fox had guests that were positive on MC, MEE, BP, mixed on SKS and negative on XRX. Cashin' In had guests that were positive on OEH, PWI, LSI, EDE, NOI and mixed on OSIP, SIRI, JPM. Bulls and Bears had guests that were positive on SNE, LEXR, AMX, TARO, MKL, QQQ, SIRI, PRAA, CRI and mixed on WTW. Barron's had negative comments on AUDC. Goldman Sachs reiterated Outperform on EBAY, DNA and Underperform on FISV. U.S. financial, health-care services and biotechnology stocks are among the favorite issues of Edward Keon Jr., chief investment strategist at Prudential Equity Group LLC, Barron's reported.
Weekend News
U.K. and German business groups will write to the U.S. SEC opposing the requirements of the Sarbanes-Oxley corporate governance law, the Financial Times reported. A two-night trip to New York from Manchester, England, to do Christmas gift shopping is cheaper than taking the train to London for a weekend to buy the same items, the Independent reported. The first stirrings of unrest have begun among the migrant workers who provide cheap labor to China's booming Pearl River Delta, which has drawn more than $50 billion in foreign investment the past five years, the Washington Post said. Colombia's largest rebel group targeted President Bush for assassination during his trip to the South American nation earlier this week, Reuters reported. The Iraqi government rejected calls for national elections to be delayed, sticking to its Jan. 30 poll date, the AP reported. Cendant Corp., the largest U.S. real estate and travel services company, will probably buy Ebookers Plc, Europe's largest online travel company, the Sunday Times reported. Researchers at the Idaho National Engineering and Environmental Laboratory and ceramics company Cerametec have found a more efficient way to produce pure hydrogen, which may be a step in weaning the U.S. off its dependence on oil, the NY Times reported. Alpaca breeding is increasing in popularity in the U.S. as a controlled market for breeding stock has caused prices for the animals to steadily rise, drawing former doctors and corporate executives to ranching, the NY Times reported. The DJIA may reach 40,000 by 2010, driven by technology and spending by people from the Baby Boom generation, author Harry Dent Jr. told Wall Street Week w/Fortune. China's inflation rate may slow to 3% next year, down from 5.3% in August, on slower growth in investment and exports, Xinhua news agency reported. E*Trade Financial will introduce a trading platform for futures contracts next year, the Financial Times reported. The decline of the dollar and the increase in oil prices haven't caused a "significant change" in the U.S. inflation outlook, the Fed's Poole said. Iraq, the fifth-largest oil producer in the Middle East, will spend more than $1 billion next year to increase oil output capacity by about 15% to 3.25 million barrels a day, Bloomberg reported. U.S. stock may build on their fourth-quarter gains in December as Microsoft's special dividend of $32 billion encourages investors to put more money into equities before year-end, Bloomberg said. Small businesses plan double-digit IT spending increases, CRN reported. Iraqi oil output was fairly steady at about 2 million barrels a day in the second and third quarters, despite frequent sabotage attempts, the Wall Street Journal reported.
Late-Night Trading
Asian indices are higher, +.25% to +1.25% on average.
S&P 500 indicated +.29%.
NASDAQ 100 indicated +.38%.
BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on gains in Asia, optimism over weekend retail sales, declining energy prices and a stabilizing dollar. The Portfolio is 125% net long heading into tomorrow.
Sunday, November 28, 2004
Weekly Outlook
There are a number of economic reports and some significant corporate earnings reports scheduled for release this week. Economic reports include Preliminary 3Q GDP(Tues.), Consumer Confidence(Tues.), Chicago Purchasing Manager(Tues.), Personal Income/Spending(Wed.), PCE Deflator Y-o-Y(Wed.), Construction Spending(Wed.), ISM Manufacturing/Prices Paid(Wed.), Fed's Beige Book(Wed.), Vehicle Sales(Wed.), Initial Jobless Claims(Thur.), Factory Orders(Thur.), Unemployment Rate(Fri.), Average Hourly Earnings(Fri.), Change in Non-farm Payrolls(Fri.), Average Weekly Hours(Fri.), and ISM Non-Manufacturing(Fri.). GDP, Consumer Confidence, Chicago Purchasing Manager, ISM Manufacturing, Change in Non-farm Payrolls and ISM Non-Manufacturing all have market-moving potential.
OSI Pharmaceuticals(OSIP-Mon.), Chico's FAS(CHS-Tues.), Omnivision Technologies(OVTI-Tues.), Neiman Marcus Group(NMG/B-Wed.) and Synopsys(SNPS-Wed.) are some of the more important companies that release quarterly earnings this week. There are also some other events that have market-moving potential. The CSFB Tech Conference(Tues.-Fri.), The Homebuilding Industry Conference(Tues.-Wed.), Merrill Health Services Conference(Tues.), INTC mid-quarter update(Thur.), Fed's Bernanke speaking(Thur.), Fed's McTeer speaking(Fri.) and Fed's Santomero speaking(Fri.) could also impact trading this week.
OSI Pharmaceuticals(OSIP-Mon.), Chico's FAS(CHS-Tues.), Omnivision Technologies(OVTI-Tues.), Neiman Marcus Group(NMG/B-Wed.) and Synopsys(SNPS-Wed.) are some of the more important companies that release quarterly earnings this week. There are also some other events that have market-moving potential. The CSFB Tech Conference(Tues.-Fri.), The Homebuilding Industry Conference(Tues.-Wed.), Merrill Health Services Conference(Tues.), INTC mid-quarter update(Thur.), Fed's Bernanke speaking(Thur.), Fed's McTeer speaking(Fri.) and Fed's Santomero speaking(Fri.) could also impact trading this week.
Bottom Line: I expect U.S. stocks to finish the week higher on seasonal strength, better-than-expected economic reports, strength in technology shares, more optimism, a rebound in the US dollar, declining energy prices, short-covering and bargain-hunting. The most important day of the year for retailers was Friday and it appears the holiday shopping season is off to a strong start. Research firm ShopperTrak said overall U.S. retail sales climbed 10.8% over last year and Visa, the No. 1 issuer of credit cards, said sales on its cards soared 15.5% from last year. The S&P 500 and Russell 2000 are at their highs for the year. The DJIA and NASDAQ will likely test their yearly highs this week. My short-term trading indicators are still giving Buy signals and the Portfolio is 125% net long heading into the week.
Saturday, November 27, 2004
Market Week in Review
S&P 500 1,182.65 +1.07%
Click here for the Weekly Wrap by Briefing.com.
Click here for the Weekly Wrap by Briefing.com.
Bottom Line: U.S. stocks finished moderately higher last week in another win for the bulls. It was the fourth weekly rise for the S&P 500 in 5 weeks. Gains were especially frustrating for the bears considering the decline in the dollar, rising energy prices and worries over inflation. Small-caps again outperformed as the Russell 2000 hit another ALL-TIME high and breadth was very healthy. Commodity-related stocks were the top-performers for the week, led by steel and oil service companies. Moreover, the AAII % Bulls fell 22.81% to 49.48%, which is big positive considering recent complacency. While perpetually negative pundits and analysts paint a bleak picture for U.S. stocks on inflation and profit fears, the overall technical picture of the market appears the healthiest to me since 1995.
Economic Week in Review
ECRI Weekly Leading Index 132.70 +.08%
Existing Home Sales for October were 6.75M versus estimates of 6.72M and 6.76M in September. "With low interest rates and an improving job market we're seeing some extraordinary numbers in housing," said the CEO of Foxtons North America, a real estate brokerage firm. October's sales were the fourth-highest ever, Bloomberg said. The median selling price of an existing home was $187,000 last month, up 8.8% from the same month last year. "As long as mortgage rates stay at about the 6-6.5% level, I think the housing market should be strong," said Bruce Harting, a senior analyst who covers mortgage companies at Lehman Brothers. Re-sales were the strongest in the South and West, rising 3.7% and 3.6% for the month respectively. While prices have increased, America's homeowners are not over-leveraged, according to the Homeownership Alliance. The latest Federal Reserve data show that mortgage payments accounted for 9.87% of disposable incomes in the second quarter of this year, down from over 10% in 1990-1992, Bloomberg said.
Durable Goods Orders for October fell .4% versus estimates of a .5% rise and an upwardly revised .9% gain in September. Durable Goods Orders Less Transportation for October fell .7% versus estimates of a .2% fall and an upwardly revised 2.8% increase in September. After the September revisions, the October dollar volume was close to estimates, Bloomberg reported. Shipments, which the government uses to calculate quarterly GDP, rose 3.1%, the biggest rise since March, Bloomberg said.
Initial Jobless Claims for last week were 323K versus estimates of 335K and 335K the prior week. Continuing Claims were 2755K versus estimates of 2795K and 2784K prior. The four-week moving average of claims dropped to a four-year low of 332,000. "Labor markets are improving, and we expect to see that reflected in payroll gains for November," said Gary Bigg, an economist at Banc of America Securities. A survey by the National Assoc. of Business Economists released on Nov. 22 showed economists expect the labor market to give a boost to the economy next year, with the unemployment rate falling to 5.2%, from its current 5.5%, Bloomberg reported. Moreover, economists project 2.2 million jobs will be created in 2005.
The Final Univ. of Mich. Consumer Confidence reading for November was 92.8 versus estimates of 96.0 and a prior forecast of 95.5. "With the election over, energy prices declining, and the labor market improving, we would have expected a more significant boost to attitudes," said Stephen Stanley, chief economist at RBS Greenwich Capital. However, the University's current conditions index, which reflects Americans' perception of their financial situation and whether it's a good time to buy big-ticket items, rose to 104.7 from 104 in October, Bloomberg said. As well, the expectations index, based on optimism about the next one to five years, rose to 85.2 from 83.8 last month. "Based on the positive momentum over the past three weeks, Visa maintains an optimistic outlook for the holiday shopping season," said Wayne Best, senior vice president of strategic and economic analysis at Visa USA. Finally, the National Retail Federation is now projecting a fairly strong 4.5% gain in retail sales during the holiday season.
New Home Sales for October rose to 1226K versus estimates of 1200K and 1224K in September. This was the third fastest rate on record, Bloomberg said. The median price jumped to $221,800, up 14% from a year ago. The U.S. gained the most jobs in seven months during October and mortgage rates remain within a percentage point of an all-time low, helping boost sales, Bloomberg reported. "We are still seeing extremely strong traffic and demand," said Alan Levan, CEO of Levitt, a homebuilder based in Fort Lauderdale, Florida. Sales of new and existing homes will reach an all-time record this year, according to a forecast from the National Assoc. of Realtors. Sales were the strongest in the Northeast and West, rising 20% and 13% respectively.
Existing Home Sales for October were 6.75M versus estimates of 6.72M and 6.76M in September. "With low interest rates and an improving job market we're seeing some extraordinary numbers in housing," said the CEO of Foxtons North America, a real estate brokerage firm. October's sales were the fourth-highest ever, Bloomberg said. The median selling price of an existing home was $187,000 last month, up 8.8% from the same month last year. "As long as mortgage rates stay at about the 6-6.5% level, I think the housing market should be strong," said Bruce Harting, a senior analyst who covers mortgage companies at Lehman Brothers. Re-sales were the strongest in the South and West, rising 3.7% and 3.6% for the month respectively. While prices have increased, America's homeowners are not over-leveraged, according to the Homeownership Alliance. The latest Federal Reserve data show that mortgage payments accounted for 9.87% of disposable incomes in the second quarter of this year, down from over 10% in 1990-1992, Bloomberg said.
Durable Goods Orders for October fell .4% versus estimates of a .5% rise and an upwardly revised .9% gain in September. Durable Goods Orders Less Transportation for October fell .7% versus estimates of a .2% fall and an upwardly revised 2.8% increase in September. After the September revisions, the October dollar volume was close to estimates, Bloomberg reported. Shipments, which the government uses to calculate quarterly GDP, rose 3.1%, the biggest rise since March, Bloomberg said.
Initial Jobless Claims for last week were 323K versus estimates of 335K and 335K the prior week. Continuing Claims were 2755K versus estimates of 2795K and 2784K prior. The four-week moving average of claims dropped to a four-year low of 332,000. "Labor markets are improving, and we expect to see that reflected in payroll gains for November," said Gary Bigg, an economist at Banc of America Securities. A survey by the National Assoc. of Business Economists released on Nov. 22 showed economists expect the labor market to give a boost to the economy next year, with the unemployment rate falling to 5.2%, from its current 5.5%, Bloomberg reported. Moreover, economists project 2.2 million jobs will be created in 2005.
The Final Univ. of Mich. Consumer Confidence reading for November was 92.8 versus estimates of 96.0 and a prior forecast of 95.5. "With the election over, energy prices declining, and the labor market improving, we would have expected a more significant boost to attitudes," said Stephen Stanley, chief economist at RBS Greenwich Capital. However, the University's current conditions index, which reflects Americans' perception of their financial situation and whether it's a good time to buy big-ticket items, rose to 104.7 from 104 in October, Bloomberg said. As well, the expectations index, based on optimism about the next one to five years, rose to 85.2 from 83.8 last month. "Based on the positive momentum over the past three weeks, Visa maintains an optimistic outlook for the holiday shopping season," said Wayne Best, senior vice president of strategic and economic analysis at Visa USA. Finally, the National Retail Federation is now projecting a fairly strong 4.5% gain in retail sales during the holiday season.
New Home Sales for October rose to 1226K versus estimates of 1200K and 1224K in September. This was the third fastest rate on record, Bloomberg said. The median price jumped to $221,800, up 14% from a year ago. The U.S. gained the most jobs in seven months during October and mortgage rates remain within a percentage point of an all-time low, helping boost sales, Bloomberg reported. "We are still seeing extremely strong traffic and demand," said Alan Levan, CEO of Levitt, a homebuilder based in Fort Lauderdale, Florida. Sales of new and existing homes will reach an all-time record this year, according to a forecast from the National Assoc. of Realtors. Sales were the strongest in the Northeast and West, rising 20% and 13% respectively.
Bottom Line: Overall, last week's economic data were mildly positive. The Weekly Leading Index has now risen 4 consecutive weeks since the election. Housing remains a pillar of strength for the U.S. economy and will remain so, barring an unexpected substantial rise in interest rates. The decline is Durable Goods Orders was a result of the significant upward revision to the prior month and is not of concern. The better jobless claims readings over the past few weeks suggest another good month for employment is in the offing. This should definitely result in better consumer confidence in the very near future, notwithstanding high energy prices. As well, stock market gains, less negativity by politicians and a strong housing market should also boost sentiment going forward. I continue to expect U.S. economic growth to surprise on the upside over the next few months. Data in December should confirm this view.
Thursday, November 25, 2004
Friday Watch
Earnings of Note
Company/Estimate
None of note.
Splits
None of note.
Economic Data
None of note.
Recommendations
Saks Inc.(SKS), which operates 350 traditional and luxury department stores, owns a high portion of is shops, making its stock an attractive buy, Business Week reported. Shares of Boston Scientific(BSX) are worth buying because the company has a "rich" pipeline of products, Business Week said. Shares of Bioenvision(BIVN), a maker of drugs to treat cancer, are expected to rise as the U.S. FDA considers approving the company's Clofarabine drug, Business Week said.
Holiday News
U.S. experts expressed reservations over an accord signed by European officials and Iran to stop the country's uranium enrichment program, the NY Times reported. U.S. Steel is interested in bidding for two steel operations of insolvent Stelco, possibly provoking a bidding war, the Globe and Mail reported. A laboratory for the manufacture of chemical weapons was found in the Iraqi city of Fallujah, Reuters reported. The Ukrainian Supreme Court today suspended publication of the Nov. 21 presidential election results until it can examine an opposition appeal challenging them, Agence France-Presse reported. The European Central Bank is waiting for the right moment to sell euros or buy dollars and curb the European currency's record-breaking rally, Reuters said. TiVo's plan to use pop-up ads is too intrusive, the AP reported. Companies plan to hire 20% more college graduates this year, Business Week reported, citing a study of 582 companies by Collegiate Employment Research Institute at Michigan State. American Express said it would replace Ernst & Young LLP as the company's independent auditor. The U.S., as a net international borrower, has "little to fear" from the dollar's slide, said Paul McCulley, a managing director at PIMCO. The European Union and Russia clashed over the results of Ukraine's presidential election, with the EU rejecting the vote outcome and Russian President Putin urging other countries to stay out of Ukraine's domestic affairs, Bloomberg said. Warehouse Group, New Zealand's largest retailer, is betting it can revive flagging sales in its peak Christmas season by adding name-brand products such as Eastman Kodak digital cameras and Dell notebook PCs, Bloomberg reported. Asian stocks are mixed tonight, with a regional benchmark set for its sixth straight weekly gain, the longest winning stretch in 14 months, Bloomberg said. China's government has cut its holdings of U.S. Treasury bonds in the nation's foreign-exchange reserves to $180 billion, First Economic and Finance Daily said. Cell phones are increasingly becoming attractive targets to computer hackers, the Washington Post says. Asian steelmaker shares are advancing, led by Nippon Steel and Posco, on speculation automakers including Toyota Motor and Nissan will pay higher prices, Bloomberg reported. Crude oil futures may decline next week on speculation the U.S. is importing enough to boost inventories, easing concern about a shortage of winter fuel, according to a Bloomberg survey.
Late-Night Trading
Asian indices are mixed, -1.25% to +.25% on average.
S&P 500 indicated -.16%.
NASDAQ 100 indicated +.06%.
Company/Estimate
None of note.
Splits
None of note.
Economic Data
None of note.
Recommendations
Saks Inc.(SKS), which operates 350 traditional and luxury department stores, owns a high portion of is shops, making its stock an attractive buy, Business Week reported. Shares of Boston Scientific(BSX) are worth buying because the company has a "rich" pipeline of products, Business Week said. Shares of Bioenvision(BIVN), a maker of drugs to treat cancer, are expected to rise as the U.S. FDA considers approving the company's Clofarabine drug, Business Week said.
Holiday News
U.S. experts expressed reservations over an accord signed by European officials and Iran to stop the country's uranium enrichment program, the NY Times reported. U.S. Steel is interested in bidding for two steel operations of insolvent Stelco, possibly provoking a bidding war, the Globe and Mail reported. A laboratory for the manufacture of chemical weapons was found in the Iraqi city of Fallujah, Reuters reported. The Ukrainian Supreme Court today suspended publication of the Nov. 21 presidential election results until it can examine an opposition appeal challenging them, Agence France-Presse reported. The European Central Bank is waiting for the right moment to sell euros or buy dollars and curb the European currency's record-breaking rally, Reuters said. TiVo's plan to use pop-up ads is too intrusive, the AP reported. Companies plan to hire 20% more college graduates this year, Business Week reported, citing a study of 582 companies by Collegiate Employment Research Institute at Michigan State. American Express said it would replace Ernst & Young LLP as the company's independent auditor. The U.S., as a net international borrower, has "little to fear" from the dollar's slide, said Paul McCulley, a managing director at PIMCO. The European Union and Russia clashed over the results of Ukraine's presidential election, with the EU rejecting the vote outcome and Russian President Putin urging other countries to stay out of Ukraine's domestic affairs, Bloomberg said. Warehouse Group, New Zealand's largest retailer, is betting it can revive flagging sales in its peak Christmas season by adding name-brand products such as Eastman Kodak digital cameras and Dell notebook PCs, Bloomberg reported. Asian stocks are mixed tonight, with a regional benchmark set for its sixth straight weekly gain, the longest winning stretch in 14 months, Bloomberg said. China's government has cut its holdings of U.S. Treasury bonds in the nation's foreign-exchange reserves to $180 billion, First Economic and Finance Daily said. Cell phones are increasingly becoming attractive targets to computer hackers, the Washington Post says. Asian steelmaker shares are advancing, led by Nippon Steel and Posco, on speculation automakers including Toyota Motor and Nissan will pay higher prices, Bloomberg reported. Crude oil futures may decline next week on speculation the U.S. is importing enough to boost inventories, easing concern about a shortage of winter fuel, according to a Bloomberg survey.
Late-Night Trading
Asian indices are mixed, -1.25% to +.25% on average.
S&P 500 indicated -.16%.
NASDAQ 100 indicated +.06%.
BOTTOM LINE: I expect U.S. stocks to open modestly lower on worries over higher interest rates and energy prices. However, stocks should rally later in the day on short-covering and more optimism as interest rates stabilize. The Portfolio is 125% net long heading into tomorrow.
Wednesday, November 24, 2004
HAPPY THANKSGIVING
I will resume blogging tomorrow night with the Friday Watch. Check out this long-term chart of the DJIA.
Mid-day Report
S&P 500 1,180.12 +.27%
NASDAQ 2,097.52 +.64%
Leading Sectors
Airlines +2.66%
Papers +1.18%
Internet +1.0%
Lagging Sectors
Defense unch.
Retail -.04%
Telecom -.63%
Other
Crude Oil 48.60 -.69%
Natural Gas 7.16 +5.4%
Gold 449.00 +.25%
Base Metals 120.24 +1.22%
U.S. Dollar 82.43 -.61%
10-Yr. T-note Yield 4.19% +.23%
VIX 12.82 +1.26%
Put/Call .61 -22.78%
NYSE Arms 1.08 -11.48%
Market Movers
Economic Data
Durable Goods Orders for October fell .4% versus estimates of a .5% increase and an upwardly revised .9% gain in September.
Durable Goods Orders Less Transportation for October fell .7% versus estimates of a .2% fall and an upwardly revised 2.8% gain in September.
Initial Jobless Claims for last week were 323K versus estimates of 335K and 335K the prior week.
Continuing Claims were 2755K versus estimates of 2795K and 2784K prior.
Final Univ. of Mich. Consumer Confidence for November was 92.8 versus estimates of 96.0 and a reading of 95.5 in October.
New Home Sales for October were 1226K versus estimates of 1200K and 1224K in September.
Help Wanted Index for October was 37 versus estimates of 37 and a reading of 36 in September.
Recommendations
Mid-day News
NASDAQ 2,097.52 +.64%
Leading Sectors
Airlines +2.66%
Papers +1.18%
Internet +1.0%
Lagging Sectors
Defense unch.
Retail -.04%
Telecom -.63%
Other
Crude Oil 48.60 -.69%
Natural Gas 7.16 +5.4%
Gold 449.00 +.25%
Base Metals 120.24 +1.22%
U.S. Dollar 82.43 -.61%
10-Yr. T-note Yield 4.19% +.23%
VIX 12.82 +1.26%
Put/Call .61 -22.78%
NYSE Arms 1.08 -11.48%
Market Movers
Economic Data
Durable Goods Orders for October fell .4% versus estimates of a .5% increase and an upwardly revised .9% gain in September.
Durable Goods Orders Less Transportation for October fell .7% versus estimates of a .2% fall and an upwardly revised 2.8% gain in September.
Initial Jobless Claims for last week were 323K versus estimates of 335K and 335K the prior week.
Continuing Claims were 2755K versus estimates of 2795K and 2784K prior.
Final Univ. of Mich. Consumer Confidence for November was 92.8 versus estimates of 96.0 and a reading of 95.5 in October.
New Home Sales for October were 1226K versus estimates of 1200K and 1224K in September.
Help Wanted Index for October was 37 versus estimates of 37 and a reading of 36 in September.
Recommendations
Mid-day News
Bottom Line: The Portfolio is higher mid-day on strength in my medical instrument, gaming and internet longs. I took profits in an internet long this morning and added BWLD long, thus leaving the Portfolio 125% net long. I am using a stop-loss of $32.50 on this position. Overall, today's economic data was mildly positive. While durable goods orders unexpectedly fell, the upward revisions for last month were significant. I would have liked to see Consumer Confidence at higher levels, however this reading should continue higher through at least year-end. Considering the small gains by the major indices, today's breadth is very healthy. I expect U.S. stocks to trade modestly higher into the close as higher energy prices are more than offset by short-covering.
Tuesday, November 23, 2004
Wednesday Watch
Earnings of Note
Company/Estimate
PDCO/.32
HRL/.49
Splits
None of note.
Economic Data
Durable Goods Orders for October estimated to rise .5% versus a .2% increase in September.
Durable Goods Orders Less Transportation for October estimated to fall .2% versus a 1.8% increase in September.
Initial Jobless Claims for last week are estimated at 335K versus 334K the prior week.
Continuing Claims are estimated at 2795K versus 2792K prior.
Final Univ. of Michigan Consumer Confidence for November is estimated at 96.0 versus a prior estimate of 95.5.
New Home Sales for October are estimated at 1200K versus 1206K in September.
Help Wanted Index for October is estimated at 37 versus 36 in September.
Recommendations
Goldman Sachs reiterated Outperform on PFE, GE, NKE and ACN. Goldman reiterated Underperform on HRB and GCO.
Late-Night News
Asian indices are higher, led by financial, basic material and technology companies in the region. Newmont Mining will study Gold Fields' mines outside South Africa in case they are sold to defend against a hostile takeover bid, Reuters said. Shandong TV-net Media Development is preparing for China's first initial share sale of a business that directly controls tv channels, the Financial Times reported. South Korea's government will ask companies to refrain from aggressively selling dollars, Edaily reported. China's central bank considers growth in fixed-asset investment too fast and is monitoring the economy to gauge whether to boost interest rates again, the Financial Times said. China may relax the yuan's decade-old peg to the dollar by April 1 as the government attempts to slow inflation and cool economic growth, analysts at Banc of America and Merrill Lynch said. Intel said it's helping Chinese and Indian customers build personal computers that use the Linux operating system, an alternative to Microsoft's Windows software, Bloomberg reported. India's investment climate has improved over the past three years and it has overtaken China on "some indicators," the Financial Times reported, citing a World Bank study. The U.S. Postal Reserve will seek a bigger-than-expected increase in postage rates early next year, the Wall Street Journal reported. The Fed will raise the interest-rate target for overnight loans between banks a quarter point to 2.25% next month, said 20 of the 22 largest bond-trading firms. Russian President Putin's support for Ukrainian Prime Minister Yanukovych after Sunday's disputed presidential election may aggravate relations with the U.S. and Europe, Bloomberg reported.
Late-Night Trading
Asian Indices are +.25% to 1.0% on average.
S&P 500 indicated +.25%.
NASDAQ 100 indicated +.41%
Company/Estimate
PDCO/.32
HRL/.49
Splits
None of note.
Economic Data
Durable Goods Orders for October estimated to rise .5% versus a .2% increase in September.
Durable Goods Orders Less Transportation for October estimated to fall .2% versus a 1.8% increase in September.
Initial Jobless Claims for last week are estimated at 335K versus 334K the prior week.
Continuing Claims are estimated at 2795K versus 2792K prior.
Final Univ. of Michigan Consumer Confidence for November is estimated at 96.0 versus a prior estimate of 95.5.
New Home Sales for October are estimated at 1200K versus 1206K in September.
Help Wanted Index for October is estimated at 37 versus 36 in September.
Recommendations
Goldman Sachs reiterated Outperform on PFE, GE, NKE and ACN. Goldman reiterated Underperform on HRB and GCO.
Late-Night News
Asian indices are higher, led by financial, basic material and technology companies in the region. Newmont Mining will study Gold Fields' mines outside South Africa in case they are sold to defend against a hostile takeover bid, Reuters said. Shandong TV-net Media Development is preparing for China's first initial share sale of a business that directly controls tv channels, the Financial Times reported. South Korea's government will ask companies to refrain from aggressively selling dollars, Edaily reported. China's central bank considers growth in fixed-asset investment too fast and is monitoring the economy to gauge whether to boost interest rates again, the Financial Times said. China may relax the yuan's decade-old peg to the dollar by April 1 as the government attempts to slow inflation and cool economic growth, analysts at Banc of America and Merrill Lynch said. Intel said it's helping Chinese and Indian customers build personal computers that use the Linux operating system, an alternative to Microsoft's Windows software, Bloomberg reported. India's investment climate has improved over the past three years and it has overtaken China on "some indicators," the Financial Times reported, citing a World Bank study. The U.S. Postal Reserve will seek a bigger-than-expected increase in postage rates early next year, the Wall Street Journal reported. The Fed will raise the interest-rate target for overnight loans between banks a quarter point to 2.25% next month, said 20 of the 22 largest bond-trading firms. Russian President Putin's support for Ukrainian Prime Minister Yanukovych after Sunday's disputed presidential election may aggravate relations with the U.S. and Europe, Bloomberg reported.
Late-Night Trading
Asian Indices are +.25% to 1.0% on average.
S&P 500 indicated +.25%.
NASDAQ 100 indicated +.41%
BOTTOM LINE: I expect U.S. equities to open higher on better-than-expected economic reports, lower energy prices, short-covering and more optimism. The Portfolio is 125% net long heading into tomorrow.
Tuesday Close
S&P 500 1,176.94 -.03%
NASDAQ 2,084.28 -.04%
Leading Sectors
Restaurants +1.66%
Oil Service +1.16%
Airlines +1.11%
Lagging Sectors
Papers -.50%
Drugs -.59%
Semis -.73%
Other
Crude Oil 48.74 -.41%
Natural Gas 6.77 -.34%
Gold 447.00 -.20%
Base Metals 118.79 +1.19%
U.S. Dollar 82.94 -.30%
10-Yr. T-note Yield 4.18% +.09%
VIX 12.67 -2.31%
Put/Call .79 +11.27%
NYSE Arms 1.22 +23.23%
After-hours Movers
GOOG +5.4% after Goldman Sachs rated it Outperform, target $215.
CWTR +3.7% after beating 3Q estimates.
ELN +4.4% after winning FDA approval for its Tysabri drug to treat multiple sclerosis.
STCR +27.0% after Quantum Fuel Systems(QTWW) agreed to buy it for $185 million in stock and assumed debt.
TSA +7.8% after meeting 3Q estimates and reiterating 4Q guidance.
MIK -7.3% after meeting 3Q estimates and lowering 4Q outlook.
SEAC -9.1% after missing 3Q estimates and lowering 4Q guidance.
Recommendations
Goldman Sachs reiterated Underperform on DE and PVH. Goldman rated GOOG Outperform, target $215.
After-hours News
U.S. stocks finished quietly lower today, pressured by mild declines in semiconductor shares. After the close, the SEC and the NASD are starting an informal inquiry into gifts given to mutual fund executives by brokerage firms, CNBC reported. Users of Nokia's 7610 mobile phone are being warned about a virus that generates skull images and makes some functions on the so-called smartphone difficult to use, BBC reported. GM may use BMW's high-performance diesel engines in its Cadillac models in Europe, the Financial Times said. Sumner Redstone, CEO of Viacom, said his daughter is taking an increasingly important role at the media company, Bloomberg reported. Biogen and Elan won FDA approval of their multiple sclerosis drug, which will be called Tysabri, Bloomberg said. The U.S. said a screening test that last week indicated a possible case of mad cow disease was a "false positive," based on a more complete exam of the animal's brain tissue at a government lab, Bloomberg said. Women hold more top jobs on Wall Street than ever before, according to the Securities Industry Association. The NFL, undeterred by last week's brawl between NBA players and fans, will put spectators on the sidelines this weekend to test a new premium seating program, Bloomberg reported. Supporters of Ukraine's Viktor Yushchenko, who declared himself president after the Nov. 21 election, are surrounding the presidential office in Kiev demanding Yushchenko is allowed to begin managing the country, Bloomberg reported.
NASDAQ 2,084.28 -.04%
Leading Sectors
Restaurants +1.66%
Oil Service +1.16%
Airlines +1.11%
Lagging Sectors
Papers -.50%
Drugs -.59%
Semis -.73%
Other
Crude Oil 48.74 -.41%
Natural Gas 6.77 -.34%
Gold 447.00 -.20%
Base Metals 118.79 +1.19%
U.S. Dollar 82.94 -.30%
10-Yr. T-note Yield 4.18% +.09%
VIX 12.67 -2.31%
Put/Call .79 +11.27%
NYSE Arms 1.22 +23.23%
After-hours Movers
GOOG +5.4% after Goldman Sachs rated it Outperform, target $215.
CWTR +3.7% after beating 3Q estimates.
ELN +4.4% after winning FDA approval for its Tysabri drug to treat multiple sclerosis.
STCR +27.0% after Quantum Fuel Systems(QTWW) agreed to buy it for $185 million in stock and assumed debt.
TSA +7.8% after meeting 3Q estimates and reiterating 4Q guidance.
MIK -7.3% after meeting 3Q estimates and lowering 4Q outlook.
SEAC -9.1% after missing 3Q estimates and lowering 4Q guidance.
Recommendations
Goldman Sachs reiterated Underperform on DE and PVH. Goldman rated GOOG Outperform, target $215.
After-hours News
U.S. stocks finished quietly lower today, pressured by mild declines in semiconductor shares. After the close, the SEC and the NASD are starting an informal inquiry into gifts given to mutual fund executives by brokerage firms, CNBC reported. Users of Nokia's 7610 mobile phone are being warned about a virus that generates skull images and makes some functions on the so-called smartphone difficult to use, BBC reported. GM may use BMW's high-performance diesel engines in its Cadillac models in Europe, the Financial Times said. Sumner Redstone, CEO of Viacom, said his daughter is taking an increasingly important role at the media company, Bloomberg reported. Biogen and Elan won FDA approval of their multiple sclerosis drug, which will be called Tysabri, Bloomberg said. The U.S. said a screening test that last week indicated a possible case of mad cow disease was a "false positive," based on a more complete exam of the animal's brain tissue at a government lab, Bloomberg said. Women hold more top jobs on Wall Street than ever before, according to the Securities Industry Association. The NFL, undeterred by last week's brawl between NBA players and fans, will put spectators on the sidelines this weekend to test a new premium seating program, Bloomberg reported. Supporters of Ukraine's Viktor Yushchenko, who declared himself president after the Nov. 21 election, are surrounding the presidential office in Kiev demanding Yushchenko is allowed to begin managing the country, Bloomberg reported.
BOTTOM LINE: The Portfolio finished higher today on gains in my security, Chinese ADR, internet and retail longs. I did not trade in the afternoon, thus leaving the Portfolio 125% net long. The underlying tone of the market was pretty good today as most stocks advanced and volume increased. As well, energy prices fell from their daily highs into the afternoon. I expect U.S. stocks to rise tomorrow on better-than-expected economic reports, falling energy prices, strength in the tech sector, short-covering and more optimism.
Mid-day Report
S&P 500 1,172.29 -.42%
NASDAQ 2,071.72 -.65%
Leading Sectors
Oil Service +2.33%
Energy +1.13%
Restaurants +1.00%
Lagging Sectors
Broadcasting -.99%
Semis -1.14%
Biotech -1.18%
Other
Crude Oil 49.93 +2.65%
Natural Gas 6.82 +.93%
Gold 448.40 -.11%
Base Metals 118.79%
U.S. Dollar 82.86 -.40%
10-Yr. T-note Yield 4.14% -.87%
VIX 12.86 -.85%
Put/Call .86 +21.13%
NYSE Arms 1.14 +15.15%
Market Movers
Economic Data
Existing Home Sales for October were 6.75M versus estimates of 6.72M and 6.75M in September.
Recommendations
Mid-day News
NASDAQ 2,071.72 -.65%
Leading Sectors
Oil Service +2.33%
Energy +1.13%
Restaurants +1.00%
Lagging Sectors
Broadcasting -.99%
Semis -1.14%
Biotech -1.18%
Other
Crude Oil 49.93 +2.65%
Natural Gas 6.82 +.93%
Gold 448.40 -.11%
Base Metals 118.79%
U.S. Dollar 82.86 -.40%
10-Yr. T-note Yield 4.14% -.87%
VIX 12.86 -.85%
Put/Call .86 +21.13%
NYSE Arms 1.14 +15.15%
Market Movers
Economic Data
Existing Home Sales for October were 6.75M versus estimates of 6.72M and 6.75M in September.
Recommendations
Mid-day News
Bottom Line: The Portfolio is modestly higher mid-day on strength in my security, internet, retail, oil service and Chinese ADR longs. I have not traded today and the Portfolio is still 125% net long. I will be looking to add semi, semi-equipment and networking stocks on any near-term weakness as these areas should outperform over the intermediate-term. The underlying tone of the market is mildly positive today considering losses in the major indices. I expect U.S. shares to rise modestly into the close on optimism over future economic growth.
Tuesday Watch
Earnings of Note
Company/Estimate
ADI/.33
DE/.99
DLTR/.28
EV/.52
HRB/-.16
HNZ/.59
MIK/.30
SEAC/.12
WIND/.03
TECD/.55
Splits
STJ 2-for-1
VIP 3-for-1
Economic Data
Existing Home Sales for October estimated at 6.72M versus 6.75M in September.
Recommendations
Goldman Sachs reiterated Outperform on EMC, GE, NUE, X, XRX and Underperform on MMC, ELX.
Late-Night News
Asian indices are higher, led by Hong Kong shares, as cyclicals in the region are advancing. Cendant Corp., the U.S. lodging and travel group, will build mid-priced hotels in Russia and other former Soviet Union states, the Financial Times said. Porsche AG has asked Toyota Motor for its gasoline-electric hybrid technology to use with its Cayenne sport-utility vehicles, the Asahi newspaper said. The Chicago Mercantile Exchange may be interested in buying Reuters Group Plc's Instinet Group, the Financial Times reported. The U.S. said terrorist attacks on U.S. interests may be "imminent" in the Indian cities of Mumbai and New Delhi, Agence France-Presse reported from Washington. McDonald's said CEO and President Charlie Bell has resigned, Bloomberg reported. U.K. authorities foiled a plan by al-Qaeda to carry out an attack on London's Canary Wharf similar to the Sept. 11, 2001 attacks on the World Trade Center, the Sun reported.
Late-Night Trading
Asian Indices are +.25% to +1.25% on average.
S&P 500 indicated +.08%.
NASDAQ 100 indicated +.10%
Company/Estimate
ADI/.33
DE/.99
DLTR/.28
EV/.52
HRB/-.16
HNZ/.59
MIK/.30
SEAC/.12
WIND/.03
TECD/.55
Splits
STJ 2-for-1
VIP 3-for-1
Economic Data
Existing Home Sales for October estimated at 6.72M versus 6.75M in September.
Recommendations
Goldman Sachs reiterated Outperform on EMC, GE, NUE, X, XRX and Underperform on MMC, ELX.
Late-Night News
Asian indices are higher, led by Hong Kong shares, as cyclicals in the region are advancing. Cendant Corp., the U.S. lodging and travel group, will build mid-priced hotels in Russia and other former Soviet Union states, the Financial Times said. Porsche AG has asked Toyota Motor for its gasoline-electric hybrid technology to use with its Cayenne sport-utility vehicles, the Asahi newspaper said. The Chicago Mercantile Exchange may be interested in buying Reuters Group Plc's Instinet Group, the Financial Times reported. The U.S. said terrorist attacks on U.S. interests may be "imminent" in the Indian cities of Mumbai and New Delhi, Agence France-Presse reported from Washington. McDonald's said CEO and President Charlie Bell has resigned, Bloomberg reported. U.K. authorities foiled a plan by al-Qaeda to carry out an attack on London's Canary Wharf similar to the Sept. 11, 2001 attacks on the World Trade Center, the Sun reported.
Late-Night Trading
Asian Indices are +.25% to +1.25% on average.
S&P 500 indicated +.08%.
NASDAQ 100 indicated +.10%
BOTTOM LINE: I expect U.S. equities to open higher in the morning on declining energy prices, a strong home sales report and more optimism. The Portfolio is 125% net long heading into tomorrow.
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