Monday, March 01, 2004

Monday Watch

Earnings Announcements

MGAM 2-for-1

Economic Data
Personal Income for January estimated up .5% vs. a .2% rise prior month.
Personal Spending for January estimated up .3% vs. a .4% rise in Dec.
Construction Spending for January expected up .3% vs. a .4% rise in Dec.
ISM Manufacturing for February estimated at 62.0 vs. 63.6 last month.
ISM Prices Paid for February expected to fall to 72.0 from 75.5 last month.

Weekend Recommendations
Ken Fisher, of Fisher Investments, told that he expects the market to rise 20% this year. He also expects the U.S. dollar to rally by year-end. Fisher believes we may see a reduction in the risk of terrorism and state/federal budget deficits coming in better than current expectations. Finally, he recommends ABB, ENT, ACL and LUX. Citi Smith Barney says a Bush win this fall would be positive for pharmaceuticals, energy and utilities. WR Hambrecht will buy SBUX on any dips, saying it is having its strongest comps since 1995. Goldman Sachs expects WEN and MCD to post strong same-store-sales numbers this week and PNRA to come in soft. has a positive article on TRK, saying it would be fairly valued at $40. Thomas Kurlak says, in a editorial, that the fundamentals in semis are looking better and better. He says buying for inventory, combined with higher end demand, can result in chip orders growing 40%-60% at many companies. Kurlak thinks overall semi sales can grow 30% this year, significantly above current estimates. He is also positive on the telecom equipment market due to voice-over-internet protocol spending. Finally, he thinks Intel will earn $1.50 next year and that it is cheap, trading at a 15 P/E on his estimate. Barrons said the Comcast bid for Disney is positive for brokers. SNDK may have assuaged fears by some investors about margin declines, Barrons reported. Barrons also said rumors are flying that SEBL will acquire HYSL or COGN. Barrons also had positive commentary on HOV, PHM, SPF, OIH, MER, SGTL, AUO and UTSI. Finally, GIS was favorably mentioned. Wall Street Week guests were positive on FNM and AMGN if Kerry wins this fall and negative on all healthcare-related companies with a Kerry victory. Wall St. Week guests were also positive on XRX, TYC, DG, BMY and Brokerage stocks. Forbes on Fox had guests that were positive on NOK, EQR, PTR, SEPR, MSFT and negative on SNDK and DIS.

Weekend News
The United Nations will send an intl. peacekeeping force to prevent Haiti from descending into chaos after Pres. Aristide resigned. The U.S. deployed a contingent of Marines in the Caribbean nation. Iraq's 25-member Governing Council reached an agreement on an interim constitution, clearing the way for the transfer of power from the U.S. coalition in June, Agence France-Presse said. Saddam Hussein's government skimmed billions of dollars in kickbacks from the United Nations oil-for-food program over the years, the NY Times reported. South Korean exports rose in February at their fastest pace in more than 15 years as demand picked up in China, the U.S. and Japan. Japan's Nikkei Index rose to a 21-month high. Rumors of Bin Laden's capture continued throughout the weekend. Home Depot is spending $1B to spruce up stores in hopes to lure more women. China's leaders have decided against any revaluation of the yuan this year. Taiwan plans to resume talks with China and enlist U.S. mediation should President Chen Shui-bian win a second term. The U.S. Homeland Security Department has devised a plan to station American inspectors at foreign airports to detect possible terrorists before they board aircraft heading for the U.S., the Wall Street Journal reported. Oracle Corp. is interested in more acquisitions, WSJ reported. In the past ORCL has been interested in BEAS. Continental and Northwest are hiking air-fares due to increasing fuel costs.

Late-Night Trading
Asian indices are mostly higher with major indices in Japan, S. Korea and Taiwan up more than 2.0%.
S&P 500 indicated +.41%.
NASDAQ indicated +.58%.

BOTTOM LINE: The AAII Bullish% fell 26.34% last week to 41.58% bulls. This contrary indicator bodes well for the major U.S. indices this week. Most of the news over the weekend was positive for the markets. The Portfolio is 75% net long currently, with a focus on beaten-up Chinese cyclicals, restaurants, retailers and homebuilders. Due to reasons outlined in previous posts, I will look to increase the Portfolio's market exposure on the open to around 100% net long. I am looking for a mildly positive week.

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