S&P 500 1,114.58 -.02%
NASDAQ 1,896.84 +.15%
Leading Sectors
Iron/Steel +2.52%
Commodity +1.45%
Papers +1.40%
Lagging Sectors
Retail -.31%
Airlines -1.54%
Drugs -2.56%
Other
Crude Oil 49.46 -.36%
Natural Gas 6.64 -2.34%
Gold 420.00 -.10%
Base Metals 121.28 +3.41%
U.S. Dollar 87.38 -.82%
10-Yr. T-note Yield 4.12 +.80%
VIX 13.34 +.98%
Put/Call .82 -2.38%
NYSE Arms .94 +18.99%
After-hours Movers
NFLX +4.41% after saying it will work with Tivo(TIVO) to develop a service to offer videos to download from the Internet.
OXM +4.4% after beating 1Q estimates and reiterating outlook.
TIVO +5.14% on NFLX news.
RIMM -4.2% on profit-taking after beating 2Q estimates, reiterating 3Q guidance and raising 4Q outlook.
Recommendations
Goldman Sachs reiterated Outperform on MET and LMT.
After-hours News
U.S. stocks finished mixed today on better economic data and a plunge in the shares of Merck. After the close, News Corp.'s own polling suggests it will win support for a move to the U.S., the Australian Financial Review reported. Japanese auto companies such as Toyota Motor and shipbuilders will agree to let steelmakers boost prices, Nikkei English News said. Merck's recall of its Vioxx painkiller surprised pharmacies in the U.S. and Canada, leaving them unprepared to handle questions from concerned patients and doctors looking for alternatives and trying to get information about possible reimbursement, Bloomberg reported. Scientific studies of Merck's Vioxx arthritis medicine, withdrawn from the market today, showed as early as four years ago that the painkiller was linked to elevated risk of heart disease, Bloomberg said. U.K. Prime Minister Blair is to go to the hospital for routine heart surgery Friday, Bloomberg reported. U.S. military forces have begun a "major offensive" to seize Samarra, Iraq, in an attempt to rid the area of insurgents, CNN reported.
BOTTOM LINE: The Portfolio finished higher today on strength in my security, Chinese ADR and steel longs. I did not trade in the afternoon and the Portfolio remains 125% net long. Considering the drops in shares of MRK and FNM, today's action was pretty good. The Bloomberg US Iron/Steel Index hit a 5-year high today and is poised to move higher as global economic growth accelerates. As well, long-term interest rates are heading higher on signs of stronger economic growth. I continue to expect U.S. economic growth to reach 4.5-5% during the fourth quarter and that the stock market will begin to anticipate this in the later part of October, embarking on a very strong year-end rally.
Thursday, September 30, 2004
Mid-day Update
S&P 500 1,113.82 -.09%
NASDAQ 1,897.78 +.20%
Leading Sectors
Iron/Steel +1.84%
Commodity +1.44%
HMOs +1.21%
Lagging Sectors
Biotech -.37%
Airlines -2.05%
Drugs -2.62%
Other
Crude Oil 50.04 +1.04%
Natural Gas 6.79 -1.75%
Gold 420.40 -.02%
Base Metals 121.28 +3.41%
U.S. Dollar 87.39 -.79%
10-Yr. T-note Yield 4.14% +1.27%
VIX 13.44 +1.74%
Put/Call .80 -4.76%
NYSE Arms .99 +25.32%
Market Movers
MRK -25.5% after withdrawing its Vioxx painkiller, which generated $2.5 billion is sales last year, because of a link to heart attacks and strokes.
ERES -17.4% after Advest downgrade to Buy, target $21.40.
FNM -4.7% after saying the Justice Dept. is considering whether to conduct a criminal investigation into accounting fraud.
NSTK +12.34% on continued optimism over its nasal spray for obesity.
ACH +6.7% after saying it raised its alumina price by 5% a ton following gains in the import cost of the aluminum metal raw material.
CRAI +8.4% after beating 3Q estimates and boosting 04 guidance.
IMDC +5.1% after announcing that Patricia Walker has accepted the new position of Chief Scientific Officer and Executive VP for Clinical and Regulatory Affairs.
ARRO +5.69% after meeting 4Q estimates and reiterating 05 outlook.
CLSR -33.5% after cutting 3Q/04 outlook.
TLB -9.3% after cutting 3Q forecast and multiple downgrades.
ANN -6.3% on TLB news.
Economic Data
Personal Income for August rose .4% versus estimates of a .4% rise and a .2% increase in July.
Personal Spending for August rose 0.0% versus estimates of a .1% rise and a 1.1% increase in July.
PCE Deflator (YoY) for August rose 2.1% versus estimates of a 2.2% increase and a 2.4% rise in July.
PCE Core (YoY) for August increased 1.4% versus estimates of a 1.5% rise and a 1.4% increase in July.
Initial Jobless Claims for last week were 369K versus estimates of 343K and 351K the prior week.
Continuing Claims were 2873K versus estimates of 2875K and 2876K prior.
Chicago Purchasing Manager for September rose to 61.3 versus estimates of 58.0 and a reading of 57.3 in August.
Recommendations
Goldman Sachs reiterated Outperform on SPLS, PFE, BSX, ATYT and ASN. Citi SmithBarney reiterated Buy on MAR, target $58. Citi rated GNW Buy, target $28. Citi reiterated Buy on GE, target $38. Citi reiterated Buy on AIG, target $80. Citi reiterated Sell on RNR, target $46. Citi reiterated Buy on FHN, target $50. Citi reiterated Buy on WFR, target $14. Citi reiterated Buy on WMT, target $65. Citi reiterated Buy on SPLS, target $35. Citi reiterated Buy on FLEX, target $22. COP raised to Buy at Deutsche Bank, target $91. CG rated Outperform at CSFB, target $28. SIRI raised to Overweight at JP Morgan. LRCX rated Underweight at Morgan Stanley, target $19.40. PFE raised to Outperform at Schwab SoundView, target $41. KLAC rated Overweight at Morgan Stanley, target $45. CYMI rated Overweight at Morgan Stanley, target $35.
Mid-day News
U.S. stocks are mixed mid-day as better economic data is being offset by concerns in the pharmaceutical sector. Merck said it's withdrawing its Vioxx painkiller from the market because of data showing and increased risk of heart attack and stroke after 18 months of treatment, Bloomberg reported. Wal-Mart may be planning to sell high-definition televisions in its stores under its own label, the NY Post reported. Kmart Holding is considering moving its corporate headquarters to Atlanta from suburban Detroit, the Detroit, the Detroit News reported. About 15,000 employees of Atlantic City, New Jersey, casinos owned by companies including Harrah's Entertainment, Caesars Entertainment and Aztar may strike tomorrow if union leaders and management don't agree on a new contract, the Star-Ledger reported. DuPont is introducing impact-resistant roofs, safe rooms and products designed to minimize damage to buildings during hurricanes and other natural disasters, the Wall Street Journal reported. Merck CEO Gilmartin told CNBC that the drugmaker's dividend won't be cut after the company's decision to withdraw its Vioxx painkiller because it may be unsafe. One of the organizers of the March 11 Madrid terrorist bombings received a monthly stipend of $2,495 from a Saudi cleric, El Mundo reported. Warburg Pincus may raise more than $8 billion for the world's biggest buyout and venture capital fund next year, Bloomberg reported. Copper prices in NY are rising today to the highest levels in nine years on strong demand from China and the U.S., Bloomberg reported. The frequency and strength of small earthquakes occurring near Washington state's Mount St. Helens accelerated for a second day, raising expectations that the volcano may erupt for the first time in almost 20 years, Bloomberg reported. Iraqi Prime Minister Allawi said attacks by insurgents won't stop elections taking place as planned in January and appealed to the international community to stand by Iraq in its attempts to defeat extremists, Bloomberg said. Business in the Chicago area, a center of manufacturing, grew at a faster pace than expected in September as orders and hiring gained, Bloomberg reported. Daily oil output in the Gulf is still close to 500,000 barrels below pre-storm levels, prompting further gains in the commodity, Bloomberg said.
BOTTOM LINE: The Portfolio is higher mid-day on gains in my Chinese ADR, security and steel longs. I have not traded and the Portfolio is still 125% net long. The tone of the market is ok today, considering the damage to Merck, one of the world's largest pharmaceutical companies and a large component in the DJIA. The underlying strength in the Chicago Purchasing Manager report is welcome and bodes well for economic growth in the fourth quarter. It is also a positive that oil inventories rose this last week even with production in the Gulf at lower levels. I expect U.S. stocks to rise into the close on short-covering, end-of-quarter window dressing and better economic data.
NASDAQ 1,897.78 +.20%
Leading Sectors
Iron/Steel +1.84%
Commodity +1.44%
HMOs +1.21%
Lagging Sectors
Biotech -.37%
Airlines -2.05%
Drugs -2.62%
Other
Crude Oil 50.04 +1.04%
Natural Gas 6.79 -1.75%
Gold 420.40 -.02%
Base Metals 121.28 +3.41%
U.S. Dollar 87.39 -.79%
10-Yr. T-note Yield 4.14% +1.27%
VIX 13.44 +1.74%
Put/Call .80 -4.76%
NYSE Arms .99 +25.32%
Market Movers
MRK -25.5% after withdrawing its Vioxx painkiller, which generated $2.5 billion is sales last year, because of a link to heart attacks and strokes.
ERES -17.4% after Advest downgrade to Buy, target $21.40.
FNM -4.7% after saying the Justice Dept. is considering whether to conduct a criminal investigation into accounting fraud.
NSTK +12.34% on continued optimism over its nasal spray for obesity.
ACH +6.7% after saying it raised its alumina price by 5% a ton following gains in the import cost of the aluminum metal raw material.
CRAI +8.4% after beating 3Q estimates and boosting 04 guidance.
IMDC +5.1% after announcing that Patricia Walker has accepted the new position of Chief Scientific Officer and Executive VP for Clinical and Regulatory Affairs.
ARRO +5.69% after meeting 4Q estimates and reiterating 05 outlook.
CLSR -33.5% after cutting 3Q/04 outlook.
TLB -9.3% after cutting 3Q forecast and multiple downgrades.
ANN -6.3% on TLB news.
Economic Data
Personal Income for August rose .4% versus estimates of a .4% rise and a .2% increase in July.
Personal Spending for August rose 0.0% versus estimates of a .1% rise and a 1.1% increase in July.
PCE Deflator (YoY) for August rose 2.1% versus estimates of a 2.2% increase and a 2.4% rise in July.
PCE Core (YoY) for August increased 1.4% versus estimates of a 1.5% rise and a 1.4% increase in July.
Initial Jobless Claims for last week were 369K versus estimates of 343K and 351K the prior week.
Continuing Claims were 2873K versus estimates of 2875K and 2876K prior.
Chicago Purchasing Manager for September rose to 61.3 versus estimates of 58.0 and a reading of 57.3 in August.
Recommendations
Goldman Sachs reiterated Outperform on SPLS, PFE, BSX, ATYT and ASN. Citi SmithBarney reiterated Buy on MAR, target $58. Citi rated GNW Buy, target $28. Citi reiterated Buy on GE, target $38. Citi reiterated Buy on AIG, target $80. Citi reiterated Sell on RNR, target $46. Citi reiterated Buy on FHN, target $50. Citi reiterated Buy on WFR, target $14. Citi reiterated Buy on WMT, target $65. Citi reiterated Buy on SPLS, target $35. Citi reiterated Buy on FLEX, target $22. COP raised to Buy at Deutsche Bank, target $91. CG rated Outperform at CSFB, target $28. SIRI raised to Overweight at JP Morgan. LRCX rated Underweight at Morgan Stanley, target $19.40. PFE raised to Outperform at Schwab SoundView, target $41. KLAC rated Overweight at Morgan Stanley, target $45. CYMI rated Overweight at Morgan Stanley, target $35.
Mid-day News
U.S. stocks are mixed mid-day as better economic data is being offset by concerns in the pharmaceutical sector. Merck said it's withdrawing its Vioxx painkiller from the market because of data showing and increased risk of heart attack and stroke after 18 months of treatment, Bloomberg reported. Wal-Mart may be planning to sell high-definition televisions in its stores under its own label, the NY Post reported. Kmart Holding is considering moving its corporate headquarters to Atlanta from suburban Detroit, the Detroit, the Detroit News reported. About 15,000 employees of Atlantic City, New Jersey, casinos owned by companies including Harrah's Entertainment, Caesars Entertainment and Aztar may strike tomorrow if union leaders and management don't agree on a new contract, the Star-Ledger reported. DuPont is introducing impact-resistant roofs, safe rooms and products designed to minimize damage to buildings during hurricanes and other natural disasters, the Wall Street Journal reported. Merck CEO Gilmartin told CNBC that the drugmaker's dividend won't be cut after the company's decision to withdraw its Vioxx painkiller because it may be unsafe. One of the organizers of the March 11 Madrid terrorist bombings received a monthly stipend of $2,495 from a Saudi cleric, El Mundo reported. Warburg Pincus may raise more than $8 billion for the world's biggest buyout and venture capital fund next year, Bloomberg reported. Copper prices in NY are rising today to the highest levels in nine years on strong demand from China and the U.S., Bloomberg reported. The frequency and strength of small earthquakes occurring near Washington state's Mount St. Helens accelerated for a second day, raising expectations that the volcano may erupt for the first time in almost 20 years, Bloomberg reported. Iraqi Prime Minister Allawi said attacks by insurgents won't stop elections taking place as planned in January and appealed to the international community to stand by Iraq in its attempts to defeat extremists, Bloomberg said. Business in the Chicago area, a center of manufacturing, grew at a faster pace than expected in September as orders and hiring gained, Bloomberg reported. Daily oil output in the Gulf is still close to 500,000 barrels below pre-storm levels, prompting further gains in the commodity, Bloomberg said.
BOTTOM LINE: The Portfolio is higher mid-day on gains in my Chinese ADR, security and steel longs. I have not traded and the Portfolio is still 125% net long. The tone of the market is ok today, considering the damage to Merck, one of the world's largest pharmaceutical companies and a large component in the DJIA. The underlying strength in the Chicago Purchasing Manager report is welcome and bodes well for economic growth in the fourth quarter. It is also a positive that oil inventories rose this last week even with production in the Gulf at lower levels. I expect U.S. stocks to rise into the close on short-covering, end-of-quarter window dressing and better economic data.
Thursday Watch
Earnings of Note
Company/Estimate
CMN/.27
STZ/.70
FDO/.26
Splits
None of note.
Economic Data
Personal Income for August estimated up .4% versus a .1% rise in July.
Personal Spending for August estimated up .1% versus a .8% increase in July.
PCE Deflator (YoY) for August estimated up 2.2% versus a 2.4% rise in July.
PCE Core (Yoy) for August estimated up 1.5% versus a 1.5% increase in July.
Initial Jobless Claims for last week are estimated at 343K versus 350K the prior week.
Continuing Claims are estimated at 2875K versus 2883K prior.
Chicago Purchasing Manager for September estimated at 58.0 versus 57.3 in August.
Recommendations
Goldman Sachs reiterated Attractive view of Non-life Insurance industry. Goldman reiterated Outperform on IBM, TYC, GE and Underperform on FHN, PGL, FHCC.
Late-Night News
Asian indices are higher on optimism over better U.S. economic growth and falling oil prices. About $14 billion should be spent upgrading power plants and transmission lines in the U.S. Rocky Mountain states, the AP reported. Genentech's breast-cancer treatment Herceptin may work in some types of lung cancer, Reuters reported. CEOs of three of the world's biggest automakers asked Treasury Secretary John Snow to urge Japan not to resume yen sales that they say unfairly make Japanese cars less expensive in the U.S., Bloomberg reported. Caterpillar, its rival Komatsu and SGS SA, which test mineral samples, said sales are rising in Mongolia from a surge in mining exploration in the country, Bloomberg reported. U.S. Medicare advisers in November will assess the safety and cost of surgery as a way for patients to lose weight, the NY Times reported.
Late-Night Trading
Asian Indices are -.25% to +1.0% on average.
S&P 500 indicated +.10%.
NASDAQ 100 indicated unch.
BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning on better economic data, gains in Asia, declining oil prices, short-covering and end-of-the-quarter window dressing. The Portfolio is 125% net long heading into tomorrow.
Company/Estimate
CMN/.27
STZ/.70
FDO/.26
Splits
None of note.
Economic Data
Personal Income for August estimated up .4% versus a .1% rise in July.
Personal Spending for August estimated up .1% versus a .8% increase in July.
PCE Deflator (YoY) for August estimated up 2.2% versus a 2.4% rise in July.
PCE Core (Yoy) for August estimated up 1.5% versus a 1.5% increase in July.
Initial Jobless Claims for last week are estimated at 343K versus 350K the prior week.
Continuing Claims are estimated at 2875K versus 2883K prior.
Chicago Purchasing Manager for September estimated at 58.0 versus 57.3 in August.
Recommendations
Goldman Sachs reiterated Attractive view of Non-life Insurance industry. Goldman reiterated Outperform on IBM, TYC, GE and Underperform on FHN, PGL, FHCC.
Late-Night News
Asian indices are higher on optimism over better U.S. economic growth and falling oil prices. About $14 billion should be spent upgrading power plants and transmission lines in the U.S. Rocky Mountain states, the AP reported. Genentech's breast-cancer treatment Herceptin may work in some types of lung cancer, Reuters reported. CEOs of three of the world's biggest automakers asked Treasury Secretary John Snow to urge Japan not to resume yen sales that they say unfairly make Japanese cars less expensive in the U.S., Bloomberg reported. Caterpillar, its rival Komatsu and SGS SA, which test mineral samples, said sales are rising in Mongolia from a surge in mining exploration in the country, Bloomberg reported. U.S. Medicare advisers in November will assess the safety and cost of surgery as a way for patients to lose weight, the NY Times reported.
Late-Night Trading
Asian Indices are -.25% to +1.0% on average.
S&P 500 indicated +.10%.
NASDAQ 100 indicated unch.
BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning on better economic data, gains in Asia, declining oil prices, short-covering and end-of-the-quarter window dressing. The Portfolio is 125% net long heading into tomorrow.
Wednesday, September 29, 2004
Wednesday Close
S&P 500 1,114.80 +.43%
NASDAQ 1,893.94 +1.29%
Leading Sectors
Disk Drives +2.91%
Airlines +2.21%
Semis +1.85%
Lagging Sectors
Energy -1.18%
Oil Service -1.51%
Broadcasting -2.20%
Other
Crude Oil 49.56 -.68%
Natural Gas 6.91 +8.82%
Gold 414.90 +.17%
Base Metals 117.28 +.88%
U.S. Dollar 88.07 -.05%
10-Yr. T-note Yield 4.09% +2.10%
VIX 13.21 -4.48%
Put/Call .84 -6.67%
NYSE Arms .79 -11.24%
After-hours Movers
TLB -8.29% after cutting 3Q forecast.
RECN -4.84% after substantially beating 1Q estimates and saying future hiring may hurt operating income.
NARA +4.15%
Recommendations
Goldman Sachs reiterated Outperform on PFE. Goldman reiterated Underperform on TSG and S.
After-hours News
U.S. stocks rose today, led by technology shares, after oil prices fell and an economic report showed faster economic growth than originally expected. After the close, Saudi Arabia's top religious authority banned the use of camera cellular phones, saying the devices are responsible for helping to spread "obscenity," the AP reported. The Montreal Expos said they're moving to Washington next season, bringing Major League Baseball back to the nation's capital after a 33-year absence, Bloomberg said. The chairman of a U.S. Congress panel responsible for Fannie Mae gained authority to subpoena executives at the biggest U.S. mortgage finance company for information related to allegations of accounting violations, Bloomberg reported. AIG said the U.S. Department of Justice is investigating the company for helping PNC Financial Services remove bad loans from its books, Bloomberg said. A judge struck down portions of the USA Patriot Act requiring Internet and telephone companies to surrender customer records sought in terrorism investigations and barring notice to clients that their data was handed over, Bloomberg reported. Micron Technology reported a second-straight quarterly profit as sales jumped 34%, Bloomberg reported. Delphi said the U.S. SEC is investigating $86.5 million of the company's transactions with computer-services provider Electronic Data Systems, Bloomberg said.
BOTTOM LINE: The Portfolio finished unchanged today as my rising internet and homebuilding longs offset losses in my commodity-related longs. I covered a few technology shorts in the afternoon and added some semiconductor longs, leaving the Portfolio 125% net long. One of my new longs is BRCM and I am using a $26.50 stop-loss on this position. Volume increased and the advance/decline line was pretty strong today. However, measures of investor complacency rose again. The major U.S. indices will likely remain strong through week's end.
NASDAQ 1,893.94 +1.29%
Leading Sectors
Disk Drives +2.91%
Airlines +2.21%
Semis +1.85%
Lagging Sectors
Energy -1.18%
Oil Service -1.51%
Broadcasting -2.20%
Other
Crude Oil 49.56 -.68%
Natural Gas 6.91 +8.82%
Gold 414.90 +.17%
Base Metals 117.28 +.88%
U.S. Dollar 88.07 -.05%
10-Yr. T-note Yield 4.09% +2.10%
VIX 13.21 -4.48%
Put/Call .84 -6.67%
NYSE Arms .79 -11.24%
After-hours Movers
TLB -8.29% after cutting 3Q forecast.
RECN -4.84% after substantially beating 1Q estimates and saying future hiring may hurt operating income.
NARA +4.15%
Recommendations
Goldman Sachs reiterated Outperform on PFE. Goldman reiterated Underperform on TSG and S.
After-hours News
U.S. stocks rose today, led by technology shares, after oil prices fell and an economic report showed faster economic growth than originally expected. After the close, Saudi Arabia's top religious authority banned the use of camera cellular phones, saying the devices are responsible for helping to spread "obscenity," the AP reported. The Montreal Expos said they're moving to Washington next season, bringing Major League Baseball back to the nation's capital after a 33-year absence, Bloomberg said. The chairman of a U.S. Congress panel responsible for Fannie Mae gained authority to subpoena executives at the biggest U.S. mortgage finance company for information related to allegations of accounting violations, Bloomberg reported. AIG said the U.S. Department of Justice is investigating the company for helping PNC Financial Services remove bad loans from its books, Bloomberg said. A judge struck down portions of the USA Patriot Act requiring Internet and telephone companies to surrender customer records sought in terrorism investigations and barring notice to clients that their data was handed over, Bloomberg reported. Micron Technology reported a second-straight quarterly profit as sales jumped 34%, Bloomberg reported. Delphi said the U.S. SEC is investigating $86.5 million of the company's transactions with computer-services provider Electronic Data Systems, Bloomberg said.
BOTTOM LINE: The Portfolio finished unchanged today as my rising internet and homebuilding longs offset losses in my commodity-related longs. I covered a few technology shorts in the afternoon and added some semiconductor longs, leaving the Portfolio 125% net long. One of my new longs is BRCM and I am using a $26.50 stop-loss on this position. Volume increased and the advance/decline line was pretty strong today. However, measures of investor complacency rose again. The major U.S. indices will likely remain strong through week's end.
Mid-day Uddate
S&P 500 1,110.61 +.05%
NASDAQ 1,889.26 +1.03%
Leading Sectors
Disk Drives +2.76%
Semis +2.29%
Airlines +2.07%
Lagging Sectors
Energy -1.48%
Broadcasting -1.72%
Oil Service -2.19%
Other
Crude Oil 48.60 -2.71%
Natural Gas 6.73 +7.70%
Gold 415.20 +.24%
Base Metals 117.28 +.88%
U.S. Dollar 88.19 +.10%
10-Yr. T-note Yield 4.09% +2.20%
VIX 13.33 -3.62%
Put/Call .73 -18.89%
NYSE Arms 1.05 +17.98%
Market Movers
ORBZ +30.8% after Cendant(CD) agreed to buy it for $1.25 billion.
GOOG +4.0% after Morgan Stanley rated it Overweight.
IACI +5.6% on ORBZ news.
JMDT +41.0% on strong IPO demand.
CAT +3.9% on continued optimism over earnings forecast.
PFCB +5.5% after meeting 3Q estimates.
SHFL +5.8% as Calyon Securities rated it Add.
INSP +5.1% as Raymond James rated it Strong Buy.
BLUD +7.8% after beating 1Q estimates and raising 05 forecast.
PCLN +9.6% on ORBZ news.
PDX -15.2% after lowering 3Q/4Q outlook.
CPC -12.7% after cutting 04 guidance and multiple downgrades.
TSCO -5.8% after lowering 3Q forecast.
Economic Data
Final 2Q GDP rose 3.3% versus estimates of 3.0% and a prior estimate of 2.8%.
Final 2Q Personal Consumption rose 1.6% versus estimates of 1.6% and a prior estimate of 1.6%.
Final 2Q Price Deflator rose 3.2% versus estimates of 3.2% and a prior estimate of 3.2%.
Recommendations
Goldman Sachs reiterated Outperform on MDT, AMT, SLR, BIIB, AMGN, GDT, MET, CCL, RCL, GCI, CAT, Goldman reiterated Underperform on FHCC and DJ. Citi SmithBarney rated DEX Sell, target $19. Citi said to Buy WMT on weakness, target $65. Citi reiterated Sell on CLX, target $47. Citi reiterated Buy on AMGN, target $90. Citi reiterated Buy on LOW, target $67. Citi reiterated Sell on GDT, target $54. JNY raised to Overweight at JP Morgan. SPH cut to Reduce at UBS, target $32. WPI rated Outperform at CSFB, target $37. IPXL rated Outperform at CSFB, target $22. MAR raised to Sector Outperform at CIBC. LQI raised to Sector Outperform at CIBC.
Mid-day News
U.S. stocks are rising mid-day as energy prices fall and a report showed economic growth exceeded expectations for the third-quarter. Sprint plans to provide Internet and telephone service to a chain of U.S. coffeehouses owned by the National Federation of Coffee Growers of Columbia, the NY Times reported. Burger King signed up a franchise partner to open its first restaurants in Brazil, Valor Economico reported. China will pursue reunification with Taiwan through peaceful means to keep the country whole, China Central TV said. Martha Stewart will serve her prison term for obstruction of justice at a facility in West Virginia, CNBC reported. Many Floridians are suffering depression and anxiety after living through four hurricanes in six weeks, the AP reported. Senator Brownback said lawmakers from the U.S. senate and House of Representatives agreed to raise the maximum fines for broadcasting indecency, the LA Times reported. A measure of the number of applications to buy a home or refinance existing mortgages rose last week to the highest level since early May, Bloomberg reported. ConocoPhillips will buy 7.6% of OAO Lukoil of Russia for $1.99 billion and said it may raise that stake further, Bloomberg reported. SpaceShipOne, financed by Microsoft co-founder Paul Allen and built by aviation pioneer Burt Rutan, rocketed high over the California desert early today in a quest to win a $10 million competition designed to accelerate space tourism, Bloomberg said. The IMF said world economic growth will be a very robust 4.3% in 2005 after reaching 5.0% this year, the strongest in almost 30 years, Bloomberg reported. Crude oil fell for the first session in 10 after the Energy Department reported an unexpected increase in U.S. stockpiles, easing concern about the production and shipping disruptions caused by Hurricane Ivan, Bloomberg reported. U.S. GDP growth rose 3.3%, more than previously forecast for the third-quarter, on stronger exports and inventory rebuilding, Bloomberg said.
BOTTOM LINE: The Portfolio is slightly higher mid-day on strength in my internet and homebuilding longs. I have not traded today and the Portfolio is still 100% net long. The tone of the market is pretty good on the unexpected build in oil inventories and better economic growth. Considering recent disruptions, the build bodes well for further declines in oil prices. Interest rates should continue heading modestly high through year-end on a reacceleration in U.S. economic growth. Shorting TLT is one way to play this. I expect stocks to continue moving modestly higher over the next couple of days on short-covering, end-of-the-quarter window dressing, better economic data, declining energy prices and the Presidential debate.
NASDAQ 1,889.26 +1.03%
Leading Sectors
Disk Drives +2.76%
Semis +2.29%
Airlines +2.07%
Lagging Sectors
Energy -1.48%
Broadcasting -1.72%
Oil Service -2.19%
Other
Crude Oil 48.60 -2.71%
Natural Gas 6.73 +7.70%
Gold 415.20 +.24%
Base Metals 117.28 +.88%
U.S. Dollar 88.19 +.10%
10-Yr. T-note Yield 4.09% +2.20%
VIX 13.33 -3.62%
Put/Call .73 -18.89%
NYSE Arms 1.05 +17.98%
Market Movers
ORBZ +30.8% after Cendant(CD) agreed to buy it for $1.25 billion.
GOOG +4.0% after Morgan Stanley rated it Overweight.
IACI +5.6% on ORBZ news.
JMDT +41.0% on strong IPO demand.
CAT +3.9% on continued optimism over earnings forecast.
PFCB +5.5% after meeting 3Q estimates.
SHFL +5.8% as Calyon Securities rated it Add.
INSP +5.1% as Raymond James rated it Strong Buy.
BLUD +7.8% after beating 1Q estimates and raising 05 forecast.
PCLN +9.6% on ORBZ news.
PDX -15.2% after lowering 3Q/4Q outlook.
CPC -12.7% after cutting 04 guidance and multiple downgrades.
TSCO -5.8% after lowering 3Q forecast.
Economic Data
Final 2Q GDP rose 3.3% versus estimates of 3.0% and a prior estimate of 2.8%.
Final 2Q Personal Consumption rose 1.6% versus estimates of 1.6% and a prior estimate of 1.6%.
Final 2Q Price Deflator rose 3.2% versus estimates of 3.2% and a prior estimate of 3.2%.
Recommendations
Goldman Sachs reiterated Outperform on MDT, AMT, SLR, BIIB, AMGN, GDT, MET, CCL, RCL, GCI, CAT, Goldman reiterated Underperform on FHCC and DJ. Citi SmithBarney rated DEX Sell, target $19. Citi said to Buy WMT on weakness, target $65. Citi reiterated Sell on CLX, target $47. Citi reiterated Buy on AMGN, target $90. Citi reiterated Buy on LOW, target $67. Citi reiterated Sell on GDT, target $54. JNY raised to Overweight at JP Morgan. SPH cut to Reduce at UBS, target $32. WPI rated Outperform at CSFB, target $37. IPXL rated Outperform at CSFB, target $22. MAR raised to Sector Outperform at CIBC. LQI raised to Sector Outperform at CIBC.
Mid-day News
U.S. stocks are rising mid-day as energy prices fall and a report showed economic growth exceeded expectations for the third-quarter. Sprint plans to provide Internet and telephone service to a chain of U.S. coffeehouses owned by the National Federation of Coffee Growers of Columbia, the NY Times reported. Burger King signed up a franchise partner to open its first restaurants in Brazil, Valor Economico reported. China will pursue reunification with Taiwan through peaceful means to keep the country whole, China Central TV said. Martha Stewart will serve her prison term for obstruction of justice at a facility in West Virginia, CNBC reported. Many Floridians are suffering depression and anxiety after living through four hurricanes in six weeks, the AP reported. Senator Brownback said lawmakers from the U.S. senate and House of Representatives agreed to raise the maximum fines for broadcasting indecency, the LA Times reported. A measure of the number of applications to buy a home or refinance existing mortgages rose last week to the highest level since early May, Bloomberg reported. ConocoPhillips will buy 7.6% of OAO Lukoil of Russia for $1.99 billion and said it may raise that stake further, Bloomberg reported. SpaceShipOne, financed by Microsoft co-founder Paul Allen and built by aviation pioneer Burt Rutan, rocketed high over the California desert early today in a quest to win a $10 million competition designed to accelerate space tourism, Bloomberg said. The IMF said world economic growth will be a very robust 4.3% in 2005 after reaching 5.0% this year, the strongest in almost 30 years, Bloomberg reported. Crude oil fell for the first session in 10 after the Energy Department reported an unexpected increase in U.S. stockpiles, easing concern about the production and shipping disruptions caused by Hurricane Ivan, Bloomberg reported. U.S. GDP growth rose 3.3%, more than previously forecast for the third-quarter, on stronger exports and inventory rebuilding, Bloomberg said.
BOTTOM LINE: The Portfolio is slightly higher mid-day on strength in my internet and homebuilding longs. I have not traded today and the Portfolio is still 100% net long. The tone of the market is pretty good on the unexpected build in oil inventories and better economic growth. Considering recent disruptions, the build bodes well for further declines in oil prices. Interest rates should continue heading modestly high through year-end on a reacceleration in U.S. economic growth. Shorting TLT is one way to play this. I expect stocks to continue moving modestly higher over the next couple of days on short-covering, end-of-the-quarter window dressing, better economic data, declining energy prices and the Presidential debate.
Wednesday Watch
Earnings of Note
Company/Estimate
AM/.00
ARRO/.34
BLUD/.14
MKC/.32
MU/.20
RECN/.32
Splits
CATY 2-for-1
Economic Data
Final 2Q GDP estimated +3.0% versus a prior estimate of +2.8%.
Final 2Q Personal Consumption estimated +1.6% versus a prior estimate of +1.6%.
Final 2Q GDP Price Deflator estimated +3.2% versus a prior estimate of +3.2%.
Recommendations
Goldman Sachs reiterated Outperform on DVN, SLR, AMT, CLX and AMGN.
Late-Night News
Asian indices are quietly mixed as strength in Australian shares is being offset by weakness in Hong Kong. The U.S. may bring North Korea before the United Nations Security Council if the communist country doesn't continue talks to dismantle its nuclear programs, Agence France-Presse reported. Funds owned by AMP Ltd., Australia's largest life insurer, raised their stake in Fisher & Paykel Appliances Holdings to 5.2%, betting that U.S. distribution and technology accords will bolster earnings, Bloomberg reported. Toyota Motor and Nissan Motor may start production in Russia to boost their market share in what is expected to be the world's third-fastest growing car market over the next four years, Bloomberg said. China's university graduates face increasing pressure to find jobs, with the number of students expected to complete their degrees in 2005 rising 21% from this year to 3.38 million, the official Xinhua news agency said. The dollar fell against the yen in Asia after Federal Reserve Bank of Kansas President Hoenig said a lower dollar helped with the U.S. trade deficit and that the news on inflation is good, Bloomberg reported. Taiwan may have the technology to mass produce mid-range missiles capable of striking Shanghai in two years, a lawmaker said, adding teeth to Premier Yu Shyi-kun's warning that the island will retaliate if China attacks, Bloomberg reported. American International Group Chairman Greenberg said he may buy U.S. property and casualty competitors stung by losses, Bloomberg said.
Late-Night Trading
Asian Indices are -.25% to +.50% on average.
S&P 500 indicated +.01%.
NASDAQ 100 indicated +.04%
BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning on a continuation of today's rally. I will closely watch the market's reaction to the energy inventory data before shifting the Portfolio's market exposure. The Portfolio is 100% net long heading into tomorrow.
Company/Estimate
AM/.00
ARRO/.34
BLUD/.14
MKC/.32
MU/.20
RECN/.32
Splits
CATY 2-for-1
Economic Data
Final 2Q GDP estimated +3.0% versus a prior estimate of +2.8%.
Final 2Q Personal Consumption estimated +1.6% versus a prior estimate of +1.6%.
Final 2Q GDP Price Deflator estimated +3.2% versus a prior estimate of +3.2%.
Recommendations
Goldman Sachs reiterated Outperform on DVN, SLR, AMT, CLX and AMGN.
Late-Night News
Asian indices are quietly mixed as strength in Australian shares is being offset by weakness in Hong Kong. The U.S. may bring North Korea before the United Nations Security Council if the communist country doesn't continue talks to dismantle its nuclear programs, Agence France-Presse reported. Funds owned by AMP Ltd., Australia's largest life insurer, raised their stake in Fisher & Paykel Appliances Holdings to 5.2%, betting that U.S. distribution and technology accords will bolster earnings, Bloomberg reported. Toyota Motor and Nissan Motor may start production in Russia to boost their market share in what is expected to be the world's third-fastest growing car market over the next four years, Bloomberg said. China's university graduates face increasing pressure to find jobs, with the number of students expected to complete their degrees in 2005 rising 21% from this year to 3.38 million, the official Xinhua news agency said. The dollar fell against the yen in Asia after Federal Reserve Bank of Kansas President Hoenig said a lower dollar helped with the U.S. trade deficit and that the news on inflation is good, Bloomberg reported. Taiwan may have the technology to mass produce mid-range missiles capable of striking Shanghai in two years, a lawmaker said, adding teeth to Premier Yu Shyi-kun's warning that the island will retaliate if China attacks, Bloomberg reported. American International Group Chairman Greenberg said he may buy U.S. property and casualty competitors stung by losses, Bloomberg said.
Late-Night Trading
Asian Indices are -.25% to +.50% on average.
S&P 500 indicated +.01%.
NASDAQ 100 indicated +.04%
BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning on a continuation of today's rally. I will closely watch the market's reaction to the energy inventory data before shifting the Portfolio's market exposure. The Portfolio is 100% net long heading into tomorrow.
Tuesday, September 28, 2004
Tuesday Close
S&P 500 1,110.06 +.59%
NASDAQ 1,869.87 +.54%
Leading Sectors
Iron/Steel +4.10%
Airlines +3.33%
Commodity +2.78%
Lagging Sectors
Networking -.40%
Semis -.87%
Homebuilders -1.49%
Other
Crude Oil 49.88 -.04%
Natural Gas 6.45 +1.56%
Gold 414.00 -.05%
Base Metals 116.26 -.75%
U.S. Dollar 88.11 -.20%
10-Yr. T-note Yield 4.00% +.38%
VIX 13.83 -5.40%
Put/Call .90 -7.22%
NYSE Arms .89 -44.38%
After-hours Movers
IACI +3.85% on ORBZ news.
ORBZ +27.59% on reports it may be purchased by Cendant for about $1.2 billion.
PCLN +11.61% on ORBZ news.
Recommendations
Goldman Sachs reiterated Outperform on JNPR, AYE and MET.
After-hours News
U.S. stocks rose today, led by surging commodity-related shares. After the close, China Minmetals has put in place the financing needed for a planned $5 billion takeover of Canada's biggest mining company, Noranda Inc., Reuters reported. Medicare, the U.S. medical-cost reimbursement program for the elderly, will increase the number of heart conditions that qualify for treatment with implantable cardiac defibrillators, CNBC said. Caterpillar raised its 2004 sales forecast and said revenue next year will increase by about 10% from this year as demand for its machines and engines grows, Bloomberg said. Preparations for Afghanistan's presidential election on Oct. 9 are "on track," a United Nations official said.
BOTTOM LINE: The Portfolio finished unchanged today as my rising steel and internet longs offset my declining homebuilding and security longs. I covered a few technology shorts and added some new Chinese ADR longs in the afternoon, leaving the Portfolio 100% net long. One of my new longs is ACH and I am using a stop-loss of $60.45 on this position. The tone of the market improved quite a bit in the afternoon, despite rising energy prices, as volume picked-up and the advance/decline line finished at its highs for the day. However, measures of investor anxiety fell again and are approaching very complacent levels. U.S. stocks should drift modestly higher through week's end on better economic data, short-covering, the Presidential debate and end-of-the quarter window-dressing. Tomorrow's reaction to the energy inventory data will also help determine the market's short-term direction.
NASDAQ 1,869.87 +.54%
Leading Sectors
Iron/Steel +4.10%
Airlines +3.33%
Commodity +2.78%
Lagging Sectors
Networking -.40%
Semis -.87%
Homebuilders -1.49%
Other
Crude Oil 49.88 -.04%
Natural Gas 6.45 +1.56%
Gold 414.00 -.05%
Base Metals 116.26 -.75%
U.S. Dollar 88.11 -.20%
10-Yr. T-note Yield 4.00% +.38%
VIX 13.83 -5.40%
Put/Call .90 -7.22%
NYSE Arms .89 -44.38%
After-hours Movers
IACI +3.85% on ORBZ news.
ORBZ +27.59% on reports it may be purchased by Cendant for about $1.2 billion.
PCLN +11.61% on ORBZ news.
Recommendations
Goldman Sachs reiterated Outperform on JNPR, AYE and MET.
After-hours News
U.S. stocks rose today, led by surging commodity-related shares. After the close, China Minmetals has put in place the financing needed for a planned $5 billion takeover of Canada's biggest mining company, Noranda Inc., Reuters reported. Medicare, the U.S. medical-cost reimbursement program for the elderly, will increase the number of heart conditions that qualify for treatment with implantable cardiac defibrillators, CNBC said. Caterpillar raised its 2004 sales forecast and said revenue next year will increase by about 10% from this year as demand for its machines and engines grows, Bloomberg said. Preparations for Afghanistan's presidential election on Oct. 9 are "on track," a United Nations official said.
BOTTOM LINE: The Portfolio finished unchanged today as my rising steel and internet longs offset my declining homebuilding and security longs. I covered a few technology shorts and added some new Chinese ADR longs in the afternoon, leaving the Portfolio 100% net long. One of my new longs is ACH and I am using a stop-loss of $60.45 on this position. The tone of the market improved quite a bit in the afternoon, despite rising energy prices, as volume picked-up and the advance/decline line finished at its highs for the day. However, measures of investor anxiety fell again and are approaching very complacent levels. U.S. stocks should drift modestly higher through week's end on better economic data, short-covering, the Presidential debate and end-of-the quarter window-dressing. Tomorrow's reaction to the energy inventory data will also help determine the market's short-term direction.
Mid-day Update
S&P 500 1,106.87 +.30%
NASDAQ 1,861.67 +.10%
Leading Sectors
Iron/Steel +2.93%
Airlines +2.79%
Commodity +2.56%
Lagging Sectors
Networking -1.46%
Homebuilders -1.46%
Semis -1.58%
Other
Crude Oil 49.80 +.52%
Natural Gas 5.51 +4.71%
Gold 413.40 +.66%
Base Metals 116.26 -.75%
U.S. Dollar 88.18 -.12%
10-Yr. T-note Yield 4.02 +.72%
VIX 14.23 -2.67%
Put/Call .90 -7.22%
NYSE Arms 1.12 -30.0%
Market Movers
AGIX +57.6% after saying its experimental drug for clogged arteries significantly reduced the amount of fatty plaque in blood vessels.
JNPR -5.1% on Friedman Billings downgrade to Market Perform.
NABI +16.2% after announcing positive test results for its antismoking vaccine.
GGC +7.9% after saying full-year sales would be better than estimates.
CNC +11.7% after agreeing to buy two health plans for about $93 million to gain patients in Kansas and Missouri.
GOOG +4.1% after multiple Buy ratings by underwriters.
STTX +10.7% after substantially boosting 4Q and 04 outlook.
IMCL +5.46% after Friedman, Billings upgrade to Outperform.
TZOO -13.8% on profit-taking.
DJO -13.2% after lowering 3Q/4Q guidance.
SNA -11.2% after lowering 3Q/04 outlook and Robert Baird downgrade to Underperform.
Economic Data
Consumer Confidence for September was 96.8 versus estimates of 99.5.
Recommendations
GOOG rated Outperform at CSFB, target $145. LWSN raised to Overweight at JP Morgan. GOOG rated Outperform at Thomas Weisel. GOOG rated Overweight at JP Morgan. UTEK raised to Buy at Merrill Lynch, target $22. GOOG rated Overweight at Morgan Stanley. Goldman Sachs reiterated Outperform on RIG, DO, KSS, GDT, Goldman reiterated Underperform on PBG. Goldman reiterated Attractive view of Oil Service sector, favorites are RIG, DO, SLB, BHI and SII. Citi SmithBarney says to Buy DOW and LYO. Citi reiterated Buy on PRE, target $69. Citi reiterated Buy on EMC, target $13.50. Citi reiterated Buy on SMTC, target $24. Citi reiterated Sell on ISIL, target $14. Citi reiterated Buy on AFC, target $36. Citi reiterated Buy on WR, target $22.50. Citi reiterated Buy on NPSP, target $25.
Mid-day News
U.S. stocks are modestly higher mid-day as a weaker consumer confidence report is being more than offset by strength in commodity-related stocks. Saudi Arabia will raise oil production to 11 million barrels a day, the AP reported. Fannie Mae's need to restate earnings will be decided by the SEC, Reuters reported. A top al-Qaeda leader was seen in July meeting in Honduras with leaders of a Salvadoran criminal gang that has roots in the U.S., including a presence in Washington, D.C., the Washington Times reported. Major League Baseball may disclose that Washington, D.C. will be the new home of the Montreal Expos on Thursday, the AP reported. The San Francisco 49ers professional football team sold the naming right to Candlestick Park to Monster Cable Products for about $6 million over four years, the San Francisco Chronicle reported. Amazon.com and Microsoft filed lawsuits to fight "spoofing" and "phishing," or the use of forged e-mail that purports to come from Amazon.com, Hotmail.com and other domains, Bloomberg reported. Bonds of Allstate and other home and auto insurers are holding steady after Hurricane Jeanne became the fourth storm in seven weeks to hit Florida and generate as much as $26 billion of damage claims, Bloomberg said. SpaceShipOne, a spacecraft financed by Microsoft co-founder Paul Allen, will travel more than 62 miles above the California desert tomorrow in its first official attempt to win a $10 million competition to encourage space tourism, Bloomberg reported. Cisco Systems will sell 180,000 phones that transmit phone calls over the Internet to Bank of America, Bloomberg reported. The value of derivatives traded outside exchanges more than doubled to $1.2 trillion a day in the three years through April led by dollar-denominated interest-rate contracts, the Bank for International Settlements said. Google, whose shares are up 39% since its IPO, may rise further as it boosts advertising revenue and international sales, CSFB and JP Morgan said in research reports. Foreign-exchange trading surged to a record daily average of $1.9 trillion this year as hedge funds and other money managers increases bets on currencies, Bloomberg said.
BOTTOM LINE: The Portfolio is slightly lower mid-day as declines in my security and homebuilding longs are more than offsetting my declining semi and software shorts. I added a few alternative energy, wireless and internet longs this morning, leaving the Portfolio 50% net long. One of my new longs is PLUG and I am using a $5.90 stop-loss on this position. End-of-the quarter window-dressing, better economic data, the Presidential debate and short-covering should push stocks modestly higher over the next few days.
NASDAQ 1,861.67 +.10%
Leading Sectors
Iron/Steel +2.93%
Airlines +2.79%
Commodity +2.56%
Lagging Sectors
Networking -1.46%
Homebuilders -1.46%
Semis -1.58%
Other
Crude Oil 49.80 +.52%
Natural Gas 5.51 +4.71%
Gold 413.40 +.66%
Base Metals 116.26 -.75%
U.S. Dollar 88.18 -.12%
10-Yr. T-note Yield 4.02 +.72%
VIX 14.23 -2.67%
Put/Call .90 -7.22%
NYSE Arms 1.12 -30.0%
Market Movers
AGIX +57.6% after saying its experimental drug for clogged arteries significantly reduced the amount of fatty plaque in blood vessels.
JNPR -5.1% on Friedman Billings downgrade to Market Perform.
NABI +16.2% after announcing positive test results for its antismoking vaccine.
GGC +7.9% after saying full-year sales would be better than estimates.
CNC +11.7% after agreeing to buy two health plans for about $93 million to gain patients in Kansas and Missouri.
GOOG +4.1% after multiple Buy ratings by underwriters.
STTX +10.7% after substantially boosting 4Q and 04 outlook.
IMCL +5.46% after Friedman, Billings upgrade to Outperform.
TZOO -13.8% on profit-taking.
DJO -13.2% after lowering 3Q/4Q guidance.
SNA -11.2% after lowering 3Q/04 outlook and Robert Baird downgrade to Underperform.
Economic Data
Consumer Confidence for September was 96.8 versus estimates of 99.5.
Recommendations
GOOG rated Outperform at CSFB, target $145. LWSN raised to Overweight at JP Morgan. GOOG rated Outperform at Thomas Weisel. GOOG rated Overweight at JP Morgan. UTEK raised to Buy at Merrill Lynch, target $22. GOOG rated Overweight at Morgan Stanley. Goldman Sachs reiterated Outperform on RIG, DO, KSS, GDT, Goldman reiterated Underperform on PBG. Goldman reiterated Attractive view of Oil Service sector, favorites are RIG, DO, SLB, BHI and SII. Citi SmithBarney says to Buy DOW and LYO. Citi reiterated Buy on PRE, target $69. Citi reiterated Buy on EMC, target $13.50. Citi reiterated Buy on SMTC, target $24. Citi reiterated Sell on ISIL, target $14. Citi reiterated Buy on AFC, target $36. Citi reiterated Buy on WR, target $22.50. Citi reiterated Buy on NPSP, target $25.
Mid-day News
U.S. stocks are modestly higher mid-day as a weaker consumer confidence report is being more than offset by strength in commodity-related stocks. Saudi Arabia will raise oil production to 11 million barrels a day, the AP reported. Fannie Mae's need to restate earnings will be decided by the SEC, Reuters reported. A top al-Qaeda leader was seen in July meeting in Honduras with leaders of a Salvadoran criminal gang that has roots in the U.S., including a presence in Washington, D.C., the Washington Times reported. Major League Baseball may disclose that Washington, D.C. will be the new home of the Montreal Expos on Thursday, the AP reported. The San Francisco 49ers professional football team sold the naming right to Candlestick Park to Monster Cable Products for about $6 million over four years, the San Francisco Chronicle reported. Amazon.com and Microsoft filed lawsuits to fight "spoofing" and "phishing," or the use of forged e-mail that purports to come from Amazon.com, Hotmail.com and other domains, Bloomberg reported. Bonds of Allstate and other home and auto insurers are holding steady after Hurricane Jeanne became the fourth storm in seven weeks to hit Florida and generate as much as $26 billion of damage claims, Bloomberg said. SpaceShipOne, a spacecraft financed by Microsoft co-founder Paul Allen, will travel more than 62 miles above the California desert tomorrow in its first official attempt to win a $10 million competition to encourage space tourism, Bloomberg reported. Cisco Systems will sell 180,000 phones that transmit phone calls over the Internet to Bank of America, Bloomberg reported. The value of derivatives traded outside exchanges more than doubled to $1.2 trillion a day in the three years through April led by dollar-denominated interest-rate contracts, the Bank for International Settlements said. Google, whose shares are up 39% since its IPO, may rise further as it boosts advertising revenue and international sales, CSFB and JP Morgan said in research reports. Foreign-exchange trading surged to a record daily average of $1.9 trillion this year as hedge funds and other money managers increases bets on currencies, Bloomberg said.
BOTTOM LINE: The Portfolio is slightly lower mid-day as declines in my security and homebuilding longs are more than offsetting my declining semi and software shorts. I added a few alternative energy, wireless and internet longs this morning, leaving the Portfolio 50% net long. One of my new longs is PLUG and I am using a $5.90 stop-loss on this position. End-of-the quarter window-dressing, better economic data, the Presidential debate and short-covering should push stocks modestly higher over the next few days.
Tuesday Watch
Earnings of Note
Company/Estimate
EMMS/.21
SLR/.04
Splits
None of note.
Economic Data
Consumer Confidence for September estimated at 99.5 versus 98.2 in August.
Recommendations
Goldman Sachs said to Buy AIG, ALL, ENH and RE on any weakness. Goldman reiterated Outperform on DVN and Underperform on QGENF.
Late-Night News
Asian indices are mostly lower on continuing worries that high energy prices will hurt exporters in the region. It may take "18 months to two years" to boost earnings at Coca-Cola, the Financial Times reported, citing Chairman and CEO Isdell. North Korea has "weaponized" the enriched uranium from 8,000 spent nuclear fuel rods, the AP reported. AT&T agreed to a doubling of the interest premium on its bank credit line after the telephone company's bond rating was lowered to non-investment grade, Bloomberg reported. China may award an $8 billion order for four nuclear reactors to an overseas supplier such as Areva SA, Westinghouse Electric or Siemens AG as part of the world's biggest nuclear power construction program, Bloomberg said. Pfizer appealed China's revocation of its Viagra patent in a case that may test the nation's commitment to stronger protection for intellectual property rights, Bloomberg reported. Crude oil is rising above $50/bbl. in NY on concern rebel attacks in Nigeria may reduce supply from Africa's biggest oil producer at a time when U.S. inventories are close to a 29-year low, Bloomberg said. America Coming Together, a 527 political group backed by billionaire hedge fund manager George Soros, is paying 1,500 people $8-$12 an hour to go door-to-door in 17 battleground states to register voters, urging them to vote for Senator Kerry, Bloomberg Reported. The group has raised $80 million and is the best-funded get-out-the-vote effort in Democratic Party history, Bloomberg said.
Late-Night Trading
Asian Indices are -.75% to unch. on average.
S&P 500 indicated -.02%.
NASDAQ 100 indicated -.04%
BOTTOM LINE: I expect U.S. equities to open modestly lower in the morning on continuing worries over high oil prices and profit-taking. The Portfolio is 25% net short heading into tomorrow.
Company/Estimate
EMMS/.21
SLR/.04
Splits
None of note.
Economic Data
Consumer Confidence for September estimated at 99.5 versus 98.2 in August.
Recommendations
Goldman Sachs said to Buy AIG, ALL, ENH and RE on any weakness. Goldman reiterated Outperform on DVN and Underperform on QGENF.
Late-Night News
Asian indices are mostly lower on continuing worries that high energy prices will hurt exporters in the region. It may take "18 months to two years" to boost earnings at Coca-Cola, the Financial Times reported, citing Chairman and CEO Isdell. North Korea has "weaponized" the enriched uranium from 8,000 spent nuclear fuel rods, the AP reported. AT&T agreed to a doubling of the interest premium on its bank credit line after the telephone company's bond rating was lowered to non-investment grade, Bloomberg reported. China may award an $8 billion order for four nuclear reactors to an overseas supplier such as Areva SA, Westinghouse Electric or Siemens AG as part of the world's biggest nuclear power construction program, Bloomberg said. Pfizer appealed China's revocation of its Viagra patent in a case that may test the nation's commitment to stronger protection for intellectual property rights, Bloomberg reported. Crude oil is rising above $50/bbl. in NY on concern rebel attacks in Nigeria may reduce supply from Africa's biggest oil producer at a time when U.S. inventories are close to a 29-year low, Bloomberg said. America Coming Together, a 527 political group backed by billionaire hedge fund manager George Soros, is paying 1,500 people $8-$12 an hour to go door-to-door in 17 battleground states to register voters, urging them to vote for Senator Kerry, Bloomberg Reported. The group has raised $80 million and is the best-funded get-out-the-vote effort in Democratic Party history, Bloomberg said.
Late-Night Trading
Asian Indices are -.75% to unch. on average.
S&P 500 indicated -.02%.
NASDAQ 100 indicated -.04%
BOTTOM LINE: I expect U.S. equities to open modestly lower in the morning on continuing worries over high oil prices and profit-taking. The Portfolio is 25% net short heading into tomorrow.
Monday, September 27, 2004
Monday Close
S&P 500 1,103.52 -.59%
NASDAQ 1,859.88 -1.04%
Leading Sectors
Broadcasting +1.03%
Homebuilders +.91%
Utilities +.31%
Lagging Sectors
Biotech -1.85%
Networking -2.31%
Airlines -4.01%
Other
Crude Oil 49.92 +.62%
Natural Gas 5.30 +.72%
Gold 410.40 -.07%
Base Metals 117.14 +.98%
U.S. Dollar 88.29 -.12%
10-Yr. T-note Yield 3.98% -.95%
VIX 14.62 +2.38%
Put/Call .97 +4.30%
NYSE Arms 1.60 +52.38%
After-hours Movers
AGIX +64.0% after saying its experimental drug for clogged arteries significantly reduced the amount of fatty plaque in blood vessels.
NSTK +4.7% on continued optimism over its nasal spray for obesity.
MCHX +8.3% after announcing agreements with two of the Internet's leading shopping services through its TrafficLeader subsidiary.
HGSI -5.4% after announcing that it intends to offer $200 million aggregate principal amount of convertible subordinated notes.
MCIP -5.1% after saying Leucadia National has sold its 5% stake for $20 million pretax profit.
Recommendations
Goldman Sachs reiterated Outperform on HOT, FD, HD, WAG, AGN, CAT and PPL.
After-hours News
U.S. stocks finished lower today on rising commodity prices and profit-taking. After the close, Apollo Management is the leading bidder for News Corp.'s Hughes Network Systems unit after offering $300 million, Dow Jones reported. Iraq and the International Monetary Fund likely will reach an agreement this week or next on a program aimed at rebuilding Iraq's economy, Goldman Sachs International Vice Chairman Hormats told CNBC. American Airlines dropped a $10 per round trip fare increase on most U.S. and U.S.-Canada flights after competitors declined to match the change on all routes, Bloomberg reported. Nextel Communications said it purchased 6 million of its own shares, and some shares of Nextel Partners, from Motorola, Bloomberg said. Orange-juice prices in NY surged the most in more than three years to a 15-month high on supply concerns after Hurricane Jeanne hit Florida, Bloomberg reported.
BOTTOM LINE: The Portfolio finished slightly lower today as declines in my security longs offset gains in my homebuilding longs. I exited a few security-related longs in the afternoon as they hit stop-losses, thus leaving the Portfolio 25% net short. Volume was light today and the advance/decline line was poor. On the positive side, measures of investor anxiety are rising and interest rates continue to fall. I still expect homebuilders to reach all-time highs in the fourth quarter.
NASDAQ 1,859.88 -1.04%
Leading Sectors
Broadcasting +1.03%
Homebuilders +.91%
Utilities +.31%
Lagging Sectors
Biotech -1.85%
Networking -2.31%
Airlines -4.01%
Other
Crude Oil 49.92 +.62%
Natural Gas 5.30 +.72%
Gold 410.40 -.07%
Base Metals 117.14 +.98%
U.S. Dollar 88.29 -.12%
10-Yr. T-note Yield 3.98% -.95%
VIX 14.62 +2.38%
Put/Call .97 +4.30%
NYSE Arms 1.60 +52.38%
After-hours Movers
AGIX +64.0% after saying its experimental drug for clogged arteries significantly reduced the amount of fatty plaque in blood vessels.
NSTK +4.7% on continued optimism over its nasal spray for obesity.
MCHX +8.3% after announcing agreements with two of the Internet's leading shopping services through its TrafficLeader subsidiary.
HGSI -5.4% after announcing that it intends to offer $200 million aggregate principal amount of convertible subordinated notes.
MCIP -5.1% after saying Leucadia National has sold its 5% stake for $20 million pretax profit.
Recommendations
Goldman Sachs reiterated Outperform on HOT, FD, HD, WAG, AGN, CAT and PPL.
After-hours News
U.S. stocks finished lower today on rising commodity prices and profit-taking. After the close, Apollo Management is the leading bidder for News Corp.'s Hughes Network Systems unit after offering $300 million, Dow Jones reported. Iraq and the International Monetary Fund likely will reach an agreement this week or next on a program aimed at rebuilding Iraq's economy, Goldman Sachs International Vice Chairman Hormats told CNBC. American Airlines dropped a $10 per round trip fare increase on most U.S. and U.S.-Canada flights after competitors declined to match the change on all routes, Bloomberg reported. Nextel Communications said it purchased 6 million of its own shares, and some shares of Nextel Partners, from Motorola, Bloomberg said. Orange-juice prices in NY surged the most in more than three years to a 15-month high on supply concerns after Hurricane Jeanne hit Florida, Bloomberg reported.
BOTTOM LINE: The Portfolio finished slightly lower today as declines in my security longs offset gains in my homebuilding longs. I exited a few security-related longs in the afternoon as they hit stop-losses, thus leaving the Portfolio 25% net short. Volume was light today and the advance/decline line was poor. On the positive side, measures of investor anxiety are rising and interest rates continue to fall. I still expect homebuilders to reach all-time highs in the fourth quarter.
Mid-day Update
S&P 500 1,107.10 -.27%
NASDAQ 1,868.72 -.57%
Leading Sectors
Homebuilders +1.89%
Broadcasting +.38%
Drugs +.30%
Lagging Sectors
I-Banks -1.29%
Networking -1.31%
Airlines -3.45%
Other
Crude Oil 49.30 +.86%
Natural Gas 5.23 -2.91%
Gold 411.10 +.34%
Base Metals 117.02 +.88%
U.S. Dollar 88.21 -.21%
10-Yr. T-note Yield 3.99% -.76%
VIX 14.62 +2.38%
Put/Call .72 -22.58%
NYSE Arms 1.17 +11.43%
Market Movers
CX -7.5% after saying it agreed to buy RMC Group Plc for $4.15 billion to double revenue and expand in concrete markets in Europe and the U.S.
TOM -20.1% after saying U.S. authorities are investigating commissions the company paid to an overseas-purchasing unit.
VSEC +38.6% after saying it received a cost-plus-fixed-fee contract from the U.S. Navy valued as much as $1 billion.
NSTK +33.7% after announcing a global alliance with Merck(MRK) to develop an experimental nasal spray treatment for obesity.
PER +11.4% after boosting 3Q estimates.
CNCT after saying it had commenced the Phase III clinical trial program for Desilux, a low-potency topical steroid.
GMAI -14.7% on negative Barron's article.
Economic Data
New Home Sales for August were 1184K versus estimates of 1155K and 1082K in July.
Recommendations
Goldman Sachs reiterated Outperform on RE, ALL, ENH, AGN, FSL, HOT, KO, BSX, DNA, AMGN, STLD, FS, IGT, HD, GDT, MDT, MRVL and PFE. Goldman reiterated Underperform on AMCC. Citi SmithBarney reiterated Buy on MMM, target $95. Citi reiterated Buy on VIAB, target $50. Citi reiterated Buy on WMT, target $65. Citi reiterated Buy on HAL, target $44. Citi reiterated Sell on PGN, target $38.50. Citi reiterated Buy on UNM, target $20. Citi reiterated Buy on FNM, target $81. ISG raised to Outperform on CSFB. VISG rated Buy at UBS. WMT upgraded to Buy at Bank of America, target $60. JBLU, FRNT and AAI cut to Underweight at JP Morgan. FDO raised to Buy at Bank of America, target $33.50. IMOS raised to Outperform at Thomas Weisel, target $10. PTEN cut to Underweight at Morgan Stanley. TOM downgraded to Underweight, target $8.
Mid-day News
U.S. stocks are falling modestly mid-day on profit-taking and continuing fears over higher energy prices. IBM will invest $250 million over the next five years and employ1,000 people in a new business unit supporting products and services related to sensor networks, the NY Times reported. PalmSource will announce tomorrow its first operating system for so-called smart phones, the International Herald Tribune reported. Bank of America may close or merge as many as 38 mutual funds as part of its acquisition of FleetBoston Financial, the Boston Herald reported. Starbucks will raise beverage prices 11 cents on average, the Wall Street Journal reported. JP Morgan agreed to buy hedge fund company Highbridge Capital, Bloomberg reported. Anglo American Platinum, Impala Platinum and Northam Platinum may face strikes over pay at South African mines, crippling 60% of the world's platinum production and boosting prices of the metal, Bloomberg said. Walgreen said fourth-quarter profit rose 18%, helped by sales of prescription drugs, Bloomberg reported. Fannie Mae agreed to correct its bookkeeping policies to meet generally accepted accounting principles, Bloomberg said. A series of small tremors culminating in more than 10 larger earthquakes near Mount St. Helens may be a precursor to explosions, landslides and the release of ash clouds, the U.S. Geological Survey said. U.S. new home sales surged 9.4% in August, propelled by the lowest mortgage rates in four months, Bloomberg reported. Comcast is working with Time Warner to explore a potential transaction regarding bankrupt cable-tv operator Adelphia Communications, Bloomberg reported. Jeanne, the fourth hurricane to hit Florida in two months, weakened as it moved into Georgia, leaving behind a trail of destruction and at least 7 deaths, Bloomberg said. Crude oil is rising amid concern rebel attacks in Nigeria will reduce production and U.S. refiners will struggle to replenish supplies disrupted by Hurricane Ivan, Bloomberg reported.
BOTTOM LINE: The Portfolio is slightly lower mid-day as my declining security longs are more than offsetting my rising homebuilding longs. I have not traded today and the Portfolio is still market neutral. The tone of the market is negative today and the CRB is spiking up, mostly as a result of the hurricanes. I expect U.S. stocks to traded mixed into the afternoon.
NASDAQ 1,868.72 -.57%
Leading Sectors
Homebuilders +1.89%
Broadcasting +.38%
Drugs +.30%
Lagging Sectors
I-Banks -1.29%
Networking -1.31%
Airlines -3.45%
Other
Crude Oil 49.30 +.86%
Natural Gas 5.23 -2.91%
Gold 411.10 +.34%
Base Metals 117.02 +.88%
U.S. Dollar 88.21 -.21%
10-Yr. T-note Yield 3.99% -.76%
VIX 14.62 +2.38%
Put/Call .72 -22.58%
NYSE Arms 1.17 +11.43%
Market Movers
CX -7.5% after saying it agreed to buy RMC Group Plc for $4.15 billion to double revenue and expand in concrete markets in Europe and the U.S.
TOM -20.1% after saying U.S. authorities are investigating commissions the company paid to an overseas-purchasing unit.
VSEC +38.6% after saying it received a cost-plus-fixed-fee contract from the U.S. Navy valued as much as $1 billion.
NSTK +33.7% after announcing a global alliance with Merck(MRK) to develop an experimental nasal spray treatment for obesity.
PER +11.4% after boosting 3Q estimates.
CNCT after saying it had commenced the Phase III clinical trial program for Desilux, a low-potency topical steroid.
GMAI -14.7% on negative Barron's article.
Economic Data
New Home Sales for August were 1184K versus estimates of 1155K and 1082K in July.
Recommendations
Goldman Sachs reiterated Outperform on RE, ALL, ENH, AGN, FSL, HOT, KO, BSX, DNA, AMGN, STLD, FS, IGT, HD, GDT, MDT, MRVL and PFE. Goldman reiterated Underperform on AMCC. Citi SmithBarney reiterated Buy on MMM, target $95. Citi reiterated Buy on VIAB, target $50. Citi reiterated Buy on WMT, target $65. Citi reiterated Buy on HAL, target $44. Citi reiterated Sell on PGN, target $38.50. Citi reiterated Buy on UNM, target $20. Citi reiterated Buy on FNM, target $81. ISG raised to Outperform on CSFB. VISG rated Buy at UBS. WMT upgraded to Buy at Bank of America, target $60. JBLU, FRNT and AAI cut to Underweight at JP Morgan. FDO raised to Buy at Bank of America, target $33.50. IMOS raised to Outperform at Thomas Weisel, target $10. PTEN cut to Underweight at Morgan Stanley. TOM downgraded to Underweight, target $8.
Mid-day News
U.S. stocks are falling modestly mid-day on profit-taking and continuing fears over higher energy prices. IBM will invest $250 million over the next five years and employ1,000 people in a new business unit supporting products and services related to sensor networks, the NY Times reported. PalmSource will announce tomorrow its first operating system for so-called smart phones, the International Herald Tribune reported. Bank of America may close or merge as many as 38 mutual funds as part of its acquisition of FleetBoston Financial, the Boston Herald reported. Starbucks will raise beverage prices 11 cents on average, the Wall Street Journal reported. JP Morgan agreed to buy hedge fund company Highbridge Capital, Bloomberg reported. Anglo American Platinum, Impala Platinum and Northam Platinum may face strikes over pay at South African mines, crippling 60% of the world's platinum production and boosting prices of the metal, Bloomberg said. Walgreen said fourth-quarter profit rose 18%, helped by sales of prescription drugs, Bloomberg reported. Fannie Mae agreed to correct its bookkeeping policies to meet generally accepted accounting principles, Bloomberg said. A series of small tremors culminating in more than 10 larger earthquakes near Mount St. Helens may be a precursor to explosions, landslides and the release of ash clouds, the U.S. Geological Survey said. U.S. new home sales surged 9.4% in August, propelled by the lowest mortgage rates in four months, Bloomberg reported. Comcast is working with Time Warner to explore a potential transaction regarding bankrupt cable-tv operator Adelphia Communications, Bloomberg reported. Jeanne, the fourth hurricane to hit Florida in two months, weakened as it moved into Georgia, leaving behind a trail of destruction and at least 7 deaths, Bloomberg said. Crude oil is rising amid concern rebel attacks in Nigeria will reduce production and U.S. refiners will struggle to replenish supplies disrupted by Hurricane Ivan, Bloomberg reported.
BOTTOM LINE: The Portfolio is slightly lower mid-day as my declining security longs are more than offsetting my rising homebuilding longs. I have not traded today and the Portfolio is still market neutral. The tone of the market is negative today and the CRB is spiking up, mostly as a result of the hurricanes. I expect U.S. stocks to traded mixed into the afternoon.
Monday Watch
Earnings of Note
Company/Estimate
WAG/.31
Splits
AMWD 2-for-1
LM 3-for-2
Economic Data
New Home Sales for August estimated at 1155K versus 1134K in July.
Weekend Recommendations
Louis Rukeyser's Wall Street had guests that were positive on EK, INTC, DIA, PFE, BK and CMCSA. Wall St. Week w/Fortune had guests that were positive on CMCSA, NXTL, EBAY and EK. Bulls and Bears had guests that were positive on ERES, BAC, SLM, LDG, JBHT, CCL, AH, CL and mixed on KMRT, ORCL. Forbes on Fox had guests that were positive on INGR, QSTR, MSFT, WIT and MSO. Cashin' In had guests that were positive on FLIR, MMC, mixed on ISSX, KKD, ESPD, EDP and negative on MSO. Barron's had positive comments on BBI, F, TM, HMC, DCX and negative comments on VLKAY and GMAI. Goldman Sachs reiterated Outperform on EBAY. Goldman reiterated Attractive view on Gold stocks.
Weekend News
China may let its insurance companies buy stocks directly as early as next month, the 21st Century Business Herald said. Tesco Plc, Britain's biggest retailer, is testing RFID tags that will replace the bar code on products from bread to stereos, the Financial Times said. KarstadtQuelle AG, the largest German department store operator, plans to end its joint venture with Starbucks, Frankfurter Allgemeine Sonntagszeitung said. Iraq's Prime Minister Allawi and Secretary of State Colin Powell said they expected all Iraqis would participate in the election planned for January, the Washington Post reported. Semiconductor Manufacturing International has started making 12-inch wafers at its newest plant in Beijing, Xinhua news said. The world economy is at its best in five years, said IMF Managing Director Rodrigo Rato in an interview with El Pais. Senator Kerry, who supported extending a U.S. assault-weapons ban that expired two weeks ago, said that he owns a Chinese assault rifle, the NY Times reported. Viacom CEO Redstone said he will wait on a report by a panel investigating Dan Rather's use of questionable documents before deciding on the CBS News anchorman's future, Time magazine reported. Johnson & Johnson's may enter the hearing aid market and expand its over-the-counter drugs business in an effort to boost sales, the Financial Times said. France and Germany won't increase military aid to Iraq even if Senator Kerry wins the U.S. election, the Financial Times reported, citing French and German officials. Texas Instruments and Xilinx have cut chip orders at United Microelectronics after paring forecasts for their quarterly sales, the Commercial Times reported. Hewlett-Packard will stop making desktop computers based on Intel's Itanium chip, the Wall Street Journal reported. Asian traders said any declines in Fannie Mae debt, after regulators told the company to amend account ting procedures, are a buying opportunity, the Asian Wall Street Journal reported. U.S. oil inventories should make a quick recovery to normal levels after Hurricane Ivan disrupted supply to the U.S. Gulf of Mexico over the last two weeks, Qatar's oil minister said. Hurricane Jeanne, which slammed into Florida's Atlantic coast overnight, may cost insurers $6 billion to $14 billion, rivaling Hurricane Charley as the most expensive storm of the season, Bloomberg reported. Inco, the world's second-biggest nickel producer, and Falconbridge may spend $3.5 billion for the metal from Chinese stainless steel makers soars, Bloomberg said. The U.S. Army may reduce the length of time soldiers are required to spend in combat zones in Iraq and Afghanistan, the NY Times reported. Fannie Mae may have to sell assets or turn to investors to raise cash to meet its regulatory capital standards, the Wall Street Journal said.
Late-Night Trading
Asian indices are mixed, -.75% to +.25% on average.
S&P 500 indicated +.04%.
NASDAQ indicated +.04%
BOTTOM LINE: I expect U.S. stocks to open modestly lower in the morning on higher energy prices and greater-than-expected damage from Hurricane Jeanne. The Portfolio is market neutral heading into the week.
Company/Estimate
WAG/.31
Splits
AMWD 2-for-1
LM 3-for-2
Economic Data
New Home Sales for August estimated at 1155K versus 1134K in July.
Weekend Recommendations
Louis Rukeyser's Wall Street had guests that were positive on EK, INTC, DIA, PFE, BK and CMCSA. Wall St. Week w/Fortune had guests that were positive on CMCSA, NXTL, EBAY and EK. Bulls and Bears had guests that were positive on ERES, BAC, SLM, LDG, JBHT, CCL, AH, CL and mixed on KMRT, ORCL. Forbes on Fox had guests that were positive on INGR, QSTR, MSFT, WIT and MSO. Cashin' In had guests that were positive on FLIR, MMC, mixed on ISSX, KKD, ESPD, EDP and negative on MSO. Barron's had positive comments on BBI, F, TM, HMC, DCX and negative comments on VLKAY and GMAI. Goldman Sachs reiterated Outperform on EBAY. Goldman reiterated Attractive view on Gold stocks.
Weekend News
China may let its insurance companies buy stocks directly as early as next month, the 21st Century Business Herald said. Tesco Plc, Britain's biggest retailer, is testing RFID tags that will replace the bar code on products from bread to stereos, the Financial Times said. KarstadtQuelle AG, the largest German department store operator, plans to end its joint venture with Starbucks, Frankfurter Allgemeine Sonntagszeitung said. Iraq's Prime Minister Allawi and Secretary of State Colin Powell said they expected all Iraqis would participate in the election planned for January, the Washington Post reported. Semiconductor Manufacturing International has started making 12-inch wafers at its newest plant in Beijing, Xinhua news said. The world economy is at its best in five years, said IMF Managing Director Rodrigo Rato in an interview with El Pais. Senator Kerry, who supported extending a U.S. assault-weapons ban that expired two weeks ago, said that he owns a Chinese assault rifle, the NY Times reported. Viacom CEO Redstone said he will wait on a report by a panel investigating Dan Rather's use of questionable documents before deciding on the CBS News anchorman's future, Time magazine reported. Johnson & Johnson's may enter the hearing aid market and expand its over-the-counter drugs business in an effort to boost sales, the Financial Times said. France and Germany won't increase military aid to Iraq even if Senator Kerry wins the U.S. election, the Financial Times reported, citing French and German officials. Texas Instruments and Xilinx have cut chip orders at United Microelectronics after paring forecasts for their quarterly sales, the Commercial Times reported. Hewlett-Packard will stop making desktop computers based on Intel's Itanium chip, the Wall Street Journal reported. Asian traders said any declines in Fannie Mae debt, after regulators told the company to amend account ting procedures, are a buying opportunity, the Asian Wall Street Journal reported. U.S. oil inventories should make a quick recovery to normal levels after Hurricane Ivan disrupted supply to the U.S. Gulf of Mexico over the last two weeks, Qatar's oil minister said. Hurricane Jeanne, which slammed into Florida's Atlantic coast overnight, may cost insurers $6 billion to $14 billion, rivaling Hurricane Charley as the most expensive storm of the season, Bloomberg reported. Inco, the world's second-biggest nickel producer, and Falconbridge may spend $3.5 billion for the metal from Chinese stainless steel makers soars, Bloomberg said. The U.S. Army may reduce the length of time soldiers are required to spend in combat zones in Iraq and Afghanistan, the NY Times reported. Fannie Mae may have to sell assets or turn to investors to raise cash to meet its regulatory capital standards, the Wall Street Journal said.
Late-Night Trading
Asian indices are mixed, -.75% to +.25% on average.
S&P 500 indicated +.04%.
NASDAQ indicated +.04%
BOTTOM LINE: I expect U.S. stocks to open modestly lower in the morning on higher energy prices and greater-than-expected damage from Hurricane Jeanne. The Portfolio is market neutral heading into the week.
Sunday, September 26, 2004
Chart of the Week
Phelps Dodge Corporation
Bottom Line: Phelps Dodge(PD), the leading U.S. copper producer, rose 8.82% to a new all-time high last week. Accelerating demand for copper bodes well for future U.S. economic growth. I expect PD to break $100/share before year-end.
Bottom Line: Phelps Dodge(PD), the leading U.S. copper producer, rose 8.82% to a new all-time high last week. Accelerating demand for copper bodes well for future U.S. economic growth. I expect PD to break $100/share before year-end.
Weekly Outlook
There are a number of important economic reports and a few significant corporate earnings reports scheduled for release this week. Economic reports include New Home Sales, Consumer Confidence, Final 2Q GDP readings, Personal Income, Personal Spending, PCE Deflator, Initial Jobless Claims, Help Wanted Index, Chicago Purchasing Manager, Final Univ. of Mich. Consumer Confidence, Construction Spending, ISM Manufacturing/Prices Paid and Vehicle Sales. New Home Sales, Consumer Confidence, GDP readings, Personal Spending, Chicago Purchasing Manager and ISM all have market-moving potential.
Walgreen(WAG), Solectron(SLR), American Greeting(AM), Micron Technology(MU), Constellation Brands(STZ) and Family Dollar Stores(FDO) are some of the more important companies that release quarterly earnings this week. There are also a number of other events that have market-moving potential. The UBS Global Life Sciences Conference, Oil & Gas Investment Symposium West, Deutsche Bank Global Oil & Gas Conference, Merrill Lynch Media Conference, Thomas Weisel Consumer Conference, Fed's Hoenig speaking, CSFB Chemical Conference, Fed's McTeer speaking and the Fed's Geithner speaking could also impact trading this week.
Bottom Line: I expect U.S. stocks to finish the week mixed as earnings worries and profit-taking offset better economic data and quarter-end window dressing. As well, investor complacency and the market's technically overbought state should lead to further consolidation. Investors are overreacting to slowing earnings growth as 3Q earnings are projected to rise 14.2% versus a historical average of 7%. Moreover, the negative-to-positive preannouncement ratio is currently around 2.0, below the market's long-term average. My short-term trading indicators are giving mixed signals and the Portfolio is market neutral(longs-shorts=0% market exposure) heading into the week.
Walgreen(WAG), Solectron(SLR), American Greeting(AM), Micron Technology(MU), Constellation Brands(STZ) and Family Dollar Stores(FDO) are some of the more important companies that release quarterly earnings this week. There are also a number of other events that have market-moving potential. The UBS Global Life Sciences Conference, Oil & Gas Investment Symposium West, Deutsche Bank Global Oil & Gas Conference, Merrill Lynch Media Conference, Thomas Weisel Consumer Conference, Fed's Hoenig speaking, CSFB Chemical Conference, Fed's McTeer speaking and the Fed's Geithner speaking could also impact trading this week.
Bottom Line: I expect U.S. stocks to finish the week mixed as earnings worries and profit-taking offset better economic data and quarter-end window dressing. As well, investor complacency and the market's technically overbought state should lead to further consolidation. Investors are overreacting to slowing earnings growth as 3Q earnings are projected to rise 14.2% versus a historical average of 7%. Moreover, the negative-to-positive preannouncement ratio is currently around 2.0, below the market's long-term average. My short-term trading indicators are giving mixed signals and the Portfolio is market neutral(longs-shorts=0% market exposure) heading into the week.
Market Week in Review
S&P 500 1,110.11 -1.63%
Click here for the Weekly Wrap by Briefing.com
Bottom Line: Last week's market action was mostly negative as U.S. stocks fell, driving the S&P 500 to its first weekly loss in seven, amid disappointing earnings and rising energy prices. However, most cyclicals continued to hold up well, pointing towards a re-acceleration of economic growth. Moreover, the Base Metal Spot Price Index broke out last week, which also bodes well for a pick-up in growth. Many investors view the current decline in long-term interest rates as a forecast of very slow economic growth or recession. I do not agree with this assessment at this point and view the decline as a big positive. Measures of investor anxiety were mixed last week and will likely head higher over the next few weeks. Finally, most stocks remain technically overbought after recent gains.
Click here for the Weekly Wrap by Briefing.com
Bottom Line: Last week's market action was mostly negative as U.S. stocks fell, driving the S&P 500 to its first weekly loss in seven, amid disappointing earnings and rising energy prices. However, most cyclicals continued to hold up well, pointing towards a re-acceleration of economic growth. Moreover, the Base Metal Spot Price Index broke out last week, which also bodes well for a pick-up in growth. Many investors view the current decline in long-term interest rates as a forecast of very slow economic growth or recession. I do not agree with this assessment at this point and view the decline as a big positive. Measures of investor anxiety were mixed last week and will likely head higher over the next few weeks. Finally, most stocks remain technically overbought after recent gains.
Saturday, September 25, 2004
Economic Week in Review
ECRI Weekly Leading Index 131.40 -.15%
Housing Starts for August were 2000K versus estimates of 1930K and 1988K in July. Building Permits for August were 1952K versus estimates of 1985K and 2066K in July. "I don’t know many people who can't buy homes because of mortgage rates, and there is still unmet demand for affordable homes," said Sun Won Sohn, chief economist at Wells Fargo. "Housing remains quite strong, and is still there as a source of support for the economy, however the decline in building permits does suggest that builders are turning somewhat more cautious," said Lynn Reaser, chief economist at Banc of America Capital. Starts in the northeast rose 6.5%, showing the most strength of any region and the best performance since 1990, Bloomberg said.
The FOMC raised rates 25 basis points to 1.75%. "With underlying inflation expected to be relatively low, the committee believes that policy accommodation can be removed at a pace that is likely to be measured," said members of the Fed in their policy statement. Low automobile and clothing prices helped hold the rise in the consumer price index to 2.7% for the year ended in August, below the average rate of inflation of 3.0% for the last 41 years, Bloomberg reported. The third rate-hike this year and the possibility the FOMC may keep raising rates suggests central bankers are confident that the world's largest economy will continue to expand, Bloomberg reported. "Output growth appears to have regained some traction and labor market conditions have improved modestly," the FOMC statement also said.
Initial Jobless Claims for last week were 350K versus estimates of 335K and 336K the prior week. Continuing Claims were 2883K versus estimates of 2880K and 2878K prior. Claims began to fluctuate last month because of disruptions from hurricanes, with figures ranging from 317,000 to 360,000 since the first storm, Charley, struck Florida on Aug. 13, Bloomberg reported. Last week's number is close to the 344,000 average for the year and consistent with increased hiring as demand recovers from a mid-year lull, economists said. "The September numbers may be understating actual hiring demand," said Mat Johnson, chief economist at ThinkEquity Partners.
Leading Indicators for August fell .3% versus estimates of a .2% decline and a .3% fall in July. The index of coincident indicators, a gauge of current economic conditions, rose .2% for a second month. The index tracks payrolls, incomes, sales and production, Bloomberg reported. "The economy has moderated slightly, but is still very much at positive levels," said John McConnell, chief executive of Worthington Industries. "I don't think there will be long-term inflationary pressures that will disrupt growth in the economy." Worthington shapes steel for automakers.
Durable Goods Orders for August fell .5% versus estimates of a .3% fall and an upwardly revised 1.8% increase in July. Durable Goods Less Transportation for August rose 2.3% versus estimates of a .8% rise and no change in July. The increase excluding transportation equipment was led by orders for metals, computers and communications equipment. The numbers suggest the U.S. manufacturing economy gained strength last month. "The basic message is that most manufacturing industries are currently faring quite well," said Ken Mayland, president of ClearView Economics. "These numbers are begging for the employment of more production workers." Lehman Brothers raised its forecast for economic growth in the third quarter to 4% at an annual rate from 3.3%. The U.S. economy is projected to expand 4.3% this year, the most since the height of the stock market bubble in 1999, Bloomberg reported.
Existing Home Sales for August were 6.54M versus estimates of 6.63M and 6.72M in July. "Sales are down a bit due to higher interest rates," said David Lereah, the National Association of Realtors' chief economist. However, mortgage rates are now falling as inflation expectations diminish, Bloomberg reported. The average rate on a 30-year fixed mortgage fell to 5.7% this week from 6.25% in June, according to Freddie Mac. The median selling price of an existing home in the U.S. was $190,100 last month, up 7.3% from a year ago. As well, 81% of consumers surveyed by the Univ. of Mich. this month said it was a good time to buy a home, up from 77% in August, Bloomberg reported.
Bottom Line: Overall, last week's economic data were mixed. Measures of the health of the housing market remain very strong, but show deceleration from all-time record high levels. However, the recent decline in mortgage rates may reignite the housing market towards year-end. While I do not think it was necessary for the Fed to raise rates last week or maintain their "measured pace of increases" language, I do understand why they are doing this. I believe it is to have ammunition, in the form of rate-cuts, in case of an emergency situation. Moreover, the Fed Funds rate is still so low that the increases aren't negatively impacting business activity to any extent. It also sends the message that they are being vigilant with respect to inflation, thus resulting in diminished inflation expectations and falling long-term interest rates. The hurricanes over the last few weeks likely affected the leading indicators negatively and continue to disrupt jobless claims. However, rebuilding efforts should boost these measures during the fourth quarter. The Durable Goods report was very positive and also bodes well for future economic growth.
Housing Starts for August were 2000K versus estimates of 1930K and 1988K in July. Building Permits for August were 1952K versus estimates of 1985K and 2066K in July. "I don’t know many people who can't buy homes because of mortgage rates, and there is still unmet demand for affordable homes," said Sun Won Sohn, chief economist at Wells Fargo. "Housing remains quite strong, and is still there as a source of support for the economy, however the decline in building permits does suggest that builders are turning somewhat more cautious," said Lynn Reaser, chief economist at Banc of America Capital. Starts in the northeast rose 6.5%, showing the most strength of any region and the best performance since 1990, Bloomberg said.
The FOMC raised rates 25 basis points to 1.75%. "With underlying inflation expected to be relatively low, the committee believes that policy accommodation can be removed at a pace that is likely to be measured," said members of the Fed in their policy statement. Low automobile and clothing prices helped hold the rise in the consumer price index to 2.7% for the year ended in August, below the average rate of inflation of 3.0% for the last 41 years, Bloomberg reported. The third rate-hike this year and the possibility the FOMC may keep raising rates suggests central bankers are confident that the world's largest economy will continue to expand, Bloomberg reported. "Output growth appears to have regained some traction and labor market conditions have improved modestly," the FOMC statement also said.
Initial Jobless Claims for last week were 350K versus estimates of 335K and 336K the prior week. Continuing Claims were 2883K versus estimates of 2880K and 2878K prior. Claims began to fluctuate last month because of disruptions from hurricanes, with figures ranging from 317,000 to 360,000 since the first storm, Charley, struck Florida on Aug. 13, Bloomberg reported. Last week's number is close to the 344,000 average for the year and consistent with increased hiring as demand recovers from a mid-year lull, economists said. "The September numbers may be understating actual hiring demand," said Mat Johnson, chief economist at ThinkEquity Partners.
Leading Indicators for August fell .3% versus estimates of a .2% decline and a .3% fall in July. The index of coincident indicators, a gauge of current economic conditions, rose .2% for a second month. The index tracks payrolls, incomes, sales and production, Bloomberg reported. "The economy has moderated slightly, but is still very much at positive levels," said John McConnell, chief executive of Worthington Industries. "I don't think there will be long-term inflationary pressures that will disrupt growth in the economy." Worthington shapes steel for automakers.
Durable Goods Orders for August fell .5% versus estimates of a .3% fall and an upwardly revised 1.8% increase in July. Durable Goods Less Transportation for August rose 2.3% versus estimates of a .8% rise and no change in July. The increase excluding transportation equipment was led by orders for metals, computers and communications equipment. The numbers suggest the U.S. manufacturing economy gained strength last month. "The basic message is that most manufacturing industries are currently faring quite well," said Ken Mayland, president of ClearView Economics. "These numbers are begging for the employment of more production workers." Lehman Brothers raised its forecast for economic growth in the third quarter to 4% at an annual rate from 3.3%. The U.S. economy is projected to expand 4.3% this year, the most since the height of the stock market bubble in 1999, Bloomberg reported.
Existing Home Sales for August were 6.54M versus estimates of 6.63M and 6.72M in July. "Sales are down a bit due to higher interest rates," said David Lereah, the National Association of Realtors' chief economist. However, mortgage rates are now falling as inflation expectations diminish, Bloomberg reported. The average rate on a 30-year fixed mortgage fell to 5.7% this week from 6.25% in June, according to Freddie Mac. The median selling price of an existing home in the U.S. was $190,100 last month, up 7.3% from a year ago. As well, 81% of consumers surveyed by the Univ. of Mich. this month said it was a good time to buy a home, up from 77% in August, Bloomberg reported.
Bottom Line: Overall, last week's economic data were mixed. Measures of the health of the housing market remain very strong, but show deceleration from all-time record high levels. However, the recent decline in mortgage rates may reignite the housing market towards year-end. While I do not think it was necessary for the Fed to raise rates last week or maintain their "measured pace of increases" language, I do understand why they are doing this. I believe it is to have ammunition, in the form of rate-cuts, in case of an emergency situation. Moreover, the Fed Funds rate is still so low that the increases aren't negatively impacting business activity to any extent. It also sends the message that they are being vigilant with respect to inflation, thus resulting in diminished inflation expectations and falling long-term interest rates. The hurricanes over the last few weeks likely affected the leading indicators negatively and continue to disrupt jobless claims. However, rebuilding efforts should boost these measures during the fourth quarter. The Durable Goods report was very positive and also bodes well for future economic growth.
Friday, September 24, 2004
Weekly Scoreboard*
Indices
S&P 500 1,110.11 -1.63%
Dow 10,047.24 -2.31%
NASDAQ 1,879.48 -1.60%
Russell 2000 565.97 -1.26%
S&P Equity Long/Short Index 969.46 +.29%
Put/Call .93 +13.41%
NYSE Arms 1.05 +43.84%
Volatility(VIX) 14.28 +1.78%
AAII % Bulls 51.22 +12.70%
US Dollar 88.40 -.53%
CRB 277.77 +1.22%
Futures Spot Prices
Gold 409.70 +.54%
Crude Oil 48.88 +7.15%
Unleaded Gasoline 134.82 +6.20%
Natural Gas 5.39 +5.21%
Base Metals 116.00 +5.87%
10-year US Treasury Yield 4.03% -1.95%
Average 30-year Mortgage Rate 5.70% -.87%
Leading Sectors
Oil Service +2.70%
Energy +2.02%
Gaming +1.84%
Lagging Sectors
Internet -3.08%
Iron/Steel -3.19%
Airlines -8.41%
*% Gain or loss for the week
S&P 500 1,110.11 -1.63%
Dow 10,047.24 -2.31%
NASDAQ 1,879.48 -1.60%
Russell 2000 565.97 -1.26%
S&P Equity Long/Short Index 969.46 +.29%
Put/Call .93 +13.41%
NYSE Arms 1.05 +43.84%
Volatility(VIX) 14.28 +1.78%
AAII % Bulls 51.22 +12.70%
US Dollar 88.40 -.53%
CRB 277.77 +1.22%
Futures Spot Prices
Gold 409.70 +.54%
Crude Oil 48.88 +7.15%
Unleaded Gasoline 134.82 +6.20%
Natural Gas 5.39 +5.21%
Base Metals 116.00 +5.87%
10-year US Treasury Yield 4.03% -1.95%
Average 30-year Mortgage Rate 5.70% -.87%
Leading Sectors
Oil Service +2.70%
Energy +2.02%
Gaming +1.84%
Lagging Sectors
Internet -3.08%
Iron/Steel -3.19%
Airlines -8.41%
*% Gain or loss for the week
Mid-day Update
S&P 500 1,111.01 +.24%
NASDAQ 1,884.52 -.10%
Leading Sectors
Oil Service +2.02%
Restaurants +1.23%
Energy +1.23%
Lagging Sectors
Disk Drives -1.79%
Airlines -2.72%
Semis -2.88%
Other
Crude Oil 48.43 -.12%
Natural Gas 5.40 -2.95%
Gold 409.80 -.68%
Base Metals 116.36 +.11%
U.S. Dollar 88.44 unch.
10-Yr. T-note Yield 4.04 +.81%
VIX 14.32 -3.24%
Put/Call 1.0 +8.70%
NYSE Arms 1.08 -32.05%
Market Movers
COGT +47.5% on strong demand for IPO.
MSO +7.7% on continuing optimism over recent events.
ECSI +16.0% after agreeing to be bought by STJ for $11.75/share.
AH +4.1% after saying it won a $23 million contract from the U.S. Army.
JLG +11.9% after beating 4Q estimates and making positive comments.
ESIO -19.3% after missing 1Q estimates and lowering 2Q outlook.
PSRC -17.2% after beating 1Q forecast, but lowering 2Q estimates.
Economic Data
Durable Goods Orders for August fell .5% versus estimates of a .3% decline and an upwardly revised 1.8% increase in July.
Durable Goods Less Transportation for August rose 2.3% versus estimates of a .8% increase and an upwardly revised 0.0% in July.
Existing Home Sales for August were 6.54M versus estimates of 6.63M and 6.72M in July.
Recommendations
Goldman Sachs reiterated Outperform on MER, BPO and VNO. Citi SmithBarney upgraded MRO to Buy, target $45. Citi reiterated Buy on BK, target $37. Citi reiterated Buy on DOW, target $50. Citi reiterated Sell on PGL, target $36. Citi reiterated Buy on FLEX, target $22. Citi reiterated Buy on PRU, target $55. MDCO rated Reduce at UBS, target $25. NTMD rated Buy at UBS, target $32. APC, KMG, XTO raised to Buy at Citi. NTMD rated Overweight at JP Morgan. DTE raised to Overweight at Morgan Stanley. ARO raised to Buy at Deutsche Bank, target $33. Lehman says US Dollar will decline as interest rates fall.
Mid-day News
U.S. stocks are mixed mid-day on conflicting economic data, weakness in technology stocks and stabilizing energy prices. Hollywood directors will get at least $40 million in increased payments to their health-care plan under a proposed three-year contract agreement they reached with producers, the NY Times reported. NYC said it created a communications system to get emergency information to the public quickly over television and radio, the NY Times reported. IBM plans to open an office in Fairfax County, Virginia, that will created 1,200 government-contracting jobs, the Washington Post reported. California Governor Schwarzenegger signed into law bills intended to protect the environment, including measures to protect the Sierra Nevada mountain range and decrease cruise ship pollution, the LA Times reported. Two California ballot propositions aimed at expanding slot-machine gambling in the state are failing among likely voters, less that six weeks before the election, the LA Times said. Oil-tanker rates from the Persian Gulf to the U.S. and Asia surged to seven-month highs as refiners scoured the market for ships to haul October cargoes, preparing to meet increased heating demand, Bloomberg said. Russian President Putin said state-run companies may bid for OAO Yukos assets in any sales to collect back taxes, Bloomberg reported. Hurricane Jeanne is heading for the U.S. and may reach Florida's east coast this weekend, making it the first time the state has been hit by four hurricanes in one season, Bloomberg reported.
BOTTOM LINE: The Portfolio is unchanged again mid-day and I have not traded, thus leaving my market neutral stance in tact. The tone of the market is decidedly mixed today. However, the weakness in technology stocks will likely spill over into the rest of the market this afternoon, leaving the major U.S. indices modestly lower on the day.
NASDAQ 1,884.52 -.10%
Leading Sectors
Oil Service +2.02%
Restaurants +1.23%
Energy +1.23%
Lagging Sectors
Disk Drives -1.79%
Airlines -2.72%
Semis -2.88%
Other
Crude Oil 48.43 -.12%
Natural Gas 5.40 -2.95%
Gold 409.80 -.68%
Base Metals 116.36 +.11%
U.S. Dollar 88.44 unch.
10-Yr. T-note Yield 4.04 +.81%
VIX 14.32 -3.24%
Put/Call 1.0 +8.70%
NYSE Arms 1.08 -32.05%
Market Movers
COGT +47.5% on strong demand for IPO.
MSO +7.7% on continuing optimism over recent events.
ECSI +16.0% after agreeing to be bought by STJ for $11.75/share.
AH +4.1% after saying it won a $23 million contract from the U.S. Army.
JLG +11.9% after beating 4Q estimates and making positive comments.
ESIO -19.3% after missing 1Q estimates and lowering 2Q outlook.
PSRC -17.2% after beating 1Q forecast, but lowering 2Q estimates.
Economic Data
Durable Goods Orders for August fell .5% versus estimates of a .3% decline and an upwardly revised 1.8% increase in July.
Durable Goods Less Transportation for August rose 2.3% versus estimates of a .8% increase and an upwardly revised 0.0% in July.
Existing Home Sales for August were 6.54M versus estimates of 6.63M and 6.72M in July.
Recommendations
Goldman Sachs reiterated Outperform on MER, BPO and VNO. Citi SmithBarney upgraded MRO to Buy, target $45. Citi reiterated Buy on BK, target $37. Citi reiterated Buy on DOW, target $50. Citi reiterated Sell on PGL, target $36. Citi reiterated Buy on FLEX, target $22. Citi reiterated Buy on PRU, target $55. MDCO rated Reduce at UBS, target $25. NTMD rated Buy at UBS, target $32. APC, KMG, XTO raised to Buy at Citi. NTMD rated Overweight at JP Morgan. DTE raised to Overweight at Morgan Stanley. ARO raised to Buy at Deutsche Bank, target $33. Lehman says US Dollar will decline as interest rates fall.
Mid-day News
U.S. stocks are mixed mid-day on conflicting economic data, weakness in technology stocks and stabilizing energy prices. Hollywood directors will get at least $40 million in increased payments to their health-care plan under a proposed three-year contract agreement they reached with producers, the NY Times reported. NYC said it created a communications system to get emergency information to the public quickly over television and radio, the NY Times reported. IBM plans to open an office in Fairfax County, Virginia, that will created 1,200 government-contracting jobs, the Washington Post reported. California Governor Schwarzenegger signed into law bills intended to protect the environment, including measures to protect the Sierra Nevada mountain range and decrease cruise ship pollution, the LA Times reported. Two California ballot propositions aimed at expanding slot-machine gambling in the state are failing among likely voters, less that six weeks before the election, the LA Times said. Oil-tanker rates from the Persian Gulf to the U.S. and Asia surged to seven-month highs as refiners scoured the market for ships to haul October cargoes, preparing to meet increased heating demand, Bloomberg said. Russian President Putin said state-run companies may bid for OAO Yukos assets in any sales to collect back taxes, Bloomberg reported. Hurricane Jeanne is heading for the U.S. and may reach Florida's east coast this weekend, making it the first time the state has been hit by four hurricanes in one season, Bloomberg reported.
BOTTOM LINE: The Portfolio is unchanged again mid-day and I have not traded, thus leaving my market neutral stance in tact. The tone of the market is decidedly mixed today. However, the weakness in technology stocks will likely spill over into the rest of the market this afternoon, leaving the major U.S. indices modestly lower on the day.
Friday Watch
Earnings of Note
Company/Estimate
None of note.
Splits
None of note.
Economic Data
Durable Goods Orders for August estimated -.3% versus a 1.6% rise in July.
Durable Goods Less Transportation for August estimated +.8% versus a -.2% decline in July.
Existing Home Sales for August estimated at 6.63M versus 6.72M in July.
Recommendations
Goldman Sachs reiterated Outperform on MDT and WAG. Goldman reiterated Underperform on SCS and AMCC. Goldman reiterated Attractive view of Steel sector, favorites are ISG and STLD. Shares of Alliance Gaming are expected to rise as demand for gambling devices picks up in 2005, Business Week reported.
Late-Night News
Asian indices are mixed as strength in China is being offset by weakness in Japan. Matsushita Electric plans to begin supplying tv set-top boxes and software to Comcast, the largest U.S. cable tv operator, Nikkei English News reported. Taser International pitched its weapons to the San Francisco Police Dept. and used a stun gun on an officer to demonstrate its effectiveness, the San Francisco Chronicle said. While the dept. hasn't formerly asked the San Francisco Police Commission to adopt the device, Police Chief Heather Fong wants every officer in the 2,200-member force to be armed with the device, the paper reported. California regulators are expected to boost the fee rival telephone companies pay SBC Communications for access to copper lines linking homes and businesses to the phone network, the LA Times said. Boeing, IBM and Microsoft are among 28 companies that on Sept. 28 will announce a consortium dedicated to technology standardization for a military network, Business Week said. Google may be planning to offer Internet browser software, News.com reported. The European Commission will probably clear Oracle's $7.7 billion bid for PeopleSoft, the Financial Times said. Citigroup officials are being investigated by U.S. regulators for failing to supervise analysts and investment bankers and preventing conflicts of interest, Business Week reported. FedEx has applied for six weekly flights to the southern Chinese city of Guangzhou in 2006, the South China Morning Post reported. The U.S. Congress approved $146 billion in tax cuts for middle-income families and businesses, Bloomberg reported. Royal Philips Electronic, Europe's third-largest maker of semiconductors, reduced its third-quarter chip sales forecast as demand wanes, Bloomberg reported.
Late-Night Trading
Asian Indices are -1.0% to +.50% on average.
S&P 500 indicated +.09%.
NASDAQ 100 indicated unch.
BOTTOM LINE: I expect U.S. equities to open mixed in the morning as better economic numbers and declining energy prices offset weakness in Asia. The Portfolio is market neutral heading into tomorrow.
Company/Estimate
None of note.
Splits
None of note.
Economic Data
Durable Goods Orders for August estimated -.3% versus a 1.6% rise in July.
Durable Goods Less Transportation for August estimated +.8% versus a -.2% decline in July.
Existing Home Sales for August estimated at 6.63M versus 6.72M in July.
Recommendations
Goldman Sachs reiterated Outperform on MDT and WAG. Goldman reiterated Underperform on SCS and AMCC. Goldman reiterated Attractive view of Steel sector, favorites are ISG and STLD. Shares of Alliance Gaming are expected to rise as demand for gambling devices picks up in 2005, Business Week reported.
Late-Night News
Asian indices are mixed as strength in China is being offset by weakness in Japan. Matsushita Electric plans to begin supplying tv set-top boxes and software to Comcast, the largest U.S. cable tv operator, Nikkei English News reported. Taser International pitched its weapons to the San Francisco Police Dept. and used a stun gun on an officer to demonstrate its effectiveness, the San Francisco Chronicle said. While the dept. hasn't formerly asked the San Francisco Police Commission to adopt the device, Police Chief Heather Fong wants every officer in the 2,200-member force to be armed with the device, the paper reported. California regulators are expected to boost the fee rival telephone companies pay SBC Communications for access to copper lines linking homes and businesses to the phone network, the LA Times said. Boeing, IBM and Microsoft are among 28 companies that on Sept. 28 will announce a consortium dedicated to technology standardization for a military network, Business Week said. Google may be planning to offer Internet browser software, News.com reported. The European Commission will probably clear Oracle's $7.7 billion bid for PeopleSoft, the Financial Times said. Citigroup officials are being investigated by U.S. regulators for failing to supervise analysts and investment bankers and preventing conflicts of interest, Business Week reported. FedEx has applied for six weekly flights to the southern Chinese city of Guangzhou in 2006, the South China Morning Post reported. The U.S. Congress approved $146 billion in tax cuts for middle-income families and businesses, Bloomberg reported. Royal Philips Electronic, Europe's third-largest maker of semiconductors, reduced its third-quarter chip sales forecast as demand wanes, Bloomberg reported.
Late-Night Trading
Asian Indices are -1.0% to +.50% on average.
S&P 500 indicated +.09%.
NASDAQ 100 indicated unch.
BOTTOM LINE: I expect U.S. equities to open mixed in the morning as better economic numbers and declining energy prices offset weakness in Asia. The Portfolio is market neutral heading into tomorrow.
Thursday, September 23, 2004
Thursday Close
S&P 500 1,108.36 -.47%
NASDAQ 1,886.43 +.04%
Leading Sectors
Semis +.52%
Wireless +.51%
Internet +.44%
Lagging Sectors
Iron/Steel -1.07%
Fashion -1.49%
Airlines -2.84%
Other
Crude Oil 48.28 -.14%
Natural Gas 5.48 -2.65%
Gold 411.50 -.27%
Base Metals 116.23 +.82%
U.S. Dollar 88.44 -.08%
10-Yr. T-note Yield 4.02% +.96%
VIX 14.80 +.41%
Put/Call .92 -16.36%
NYSE Arms 1.60 -32.20%
After-hours Movers
ESIO -11.99% after missing 1Q estimates and lowering 2Q outlook.
FINL -3.09% after missing 2Q estimates.
Recommendations
Goldman Sachs reiterated Outperform on WMT.
After-hours News
U.S. stocks finished mixed today as worries that high energy prices would stall the economy were offset by optimism in the technology sector. After the close, China is cracking down on unauthorized steel plants as it tries to deflate the country's steel boom, and reduce shortages of power, coal and transport that threaten the economy, the Financial Times reported. Federal Reserve policy makers said the slowing in economic growth in the second quarter would be "short-lived" as they voted unanimously on Aug. 10 to raise interest rates, minutes of the meeting showed, Bloomberg said. Northern Trust may be fired tomorrow as custodian and index fund manager for the Illinois State Board of Investment, a 20-year client that overseas $10.4 billion for three of the state's five pension systems, Bloomberg reported. California Governor Schwarzenegger signed a law opening up car-pool lanes on highways to the most fuel-efficient gas-electric hybrid cars, a potential boost to Honda Motor and Toyota Motor in the largest U.S. auto market, Bloomberg said. Martha Stewart Living entered a five-year employment contract with its founder that will pay her a base salary of $900,000 annually and make her eligible to receive a bonus of as much as $1.35 million per year, Bloomberg said. Delta Air agreed to sell eight planes and four spare engines to FedEx as part of a plan to cut costs by eliminating some aircraft types, Bloomberg reported. Viacom is expanding its presence in China, including its second production venture in the country, Viacom CEO Redstone said.
BOTTOM LINE: The Portfolio finished unchanged today as weakness in my homebuilding and security longs was offset by my falling retail and software shorts. I did not trade in the afternoon, thus the Portfolio is still market neutral. I continue to believe the major U.S. indices will consolidate recent gains over the near-term before another move higher beginning in the latter part of October. A sharp decline in energy prices, while unlikely, could result in the rally beginning sooner than I currently anticipate.
NASDAQ 1,886.43 +.04%
Leading Sectors
Semis +.52%
Wireless +.51%
Internet +.44%
Lagging Sectors
Iron/Steel -1.07%
Fashion -1.49%
Airlines -2.84%
Other
Crude Oil 48.28 -.14%
Natural Gas 5.48 -2.65%
Gold 411.50 -.27%
Base Metals 116.23 +.82%
U.S. Dollar 88.44 -.08%
10-Yr. T-note Yield 4.02% +.96%
VIX 14.80 +.41%
Put/Call .92 -16.36%
NYSE Arms 1.60 -32.20%
After-hours Movers
ESIO -11.99% after missing 1Q estimates and lowering 2Q outlook.
FINL -3.09% after missing 2Q estimates.
Recommendations
Goldman Sachs reiterated Outperform on WMT.
After-hours News
U.S. stocks finished mixed today as worries that high energy prices would stall the economy were offset by optimism in the technology sector. After the close, China is cracking down on unauthorized steel plants as it tries to deflate the country's steel boom, and reduce shortages of power, coal and transport that threaten the economy, the Financial Times reported. Federal Reserve policy makers said the slowing in economic growth in the second quarter would be "short-lived" as they voted unanimously on Aug. 10 to raise interest rates, minutes of the meeting showed, Bloomberg said. Northern Trust may be fired tomorrow as custodian and index fund manager for the Illinois State Board of Investment, a 20-year client that overseas $10.4 billion for three of the state's five pension systems, Bloomberg reported. California Governor Schwarzenegger signed a law opening up car-pool lanes on highways to the most fuel-efficient gas-electric hybrid cars, a potential boost to Honda Motor and Toyota Motor in the largest U.S. auto market, Bloomberg said. Martha Stewart Living entered a five-year employment contract with its founder that will pay her a base salary of $900,000 annually and make her eligible to receive a bonus of as much as $1.35 million per year, Bloomberg said. Delta Air agreed to sell eight planes and four spare engines to FedEx as part of a plan to cut costs by eliminating some aircraft types, Bloomberg reported. Viacom is expanding its presence in China, including its second production venture in the country, Viacom CEO Redstone said.
BOTTOM LINE: The Portfolio finished unchanged today as weakness in my homebuilding and security longs was offset by my falling retail and software shorts. I did not trade in the afternoon, thus the Portfolio is still market neutral. I continue to believe the major U.S. indices will consolidate recent gains over the near-term before another move higher beginning in the latter part of October. A sharp decline in energy prices, while unlikely, could result in the rally beginning sooner than I currently anticipate.
Mid-day Update
S&P 500 1,110.14 -.31%
NASDAQ 1,888.05 +.12%
Leading Sectors
Tobacco +1.45%
Restaurants +.83%
Wireless +.62%
Lagging Sectors
Homebuilders -1.31%
Fashion -1.47%
Airlines -1.56%
Other
Crude Oil 48.00 -.72%
Natural Gas 5.42 -3.62%
Gold 412.40 +.83%
Base Metals 115.22 -.05%
U.S. Dollar 88.27 -.27%
10-Yr. T-note Yield 3.99% +.29%
VIX 14.85 +.75%
Put/Call .71 -35.45%
NYSE Arms 1.43 -39.41%
Market Movers
FNM -3.91% after multiple downgrades.
CYBX +4.0% said the FDA approved its device for testing on life-threatening treatment-resistant depression.
MSO +14.2% after it said it agreed to work with tv producer Mark Burnett, who created the popular "Survivor" series.
IMGC +10.9% after beating 1Q estimates, reiterating 2Q outlook and Needham upgrade to Strong Buy.
GPN +11.3% after beating 1Q estimates and raising 05 outlook.
DRI +6.3% after beating 1Q estimates.
CVS +4.44% after Matrix rated it Strong Buy.
STMP -12.2% after canceling appearance at ThinkEquity Conference.
APPX -9.5% after the Wall Street Journal reported that the SEC is investigating the company on suspicion that it may have misled investors on progress made with a cancer drug.
DECK -6.2% after RBC Capital cut it to Sector Perform.
Economic Data
Initial Jobless Claims for last week were 350K versus estimates of 335K and 336K prior.
Continuing Claims were 2883K versus estimates of 2880K and 2878K prior.
Leading Indicators fell .3% versus estimates of a .2% decline and a .3% decrease in July.
Recommendations
Goldman Sachs reiterated Outperform on AMR, SMP, CLX, BIIB, PFE, AMGN, FS, HOT, TPX and BC. Goldman reiterated Underperform on MKL, RAI, BSC and EK. Citi SmithBarney reiterated Buy on FNM, target $86. Citi reiterated Buy on COGN, target $44. Citi reiterated Buy on GPN, target $55. Citi reiterated Buy on MWD, target $72. Citi reiterated Buy on TGT, target $50. Citi said to Buy MSTR as strength at COGN will also benefit it, target $59.
Mid-day News
U.S. stocks are mixed mid-day on continuing worries that high energy prices are leading to slower economic growth. The International Accounting Standards Board plans to overhaul the rules on accounting for leased assets, the Wall Street Journal reported. U.S. government agencies such as the FBI and private groups such as the Search for International Terrorist Entities Institute monitor hundreds of suspected terrorist Web sites on the Internet and sometimes track users, the NY Times reported. U.S. President Bush lead Senator Kerry 49% to 41% among registered voters in Florida, a Quinnipiac University poll found. WebMD promoted Kevin Cameron to CEO and said the company may spin off or sell shares in its WebMD Health unit. Halliburton said it may sell its KBR unit, which is being investigated, to boost its share price, Bloomberg said. Iraqi interim Prime Minister Allawi said the conflict in his country is part of a global terrorist threat, pledging to defeat foreign fighters and hold elections on time in January, Bloomberg reported. Florida residents were advised to prepare for their fourth hurricane strike this season as Jeanne headed westward through the Bahamas on a path that may take the storm up the state's east coast as soon as Sunday, Bloomberg said. Crude oil is falling from a one-month high after a White House spokesman said the U.S. may loan oil to refiners from the Strategic Petroleum Reserve to make up for supply disruptions caused by Hurricane Ivan, Bloomberg reported. The average rate on a benchmark 30-year fixed mortgage in the U.S. fell to 5.7%, the lowest since early April, from 5.75% last week, Bloomberg reported.
BOTTOM LINE: The Portfolio is unchanged mid-day as my declining steel and security longs are being offset by my falling software and retail shorts. I have not traded today and the Portfolio is still market neutral. The tone of the market is relatively weak. Most measures of investor complacency are rising. The weekly reading from the AAII shows the % Bulls actually jumped 12.7% to 51.22%. As well, talk of tapping the strategic petroleum reserve is not sending oil prices lower, which is a negative. I expect stocks to decline modestly into the close.
NASDAQ 1,888.05 +.12%
Leading Sectors
Tobacco +1.45%
Restaurants +.83%
Wireless +.62%
Lagging Sectors
Homebuilders -1.31%
Fashion -1.47%
Airlines -1.56%
Other
Crude Oil 48.00 -.72%
Natural Gas 5.42 -3.62%
Gold 412.40 +.83%
Base Metals 115.22 -.05%
U.S. Dollar 88.27 -.27%
10-Yr. T-note Yield 3.99% +.29%
VIX 14.85 +.75%
Put/Call .71 -35.45%
NYSE Arms 1.43 -39.41%
Market Movers
FNM -3.91% after multiple downgrades.
CYBX +4.0% said the FDA approved its device for testing on life-threatening treatment-resistant depression.
MSO +14.2% after it said it agreed to work with tv producer Mark Burnett, who created the popular "Survivor" series.
IMGC +10.9% after beating 1Q estimates, reiterating 2Q outlook and Needham upgrade to Strong Buy.
GPN +11.3% after beating 1Q estimates and raising 05 outlook.
DRI +6.3% after beating 1Q estimates.
CVS +4.44% after Matrix rated it Strong Buy.
STMP -12.2% after canceling appearance at ThinkEquity Conference.
APPX -9.5% after the Wall Street Journal reported that the SEC is investigating the company on suspicion that it may have misled investors on progress made with a cancer drug.
DECK -6.2% after RBC Capital cut it to Sector Perform.
Economic Data
Initial Jobless Claims for last week were 350K versus estimates of 335K and 336K prior.
Continuing Claims were 2883K versus estimates of 2880K and 2878K prior.
Leading Indicators fell .3% versus estimates of a .2% decline and a .3% decrease in July.
Recommendations
Goldman Sachs reiterated Outperform on AMR, SMP, CLX, BIIB, PFE, AMGN, FS, HOT, TPX and BC. Goldman reiterated Underperform on MKL, RAI, BSC and EK. Citi SmithBarney reiterated Buy on FNM, target $86. Citi reiterated Buy on COGN, target $44. Citi reiterated Buy on GPN, target $55. Citi reiterated Buy on MWD, target $72. Citi reiterated Buy on TGT, target $50. Citi said to Buy MSTR as strength at COGN will also benefit it, target $59.
Mid-day News
U.S. stocks are mixed mid-day on continuing worries that high energy prices are leading to slower economic growth. The International Accounting Standards Board plans to overhaul the rules on accounting for leased assets, the Wall Street Journal reported. U.S. government agencies such as the FBI and private groups such as the Search for International Terrorist Entities Institute monitor hundreds of suspected terrorist Web sites on the Internet and sometimes track users, the NY Times reported. U.S. President Bush lead Senator Kerry 49% to 41% among registered voters in Florida, a Quinnipiac University poll found. WebMD promoted Kevin Cameron to CEO and said the company may spin off or sell shares in its WebMD Health unit. Halliburton said it may sell its KBR unit, which is being investigated, to boost its share price, Bloomberg said. Iraqi interim Prime Minister Allawi said the conflict in his country is part of a global terrorist threat, pledging to defeat foreign fighters and hold elections on time in January, Bloomberg reported. Florida residents were advised to prepare for their fourth hurricane strike this season as Jeanne headed westward through the Bahamas on a path that may take the storm up the state's east coast as soon as Sunday, Bloomberg said. Crude oil is falling from a one-month high after a White House spokesman said the U.S. may loan oil to refiners from the Strategic Petroleum Reserve to make up for supply disruptions caused by Hurricane Ivan, Bloomberg reported. The average rate on a benchmark 30-year fixed mortgage in the U.S. fell to 5.7%, the lowest since early April, from 5.75% last week, Bloomberg reported.
BOTTOM LINE: The Portfolio is unchanged mid-day as my declining steel and security longs are being offset by my falling software and retail shorts. I have not traded today and the Portfolio is still market neutral. The tone of the market is relatively weak. Most measures of investor complacency are rising. The weekly reading from the AAII shows the % Bulls actually jumped 12.7% to 51.22%. As well, talk of tapping the strategic petroleum reserve is not sending oil prices lower, which is a negative. I expect stocks to decline modestly into the close.
Thursday Watch
Earnings of Note
Company/Estimate
AGE/.55
FINL/.87
PSRC/-.02
SCS/.01
Splits
HUG 2-for-1
Economic Data
Initial Jobless Claims for last week are estimated at 335K versus 333K the prior week.
Continuing Claims are estimated at 2880K versus 2882K prior.
Leading Indicators for Aug. estimated -.2% versus -.3% in July.
Minutes of Aug. 10 FOMC Meeting.
Recommendations
Goldman reiterated Underperform on EK.
Late-Night News
Asian indices are lower following weakness in the U.S. over rising energy prices. IBM Japan and Cisco Systems are jointly developing and marketing a product to protect corporate networks from damage when virus-infected computers are linked to the system, the Nihon Keizai newspaper reported. Singapore's Straits Times Index may reach 2,300 in the next 12 months, boosted by companies moving to combine their businesses, the Straits Times said. China's consumer-price inflation will ease for the rest of the year as improving harvests reduce pressure on food costs to rise, Wen Wei Po reported. Australian police are investigating a potentially explosive device that was found in the cargo hold of a Virgin Blue Holdings plane at Sydney airport, Bloomberg said. Taiwan Semiconductor Manufacturing said its factory use will decline from its peak of 106% in the last quarter because customers are cutting inventory, Bloomberg said. China will attend talks of the G7 industrialized countries for the first time next week, reflecting the emerging importance of the world's biggest developing nation to the global economy, Bloomberg reported. Crude oil futures are falling tonight, snapping an 11% gain in the past week, as concern eased that disruptions at Russia's biggest oil exporter and hurricane damage in the Gulf will further cut supply, Bloomberg said. Donald Trump's Trump Hotels & Casino Resorts said it has ended talks with a CSFB investment unit, which had planned to invest $400 million in Trump Hotels and become the majority shareholder, Bloomberg reported. Fannie Mae CFO Howard is to blame for violating accounting rules that have potentially large financial consequences, said federal regulators. Lehman Brothers agreed to pay $222.5 million to resolve a suit filed by investors over the bank's role as underwrite for Enron, the bankrupt energy trader, Bloomberg reported. U.S. automakers are boosting advertising for passenger cars in an effort to regain market share from Japanese competitors such as Toyota Motor and Honda Motor, the Washington Post reported.
Late-Night Trading
Asian Indices are -.75% to -.25% on average.
S&P 500 indicated +.10%.
NASDAQ 100 indicated +.07%
BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning on stabilizing energy prices and better economic reports. However, shares may come under pressure later in the day on a continuation of today's sell-off. The Portfolio is market neutral heading into tomorrow.
Company/Estimate
AGE/.55
FINL/.87
PSRC/-.02
SCS/.01
Splits
HUG 2-for-1
Economic Data
Initial Jobless Claims for last week are estimated at 335K versus 333K the prior week.
Continuing Claims are estimated at 2880K versus 2882K prior.
Leading Indicators for Aug. estimated -.2% versus -.3% in July.
Minutes of Aug. 10 FOMC Meeting.
Recommendations
Goldman reiterated Underperform on EK.
Late-Night News
Asian indices are lower following weakness in the U.S. over rising energy prices. IBM Japan and Cisco Systems are jointly developing and marketing a product to protect corporate networks from damage when virus-infected computers are linked to the system, the Nihon Keizai newspaper reported. Singapore's Straits Times Index may reach 2,300 in the next 12 months, boosted by companies moving to combine their businesses, the Straits Times said. China's consumer-price inflation will ease for the rest of the year as improving harvests reduce pressure on food costs to rise, Wen Wei Po reported. Australian police are investigating a potentially explosive device that was found in the cargo hold of a Virgin Blue Holdings plane at Sydney airport, Bloomberg said. Taiwan Semiconductor Manufacturing said its factory use will decline from its peak of 106% in the last quarter because customers are cutting inventory, Bloomberg said. China will attend talks of the G7 industrialized countries for the first time next week, reflecting the emerging importance of the world's biggest developing nation to the global economy, Bloomberg reported. Crude oil futures are falling tonight, snapping an 11% gain in the past week, as concern eased that disruptions at Russia's biggest oil exporter and hurricane damage in the Gulf will further cut supply, Bloomberg said. Donald Trump's Trump Hotels & Casino Resorts said it has ended talks with a CSFB investment unit, which had planned to invest $400 million in Trump Hotels and become the majority shareholder, Bloomberg reported. Fannie Mae CFO Howard is to blame for violating accounting rules that have potentially large financial consequences, said federal regulators. Lehman Brothers agreed to pay $222.5 million to resolve a suit filed by investors over the bank's role as underwrite for Enron, the bankrupt energy trader, Bloomberg reported. U.S. automakers are boosting advertising for passenger cars in an effort to regain market share from Japanese competitors such as Toyota Motor and Honda Motor, the Washington Post reported.
Late-Night Trading
Asian Indices are -.75% to -.25% on average.
S&P 500 indicated +.10%.
NASDAQ 100 indicated +.07%
BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning on stabilizing energy prices and better economic reports. However, shares may come under pressure later in the day on a continuation of today's sell-off. The Portfolio is market neutral heading into tomorrow.
Wednesday, September 22, 2004
Wednesday Close
S&P 500 1,113.56 -1.39%
NASDAQ 1,885.71 -1.85%
Leading Sectors
Broadcasting +.84%
Homebuilders +.36%
Oil Service -.11%
Lagging Sectors
Networking -2.89%
Semis -2.97%
I-Banks -3.30%
Other
Crude Oil 47.95 -.83%
Natural Gas 5.63 unch.
Gold 409.10 +.02%
Base Metals 115.28 +1.14%
U.S. Dollar 88.49 +.41%
10-Yr. T-note Yield 3.98% -1.42%
VIX 14.74 +7.91%
Put/Call 1.10 +59.42%
NYSE Arms 2.36 +177.65%
After-hours Movers
MERX +5.96% after beating 1Q estimates and raising 2Q guidance.
MSO +9.81% after saying it agreed to work with television producer Mark Burnett to create a primetime TV series featuring Martha Stewart.
COGN +3.12% after beating 2Q estimates and giving positive outlook.
BBBY -3.41% after beating 2Q estimates, but giving conservative 3Q guidance.
Recommendations
Goldman Sachs reiterated Outperform on CLX.
After-hours News
U.S. stocks fell today on profit-taking, worries over slowing earnings growth and rising energy prices. After the close, NATO allies are expected to send about 300 officers to Iraq to establish and operated a military academy outside Baghdad, the AP reported. Oil refiners asked to borrow crude oil from the U.S. Strategic Petroleum Reserve as they seek to recover from losses related to Hurricane Ivan, Dow Jones Newswires reported. Bed Bath & Beyond said second-quarter net income rose to $120 million, meeting analysts' estimates, Bloomberg reported. The U.S. Senate approved Porter Goss, a Republican congressman, to be director of the CIA, confirming President Bush's nominee to lead the agency through a reorganization recommended by the 9/11 commission, Bloomberg reported. US Airways will seek court permission Friday to impose new labor contract terms to reduce costs if tentative agreements with unions can't be reached, Bloomberg said.
BOTTOM LINE: The Portfolio finished lower today on declines in my Chinese ADR, internet and telecom-related longs. I exited a few more longs in the afternoon and added some new shorts in various sectors, thus leaving the Portfolio market neutral(longs-shorts=0% market exposure). One of my new shorts is SYMC and I am using a $52.60 stop-loss on this position. The tone of the market worsened into the afternoon as energy prices continued to rise. I do not expect this correction to bring stocks substantially lower. U.S. equities will likely trade weaker-to-neutral through mid-October before another upwards thrust in stock prices commences and lasts through year-end. The likely weakness over the next few weeks should be used by longer-term investors to build positions in favorite longs.
NASDAQ 1,885.71 -1.85%
Leading Sectors
Broadcasting +.84%
Homebuilders +.36%
Oil Service -.11%
Lagging Sectors
Networking -2.89%
Semis -2.97%
I-Banks -3.30%
Other
Crude Oil 47.95 -.83%
Natural Gas 5.63 unch.
Gold 409.10 +.02%
Base Metals 115.28 +1.14%
U.S. Dollar 88.49 +.41%
10-Yr. T-note Yield 3.98% -1.42%
VIX 14.74 +7.91%
Put/Call 1.10 +59.42%
NYSE Arms 2.36 +177.65%
After-hours Movers
MERX +5.96% after beating 1Q estimates and raising 2Q guidance.
MSO +9.81% after saying it agreed to work with television producer Mark Burnett to create a primetime TV series featuring Martha Stewart.
COGN +3.12% after beating 2Q estimates and giving positive outlook.
BBBY -3.41% after beating 2Q estimates, but giving conservative 3Q guidance.
Recommendations
Goldman Sachs reiterated Outperform on CLX.
After-hours News
U.S. stocks fell today on profit-taking, worries over slowing earnings growth and rising energy prices. After the close, NATO allies are expected to send about 300 officers to Iraq to establish and operated a military academy outside Baghdad, the AP reported. Oil refiners asked to borrow crude oil from the U.S. Strategic Petroleum Reserve as they seek to recover from losses related to Hurricane Ivan, Dow Jones Newswires reported. Bed Bath & Beyond said second-quarter net income rose to $120 million, meeting analysts' estimates, Bloomberg reported. The U.S. Senate approved Porter Goss, a Republican congressman, to be director of the CIA, confirming President Bush's nominee to lead the agency through a reorganization recommended by the 9/11 commission, Bloomberg reported. US Airways will seek court permission Friday to impose new labor contract terms to reduce costs if tentative agreements with unions can't be reached, Bloomberg said.
BOTTOM LINE: The Portfolio finished lower today on declines in my Chinese ADR, internet and telecom-related longs. I exited a few more longs in the afternoon and added some new shorts in various sectors, thus leaving the Portfolio market neutral(longs-shorts=0% market exposure). One of my new shorts is SYMC and I am using a $52.60 stop-loss on this position. The tone of the market worsened into the afternoon as energy prices continued to rise. I do not expect this correction to bring stocks substantially lower. U.S. equities will likely trade weaker-to-neutral through mid-October before another upwards thrust in stock prices commences and lasts through year-end. The likely weakness over the next few weeks should be used by longer-term investors to build positions in favorite longs.
Mid-day Update
S&P 500 1,116.68 -1.11%
NASDAQ 1,894.44 -1.39%
Leading Sectors
Broadcasting +.19%
Oil Service +.12%
Homebuilders +.11%
Lagging Sectors
I-Banks -2.18%
Restaurants -2.25%
Semis -2.30%
Other
Crude Oil 48.20 +3.08%
Natural Gas 5.61 +.04%
Gold 408.90 -.32%
Base Metals 115.28 +1.14%
U.S. Dollar 88.55 +.48%
10-Yr. T-note Yield 3.99% -1.04%
VIX 14.48 +6.0%
Put/Call 1.08 +56.52%
NYSE Arms 1.71 +101.18%
Market Movers
FNM -6.9% after saying federal regulators uncovered practices that don't comply with generally accepted accounting principles, raising doubts about the validity of earnings.
MWD -5.2% after missing 3Q estimates and giving cautious outlook.
CMTL +10.0% after beating 4Q estimates and giving positive guidance.
COCO +9.8% after saying its Bryman College campus now can comply with the U.S. Education Department's rules to receive tuition reimbursements in advance.
TIBX +8.65% after beating 3Q estimates and announcing a $50 million share buyback.
ONYX +67.5% after Capital One(COF) agreed to buy it for $191 million.
PETD +9.81% after saying it will be added to the S&P 600.
CYH +9.1% after Fortsmann Little sold its remaining 23% stake in the rural-hospital chain for $560 million and multiple upgrades.
PCLN +7.4% after announcing $161m acquisition, reaffirming 3Q and boosting 4Q.
JBL +5.8% after meeting 4Q estimates and raising 1Q forecast.
LEAP -16.7% after saying it expects customer turnover to rise.
CBK -11.4% after missing 2Q revenue estimates.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on KO, IP and CSCO. Citi SmithBarney reiterated Sell on ADP. Citi reiterated Buy on GS, target $125. Citi reiterated Buy on JBL, target $32. Citi reiterated Buy on CSCO, target $30. Citi reiterated Buy on CYH, target $36. Citi reiterated Sell on AFL, target $40. Citi reiterated Buy on PLUG, target $13. Citi reiterated Buy on DIS, target $30. Citi reiterated Buy on SPLS, target $35. Citi reiterated Buy on AZO, target $91. CYH named Merrill Lynch Focus 1 stock of the week.
Mid-day News
U.S. stocks are lower mid-day on worries over rising energy prices and weaker earnings. CBS News said a producer broke network policy by putting a source in contact with an aide to Senator Kerry in the ongoing falsified document scandal, the NY Times reported. American Capital Strategies(ACAS), a buyout fund, plans to offer 11.5 million shares at $31.60 each, with 9 million of the shares to be borrowed by underwriters and sold "short," the NY Times reported. The Swift Boat Veterans for Truth will air a new commercial that accuses Senator Kerry of secretly meeting with enemy leaders in Paris during the Vietnam War, the Washington Post reported. Republican leader in the U.S. Congress are pushing to revive legislation that would encourage contributions to charities through tax breaks, the Washington Post reported. Canada's federal government will ban low-carb claims and trademarks that imply such claims, such as Unilever's Carb Options and General Mills' Carb Monitor, the Toronto Star reported. Royal Dutch/Shell plans to increase spending to $15 billion/yr. and drill more to replenish oil and gas reserves that had been overstated for years, Bloomberg said. Eastman Kodak said sales of digital products are increasing more than it expected as film sales decline faster than it anticipated, Bloomberg reported. FedEx said quarterly profit more than doubles, as international air shipments climbed and the company carried more U.S. ground freight, Bloomberg said. Morgan Stanley said fiscal third-quarter profit tumbled 34% as bond trading plunged, Bloomberg reported. GM and Ford will offer no-interest loans of as long as six years on most 2004 cars and trucks to clear them from dealer lots amid slow sales, Bloomberg said. Viacom's CBS television unit was fined a record $550,000 by the U.S. Federal Communications Commission for airing indecent material during the Super Bowl halftime show, which singer Janet Jackson's breast was exposed, Bloomberg reported. Computer Associates will pay $225 million to settle an investigation by U.S. regulators into how the software maker inflated sales by $2.2 billion and won't be prosecuted for the fraud in exchange for instituting accounting reforms, including and outside examiner, Bloomberg reported. The benchmark 10-year U.S. Treasury note's yield fell below 4% for the first time since April 2 on growing speculation that inflation won't accelerate, Bloomberg said. Crude oil futures are rising after an Energy Department report showed that U.S. inventories declined because Hurricane Ivan forced oil companies to shut production platforms in the Gulf of Mexico, Bloomberg reported.
BOTTOM LINE: The Portfolio is lower mid-day on declines in my Chinese ADR longs, internet and telecom-related longs. I exited a few long positions this morning and added some more technology shorts, thus leaving the Portfolio 50% net long. One of my new shorts is AAPL and I am using a $39 stop-loss on this position. Rising energy prices finally caught up with the Bulls today. The tone of the market is poor today, however it is good to see measures of investor anxiety rising. Base Metal prices are close to a breakout on demand from rebuilding in Florida and an acceleration of Chinese growth. A short-term mild correction has likely begun in U.S. stocks that may extend through the first few weeks in October. Over the next several weeks, investors will likely focus on relatively disappointing 3Q earnings, violence in Iraq and high energy prices. This should present one last opportunity to buy stocks at depressed levels before the fourth quarter rally I envision beginning in the latter part of October.
NASDAQ 1,894.44 -1.39%
Leading Sectors
Broadcasting +.19%
Oil Service +.12%
Homebuilders +.11%
Lagging Sectors
I-Banks -2.18%
Restaurants -2.25%
Semis -2.30%
Other
Crude Oil 48.20 +3.08%
Natural Gas 5.61 +.04%
Gold 408.90 -.32%
Base Metals 115.28 +1.14%
U.S. Dollar 88.55 +.48%
10-Yr. T-note Yield 3.99% -1.04%
VIX 14.48 +6.0%
Put/Call 1.08 +56.52%
NYSE Arms 1.71 +101.18%
Market Movers
FNM -6.9% after saying federal regulators uncovered practices that don't comply with generally accepted accounting principles, raising doubts about the validity of earnings.
MWD -5.2% after missing 3Q estimates and giving cautious outlook.
CMTL +10.0% after beating 4Q estimates and giving positive guidance.
COCO +9.8% after saying its Bryman College campus now can comply with the U.S. Education Department's rules to receive tuition reimbursements in advance.
TIBX +8.65% after beating 3Q estimates and announcing a $50 million share buyback.
ONYX +67.5% after Capital One(COF) agreed to buy it for $191 million.
PETD +9.81% after saying it will be added to the S&P 600.
CYH +9.1% after Fortsmann Little sold its remaining 23% stake in the rural-hospital chain for $560 million and multiple upgrades.
PCLN +7.4% after announcing $161m acquisition, reaffirming 3Q and boosting 4Q.
JBL +5.8% after meeting 4Q estimates and raising 1Q forecast.
LEAP -16.7% after saying it expects customer turnover to rise.
CBK -11.4% after missing 2Q revenue estimates.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on KO, IP and CSCO. Citi SmithBarney reiterated Sell on ADP. Citi reiterated Buy on GS, target $125. Citi reiterated Buy on JBL, target $32. Citi reiterated Buy on CSCO, target $30. Citi reiterated Buy on CYH, target $36. Citi reiterated Sell on AFL, target $40. Citi reiterated Buy on PLUG, target $13. Citi reiterated Buy on DIS, target $30. Citi reiterated Buy on SPLS, target $35. Citi reiterated Buy on AZO, target $91. CYH named Merrill Lynch Focus 1 stock of the week.
Mid-day News
U.S. stocks are lower mid-day on worries over rising energy prices and weaker earnings. CBS News said a producer broke network policy by putting a source in contact with an aide to Senator Kerry in the ongoing falsified document scandal, the NY Times reported. American Capital Strategies(ACAS), a buyout fund, plans to offer 11.5 million shares at $31.60 each, with 9 million of the shares to be borrowed by underwriters and sold "short," the NY Times reported. The Swift Boat Veterans for Truth will air a new commercial that accuses Senator Kerry of secretly meeting with enemy leaders in Paris during the Vietnam War, the Washington Post reported. Republican leader in the U.S. Congress are pushing to revive legislation that would encourage contributions to charities through tax breaks, the Washington Post reported. Canada's federal government will ban low-carb claims and trademarks that imply such claims, such as Unilever's Carb Options and General Mills' Carb Monitor, the Toronto Star reported. Royal Dutch/Shell plans to increase spending to $15 billion/yr. and drill more to replenish oil and gas reserves that had been overstated for years, Bloomberg said. Eastman Kodak said sales of digital products are increasing more than it expected as film sales decline faster than it anticipated, Bloomberg reported. FedEx said quarterly profit more than doubles, as international air shipments climbed and the company carried more U.S. ground freight, Bloomberg said. Morgan Stanley said fiscal third-quarter profit tumbled 34% as bond trading plunged, Bloomberg reported. GM and Ford will offer no-interest loans of as long as six years on most 2004 cars and trucks to clear them from dealer lots amid slow sales, Bloomberg said. Viacom's CBS television unit was fined a record $550,000 by the U.S. Federal Communications Commission for airing indecent material during the Super Bowl halftime show, which singer Janet Jackson's breast was exposed, Bloomberg reported. Computer Associates will pay $225 million to settle an investigation by U.S. regulators into how the software maker inflated sales by $2.2 billion and won't be prosecuted for the fraud in exchange for instituting accounting reforms, including and outside examiner, Bloomberg reported. The benchmark 10-year U.S. Treasury note's yield fell below 4% for the first time since April 2 on growing speculation that inflation won't accelerate, Bloomberg said. Crude oil futures are rising after an Energy Department report showed that U.S. inventories declined because Hurricane Ivan forced oil companies to shut production platforms in the Gulf of Mexico, Bloomberg reported.
BOTTOM LINE: The Portfolio is lower mid-day on declines in my Chinese ADR longs, internet and telecom-related longs. I exited a few long positions this morning and added some more technology shorts, thus leaving the Portfolio 50% net long. One of my new shorts is AAPL and I am using a $39 stop-loss on this position. Rising energy prices finally caught up with the Bulls today. The tone of the market is poor today, however it is good to see measures of investor anxiety rising. Base Metal prices are close to a breakout on demand from rebuilding in Florida and an acceleration of Chinese growth. A short-term mild correction has likely begun in U.S. stocks that may extend through the first few weeks in October. Over the next several weeks, investors will likely focus on relatively disappointing 3Q earnings, violence in Iraq and high energy prices. This should present one last opportunity to buy stocks at depressed levels before the fourth quarter rally I envision beginning in the latter part of October.
Wednesday Watch
Earnings of Note
Company/Estimate
BSC/1.98
BBBY/.39
CAG/.26
DRI/.43
DBRN/.37
FDX/1.08
MWD/.95
Splits
None of note.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on PAYX and CSCO.
Late-Night News
Asian indices are mostly lower on weakness in the region's exporters. Analysts and brokers are bracing for fallout in Japan on Citigroup after regulators shut the bank's Tokyo-based private banking unit, the Wall Street Journal reported. South Korean researchers discovered a gene that may be responsible for obesity, which may lead to more effective drugs for overweight people, the Korea Herald reported. Vodafone Group is to start selling a range of mobile phones superior to those of its competitors as it seeks to enter the so-called third-generation market, the Financial Times reported. Broadcom is shifting orders to Shanghai-based Semiconductor Manufacturing Intl. from Taiwan Semiconductor Manufacturing to cut costs, the Commercial Times said. An Iraqi group led by wanted terrorist al-Zarqawi said it executed a second U.S. hostage, Bloomberg reported. McDonald's received government approval to start franchising its fast-food restaurants in China, a change that will boost profit in the world's most populous nation, Bloomberg reported. OAO Yukos Oil said the Russian government may be considering ways to settle a $7.5 billion tax bill without breaking up the company, Bloomberg said. Sales gains at U.S. retailers are expected to rise 4.5% this holiday season on demand for plasma televisions and new fashionable clothing, Bloomberg said.
Late-Night Trading
Asian Indices are -1.50% to unch. on average.
S&P 500 indicated -.29%.
NASDAQ 100 indicated -.31%
BOTTOM LINE: I expect U.S. equities to open modestly lower in the morning on concerns over the continuing rise in energy prices. However, better earnings and short-covering could push shares higher later in the day. The Portfolio is 100% net long heading into tomorrow.
Company/Estimate
BSC/1.98
BBBY/.39
CAG/.26
DRI/.43
DBRN/.37
FDX/1.08
MWD/.95
Splits
None of note.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on PAYX and CSCO.
Late-Night News
Asian indices are mostly lower on weakness in the region's exporters. Analysts and brokers are bracing for fallout in Japan on Citigroup after regulators shut the bank's Tokyo-based private banking unit, the Wall Street Journal reported. South Korean researchers discovered a gene that may be responsible for obesity, which may lead to more effective drugs for overweight people, the Korea Herald reported. Vodafone Group is to start selling a range of mobile phones superior to those of its competitors as it seeks to enter the so-called third-generation market, the Financial Times reported. Broadcom is shifting orders to Shanghai-based Semiconductor Manufacturing Intl. from Taiwan Semiconductor Manufacturing to cut costs, the Commercial Times said. An Iraqi group led by wanted terrorist al-Zarqawi said it executed a second U.S. hostage, Bloomberg reported. McDonald's received government approval to start franchising its fast-food restaurants in China, a change that will boost profit in the world's most populous nation, Bloomberg reported. OAO Yukos Oil said the Russian government may be considering ways to settle a $7.5 billion tax bill without breaking up the company, Bloomberg said. Sales gains at U.S. retailers are expected to rise 4.5% this holiday season on demand for plasma televisions and new fashionable clothing, Bloomberg said.
Late-Night Trading
Asian Indices are -1.50% to unch. on average.
S&P 500 indicated -.29%.
NASDAQ 100 indicated -.31%
BOTTOM LINE: I expect U.S. equities to open modestly lower in the morning on concerns over the continuing rise in energy prices. However, better earnings and short-covering could push shares higher later in the day. The Portfolio is 100% net long heading into tomorrow.
Tuesday, September 21, 2004
Tuesday Close
S&P 500 1,129.30 +.63%
NASDAQ 1,921.18 +.69%
Leading Sectors
Homebuilders +3.75%
I-Banks +2.56%
Energy +2.53%
Lagging Sectors
Papers -.19%
Iron/Steel -.49%
Foods -.62%
Other
Crude Oil 46.82 +.13%
Natural Gas 5.64 +.57%
Gold 410.80 +.17%
Base Metals 113.98 +2.64%
U.S. Dollar 88.07 -.06%
10-Yr. T-note Yield 4.03% -.47%
VIX 13.66 -5.34%
Put/Call .69 -25.0%
NYSE Arms .85 -19.05%
After-hours Movers
JBL +7.08% after meeting 4Q estimates and raising 1Q forecast.
TIBX +3.20% after beating 3Q estimates and announcing a $50 million share buyback.
Recommendations
Goldman Sachs reiterated Outperform on AMGN and HOT.
After-hours News
U.S. stocks finished higher today on short-covering after a Fed rate hike and higher energy prices didn't send stocks lower. After the close, Comcast and the Atlanta Braves are jointly starting a channel devoted to 24-hour coverage of the baseball team, the Atlanta Journal-Constitution reported. China's central bank won't provide more financial support to state-owned commercial banks to help them reduce bad debts, People's Bank of China Governor Zhou Xiaochuan said. The elderly can cut their risk of dying by two-thirds over 10 years by exercising, eating fruits and vegetables, drinking moderately and not smoking, says a study in tomorrow's Journal of the American Medical Association, Bloomberg said. Paychex, which provides payroll services for small and medium-sized businesses, said fiscal first-quarter profit rose 9.2% because it added clients and increased prices, Bloomberg said. Federal Reserve policy makers raised the benchmark U.S. interest rate a quarter-point to 1.75% and restated a plan to carry out any further increases at a "measured" pace, Bloomberg reported.
BOTTOM LINE: The Portfolio finished slightly higher today on strength in my security, telecom equipment and homebuilding longs. I covered a few consumer-oriented shorts in the afternoon, thus leaving the Portfolio 100% net long. Today was another win for the Bulls as higher energy prices, violence in Iraq, earnings worries and a Fed rate-hike failed to send shares lower. It is also positive to see long-term interest rates continue to decline as they are now near levels where re-financings should accelerate. The strength in the I-banking stocks also bodes well for future gains. However, volume remained relatively weak today and measures of investor complacency rose.
NASDAQ 1,921.18 +.69%
Leading Sectors
Homebuilders +3.75%
I-Banks +2.56%
Energy +2.53%
Lagging Sectors
Papers -.19%
Iron/Steel -.49%
Foods -.62%
Other
Crude Oil 46.82 +.13%
Natural Gas 5.64 +.57%
Gold 410.80 +.17%
Base Metals 113.98 +2.64%
U.S. Dollar 88.07 -.06%
10-Yr. T-note Yield 4.03% -.47%
VIX 13.66 -5.34%
Put/Call .69 -25.0%
NYSE Arms .85 -19.05%
After-hours Movers
JBL +7.08% after meeting 4Q estimates and raising 1Q forecast.
TIBX +3.20% after beating 3Q estimates and announcing a $50 million share buyback.
Recommendations
Goldman Sachs reiterated Outperform on AMGN and HOT.
After-hours News
U.S. stocks finished higher today on short-covering after a Fed rate hike and higher energy prices didn't send stocks lower. After the close, Comcast and the Atlanta Braves are jointly starting a channel devoted to 24-hour coverage of the baseball team, the Atlanta Journal-Constitution reported. China's central bank won't provide more financial support to state-owned commercial banks to help them reduce bad debts, People's Bank of China Governor Zhou Xiaochuan said. The elderly can cut their risk of dying by two-thirds over 10 years by exercising, eating fruits and vegetables, drinking moderately and not smoking, says a study in tomorrow's Journal of the American Medical Association, Bloomberg said. Paychex, which provides payroll services for small and medium-sized businesses, said fiscal first-quarter profit rose 9.2% because it added clients and increased prices, Bloomberg said. Federal Reserve policy makers raised the benchmark U.S. interest rate a quarter-point to 1.75% and restated a plan to carry out any further increases at a "measured" pace, Bloomberg reported.
BOTTOM LINE: The Portfolio finished slightly higher today on strength in my security, telecom equipment and homebuilding longs. I covered a few consumer-oriented shorts in the afternoon, thus leaving the Portfolio 100% net long. Today was another win for the Bulls as higher energy prices, violence in Iraq, earnings worries and a Fed rate-hike failed to send shares lower. It is also positive to see long-term interest rates continue to decline as they are now near levels where re-financings should accelerate. The strength in the I-banking stocks also bodes well for future gains. However, volume remained relatively weak today and measures of investor complacency rose.
Mid-day Update
S&P 500 1,125.53 +.30%
NASDAQ 1,913.02 +.26%
Leading Sectors
Homebuilders +2.91%
Energy +2.0%
I-Banks +1.79%
Lagging Sectors
Tobacco -.28%
Iron/Steel -.47%
Foods -.93%
Other
Crude Oil 47.03 +1.47%
Natural Gas 5.43 +3.45%
Gold 411.00 +.98%
Base Metals 113.70 +2.39%
U.S. Dollar 88.39 -.67%
10-Yr. T-note Yield 4.07% +.33%
VIX 13.88 -3.81%
Put/Call .71 -22.83%
NYSE Arms .83 -20.95%
Market Movers
RHAT -14.0% after missing 2Q revenue estimates and lowering guidance.
PLMO -14.0% after substantially beating 1Q estimates, but giving conservative guidance on conference call.
TASR +4.0% after saying it received an order for 360 Taser X26 weapons from the U.S. Army National Guard.
TRMM +31.2% after saying it bought eFunds ATM portfolio for $150 million and Friedman, Billings rated it Outperform. EFD +14.8%.
RRGB +10.6% after boosting 3Q forecast substantially.
FDS +6.9% after beating 4Q estimates and raising 1Q outlook.
GLDB -11.1% after saying Silver Acquisition said it my cut its agreed purchase price significantly because of a reduction in GLDB's financial condition.
X -3.8% after Prudential downgrade to Neutral.
Economic Data
Housing Starts for August were 2000K versus estimates of 1930K and 1988K in July.
Building Permits for August were 1952K versus estimates of 1985K and 2066K in July.
Recommendations
Goldman Sachs reiterated Outperform on CVD, HOT and NKE. Goldman upgraded STR to Outperform. Citi SmithBarney reiterated Buy on TYC, ITT and MMM. Citi upgraded GRP to Buy, target $25. Citi upgraded BJS to Buy, target $62. Citi reiterated Buy on DOW, target $46. Citi reiterated Buy on JCP, target $50. Citi reiterated Buy on STZ, target $47. Citi reiterated Buy on VRTS, target $24. Citi reiterated Buy on KBH, target $111.00. HLT raised to Buy at Bank of America, target $23. HMT and HOT raised to Buy at Bank of America.
Mid-day News
U.S. equities are modestly higher mid-day on strength in homebuilding and investment-banking stocks. A U.S. panel might recommend this week that U.S. states expand their routine genetic screening of newborns to 30 diseases that are deemed treatable if detected early, the Wall Street Journal reported. Crude oil is rising to a one-month high of $47.18/bbl. on concern Russian exports will be disrupted after utilities cut some power supplies to OAO Yukos Oil, the country's top producer, Bloomberg reported. The Univ. of Michigan's business school is the preferred graduate business school in the U.S. among job recruiters, the Wall Street Journal reported. Senator John McCain is expected to propose a bill calling for broadcasters to only air digital television signals by 2009, Reuters reported. A new military headquarters in Washington will prepare for potential terrorist attacks in the U.S. capital and coordinate efforts of the area's military resources, the Washington Post said. P&G's application to sell a testosterone-laden skin patch, designed to boost the sex drives of women whose ovaries have been removed, was granted a priority review by the U.S. FDA, Bloomberg reported. Goldman Sachs said third-quarter profit rose 30%, buoyed by revenue from investment banking and debt trading, Bloomberg said. U.S. housing starts unexpectedly rose for a second month in August as mortgage rates near record lows attracted buyers, Bloomberg reported. American International Group said the SEC may sue the company's financial products division for violating U.S. securities laws, Bloomberg reported. Northrop Grumman won a $400 million award from the U.S. National Aeronautics and Space Administration to help design a nuclear-powered spacecraft to explore Jupiter's moons, Bloomberg said.
BOTTOM LINE: The Portfolio is unchanged mid-day as my security and software longs are rising and my steel and telecom longs are falling. I have not traded today and the Portfolio is still 75% net long. The tone of the market is pretty good today. Homebuilders are significantly outperforming. As well, i-banking stocks are under accumulation, which is positive for the broad market. However, measures of investor complacency and commodities prices are rising again. I expect the Fed to raise the Fed Funds' rate by 25 basis points this afternoon and say that diminishing inflation concerns will allow them to continue to raise rates at a measured pace. U.S. stocks should trade modestly higher into the afternoon on short-covering.
NASDAQ 1,913.02 +.26%
Leading Sectors
Homebuilders +2.91%
Energy +2.0%
I-Banks +1.79%
Lagging Sectors
Tobacco -.28%
Iron/Steel -.47%
Foods -.93%
Other
Crude Oil 47.03 +1.47%
Natural Gas 5.43 +3.45%
Gold 411.00 +.98%
Base Metals 113.70 +2.39%
U.S. Dollar 88.39 -.67%
10-Yr. T-note Yield 4.07% +.33%
VIX 13.88 -3.81%
Put/Call .71 -22.83%
NYSE Arms .83 -20.95%
Market Movers
RHAT -14.0% after missing 2Q revenue estimates and lowering guidance.
PLMO -14.0% after substantially beating 1Q estimates, but giving conservative guidance on conference call.
TASR +4.0% after saying it received an order for 360 Taser X26 weapons from the U.S. Army National Guard.
TRMM +31.2% after saying it bought eFunds ATM portfolio for $150 million and Friedman, Billings rated it Outperform. EFD +14.8%.
RRGB +10.6% after boosting 3Q forecast substantially.
FDS +6.9% after beating 4Q estimates and raising 1Q outlook.
GLDB -11.1% after saying Silver Acquisition said it my cut its agreed purchase price significantly because of a reduction in GLDB's financial condition.
X -3.8% after Prudential downgrade to Neutral.
Economic Data
Housing Starts for August were 2000K versus estimates of 1930K and 1988K in July.
Building Permits for August were 1952K versus estimates of 1985K and 2066K in July.
Recommendations
Goldman Sachs reiterated Outperform on CVD, HOT and NKE. Goldman upgraded STR to Outperform. Citi SmithBarney reiterated Buy on TYC, ITT and MMM. Citi upgraded GRP to Buy, target $25. Citi upgraded BJS to Buy, target $62. Citi reiterated Buy on DOW, target $46. Citi reiterated Buy on JCP, target $50. Citi reiterated Buy on STZ, target $47. Citi reiterated Buy on VRTS, target $24. Citi reiterated Buy on KBH, target $111.00. HLT raised to Buy at Bank of America, target $23. HMT and HOT raised to Buy at Bank of America.
Mid-day News
U.S. equities are modestly higher mid-day on strength in homebuilding and investment-banking stocks. A U.S. panel might recommend this week that U.S. states expand their routine genetic screening of newborns to 30 diseases that are deemed treatable if detected early, the Wall Street Journal reported. Crude oil is rising to a one-month high of $47.18/bbl. on concern Russian exports will be disrupted after utilities cut some power supplies to OAO Yukos Oil, the country's top producer, Bloomberg reported. The Univ. of Michigan's business school is the preferred graduate business school in the U.S. among job recruiters, the Wall Street Journal reported. Senator John McCain is expected to propose a bill calling for broadcasters to only air digital television signals by 2009, Reuters reported. A new military headquarters in Washington will prepare for potential terrorist attacks in the U.S. capital and coordinate efforts of the area's military resources, the Washington Post said. P&G's application to sell a testosterone-laden skin patch, designed to boost the sex drives of women whose ovaries have been removed, was granted a priority review by the U.S. FDA, Bloomberg reported. Goldman Sachs said third-quarter profit rose 30%, buoyed by revenue from investment banking and debt trading, Bloomberg said. U.S. housing starts unexpectedly rose for a second month in August as mortgage rates near record lows attracted buyers, Bloomberg reported. American International Group said the SEC may sue the company's financial products division for violating U.S. securities laws, Bloomberg reported. Northrop Grumman won a $400 million award from the U.S. National Aeronautics and Space Administration to help design a nuclear-powered spacecraft to explore Jupiter's moons, Bloomberg said.
BOTTOM LINE: The Portfolio is unchanged mid-day as my security and software longs are rising and my steel and telecom longs are falling. I have not traded today and the Portfolio is still 75% net long. The tone of the market is pretty good today. Homebuilders are significantly outperforming. As well, i-banking stocks are under accumulation, which is positive for the broad market. However, measures of investor complacency and commodities prices are rising again. I expect the Fed to raise the Fed Funds' rate by 25 basis points this afternoon and say that diminishing inflation concerns will allow them to continue to raise rates at a measured pace. U.S. stocks should trade modestly higher into the afternoon on short-covering.
Tuesday Watch
Earnings of Note
Company/Estimate
AZO/2.55
CEN/.19
CBK/.15
PAYX/.23
LEH/1.55
JBL/.26
GTK/.37
GS/1.43
GIS/.60
FDS/.46
SCHL/-1.27
SRR/.17
Splits
None of note.
Economic Data
Housing Starts for August estimated at 1930K versus 1978k in July.
Building Permits for August estimated at 1985K versus 2066K in July.
FOMC expected to raise the Fed Fund's rate to 1.75%.
Recommendations
Goldman reiterated Outperform on AMLN and ENH.
Late-Night News
Asian indices are mostly higher on strength in the region's technology shares. U.S. government officials told Japanese counterparts in informal talks that the U.S. is wiling to accept a condition set by Japan for removing the country's ban on U.S. beef, Kyodo News Service said. Japan plans to extend its troop deployment in Iraq for a year beyond its current commitment through Dec. 14, the Nihon Keizai reported. CBS News arranged for former Texas National Guard officer Bill Burkett to talk with Joe Lockhart, an aide to Senator Kerry, after Burkett gave the network fake documents on President Bush's military service, USA Today reported. Starwood Hotels & Resorts Worldwide will name Steven Heyer, former President and COO of Coca-Cola, as its CEO, the Wall Street Journal reported.
Late-Night Trading
Asian Indices are -.25% to +.75% on average.
S&P 500 indicated +.04%.
NASDAQ 100 indicated -.03%
BOTTOM LINE: I expect U.S. equities to open mixed in the morning as relative strength in technology shares is offset by earnings concerns. The Portfolio is 75% net long heading into tomorrow.
Company/Estimate
AZO/2.55
CEN/.19
CBK/.15
PAYX/.23
LEH/1.55
JBL/.26
GTK/.37
GS/1.43
GIS/.60
FDS/.46
SCHL/-1.27
SRR/.17
Splits
None of note.
Economic Data
Housing Starts for August estimated at 1930K versus 1978k in July.
Building Permits for August estimated at 1985K versus 2066K in July.
FOMC expected to raise the Fed Fund's rate to 1.75%.
Recommendations
Goldman reiterated Outperform on AMLN and ENH.
Late-Night News
Asian indices are mostly higher on strength in the region's technology shares. U.S. government officials told Japanese counterparts in informal talks that the U.S. is wiling to accept a condition set by Japan for removing the country's ban on U.S. beef, Kyodo News Service said. Japan plans to extend its troop deployment in Iraq for a year beyond its current commitment through Dec. 14, the Nihon Keizai reported. CBS News arranged for former Texas National Guard officer Bill Burkett to talk with Joe Lockhart, an aide to Senator Kerry, after Burkett gave the network fake documents on President Bush's military service, USA Today reported. Starwood Hotels & Resorts Worldwide will name Steven Heyer, former President and COO of Coca-Cola, as its CEO, the Wall Street Journal reported.
Late-Night Trading
Asian Indices are -.25% to +.75% on average.
S&P 500 indicated +.04%.
NASDAQ 100 indicated -.03%
BOTTOM LINE: I expect U.S. equities to open mixed in the morning as relative strength in technology shares is offset by earnings concerns. The Portfolio is 75% net long heading into tomorrow.
Monday, September 20, 2004
Monday Close
S&P 500 1,122.20 -.56%
NASDAQ 1,908.07 -.11%
Leading Sectors
Semis +2.93%
Gaming +.89%
Disk Drives +.79%
Lagging Sectors
Airlines -1.49%
Homebuilders -1.85%
Tobacco -1.98%
Other
Crude Oil 46.53 +.39%
Natural Gas 5.33 +1.54%
Gold 407.00 unch.
Base Metals 111.05 +1.35%
U.S. Dollar 88.99 +.09%
10-Yr. T-note Yield 4.05% -1.22%
VIX 14.43 +2.85%
Put/Call .92 +12.20%
NYSE Arms 1.05 +43.84%
After-hours Movers
ADBE +3.73% after beating 3Q estimates and raising 4Q guidance.
SSTI +5.26% on bargain-hunting after lowering 3Q forecast.
PLMO -9.9% after substantially beating 1Q estimates, but giving conservative guidance on conference call.
POWI -4.53% after cutting 3Q forecast.
Recommendations
Goldman Sachs reiterated Outperform on INTC, DNA and CCL. Goldman rated RIMM new Outperform, sees 15-20% upside.
After-hours News
U.S. stocks finished modestly lower today on profit-taking, earnings concerns and higher oil prices. After the close, a video posted on an Islamist Web site showed a man identified as American Eugene Armstrong being beheaded by his captors, the AP reported. Dow Chemical has been raising prices to pass on the higher costs of raw products to its customers, CEO Stavropoulos said. China tested an advanced land-attack cruise missile capable of accurately striking targets 932 miles away, the Financial Times reported. People who suffered heart attacks in the U.S. in the early 1990's were more likely to survive than victims in Canada because they underwent aggressive treatment, according to a study in Circulation: the Journal of the American Heart Association. AOL said it started an Internet shopping service, seeking to lure customers and advertising revenue from Yahoo! and Microsoft's MSN service. Adobe Systems, the world's largest maker of graphic-design software, said third-quarter profit rose to $104.5 million as higher spending on advertising fueled demand for design and publishing programs, Bloomberg said. Citigroup shares had their biggest one-day drop in 18 months after Merrill Lynch cut its rating on the stock because Japanese regulators shut the bank's Tokyo-based private banking unit, Bloomberg reported. Delta Air's pilots union leaders approved a contract exemption to help the carrier avoid a pilot shortage because of increased retirements and to fend off a bankruptcy filing, Bloomberg said. San Diego, the subject of a federal probe into pension-fund misstatements, became the largest city to lose its credit rating in more than two decades as S&P suspended its ranking on $580 million of bonds, Bloomberg reported.
BOTTOM LINE: The Portfolio finished lower today on weakness in my security, steel and education longs. I took profits in a couple of technology longs in the afternoon and added to a few of my existing steel and security longs, thus leaving the Portfolio 75% net long. The underlying tone of the market was pretty good today, notwithstanding modest declines in the major indices. However, energy prices need to head back down to prevent a correction in the near-term.
NASDAQ 1,908.07 -.11%
Leading Sectors
Semis +2.93%
Gaming +.89%
Disk Drives +.79%
Lagging Sectors
Airlines -1.49%
Homebuilders -1.85%
Tobacco -1.98%
Other
Crude Oil 46.53 +.39%
Natural Gas 5.33 +1.54%
Gold 407.00 unch.
Base Metals 111.05 +1.35%
U.S. Dollar 88.99 +.09%
10-Yr. T-note Yield 4.05% -1.22%
VIX 14.43 +2.85%
Put/Call .92 +12.20%
NYSE Arms 1.05 +43.84%
After-hours Movers
ADBE +3.73% after beating 3Q estimates and raising 4Q guidance.
SSTI +5.26% on bargain-hunting after lowering 3Q forecast.
PLMO -9.9% after substantially beating 1Q estimates, but giving conservative guidance on conference call.
POWI -4.53% after cutting 3Q forecast.
Recommendations
Goldman Sachs reiterated Outperform on INTC, DNA and CCL. Goldman rated RIMM new Outperform, sees 15-20% upside.
After-hours News
U.S. stocks finished modestly lower today on profit-taking, earnings concerns and higher oil prices. After the close, a video posted on an Islamist Web site showed a man identified as American Eugene Armstrong being beheaded by his captors, the AP reported. Dow Chemical has been raising prices to pass on the higher costs of raw products to its customers, CEO Stavropoulos said. China tested an advanced land-attack cruise missile capable of accurately striking targets 932 miles away, the Financial Times reported. People who suffered heart attacks in the U.S. in the early 1990's were more likely to survive than victims in Canada because they underwent aggressive treatment, according to a study in Circulation: the Journal of the American Heart Association. AOL said it started an Internet shopping service, seeking to lure customers and advertising revenue from Yahoo! and Microsoft's MSN service. Adobe Systems, the world's largest maker of graphic-design software, said third-quarter profit rose to $104.5 million as higher spending on advertising fueled demand for design and publishing programs, Bloomberg said. Citigroup shares had their biggest one-day drop in 18 months after Merrill Lynch cut its rating on the stock because Japanese regulators shut the bank's Tokyo-based private banking unit, Bloomberg reported. Delta Air's pilots union leaders approved a contract exemption to help the carrier avoid a pilot shortage because of increased retirements and to fend off a bankruptcy filing, Bloomberg said. San Diego, the subject of a federal probe into pension-fund misstatements, became the largest city to lose its credit rating in more than two decades as S&P suspended its ranking on $580 million of bonds, Bloomberg reported.
BOTTOM LINE: The Portfolio finished lower today on weakness in my security, steel and education longs. I took profits in a couple of technology longs in the afternoon and added to a few of my existing steel and security longs, thus leaving the Portfolio 75% net long. The underlying tone of the market was pretty good today, notwithstanding modest declines in the major indices. However, energy prices need to head back down to prevent a correction in the near-term.
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