Indices
S&P 500 1,120.68 +2.48%
Dow 10,188.45 +2.22%
NASDAQ 1,986.74 +3.90%
Russell 2000 568.28 +4.12%
Wilshire 5000 10,926.27 +2.78%
Volatility(VIX) 15.50 -16.17%
AAII % Bulls 36.11 -1.53%
US Dollar 88.90 -1.92%
CRB 277.25 +2.77%
Futures Spot Prices
Gold 394.90 +2.17%
Crude Oil 39.88 +.07%
Natural Gas 6.44 +.42%
Base Metals 108.81 +3.64%
10-year US Treasury Yield 4.65% -2.31%
Average 30-year Mortgage Rate 6.32% +.32%
Leading Sectors
Disk Drives +8.51%
Homebuilders +8.13%
Nanotechnology +7.05%
Lagging Sectors
Airlines +1.42%
Tobacco -1.06%
Telecom -1.64%
*% Gain or loss for the week
Saturday, May 29, 2004
Friday, May 28, 2004
Mid-day Update
S&P 500 1,120.43 -.08%
NASDAQ 1,986.24 +.09%
Leading Sectors
Broadcasting +3.86%
Oil Service +1.75%
Semis +1.55%
Lagging Sectors
Drugs -.68%
Iron/Steel -.99%
Airlines -1.05%
Other
Crude Oil 39.65 +.61%
Natural Gas 6.45 -1.87%
Gold 394.90 -.30%
Base Metals 108.81 +.60%
U.S. Dollar 88.97 +.34%
10-Yr. T-note Yield 4.64% +1.07%
VIX 15.55 +1.77%
Put/Call 1.01 +8.60%
NYSE Arms 1.13 +39.51%
Market Movers
UTSI +8.83% after announcing it will be added to the S&P 400 Index.
NVLS +5.4% after raising 2Q forecast substantially.
DITC +22.5% after beating 4Q estimates and raising 1Q guidance.
CAE +15.82% after beating 1Q estimates substantially.
NAP +11.31% after saying NCC is trying to sell its majority stake in the company.
BCSI -26.3% after missing 4Q estimates and lowering 1Q forecast.
OXM -6.18% after lowering 1Q and 04 forecasts.
ACDO -5.4% on speculation that Medi-Cal reimbursement cuts for blood factor will negatively impact earnings.
Economic Data
Personal Income for April +.6% versus expectations of +.5% and +.4% in March.
Personal Spending for April +.3% versus expectations of +.2% and +.5% in March.
PCE Deflator (Y-O-Y) for April +1.9% versus expectations of +1.8% and +1.5% in March.
U. of Mich. Consumer Confidence Final May reading 90.2 versus estimates of 94.2 and 94.2 prior.
Chicago Purchasing Manager report for May was 68.0 versus estimates of 62.0 and 63.9 in April.
Recommendations
BUD raised to Overweight at Morgan Stanley, target $60. BG rated Outperform at CSFB, target $46. Goldman Sachs reiterated Outperform on AUO, target $26.12. Goldman reiterated Buy on DELL, target $42. Goldman continues to believe there is meaningful upside in newspaper operating margins over the next few quarters, favorites are GCI, TRB and KRI. Goldman said to Buy SRE ahead of analyst meeting on June 2-3. Goldman reiterated Outperform on CDL. Citi SmithBarney reiterated Buy on KRB, target $31. Citi reiterated Buy on CCL, target $52. Citi reiterated Buy on PCG, target $34. Goldman reiterated Underperform on FGP. Legg Mason said SINT should benefit from a LMT win of the $15 billion homeland security contract that should be awarded any day as it is one of LMT's top 4 outsourcers.
Mid-day News
U.S. stocks are quietly mixed mid-day as investors decline to make big bets ahead of the holiday weekend. The Chicago Purchasing Managers' Index rose to a 16-year high in May, Bloomberg said. Consumer Sentiment fell more-than-expected in May as rising gas prices and violence in Iraq dominated headlines, drowning out other very positive developments, Bloomberg reported. Personal Incomes in April rose the most since the stock market bubble burst in 2000, Bloomberg reported. Internet sales of dolls that immortalize political figures such as President Bush and Senator Kerry are boosting sales of action figures in general, the Wall Street Journal reported. U.S. President Bush's planned visit to Rome next week carries "serious threats," Italian Interior Minister Pisanu told Agence France-Presse. Nascar has held preliminary talks with New York City economic development officials on building a speedway on Staten Island, the NY Times reported. The Iraqi Governing Council unanimously endorsed Iyad Allawi to become Iraq's new prime minister, the AP reported. Gillette has signed a 3-year contract with British soccer star David Beckham, the Boston Herald reported. Cable tv networks are expected to beat the seven broadcast networks during the May "sweeps" period and capture a greater share of the audience this season, Broadcasting and Cable reported. EchoStar Communications said yesterday it will add 1,000 full- and part-time jobs in Tulsa, Oklahoma, the Denver Post reported. El Paso said a reorganization in the first quarter cut annual expenses by $40 million to $50 million, helping the company to exceed expectations for cash flow and debt reduction, Bloomberg reported.
BOTTOM LINE: The Portfolio is up slightly today on strength in my semiconductor, telecom equipment and broadcasting long positions. I have not traded today and the Portfolio is still 125% net long. The Chicago Purchasing Manager report was extremely positive. The decline in consumer confidence is a function of the media's intense focus on negativity as there are many positive stories going unreported. I expect consumer confidence to improve throughout the year as employment growth continues, energy prices stabilize, Iraq improves and corporate spending accelerates. I expect U.S. stocks to move slightly higher into the close this afternoon and then resume this week's rally on Tuesday, barring any significant terrorist attack over the holiday weekend.
NASDAQ 1,986.24 +.09%
Leading Sectors
Broadcasting +3.86%
Oil Service +1.75%
Semis +1.55%
Lagging Sectors
Drugs -.68%
Iron/Steel -.99%
Airlines -1.05%
Other
Crude Oil 39.65 +.61%
Natural Gas 6.45 -1.87%
Gold 394.90 -.30%
Base Metals 108.81 +.60%
U.S. Dollar 88.97 +.34%
10-Yr. T-note Yield 4.64% +1.07%
VIX 15.55 +1.77%
Put/Call 1.01 +8.60%
NYSE Arms 1.13 +39.51%
Market Movers
UTSI +8.83% after announcing it will be added to the S&P 400 Index.
NVLS +5.4% after raising 2Q forecast substantially.
DITC +22.5% after beating 4Q estimates and raising 1Q guidance.
CAE +15.82% after beating 1Q estimates substantially.
NAP +11.31% after saying NCC is trying to sell its majority stake in the company.
BCSI -26.3% after missing 4Q estimates and lowering 1Q forecast.
OXM -6.18% after lowering 1Q and 04 forecasts.
ACDO -5.4% on speculation that Medi-Cal reimbursement cuts for blood factor will negatively impact earnings.
Economic Data
Personal Income for April +.6% versus expectations of +.5% and +.4% in March.
Personal Spending for April +.3% versus expectations of +.2% and +.5% in March.
PCE Deflator (Y-O-Y) for April +1.9% versus expectations of +1.8% and +1.5% in March.
U. of Mich. Consumer Confidence Final May reading 90.2 versus estimates of 94.2 and 94.2 prior.
Chicago Purchasing Manager report for May was 68.0 versus estimates of 62.0 and 63.9 in April.
Recommendations
BUD raised to Overweight at Morgan Stanley, target $60. BG rated Outperform at CSFB, target $46. Goldman Sachs reiterated Outperform on AUO, target $26.12. Goldman reiterated Buy on DELL, target $42. Goldman continues to believe there is meaningful upside in newspaper operating margins over the next few quarters, favorites are GCI, TRB and KRI. Goldman said to Buy SRE ahead of analyst meeting on June 2-3. Goldman reiterated Outperform on CDL. Citi SmithBarney reiterated Buy on KRB, target $31. Citi reiterated Buy on CCL, target $52. Citi reiterated Buy on PCG, target $34. Goldman reiterated Underperform on FGP. Legg Mason said SINT should benefit from a LMT win of the $15 billion homeland security contract that should be awarded any day as it is one of LMT's top 4 outsourcers.
Mid-day News
U.S. stocks are quietly mixed mid-day as investors decline to make big bets ahead of the holiday weekend. The Chicago Purchasing Managers' Index rose to a 16-year high in May, Bloomberg said. Consumer Sentiment fell more-than-expected in May as rising gas prices and violence in Iraq dominated headlines, drowning out other very positive developments, Bloomberg reported. Personal Incomes in April rose the most since the stock market bubble burst in 2000, Bloomberg reported. Internet sales of dolls that immortalize political figures such as President Bush and Senator Kerry are boosting sales of action figures in general, the Wall Street Journal reported. U.S. President Bush's planned visit to Rome next week carries "serious threats," Italian Interior Minister Pisanu told Agence France-Presse. Nascar has held preliminary talks with New York City economic development officials on building a speedway on Staten Island, the NY Times reported. The Iraqi Governing Council unanimously endorsed Iyad Allawi to become Iraq's new prime minister, the AP reported. Gillette has signed a 3-year contract with British soccer star David Beckham, the Boston Herald reported. Cable tv networks are expected to beat the seven broadcast networks during the May "sweeps" period and capture a greater share of the audience this season, Broadcasting and Cable reported. EchoStar Communications said yesterday it will add 1,000 full- and part-time jobs in Tulsa, Oklahoma, the Denver Post reported. El Paso said a reorganization in the first quarter cut annual expenses by $40 million to $50 million, helping the company to exceed expectations for cash flow and debt reduction, Bloomberg reported.
BOTTOM LINE: The Portfolio is up slightly today on strength in my semiconductor, telecom equipment and broadcasting long positions. I have not traded today and the Portfolio is still 125% net long. The Chicago Purchasing Manager report was extremely positive. The decline in consumer confidence is a function of the media's intense focus on negativity as there are many positive stories going unreported. I expect consumer confidence to improve throughout the year as employment growth continues, energy prices stabilize, Iraq improves and corporate spending accelerates. I expect U.S. stocks to move slightly higher into the close this afternoon and then resume this week's rally on Tuesday, barring any significant terrorist attack over the holiday weekend.
Friday Watch
Company/Estimate
CVNS/.12
SOL/.51
TTWO/-.14
Splits
ASD 3-for-1
ERES 3-for-2
KIND 2-for-1
Economic Data
Personal Income in April estimated +.5% versus +.4% in March.
Personal Spending in April estimated +.2% versus +.4% in March.
PCE Deflator (Y-O-Y) in April estimated +1.8% versus +1.6% in March.
University of Mich. Consumer Confidence Final May reading estimated at 94.2 versus 94.2 prior.
Chicago Purchasing Manager in May estimated at 62.0 versus 63.9 in April.
Recommendations
Goldman Sachs reiterated Outperform on BIIB, TYC and TPX. Goldman thinks FLEX will maintain upbeat tone on their mid-quarter update next Thur. TDW is undervalued at $27/share, Business Week reported. STJ shares may be poised to gain because the maker of cardiac devices could be a takeover target, Business Week reported. Napco Security's(NSSC) plan to provide a lock system to a unit of Tyco will help boost shares of the manufacturer of electronic security systems' shares, Business Week said.
Late-Night News
Asian indices are mostly higher as strength in Japanese shares boosts regional optimism. Japanese household spending rose a seasonally adjusted 9.3% from March, the largest increase since the survey began in 1975, as job growth sparked consumer spending, which makes up more than half the economy, Bloomberg reported. PETS, UTI, UOPX, MGAM and ARO topped Business Week's Hot Growth list for 2004, the magazine reported. Time Warner CEO Parsons refused to reduce stated revenue from a $400 million advertising contract with Bertelsmann AG unless outside auditors said the accounting was wrong, Business Week reported. Infineon Technologies AG may exit the computer memory-chip business to focus on making semiconductors for cars, mobile phones and other communications products, Silicon Strategies reported. Fighting in the Iraqi holy city of Najaf stopped after al-Sadr agreed with religious leaders to withdraw his militiamen, the AP reported. There have been 10 times the normal amount of tips reported to the FBI Web site since Wednesday's warning of a potential al-Qaeda attack on U.S. soil this summer, the AP reported. As many as 2,000 people may have been killed in floods and landslides caused by a week of rains in Haiti and the Dominican Republic, the AP reported. Riggs National, which was fined $25 million this month for allegedly failing to follow rules to stop money laundering, has put itself up for sale, Bloomberg reported. Exxon's purchase of Mobil and five other oil-company mergers since 1990 lifted U.S. gas prices an average of one or two cents a gallon, the U.S. General Accounting Office said. The average sale price for a home in the Hamptons rose 29% to an all-time high of $1.1 million in the first quarter as Wall Street bonuses rebound, Bloomberg reported.
Late-Night Trading
Asian Indices -.50% to +1.25% on average.
S&P 500 indicated -.02%.
NASDAQ indicated -.07%.
BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on strength in Asia and U.S. semiconductor shares. I continue to believe that the economic news from Japan, the world's second largest economy, is very positive and underreported. The Iraq situation is getting a lot better, energy prices are dropping and interest rates are falling. These are all surprisingly positive recent developments which should provide the catalysts for the major U.S. indices to continue to rally in the near-term, barring a significant terrorist attack. The Portfolio is 125% net long heading into trading tomorrow.
CVNS/.12
SOL/.51
TTWO/-.14
Splits
ASD 3-for-1
ERES 3-for-2
KIND 2-for-1
Economic Data
Personal Income in April estimated +.5% versus +.4% in March.
Personal Spending in April estimated +.2% versus +.4% in March.
PCE Deflator (Y-O-Y) in April estimated +1.8% versus +1.6% in March.
University of Mich. Consumer Confidence Final May reading estimated at 94.2 versus 94.2 prior.
Chicago Purchasing Manager in May estimated at 62.0 versus 63.9 in April.
Recommendations
Goldman Sachs reiterated Outperform on BIIB, TYC and TPX. Goldman thinks FLEX will maintain upbeat tone on their mid-quarter update next Thur. TDW is undervalued at $27/share, Business Week reported. STJ shares may be poised to gain because the maker of cardiac devices could be a takeover target, Business Week reported. Napco Security's(NSSC) plan to provide a lock system to a unit of Tyco will help boost shares of the manufacturer of electronic security systems' shares, Business Week said.
Late-Night News
Asian indices are mostly higher as strength in Japanese shares boosts regional optimism. Japanese household spending rose a seasonally adjusted 9.3% from March, the largest increase since the survey began in 1975, as job growth sparked consumer spending, which makes up more than half the economy, Bloomberg reported. PETS, UTI, UOPX, MGAM and ARO topped Business Week's Hot Growth list for 2004, the magazine reported. Time Warner CEO Parsons refused to reduce stated revenue from a $400 million advertising contract with Bertelsmann AG unless outside auditors said the accounting was wrong, Business Week reported. Infineon Technologies AG may exit the computer memory-chip business to focus on making semiconductors for cars, mobile phones and other communications products, Silicon Strategies reported. Fighting in the Iraqi holy city of Najaf stopped after al-Sadr agreed with religious leaders to withdraw his militiamen, the AP reported. There have been 10 times the normal amount of tips reported to the FBI Web site since Wednesday's warning of a potential al-Qaeda attack on U.S. soil this summer, the AP reported. As many as 2,000 people may have been killed in floods and landslides caused by a week of rains in Haiti and the Dominican Republic, the AP reported. Riggs National, which was fined $25 million this month for allegedly failing to follow rules to stop money laundering, has put itself up for sale, Bloomberg reported. Exxon's purchase of Mobil and five other oil-company mergers since 1990 lifted U.S. gas prices an average of one or two cents a gallon, the U.S. General Accounting Office said. The average sale price for a home in the Hamptons rose 29% to an all-time high of $1.1 million in the first quarter as Wall Street bonuses rebound, Bloomberg reported.
Late-Night Trading
Asian Indices -.50% to +1.25% on average.
S&P 500 indicated -.02%.
NASDAQ indicated -.07%.
BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on strength in Asia and U.S. semiconductor shares. I continue to believe that the economic news from Japan, the world's second largest economy, is very positive and underreported. The Iraq situation is getting a lot better, energy prices are dropping and interest rates are falling. These are all surprisingly positive recent developments which should provide the catalysts for the major U.S. indices to continue to rally in the near-term, barring a significant terrorist attack. The Portfolio is 125% net long heading into trading tomorrow.
Thursday, May 27, 2004
Thursday Close
S&P 500 1,121.26 +.57%
NASDAQ 1,984.50 +.42%
Leading Sectors
Iron/Steel +2.40%
Wireless +1.65%
Telecom +1.38%
Lagging Sectors
Gaming -.71%
Energy -1.40%
Oil Service -2.17%
Other
Crude Oil 39.12 -.81%
Natural Gas 6.52 -.75%
Gold 3395.50 +.15%
Base Metals 108.16 +1.36%
U.S. Dollar 88.64 -1.28%
10-Yr. T-note Yield 4.59% -1.22%
VIX 15.28 -4.32%
Put/Call .93 -7.0%
NYSE Arms .81 -27.68%
After-hours Movers
BCSI -17.9% after missing 4Q estimates and lowering 1Q forecast.
DITC +5.78% after beating 4Q estimates and raising 4Q guidance.
NVLS +4.0% after raising 2Q forecast substantially.
Recommendations
Jim Cramer, of TheStreet.com, thinks oil may sell-off hard as we are winning the war in Iraq. He says the sell-off in the Oil Service index(OSX) confirms this view.
After-hours News
U.S. stocks finished higher Thursday as declining energy prices and interest rates led to an afternoon rally. Stocks were also buoyed by a government report that showed the biggest increase in corporate profits in two decades and faster first-quarter U.S. economic growth than earlier reported. After the close, U.S. officials said they may have found two more shells armed with mustard gas in Iraq, CNN reported. National City is trying to sell its majority stake in a unit that processes credit and debit-card transactions, Bloomberg said. Bob Stansky, manager of the $65 billion Fidelity Magellan Fund, increased the fund's holdings of technology companies over the past six months, Bloomberg reported. The Fund took new positions in Apple Computer, Scientific Atlanta and SAP AG, Bloomberg said.
BOTTOM LINE: The Portfolio had a very good day today as a few of my internet and semiconductor long positions rose substantially in the afternoon. I did not trade today and the Portfolio is still 125% net long. Falling oil prices and interest rates, combined with a relatively high put/call ratio, should result in a better rally over the next few trading sessions, barring a significant terrorist attack over the weekend. The fact that U.S. corporate profits rose 31.6% in the first quarter, the best since 1984, bodes well for continued employment gains and thus corporate spending on technology. I continue to expect technology stocks to Outperform in the second half of the year.
NASDAQ 1,984.50 +.42%
Leading Sectors
Iron/Steel +2.40%
Wireless +1.65%
Telecom +1.38%
Lagging Sectors
Gaming -.71%
Energy -1.40%
Oil Service -2.17%
Other
Crude Oil 39.12 -.81%
Natural Gas 6.52 -.75%
Gold 3395.50 +.15%
Base Metals 108.16 +1.36%
U.S. Dollar 88.64 -1.28%
10-Yr. T-note Yield 4.59% -1.22%
VIX 15.28 -4.32%
Put/Call .93 -7.0%
NYSE Arms .81 -27.68%
After-hours Movers
BCSI -17.9% after missing 4Q estimates and lowering 1Q forecast.
DITC +5.78% after beating 4Q estimates and raising 4Q guidance.
NVLS +4.0% after raising 2Q forecast substantially.
Recommendations
Jim Cramer, of TheStreet.com, thinks oil may sell-off hard as we are winning the war in Iraq. He says the sell-off in the Oil Service index(OSX) confirms this view.
After-hours News
U.S. stocks finished higher Thursday as declining energy prices and interest rates led to an afternoon rally. Stocks were also buoyed by a government report that showed the biggest increase in corporate profits in two decades and faster first-quarter U.S. economic growth than earlier reported. After the close, U.S. officials said they may have found two more shells armed with mustard gas in Iraq, CNN reported. National City is trying to sell its majority stake in a unit that processes credit and debit-card transactions, Bloomberg said. Bob Stansky, manager of the $65 billion Fidelity Magellan Fund, increased the fund's holdings of technology companies over the past six months, Bloomberg reported. The Fund took new positions in Apple Computer, Scientific Atlanta and SAP AG, Bloomberg said.
BOTTOM LINE: The Portfolio had a very good day today as a few of my internet and semiconductor long positions rose substantially in the afternoon. I did not trade today and the Portfolio is still 125% net long. Falling oil prices and interest rates, combined with a relatively high put/call ratio, should result in a better rally over the next few trading sessions, barring a significant terrorist attack over the weekend. The fact that U.S. corporate profits rose 31.6% in the first quarter, the best since 1984, bodes well for continued employment gains and thus corporate spending on technology. I continue to expect technology stocks to Outperform in the second half of the year.
Mid-day Update
S&P 500 1,116.67 +.16%
NASDAQ 1,972.22 -.20%
Leading Sectors
Iron/Steel +1.38%
Wireless +1.09%
Fashion +.98%
Lagging Sectors
Disk Drives -1.04%
Energy -1.44%
Oil Service -2.22%
Other
Crude Oil 39.62 -2.65%
Natural Gas 6.59 -2.11%
Gold 394.50 +1.60%
Base Metals 107.60 +.83%
U.S. Dollar 88.74 -1.17%
10-Yr. T-note Yield 4.59% -1.31%
VIX 15.77 -1.25%
Put/Call .98 -2.0%
NYSE Arms .97 -13.39%
Market Movers
SEBL +7.83% on circulation of an IDC research report that says sales of CRM software subscriptions are expected to rise 16.6% annually through 2008.
NAVR +14.1% on strong 4Q results and 05 outlook.
MIK +8.8% after beating 1Q earnings estimates, raising 04 guidance and multiple upgrades.
TECD +10.2% after beating 1Q estimates substantially, raising 2Q guidance and Raymond James upgrade to Strong Buy.
DLTR +8.78% after beating 1Q estimate and re-affirming 2Q/04 forecast.
MANT -30.3% after lowering 2Q and 04 forecast.
STAR -12.4% after cutting 2Q forecast on higher boxed beef prices.
CAI -10.3% after disclosing the U.S. government is investigating whether its interrogators broke the rules in Iraq.
Economic Data
Preliminary 1Q GDP came in at 4.4% versus expectations of 4.5% and 4.2% prior.
Preliminary 1Q Personal Consumption was 3.9%, meeting expectations and up from 3.8% prior.
Preliminary 1Q GDP Price Deflator was 2.6% versus expectations of 2.5% and 2.5% prior.
Initial Jobless Claims for last week were 344K versus expectations of 335K and 347K prior week.
Continuing Claims 2948K versus 2923K estimate and 2929K prior.
Recommendations
KO raised to Buy at UBS. ATVI rated Buy at Wells Fargo. JDAS raised to Sector Outperform at CIBC, target $16. VAST cut to Sector Underperform at CIBC. AM rated Overweight at JP Morgan. PRU raised to Overweight at Morgan Stanley, target $52. CTS rated Outperform at Thomas Weisel. FRX raised to Outperform at Thomas Weisel. XPRT raised to Buy at Legg Mason, target $23. MLNM raised to Buy at Deutsche Bank. KSS raised to Buy at Bank of America, target $55. WDC rated Outperform at CSFB, target $12. BBT cut to Underperform at Bear Stearns. BCII rated Outperform at Bear Stearns. TECD raised to Strong Buy at Raymond James, target $48. Goldman reiterated Outperform on BSX, GDT, MDT, TYC, HOT, XOM and ENH. Citi SmithBarney said that managements from AV, JNPR and EXTR appeared confident about 2Q business on their West Coast Data Networking Bus Tour. Citi came away from TLAB investor day thinking the position of its core biz is not as tenuous as once believed and that its revenue and cost synergy guidance from the AFCI purchase was conservative across the board. Citi upgraded AZO to Buy, target $98. Citi reiterated Buy on MER, target $80. Citi reiterated Buy on CELG, target $75. Citi rated AMLN, target $31. Citi reiterated Buy on GTIV, target $22. Citi reiterated Buy on VIAB, target $54. Citi reiterated Buy on TLAB, target $11. Citi reiterated Sell on TECD, target $36.
Mid-day News
U.S. stocks are mixed mid-day as falling energy prices and interest rates are offset by terror concerns and weaker-than-expected economic data. Wall Street underwriters' price cuts on recent initial public share offerings reflect weakness in the IPO market, the Wall Street Journal reported. U.S. health insurance premiums may increase at a slower rate this year as few people are hospitalized or are prescribed expensive drugs, the New York Times said. An al-Qaeda leader in Saudi Arabia today called for a guerrilla war in the kingdom's cities as part of a campaign against the country's royal family, Reuters reported. Senator Kerry is being challenged by an increasing number of Democrats who are calling for the U.S. to set a deadline to withdraw troops from Iraq, the LA Times reported. California lawmakers have approved several bills this week that sanction importing drugs from Canada, the LA Times reported. Crude oil futures fell for a third day in London on expectations OPEC will raise production quotas next week to lower prices, Bloomberg said. The U.S. economy grew a brisk 4.4% in the first quarter as businesses replenished inventories, government spending rose and home construction accelerated. Corporate profits jumped 31.6% in the year ended in March, the biggest increase since the first quarter of 1984, Bloomberg reported. The personal consumption expenditures price index excluding food and energy, a favorite Greenspan inflation indicator, rose a less-than-expected 1.7%.
BOTTOM LINE: The Portfolio is down slightly today on weakness in my tech long positions. I have not traded and the Portfolio is still 125% net long. I expect stock gains to remain subdued today, as nervousness over a weekend terror attack persists. I believe the recent fall in interest rates and oil will provide the catalysts for another upward move in the major U.S. indices next week. As investors focus more on skyrocketing corporate profits and less on inflation, stocks should benefit.
NASDAQ 1,972.22 -.20%
Leading Sectors
Iron/Steel +1.38%
Wireless +1.09%
Fashion +.98%
Lagging Sectors
Disk Drives -1.04%
Energy -1.44%
Oil Service -2.22%
Other
Crude Oil 39.62 -2.65%
Natural Gas 6.59 -2.11%
Gold 394.50 +1.60%
Base Metals 107.60 +.83%
U.S. Dollar 88.74 -1.17%
10-Yr. T-note Yield 4.59% -1.31%
VIX 15.77 -1.25%
Put/Call .98 -2.0%
NYSE Arms .97 -13.39%
Market Movers
SEBL +7.83% on circulation of an IDC research report that says sales of CRM software subscriptions are expected to rise 16.6% annually through 2008.
NAVR +14.1% on strong 4Q results and 05 outlook.
MIK +8.8% after beating 1Q earnings estimates, raising 04 guidance and multiple upgrades.
TECD +10.2% after beating 1Q estimates substantially, raising 2Q guidance and Raymond James upgrade to Strong Buy.
DLTR +8.78% after beating 1Q estimate and re-affirming 2Q/04 forecast.
MANT -30.3% after lowering 2Q and 04 forecast.
STAR -12.4% after cutting 2Q forecast on higher boxed beef prices.
CAI -10.3% after disclosing the U.S. government is investigating whether its interrogators broke the rules in Iraq.
Economic Data
Preliminary 1Q GDP came in at 4.4% versus expectations of 4.5% and 4.2% prior.
Preliminary 1Q Personal Consumption was 3.9%, meeting expectations and up from 3.8% prior.
Preliminary 1Q GDP Price Deflator was 2.6% versus expectations of 2.5% and 2.5% prior.
Initial Jobless Claims for last week were 344K versus expectations of 335K and 347K prior week.
Continuing Claims 2948K versus 2923K estimate and 2929K prior.
Recommendations
KO raised to Buy at UBS. ATVI rated Buy at Wells Fargo. JDAS raised to Sector Outperform at CIBC, target $16. VAST cut to Sector Underperform at CIBC. AM rated Overweight at JP Morgan. PRU raised to Overweight at Morgan Stanley, target $52. CTS rated Outperform at Thomas Weisel. FRX raised to Outperform at Thomas Weisel. XPRT raised to Buy at Legg Mason, target $23. MLNM raised to Buy at Deutsche Bank. KSS raised to Buy at Bank of America, target $55. WDC rated Outperform at CSFB, target $12. BBT cut to Underperform at Bear Stearns. BCII rated Outperform at Bear Stearns. TECD raised to Strong Buy at Raymond James, target $48. Goldman reiterated Outperform on BSX, GDT, MDT, TYC, HOT, XOM and ENH. Citi SmithBarney said that managements from AV, JNPR and EXTR appeared confident about 2Q business on their West Coast Data Networking Bus Tour. Citi came away from TLAB investor day thinking the position of its core biz is not as tenuous as once believed and that its revenue and cost synergy guidance from the AFCI purchase was conservative across the board. Citi upgraded AZO to Buy, target $98. Citi reiterated Buy on MER, target $80. Citi reiterated Buy on CELG, target $75. Citi rated AMLN, target $31. Citi reiterated Buy on GTIV, target $22. Citi reiterated Buy on VIAB, target $54. Citi reiterated Buy on TLAB, target $11. Citi reiterated Sell on TECD, target $36.
Mid-day News
U.S. stocks are mixed mid-day as falling energy prices and interest rates are offset by terror concerns and weaker-than-expected economic data. Wall Street underwriters' price cuts on recent initial public share offerings reflect weakness in the IPO market, the Wall Street Journal reported. U.S. health insurance premiums may increase at a slower rate this year as few people are hospitalized or are prescribed expensive drugs, the New York Times said. An al-Qaeda leader in Saudi Arabia today called for a guerrilla war in the kingdom's cities as part of a campaign against the country's royal family, Reuters reported. Senator Kerry is being challenged by an increasing number of Democrats who are calling for the U.S. to set a deadline to withdraw troops from Iraq, the LA Times reported. California lawmakers have approved several bills this week that sanction importing drugs from Canada, the LA Times reported. Crude oil futures fell for a third day in London on expectations OPEC will raise production quotas next week to lower prices, Bloomberg said. The U.S. economy grew a brisk 4.4% in the first quarter as businesses replenished inventories, government spending rose and home construction accelerated. Corporate profits jumped 31.6% in the year ended in March, the biggest increase since the first quarter of 1984, Bloomberg reported. The personal consumption expenditures price index excluding food and energy, a favorite Greenspan inflation indicator, rose a less-than-expected 1.7%.
BOTTOM LINE: The Portfolio is down slightly today on weakness in my tech long positions. I have not traded and the Portfolio is still 125% net long. I expect stock gains to remain subdued today, as nervousness over a weekend terror attack persists. I believe the recent fall in interest rates and oil will provide the catalysts for another upward move in the major U.S. indices next week. As investors focus more on skyrocketing corporate profits and less on inflation, stocks should benefit.
Wednesday, May 26, 2004
Thursday Watch
Earnings of Note
Company/Estimate
BCSI/.23
CHS/.39
DITC/.20
DG/.20
QSII/.40
SHFL/.19
Splits
ANN 3-for-2
Economic Data
Preliminary Gross Domestic Product for 1Q estimated at 4.5% versus 4.2% prior.
Preliminary Personal Consumption for 1Q estimated at 3.9% versus 3.8% prior.
Preliminary GDP Price Deflator for 1Q estimated at 2.5% versus 2.5% prior.
Initial Jobless Claims for last week estimated at 335K versus 345K prior week.
Continuing Claims estimated at 2925K versus 2943K prior.
Help Wanted Index for April estimated at 41 versus 39 in March.
Recommendations
Goldman Sachs reiterated Outperform on CYT, TYC, HD and BBY. Goldman reiterated Outperform on Lodging sector. Goldman reiterated Underperform on PSSI.
Late-Night News
Asian indices are mostly on strength in Hong Kong and Korea. Airbus SAS forecasts the number of daily flight and aircraft in Asia-Pacific will double in the next two decades, propelling the region past the U.S. as the world's busiest, the Australian newspaper reported. Disney may abandon the sale of its European retail stores, worth $181.24 million, after talks with 2 bidders collapsed, the London-based Times said. Greece will shoot down any aircraft trying to target the Olympic Games being held in Athens in August, the BBC said. al-Sadr offered to withdraw his forces from Najaf and hand the holy city over to Iraqi police, the AP reported. Nokia may get a $250 million order from Bharti Tele-Ventures to operate and maintain some cellular phone networks, the Economic Times reported. Shanghai, China's largest city, is replacing hundreds of thousands of iron manhole covers with concrete and plastic ones after a 57% rise in scrap steel prices encouraged thieves to steal about 1,800 of the lids, Bloomberg reported.
Late-Night Trading
Asian Indices -.25% to +2.0% on average.
S&P 500 indicated -.04%.
NASDAQ indicated -.03%.
BOTTOM LINE: I expect U.S. stocks to open lower after stronger-than-expected GDP and Price Deflator reports send interest rates higher. However, stocks should firm up later in the day on weakening oil prices and short-covering. I do not expect another significant rally until after the holiday weekend. The Portfolio is 125% net long heading into tomorrow.
Company/Estimate
BCSI/.23
CHS/.39
DITC/.20
DG/.20
QSII/.40
SHFL/.19
Splits
ANN 3-for-2
Economic Data
Preliminary Gross Domestic Product for 1Q estimated at 4.5% versus 4.2% prior.
Preliminary Personal Consumption for 1Q estimated at 3.9% versus 3.8% prior.
Preliminary GDP Price Deflator for 1Q estimated at 2.5% versus 2.5% prior.
Initial Jobless Claims for last week estimated at 335K versus 345K prior week.
Continuing Claims estimated at 2925K versus 2943K prior.
Help Wanted Index for April estimated at 41 versus 39 in March.
Recommendations
Goldman Sachs reiterated Outperform on CYT, TYC, HD and BBY. Goldman reiterated Outperform on Lodging sector. Goldman reiterated Underperform on PSSI.
Late-Night News
Asian indices are mostly on strength in Hong Kong and Korea. Airbus SAS forecasts the number of daily flight and aircraft in Asia-Pacific will double in the next two decades, propelling the region past the U.S. as the world's busiest, the Australian newspaper reported. Disney may abandon the sale of its European retail stores, worth $181.24 million, after talks with 2 bidders collapsed, the London-based Times said. Greece will shoot down any aircraft trying to target the Olympic Games being held in Athens in August, the BBC said. al-Sadr offered to withdraw his forces from Najaf and hand the holy city over to Iraqi police, the AP reported. Nokia may get a $250 million order from Bharti Tele-Ventures to operate and maintain some cellular phone networks, the Economic Times reported. Shanghai, China's largest city, is replacing hundreds of thousands of iron manhole covers with concrete and plastic ones after a 57% rise in scrap steel prices encouraged thieves to steal about 1,800 of the lids, Bloomberg reported.
Late-Night Trading
Asian Indices -.25% to +2.0% on average.
S&P 500 indicated -.04%.
NASDAQ indicated -.03%.
BOTTOM LINE: I expect U.S. stocks to open lower after stronger-than-expected GDP and Price Deflator reports send interest rates higher. However, stocks should firm up later in the day on weakening oil prices and short-covering. I do not expect another significant rally until after the holiday weekend. The Portfolio is 125% net long heading into tomorrow.
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