Sunday, December 16, 2007

Monday Watch

Weekend Headlines
- OPEC may increase output quotas when it meets Feb. 1 because stronger demand is expected during the winter season, Algerian Oil Minister Chakib Khelil said.
- The IEA said signs of rising OPEC supply have helped lower prices from a near record $100/bbl. in the past month, boosting prospects for winter heating fuel consumers.
Consumer confidence is falling, the odds of a recession have risen, analysts predict the worst holiday shopping since 2002 – and retail-industry executives are buying their companies’ shares like never before. Limited Brands(LTD) CEO Leslie Wexner and eight other executives bought a record amount of stock last month after prices fell to a four-year low. Dillard’s(DDS) director Warren Stephens made the biggest insider purchase ever as shares of the department store headed for the steepest decline since at least 1980. Cambiar Investors LLC, Royce & Assoc. LLC and Becker Capital Management say insider buying foreshadows a rebound. The last four times executives added to their holdings, the S&P 500 Supercomposite Retailing Index rose an average of 9.9% in the next three months, topping a 6.2% average rise in the S&P 500. Retail company officials increased their investments by $346.4 million sine the start of November, according to data compiled by Bloomberg and
The US Senate approved a measure that would give the Commodity Futures Trading Commission new authority to monitor and limit trading on electronic markets such as the Intercontinental Exchange(ICE). The provision would close the “Enron loophole,” which exempted electronic energy exchanges from the same requirements as the New York Mercantile Exchange and other traditional markets.
- The US dollar rose to the highest levels in more than a month against the euro and yen on reduced speculation that the Federal Reserve will lower borrowing costs next year.
- UK troops turned over to Iraqi forces control of the Basra province, the last area where they had direct responsibility for security, British Foreign Secretary David Miliband said.
- Bond investors should bet Europe won’t be “immune” to a slowing US economy, and that the European Central Bank will cut interest rates next year to support growth, Lehman Brothers(LEH) said.

Wall Street Journal:
- Bali Aims to Share Weight of Emissions Cuts. The climate-change pact adopted here Saturday paves the way for developing nations to take more responsibility in combating the global threat, a departure from the Kyoto Protocol.
- The battered US dollar is getting a reprieve as investors temper their pessimism about the state of the economy.
- Holiday sales of electronics products have been strong, Sony Corp. CEO Howard Stringer said.
- Growth stocks are the new retro chic. According to Wisdom Tree, an investment firm, growth stocks have beater their “value” counterparts by 12 percentage points among large American stocks, 16 points among smaller companies and by ten points on international(non-American) markets.

NY Times:
- Google(GOOG) Gets Ready to Rumble with Microsoft(MSFT).
- Retailers are giving shopping bags a makeover, turning consumers into walking ads.
- Tech Trends to Watch in 2008.
- Consumers Say No to Economic Bah Humbug. Easing fears the Economic Grinch will steal Christmas, the CNBC Holiday Central Survey finds that Americans appear ready to up their holiday spending a healthy 6% over last year to $782.
- Google(GOOG) Takes on Wikipedia with Online Encyclopedia.
- US world’s new shopping mall. The cheaper dollar is drawing planeloads of foreign shoppers to US shores and upmarket retailers are trying to lure more. The trend may give some stores a boost this season.
- Now ‘offshoring’ means US. Weak dollar, pricey oil make US hot spot for multinationals seeking lower manufacturing costs, cheaper access to market. Forget about China, the US is the new hot spot for global firms looking for lower production and transport costs, increased supply-chain flexibility and a crack at wooing the world’s most demanding customers.
- Spending you way to better health and fitness. 8 creative ways to put end-of-year cash to best use for your body.
- Instead of cashing out of a winner and writing a check, donate the securities directly, advises Jonathan Burton.
- Mutual funds that were long closed to investors are now open again. Shefali Anand looks at some of the better ones.
- Nasdaq-100 adds 5 stocks, removes Ericsson, XM Satellite.
- Best newsletters forecast a higher stock market next year.

- Verizon Is Calling China, India Big Targets For Business Unit.

Washington Post:
- The Clinton presidential library raised more than 10% of the cost of its $165 million facility from abroad, with the biggest overseas donation - $10 million – coming from the royal family of Saudi Arabia.
- The ties Senator Hillary Rodham Clinton of NY formed with New Hampshire voters when her husband, Bill Clinton, campaigned for president there in 1992 are no assurance of a victory in the state’s Democratic presidential primary. Several polls last week showed her tied with Senator Barack Obama of Illinois, who was 20 points behind her three months ago.

A Dash of Insight:
- Top Secret Investment Opportunity: Don’t Fight the Fed!.

Miami Herald:
- Miami Dolphins owner Wayne Huizenga is in talks to sell the NFL team and its stadium to real-estate developers Stephen Ross and Jorge Perez.

Business Week:
- What’s Bigger Than Cisco, Coke, Or McDonald’s? Steve Feinberg’s Cerberus, a vast hedge fund that’s snapping up companies – lots of them.
- Iraqi oil output has risen in a “dramatic way” in recent months, hitting its highest monthly level in about 3 ½ years in November, the IEA said.

- 2008 Sector Outlook: Technology. S&P analysts have just one overweight recommendation: information technology.
- 9 Nifty Consumer Stocks.

San Francisco Chronicle:
- More than a fifth of properties foreclosed in California’s Bay Area from January through September were owned by real estate speculators.

USA Today:
- Productivity gains keep lid on China export prices.
- NYC hotel boom may ease room shortage.
- Canadians snap up US homes.
- Online Holiday Retail Spending Surpasses $22 billion, Up 18% Versus Year Ago, as Retailers Prepare for Final Week of Pre-Christmas Shopping.
- Blue-ribbon companies. These giants landed on the most Fortune 2007 lists – from the Fortune 500 to 100 Best Companies to Work For.
- 10 stocks to buy now.
- Luxury gifts for golfers.

- The trendsetter’s gift guide.
- Millionaires-in-chief. The top White House contenders are a lot richer than the rest of us, but a review of their finances shows they make the same money mistakes we all make.

- Two of this week’s IPOs hope to spark investor interest; one with celebrity appeal, while the other quite literally promises a brighter future.
- Goldman(GS) success brings unwanted attention.

Financial Times:
- Expedia(EXPE) has signaled an all-out attack on the European travel market, saying it will mount an aggressive marketing campaign on the continent next year, in a strategic effort to seize market share from rivals Thomas Cook and Tui Travel.
- Silicon Valley, birthplace of the semiconductor industry and then of Google(GOOG), Yahoo(YHOO) and eBay(EBAY), is experiencing a fresh wave of growth as a telecommunications innovator.
- Daimler Set to Sell Smart Car in US Next Month.

- Plenty of oil left in the global tank. The “peak oil has already happened” argument was partly based on the fact that global oil production, on IEA figures, had never been higher than the 86.13 million barrels per day of July 2006. That, however, is no longer true. World oil output in October was 86.5 million barrels a day, 1 million more than in October last year and 3 million more than in October 2005. It edged up to 86.55 million last month.

The Australian:
- Babcock & Brown Wind Partners, Australia’s largest wind farm operator, could develop $861 million of new wind energy projects in the nation after a government commitment to renewable energy.

- The Gulf Arab states, including Saudi Arabia and the United Arab Emirates, may “revalue” their currencies against the dollar, citing Sultan bin Nasser al-Suwaidi, the UAE’s central bank governor. The decision to keep the US dollar peg is “final” and not open for discussion, al-Suwaidi said.

Weekend Recommendations
- Made positive comments on (CZN) and (JCP).
- Made negative comments on (BRK/A) and (ADY).

- Reiterated Buys on (AXP), (FRE) and (FNM).
- Reiterated Buy on (MDP), target $64.
- Upgraded (MDU) to Buy, target $31.50.
- Downgraded (COF) and (RDN) to Sell.
- Reiterated Sell on (DFS) and (WM).
- Per comScore, consumers are responding to heavy retailer promotion activity including free shipping and other discounts. Holiday sales are estimated to be up 18%-19% year-over-year, which is in-line with Citi’s Q4 estimate of 18%. Categories that have been particularly strong include video games, consoles & accessories(+138% year-over-year) and furniture, Appliances & Equipment(+68%). Categories with lower than average growth rates include books & magazines(+11%) and music, movies & video(+10%). From a traffic perspective, (AMZN) continues to gain share with total visits up 29% year-over-year, versus (EBAY) which is only up 3% year-over-year.
- Google’s(GOOG) product search is having a positive impact on sellers. In addition to continuing to gain share in search, since replacing “video” with the “shopping” search tab after Thanksgiving, ChannelAdvisor has seen a material shift in traffic to its merchant clients from Google. Google appears to be the #1 comparison shopping channel since the change.
- (AMD)’s expectations of limited capacity growth and improved pricing, suggests supply/demand for MPU’s is balanced to tight. Recall that Intel(INTC) is unable to satisfy current levels of notebook demand given their own tight capacity. We view this as supportive of our non-consensus view that core MPU prices should rise in 2008.

- Global Economic Perspectives “Ten surprises for 2008” 1) Global growth surprises on the upside 2) Oil prices plummet 3) The US dollar appreciates 4) Word trade clouds 5) Developed economy deflation, emerging economy inflation 6) Financials outperform 7) Emerging equity markets under-perform 8) Japanese equities outperform 9) Equity volatility settles at lower levels 10) Chinese inflation falls sharply

Night Trading
Asian indices are -2.25% to -.75% on avg.
S&P 500 futures -.33%.
NASDAQ 100 futures -.21%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Pre-market Stock Quote/Chart
Before the Bell CNBC Video(bottom right)
Global Commentary
WSJ Intl Markets Performance
Commodity Movers
Top 25 Stories
Top 20 Business Stories
Today in IBD
In Play
Bond Ticker
Economic Preview/Calendar
Daily Stock Events
Macro Calls
Rasmussen Business/Economy Polling
CNBC Guest Schedule

Earnings of Note
- (ADBE)/.48
- (ACIW)/.33

Upcoming Splits
- (KMT) 2-for-1

Economic Data
8:30 am EST

- The 3Q Current Account Deficit is estimated to shrink to -$183.3 Billion versus -$190.8 billion in 2Q.
- Empire Manufacturing for December is estimated to fall to 20.0 versus 27.4 in November.

9:00 am EST
- Net Long-term TIC Flows for October are estimated to rise to $48.5 billion versus $26.4 billion in September.

1:00 pm EST
- The NAHB Housing Market Index for December is estimated at 19 versus 19 in November.

Other Potential Market Movers
- The (SPAR) analyst meeting and (CA) Financial Analyst Meeting could also impact trading today.

BOTTOM LINE: Asian indices are sharply lower, weighed down by financial and commodity shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the week.

No comments: