Earnings of Note
Company/Estimate
BBOX/.70
CHINA/.04
TBUS/.02
CDCY/.03
MSO/-.19
PCTY/-.14
Splits
None of Note.
Economic Data
Unemployment Rate for April estimated at 5.7% versus 5.7% in March.
Change in Non-farm Payrolls for April estimated at 170K versus 308K in March.
Change in Manufacturing Payrolls for April estimated at 5K versus 0K in March.
Average Hourly Earnings for April estimated +.2% versus +.1% in March.
Average Weekly Hours for April estimated at 33.8 versus 33.7 in March.
Wholesale Inventories for March estimated +.5% versus +1.3% in February.
Recommendations
Goldman Sachs reiterated Outperform on DVN and RSE. GS reiterated Underperform on VICL. Jim Cramer, of TheStreet.com, thinks there is a good chance stocks will rise tomorrow no matter what the employment numbers are. VISX is expected to rise as demand for corrective eye surgery grows, Business Week reported. CGFW may be an acquisition target of a larger company seeking to expand in online security, Business Week reported.
Late-Night News
Asian indices are mixed on a rebound in Taiwan and slight weakness elsewhere. GE's NBC network told the NFL that it would be interested in broadcasting Sunday and Monday night games, Business Week reported. The UN tightened security around Secretary-General Kofi Annan after reports that a statement attributed to al-Qaeda's Osama bin Laden offered a reward to anyone who kills top U.S. and UN officials, Bloomberg reported. Major League Baseball dropped plans to adorn the bases in 15 ballparks with the logo for an upcoming Spider-Man movie one day after announcing the promotion, the Wall Street Journal reported. Hong Kong Dragon Air plans to spend as much as $300 million to buy five Boeing 747-400 aircraft as it aims to enter the U.S. cargo market by the end of 2006, the South China Morning Post reported. Ukrainian security officers arrested three men and seized almost 375 pounds of cesium-137, a potential ingredient in a radioactive "dirty bomb," the AP said. The U.S. Congressional Budget Office said the federal budget deficit for 04 will be smaller-than-expected because a vigorous economy is generating tax revenues $30-$40 billion above expectations. The FBI arrested an Oregon lawyer after Madrid authorities said they found evidence that linked him to material associated with the March commuter train bombing, Newsweek reported.
Late-Night Trading
Asian Indices -.50% to +1.50%.
S&P 500 indicated +.11%.
NASDAQ indicated +.14%.
BOTTOM LINE: I expect Non-farm Payrolls to rise above expectations of 170K and interest rates to rise further, pressuring stocks in the morning. However, I am not overly confident in this prediction, thus my market neutral position in the Portfolio. I will likely add long positions into any extreme weakness in stocks on the open as a result of falling bonds. If I am wrong in my assumptions and job growth falls below expectations or bonds rally, I would expect stocks to rally as well. Investors will incorrectly assume the Fed will wait longer than is currently expected to hike rates. I still expect the Fed to make their first move at the June 29-30 meeting irregardless of tomorrow's report. The Fed Funds rate is currently at emergency levels which are unwarranted in today's strong economic environment. Any stock rally, as a result of falling interest rates, will likely last a few days as the major indices are at oversold technical levels. Thus, I would likely increase market exposure under this scenario.
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