S&P 500 1,33.87 +.23%
NASDAQ 1,991.90 +.06%
Leading Sectors
Oil Service +1.37%
Energy +1.29%
Iron/Steel +1.20%
Lagging Sectors
Nanotech -1.20%
Biotech -1.31%
Airlines -3.22%
Other
Crude Oil 38.30 +1.97%
Natural Gas 6.18 +1.61%
Gold 387.50 +.60%
Base Metals 104.09 -.72%
U.S. Dollar 89.18 -.62%
10-Yr. T-note Yield 4.82% +.29%
VIX 15.01 -2.47%
Put/Call 1.13 +26.97%
NYSE Arms .86 -27.73%
Market Movers
ASKJ -6.61% on continued weakness after saying it bought Tukaroo for an undisclosed price.
DDS +13.2% on speculation that it may be acquired by FD and Bank of America upgrade to Neutral.
ACTL -11.68% after lowering 2Q estimates.
ALOG -10.39% after missing 3Q estimates.
MATK -3.49% after missing 2Q estimates lowering guidance.
Economic Data
Import Price Index for May rose 1.6% versus expectations of a .8% rise and a .2% rise in April.
Initial Jobless Claims for last week were 352K versus expectations of 335K and 340K prior week.
Continuing Claims were 2881K versus expectations of 2972K and 2987K prior.
Recommendations
Goldman Sachs reiterated Outperform on BAX, XRX, IGT, STN, BSX, FD, CIT and AMGN. Goldman still positive on cell-tower stocks, favorite is AMT. Goldman said managements of INTC, SNDK, ALTR, AMAT and MXIM are showing more optimism regarding the length of the current semi cycle. Goldman reiterated Underperform on MAY and HRB. Goldman reiterated positive stance on gold, sees 21% upside to XAU near-term, favorites are NEM and PDG. City SmithBarney upgraded EOG to Buy, target $63. Citi reiterated Sell on UST, target $28.00. Citi reiterated Buy on MNST, target $29. Citi reiterated Buy on MATK, target $90. Citi reiterated Buy on FE, target $43. Citi reiterated Buy on RDWR, target $25. BJS, ESV, NBR, NE, SII, SLB raised to Buy at UBS. ALL raised to Overweight at Morgan Stanley, target $53. CYH rated Outperform at Thomas Weisel. EXPD cut to Underweight at Morgan Stanley. NUE raised to Overweight at Prudential, target $50. STA raised to Buy at Bank of America, target $46. GVHR rated Outperform at CSFB, target $33. COST raised to Buy at Merrill Lynch, target $50. ACE rated Underweight at Lehman, target $40. INTX rated Buy at Deutsche Bank, target $26.
Mid-day News
U.S. stocks are modestly higher mid-day on strength in commodity-related shares as a higher-than expected inflation report and rising oil prices are sending those shares higher. Iraqi Prime Minister Allawi said the government would follow the interim constitution the Iraqi Governing Council approved until elections are held next year to appease Kurdish leaders, the NY Times reported. Alzheimer's disease is one of the illnesses least likely to be cured by expanded human embryonic stem cell research, even though support for such study increased following Reagan's death, the Washington Post reported. China National Petroleum plans to buy 1 million tons of pipes in the next 2 years for building a natural gas pipeline, the Tex Report said. Massachusetts Governor Romney's proposal to cut the state's income tax rate to 5% may generate thousands of jobs and boost investment, the Boston Herald said. CNN will hire an executive to overhaul prime time programming, which has trailed Fox News badly in ratings for almost 2 years, the NY Post said. Iraq is ready to re-sell oil to Jordan and revive talks on building a $450 million oil pipeline, al-Rai newspaper reported. Kmart Holding Chairman Lampert may turn Kmart into an investment company as Warren Buffett did with Berkshire Hathaway, the NY Daily News said. FedEx said it probably beat analysts' expectations for the fourth quarter, Bloomberg reported. World oil demand this year will rise the most since 1980 as economic growth leads to higher-than-expected use in Brazil, India, China and the U.S., the IEA said. Iraq's Prime Minister Allawi said those who attack the country's power grid and oil pipelines are "traitors" and "not freedom fighters," and he called on Iraqis to defeat the saboteurs, Bloomberg reported.
BOTTOM LINE: The Portfolio is unchanged today as my longs and shorts are offsetting each other. I took profits in a couple of gaming longs and added a few internet shorts this morning, leaving the Portfolio with 25% net short market exposure. One of my new shorts is YHOO and I am using a $32.50 stop-loss on the position. I expect stocks to fall modestly into the afternoon on concerns over weekend violence in the middle-east, rising oil prices and increasing interest rates.
Thursday, June 10, 2004
Thursday Watch
Earnings of Note
Company/Estimate
ALOG/.36
CRMT/.55
MTZ/.14
NSM/.29
Splits
SID 4-for-1
MOGN 2-for-1
Economic Data
Import Price Index for May estimated +.8% versus +.2% in April.
Initial Jobless Claims for last week estimated at 335K versus 339K prior week.
Continuing Claims estimated at 2972K versus 3003K prior.
Recommendations
Goldman Sachs reiterated Outperform on SYMC, MUR, ETN, DVN and Underperform on VRSN.
Late-Night News
Asian indices are mixed as strength in Japan and Australia is offsetting weakness elsewhere. United Microelectronics, the world's no. 2 supplier of made-to-order semiconductors, expects chip prices that started rising this year to continue gaining in the second half because demand exceeds supply, the Commercial Times reported. China will allow domestic institutions to invest in overseas markets for the first time by the end of this month, the Hong Kong Standard reported. China is moving closer to enacting its first telecommunication law, which industry players hope will help clarify policy and ease the government's grip on the sector, the South China Morning Post said. Terrorists killed 10 Chinese construction workers in Afghanistan and injured six others, Xinhua news reported. The G-8 rebuked North Korea and Iran for pursuing nuclear weapons in violation of the international nonproliferation treaty, Bloomberg reported. U.S. prosecutors are investigating an alleged plot by American-Muslim activist Abdurahman Alamoudi to kill Saudi Crown Prince Abdullah, the Wall Street Journal reported. Japanese machinery orders jumped 11.8% in April, exceeding economists' estimates of 2.3%, as companies planned to increase investment in factories and equipment to meet rising overseas demand for electronics goods, Bloomberg reported.
Late-Night Trading
Asian Indices -1.25% to +.50% on average.
S&P 500 indicated +.19%.
NASDAQ 100 indicated +.41%.
BOTTOM LINE: I expect U.S. stocks to open slightly higher in the morning and then turn modestly weaker later in the day. Oil is down tonight, however interest rates will likely rise again tomorrow. The postponement of the inflation readings and market close Friday have thrown my game-plan off a bit. I may boost market exposure if the major indices can hold gains throughout the day. The Portfolio is currently market neutral.
Company/Estimate
ALOG/.36
CRMT/.55
MTZ/.14
NSM/.29
Splits
SID 4-for-1
MOGN 2-for-1
Economic Data
Import Price Index for May estimated +.8% versus +.2% in April.
Initial Jobless Claims for last week estimated at 335K versus 339K prior week.
Continuing Claims estimated at 2972K versus 3003K prior.
Recommendations
Goldman Sachs reiterated Outperform on SYMC, MUR, ETN, DVN and Underperform on VRSN.
Late-Night News
Asian indices are mixed as strength in Japan and Australia is offsetting weakness elsewhere. United Microelectronics, the world's no. 2 supplier of made-to-order semiconductors, expects chip prices that started rising this year to continue gaining in the second half because demand exceeds supply, the Commercial Times reported. China will allow domestic institutions to invest in overseas markets for the first time by the end of this month, the Hong Kong Standard reported. China is moving closer to enacting its first telecommunication law, which industry players hope will help clarify policy and ease the government's grip on the sector, the South China Morning Post said. Terrorists killed 10 Chinese construction workers in Afghanistan and injured six others, Xinhua news reported. The G-8 rebuked North Korea and Iran for pursuing nuclear weapons in violation of the international nonproliferation treaty, Bloomberg reported. U.S. prosecutors are investigating an alleged plot by American-Muslim activist Abdurahman Alamoudi to kill Saudi Crown Prince Abdullah, the Wall Street Journal reported. Japanese machinery orders jumped 11.8% in April, exceeding economists' estimates of 2.3%, as companies planned to increase investment in factories and equipment to meet rising overseas demand for electronics goods, Bloomberg reported.
Late-Night Trading
Asian Indices -1.25% to +.50% on average.
S&P 500 indicated +.19%.
NASDAQ 100 indicated +.41%.
BOTTOM LINE: I expect U.S. stocks to open slightly higher in the morning and then turn modestly weaker later in the day. Oil is down tonight, however interest rates will likely rise again tomorrow. The postponement of the inflation readings and market close Friday have thrown my game-plan off a bit. I may boost market exposure if the major indices can hold gains throughout the day. The Portfolio is currently market neutral.
Wednesday, June 09, 2004
Wednesday Close
S&P 500 1,131.33 -.95%
NASDAQ 1,990.61 -1.63%
Leading Sectors
Telecom +.56%
Gaming -.12%
Oil Service -.29%
Lagging Sectors
Homebuilders -2.68%
Biotech -2.95%
Semis -3.24%
Other
Crude Oil 37.71 +.45%
Natural Gas 6.10 +.30%
Gold 384.20 -.26%
Base Metals 104.84 -2.11%
U.S. Dollar 89.75 +1.40%
10-Yr. T-note Yield 4.81% +.97%
VIX 15.39 +2.53%
Put/Call .89 +3.49%
NYSE Arms 1.19 +30.77%
After-hours Movers
TGT +5.19% after announcing that May Department Stores agreed to buy its Marshall Field's department stores for $3.24 billion.
NTOP +4.9% after beating 3Q estimates.
MATK -9.79% after missing 2Q estimates lowering guidance.
AMTD -3.42% after lowering 3Q guidance.
Recommendations
Goldman Sachs reiterated Outperform on SRE, ACN, KO, AGN, XRX, USB and Underperform on TWMC.
After-hours News
U.S. stocks finished lower today as interest rates rose ahead of several key inflation reports. Interest rate-sensitive and high-beta stocks bore the brunt of the selling. After the close, Apple Computer said it will introduce a European version of its iTunes Web site for selling music next week, the International Herald Tribune reported. Dongkuk Steel Mill bought 5,000 tons of pig iron from Russia's Kuznetsky Met Kombinat at $237 a ton, less than the $295 a ton it paid last month, the Tex Report said. AU Optronics, which is boosting capacity at a new plant making flat-panel displays for computers and televisions, is poised to become the world's No. 1 supplier of the displays, displacing two larger rivals, the Commercial Times reported. Accenture may lose a $10 billion contract to work on border security under legislation approved by a House of Representatives committee, Bloomberg reported. Former Symbol Technologies CEO Razmilovic, indicted last week for conspiring to commit accounting fraud, is a fugitive, Bloomberg reported. The Semiconductor Industry Association raised it outlook for chip growth today, predicting that revenue in 04 will jump 28% to $214 billion, Bloomberg said.
BOTTOM LINE: The Portfolio was down today on weakness in my technology, biotechnology and industrial long positions. I took profits in several more longs in the afternoon and put out a couple of new shorts, leaving the Portfolio with market neutral(longs-shorts=0) exposure. One of my new shorts is DITC and I am using a stop-loss of $22.00 on this position. As previously discussed, I expect U.S. stocks to remain neutral to lower for the next couple of weeks. I will look to selectively add to favorite long positions during this time period on any extreme weakness as I expect the rally to resume towards the end of the month or the first of July.
NASDAQ 1,990.61 -1.63%
Leading Sectors
Telecom +.56%
Gaming -.12%
Oil Service -.29%
Lagging Sectors
Homebuilders -2.68%
Biotech -2.95%
Semis -3.24%
Other
Crude Oil 37.71 +.45%
Natural Gas 6.10 +.30%
Gold 384.20 -.26%
Base Metals 104.84 -2.11%
U.S. Dollar 89.75 +1.40%
10-Yr. T-note Yield 4.81% +.97%
VIX 15.39 +2.53%
Put/Call .89 +3.49%
NYSE Arms 1.19 +30.77%
After-hours Movers
TGT +5.19% after announcing that May Department Stores agreed to buy its Marshall Field's department stores for $3.24 billion.
NTOP +4.9% after beating 3Q estimates.
MATK -9.79% after missing 2Q estimates lowering guidance.
AMTD -3.42% after lowering 3Q guidance.
Recommendations
Goldman Sachs reiterated Outperform on SRE, ACN, KO, AGN, XRX, USB and Underperform on TWMC.
After-hours News
U.S. stocks finished lower today as interest rates rose ahead of several key inflation reports. Interest rate-sensitive and high-beta stocks bore the brunt of the selling. After the close, Apple Computer said it will introduce a European version of its iTunes Web site for selling music next week, the International Herald Tribune reported. Dongkuk Steel Mill bought 5,000 tons of pig iron from Russia's Kuznetsky Met Kombinat at $237 a ton, less than the $295 a ton it paid last month, the Tex Report said. AU Optronics, which is boosting capacity at a new plant making flat-panel displays for computers and televisions, is poised to become the world's No. 1 supplier of the displays, displacing two larger rivals, the Commercial Times reported. Accenture may lose a $10 billion contract to work on border security under legislation approved by a House of Representatives committee, Bloomberg reported. Former Symbol Technologies CEO Razmilovic, indicted last week for conspiring to commit accounting fraud, is a fugitive, Bloomberg reported. The Semiconductor Industry Association raised it outlook for chip growth today, predicting that revenue in 04 will jump 28% to $214 billion, Bloomberg said.
BOTTOM LINE: The Portfolio was down today on weakness in my technology, biotechnology and industrial long positions. I took profits in several more longs in the afternoon and put out a couple of new shorts, leaving the Portfolio with market neutral(longs-shorts=0) exposure. One of my new shorts is DITC and I am using a stop-loss of $22.00 on this position. As previously discussed, I expect U.S. stocks to remain neutral to lower for the next couple of weeks. I will look to selectively add to favorite long positions during this time period on any extreme weakness as I expect the rally to resume towards the end of the month or the first of July.
Mid-day Update
S&P 500 1,135.65 -.57%
NASDAQ 2,003.20 -1.00%
Leading Sectors
Telecom +1.97%
Airlines +.38%
Gaming +.18%
Lagging Sectors
Biotech -2.17%
Semis -2.32%
Homebuilders -2.33%
Other
Crude Oil 37.15 -.35%
Natural Gas 6.08 -.57%
Gold 385.10 -1.71%
Base Metals 104.84 -2.11%
U.S. Dollar 89.47 +1.08%
10-Yr. T-note Yield 4.81 +1.01%
VIX 15.09 +.53%
Put/Call .76 -11.63%
NYSE Arms 1.05 +15.38%
Market Movers
IPIX +21.1% after saying its full-360 degree video surveillance systems are deployed at the G-8 Summit.
OVTI -29.03% after lowering 1Q estimates and saying it may restate prior quarter results.
DNA -5.91% after Sanford C. Bernstein downgrade to Market Perform.
DHB +30.6% after saying it was awarded a $239.4 million contract to supply the U.S. Army with the company's new armor that shields arms and shoulders.
BDY +15.3% after saying it has entered into a definitive agreement to acquire the assets of Bioglan Pharmaceuticals, a subsidiary of Quintiles Transnational, for $183 million.
TOM -10.96% after lowering 1Q/05 forecast.
NKTR -11.8% after saying its Exubera NDA won't come until 05.
Economic Data
Wholesale Inventories down .1% in April versus estimates of a .5% rise and a .5% rise in March.
Recommendations
Goldman reiterated Outperform on BIIB, AMLN, GILD, TRMS, CCL, RCL, FS, GDT and IP. Goldman sees PC growth of at least 12% in 04, any upside to this will drive stocks higher. Goldman rated NRG Outperform. Citi SmithBarney said to Buy STT right now, target $62. Citi reiterated Buy on KMB, target $72. Citi reiterated Buy on PCG, target $34. ROCK raised to Sector Outperform at CIBC, target $35. PXD raised to Outperform at CSFB, target $39. SPLS rated Outperform at CSFB, target $34.
Mid-day News
U.S. stocks are falling mid-day as interest rates rise ahead of several key inflation reports. AirTran is better situated than competitors as the cost of jet fuel increases, because it has "hedged" 50% of its fuel for the rest of this year and bought 15% for 05, CEO Leonard told CNBC. President Bush supports stem-cell research with limits, First Lady Laura Bush told CNN. TiVo will unveil Internet-based features that will allow subscribers to download films and music from the Web to their recorders' hard drive, the NY Times reported. Sovereign Bancorp is considering a bid for NY Community Bancorp, the NY Daily News said. The growth in health-care spending in the U.S. fell for the second year in a row in 03, because demand for health services decreased, the AP reported. Disney and three French banks agreed to bail out Euro Disney for the second time in a decade, Bloomberg reported. A government report showed inventories relative to sales dropped to an all-time record low of 1.12 month's supply in April, suggesting companies will have to order more from factories in coming months to catch up with demand, spurring production and adding to growth, Bloomberg reported. The U.S. Justice Department won't ask the Supreme Court to reverse a lower court's decision striking down federal rules that give AT&T and other carriers discounted access to local-telephone companies' networks, Bloomberg said. Crude oil is falling to a 6-week low after the Energy Department reported that U.S. oil and gasoline inventories rose last week. U.S. Treasury notes fell for the third day in four on speculation inflation will accelerate, leading the Fed to boost rates faster than anticipated, Bloomberg reported.
BOTTOM LINE: The Portfolio is down today as my semiconductor, telecom equipment and internet longs are declining. I have taken profits in many longs this morning and added several new shorts, bringing the Portfolio's market exposure to 50% net long. The Portfolio is up substantially for the year and I want to protect profits over the short-term. One of my new shorts is SSYS and I am using a $27.50 stop-loss on the position. I also shorted a few homebuilders. Inflation reports over the next week from the PPI and CPI will likely exceed expectations, further pressuring bonds. Moreover, I expect stocks to trade weaker to neutral as investor anxiety rises over the next 2 weeks ahead of the Fed rate hike, Iraqi handover, end of the quarter and Russell rebalancing. I then expect U.S. stocks to begin another up-leg at the end of the month or beginning of July.
NASDAQ 2,003.20 -1.00%
Leading Sectors
Telecom +1.97%
Airlines +.38%
Gaming +.18%
Lagging Sectors
Biotech -2.17%
Semis -2.32%
Homebuilders -2.33%
Other
Crude Oil 37.15 -.35%
Natural Gas 6.08 -.57%
Gold 385.10 -1.71%
Base Metals 104.84 -2.11%
U.S. Dollar 89.47 +1.08%
10-Yr. T-note Yield 4.81 +1.01%
VIX 15.09 +.53%
Put/Call .76 -11.63%
NYSE Arms 1.05 +15.38%
Market Movers
IPIX +21.1% after saying its full-360 degree video surveillance systems are deployed at the G-8 Summit.
OVTI -29.03% after lowering 1Q estimates and saying it may restate prior quarter results.
DNA -5.91% after Sanford C. Bernstein downgrade to Market Perform.
DHB +30.6% after saying it was awarded a $239.4 million contract to supply the U.S. Army with the company's new armor that shields arms and shoulders.
BDY +15.3% after saying it has entered into a definitive agreement to acquire the assets of Bioglan Pharmaceuticals, a subsidiary of Quintiles Transnational, for $183 million.
TOM -10.96% after lowering 1Q/05 forecast.
NKTR -11.8% after saying its Exubera NDA won't come until 05.
Economic Data
Wholesale Inventories down .1% in April versus estimates of a .5% rise and a .5% rise in March.
Recommendations
Goldman reiterated Outperform on BIIB, AMLN, GILD, TRMS, CCL, RCL, FS, GDT and IP. Goldman sees PC growth of at least 12% in 04, any upside to this will drive stocks higher. Goldman rated NRG Outperform. Citi SmithBarney said to Buy STT right now, target $62. Citi reiterated Buy on KMB, target $72. Citi reiterated Buy on PCG, target $34. ROCK raised to Sector Outperform at CIBC, target $35. PXD raised to Outperform at CSFB, target $39. SPLS rated Outperform at CSFB, target $34.
Mid-day News
U.S. stocks are falling mid-day as interest rates rise ahead of several key inflation reports. AirTran is better situated than competitors as the cost of jet fuel increases, because it has "hedged" 50% of its fuel for the rest of this year and bought 15% for 05, CEO Leonard told CNBC. President Bush supports stem-cell research with limits, First Lady Laura Bush told CNN. TiVo will unveil Internet-based features that will allow subscribers to download films and music from the Web to their recorders' hard drive, the NY Times reported. Sovereign Bancorp is considering a bid for NY Community Bancorp, the NY Daily News said. The growth in health-care spending in the U.S. fell for the second year in a row in 03, because demand for health services decreased, the AP reported. Disney and three French banks agreed to bail out Euro Disney for the second time in a decade, Bloomberg reported. A government report showed inventories relative to sales dropped to an all-time record low of 1.12 month's supply in April, suggesting companies will have to order more from factories in coming months to catch up with demand, spurring production and adding to growth, Bloomberg reported. The U.S. Justice Department won't ask the Supreme Court to reverse a lower court's decision striking down federal rules that give AT&T and other carriers discounted access to local-telephone companies' networks, Bloomberg said. Crude oil is falling to a 6-week low after the Energy Department reported that U.S. oil and gasoline inventories rose last week. U.S. Treasury notes fell for the third day in four on speculation inflation will accelerate, leading the Fed to boost rates faster than anticipated, Bloomberg reported.
BOTTOM LINE: The Portfolio is down today as my semiconductor, telecom equipment and internet longs are declining. I have taken profits in many longs this morning and added several new shorts, bringing the Portfolio's market exposure to 50% net long. The Portfolio is up substantially for the year and I want to protect profits over the short-term. One of my new shorts is SSYS and I am using a $27.50 stop-loss on the position. I also shorted a few homebuilders. Inflation reports over the next week from the PPI and CPI will likely exceed expectations, further pressuring bonds. Moreover, I expect stocks to trade weaker to neutral as investor anxiety rises over the next 2 weeks ahead of the Fed rate hike, Iraqi handover, end of the quarter and Russell rebalancing. I then expect U.S. stocks to begin another up-leg at the end of the month or beginning of July.
Wednesday Watch
Earnings of Note
Company/Estimate
AMWD/1.02
HRB/3.16
MATK/.14
OVTI/.31
SFD/.51
TOM/.37
Splits
PNR 2-for-1
ZLC 2-for-1
Economic Data
Wholesale Inventories for April estimated +.5% versus +.6% in March.
Recommendations
Goldman Sachs reiterated Underperform on FHCC and Outperform on AVP, PXD. Goldman said lodging sector managements had trouble controlling their "glee" on how strong current trends are at their conference yesterday.
Late-Night News
Asian indices are modestly lower on declines in Japanese bank shares after Goldman Sachs lowered their ratings. Qualcomm, unable to meet demand for its chips, is negotiating with South Korean companies to build semiconductors that go into mobile phones, Electronic Times reported. Oracle has a "really good case" in its trial to stop the Justice Department from blocking the company's purchase of Peoplesoft, CEO Larry Ellison said at a trade show. Beijing may face power blackouts this summer because peak electricity demand is forecast to be 14% higher than a year ago, the Beijing News reported. Clear Channel Communications has agreed to pay an estimated $1.75 million in penalties to settle indecency complaint with the FCC, the NY Times reported. State Street Global Advisors said it expects to get approval this year to set up China's first exchange-traded fund, Bloomberg reported. Japan raised its estimate for first-quarter economic growth to a 6.1% annual pace, above the 5.8% economists expected. Gilead Sciences, CIT Group and Vornado Realty Trust may join the S&P 500 in the next few months as takeovers open at least five spots in the benchmark index, Bloomberg reported.
Late-Night Trading
Asian Indices -.50% to +.25% on average.
S&P 500 indicated -.08%.
NASDAQ 100 indicated -.03%.
BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on another fall in energy prices tonight and continuing improvements in Iraq. Japanese GDP growth exceeded expectations as I expected. The Japanese consumer is contributing meaningfully to this recovery, unlike past failed recoveries, which leads me to believe it is sustainable and a very positive development for world economic growth. I will likely cut the Portfolio's market exposure into any market strength tomorrow as I expect Thursday's PPI and jobs numbers to exceed expectations, resulting in another rise in interest rates. The Portfolio is 125% net long heading into tomorrow.
Company/Estimate
AMWD/1.02
HRB/3.16
MATK/.14
OVTI/.31
SFD/.51
TOM/.37
Splits
PNR 2-for-1
ZLC 2-for-1
Economic Data
Wholesale Inventories for April estimated +.5% versus +.6% in March.
Recommendations
Goldman Sachs reiterated Underperform on FHCC and Outperform on AVP, PXD. Goldman said lodging sector managements had trouble controlling their "glee" on how strong current trends are at their conference yesterday.
Late-Night News
Asian indices are modestly lower on declines in Japanese bank shares after Goldman Sachs lowered their ratings. Qualcomm, unable to meet demand for its chips, is negotiating with South Korean companies to build semiconductors that go into mobile phones, Electronic Times reported. Oracle has a "really good case" in its trial to stop the Justice Department from blocking the company's purchase of Peoplesoft, CEO Larry Ellison said at a trade show. Beijing may face power blackouts this summer because peak electricity demand is forecast to be 14% higher than a year ago, the Beijing News reported. Clear Channel Communications has agreed to pay an estimated $1.75 million in penalties to settle indecency complaint with the FCC, the NY Times reported. State Street Global Advisors said it expects to get approval this year to set up China's first exchange-traded fund, Bloomberg reported. Japan raised its estimate for first-quarter economic growth to a 6.1% annual pace, above the 5.8% economists expected. Gilead Sciences, CIT Group and Vornado Realty Trust may join the S&P 500 in the next few months as takeovers open at least five spots in the benchmark index, Bloomberg reported.
Late-Night Trading
Asian Indices -.50% to +.25% on average.
S&P 500 indicated -.08%.
NASDAQ 100 indicated -.03%.
BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on another fall in energy prices tonight and continuing improvements in Iraq. Japanese GDP growth exceeded expectations as I expected. The Japanese consumer is contributing meaningfully to this recovery, unlike past failed recoveries, which leads me to believe it is sustainable and a very positive development for world economic growth. I will likely cut the Portfolio's market exposure into any market strength tomorrow as I expect Thursday's PPI and jobs numbers to exceed expectations, resulting in another rise in interest rates. The Portfolio is 125% net long heading into tomorrow.
Tuesday, June 08, 2004
Tuesday Close
S&P 500 1,142.18 +.15%
NASDAQ 2,023.53 +.14%
Leading Sectors
Airlines +2.50%
Restaurants +1.08%
Computer Boxmakers +.85%
Lagging Sectors
Gaming -.89%
Biotech -1.03%
Homebuilders -2.44%
Other
Crude Oil 36.95 -.89%
Natural Gas 6.09 -.41%
Gold 392.10 +.08%
Base Metals 107.10 -.94%
U.S. Dollar 88.51 +.29%
10-Yr. T-note Yield 4.76 +.04%
VIX 15.01 -2.47%
Put/Call .86 +6.17%
NYSE Arms .91 +167.65%
After-hours Movers
DHB +40.0% after saying it was awarded a $239.4 million contract to supply the U.S. Army with the company's new armor that shields arms and shoulders.
REMC +7.87% after beating 1Q estimates.
CACH -8.91% after cutting 2Q and 04 forecasts.
Recommendations
Goldman Sachs reiterated Outperform on DTV and Underperform on VRTX. Scott Moritz wrote a positive column on AGR/A for TheStreet.com.
After-hours News
U.S. stocks finished modestly higher today as short covering and investors afraid of missing the recent rally boosted shares in the afternoon. After the close, President Bush said he may ask governments attending the G-8 summit starting tomorrow to help write-off Iraq's debts, the Financial Times reported. Lea Fastow, the wife of former Enron CFO Andrew Fastow, has been ordered to report to a prison in downtown Houston rather than the minimum-security facility her lawyers had sought, the Houston Chronicle reported. Crude oil futures fell to a six-week low on expectations of rising U.S. inventories, Bloomberg reported. The dollar had its biggest rise against the euro in three weeks after Greenspan said that interest-rate increases are coming and signaled the central bank is prepared to accelerate the pace of those increases if inflation exceeds forecasts. Almost daily stomach and urinary problems may help doctors diagnose ovarian cancer before it becomes deadly, according to a study in the AMA Journal. Shares of Sears and Kmart rose today on speculation that Sears may purchase some stores from Kmart, Bloomberg said. Mexico's tourism revenue grew 15% in the first four months of the year, double the pace in the same period of 2003, as an improving economy spurred travel and terrorism concerns kept U.S. travelers close to home, Bloomberg reported. The UN Security Council voted 15-0 to restore Iraq's sovereignty on June 30 and mandate U.S.-led forces to maintain security until the end of 2005, Bloomberg reported.
BOTTOM LINE: The Portfolio was unchanged on the day as my rising semiconductor and semi-equipment longs were offset by declines in my internet and industrial longs. I took profits in one of my industrial longs in the afternoon and added TZOO. I am keeping a stop-loss of $19.00 on this new long position. Today's muted action was positive for the Bulls considering the comments Greenspan made with respect to inflation and raising rates. I continue to expect an increase in the Fed Funds' rate of 50 basis points by June 30. With energy prices continuing to fall and interest rates stabilizing, another burst of buying activity in U.S. stocks is possible before a short-term top is formed. This will likely occur at any time. However, I will use any extreme strength to lighten market exposure ahead of several key inflation reports.
NASDAQ 2,023.53 +.14%
Leading Sectors
Airlines +2.50%
Restaurants +1.08%
Computer Boxmakers +.85%
Lagging Sectors
Gaming -.89%
Biotech -1.03%
Homebuilders -2.44%
Other
Crude Oil 36.95 -.89%
Natural Gas 6.09 -.41%
Gold 392.10 +.08%
Base Metals 107.10 -.94%
U.S. Dollar 88.51 +.29%
10-Yr. T-note Yield 4.76 +.04%
VIX 15.01 -2.47%
Put/Call .86 +6.17%
NYSE Arms .91 +167.65%
After-hours Movers
DHB +40.0% after saying it was awarded a $239.4 million contract to supply the U.S. Army with the company's new armor that shields arms and shoulders.
REMC +7.87% after beating 1Q estimates.
CACH -8.91% after cutting 2Q and 04 forecasts.
Recommendations
Goldman Sachs reiterated Outperform on DTV and Underperform on VRTX. Scott Moritz wrote a positive column on AGR/A for TheStreet.com.
After-hours News
U.S. stocks finished modestly higher today as short covering and investors afraid of missing the recent rally boosted shares in the afternoon. After the close, President Bush said he may ask governments attending the G-8 summit starting tomorrow to help write-off Iraq's debts, the Financial Times reported. Lea Fastow, the wife of former Enron CFO Andrew Fastow, has been ordered to report to a prison in downtown Houston rather than the minimum-security facility her lawyers had sought, the Houston Chronicle reported. Crude oil futures fell to a six-week low on expectations of rising U.S. inventories, Bloomberg reported. The dollar had its biggest rise against the euro in three weeks after Greenspan said that interest-rate increases are coming and signaled the central bank is prepared to accelerate the pace of those increases if inflation exceeds forecasts. Almost daily stomach and urinary problems may help doctors diagnose ovarian cancer before it becomes deadly, according to a study in the AMA Journal. Shares of Sears and Kmart rose today on speculation that Sears may purchase some stores from Kmart, Bloomberg said. Mexico's tourism revenue grew 15% in the first four months of the year, double the pace in the same period of 2003, as an improving economy spurred travel and terrorism concerns kept U.S. travelers close to home, Bloomberg reported. The UN Security Council voted 15-0 to restore Iraq's sovereignty on June 30 and mandate U.S.-led forces to maintain security until the end of 2005, Bloomberg reported.
BOTTOM LINE: The Portfolio was unchanged on the day as my rising semiconductor and semi-equipment longs were offset by declines in my internet and industrial longs. I took profits in one of my industrial longs in the afternoon and added TZOO. I am keeping a stop-loss of $19.00 on this new long position. Today's muted action was positive for the Bulls considering the comments Greenspan made with respect to inflation and raising rates. I continue to expect an increase in the Fed Funds' rate of 50 basis points by June 30. With energy prices continuing to fall and interest rates stabilizing, another burst of buying activity in U.S. stocks is possible before a short-term top is formed. This will likely occur at any time. However, I will use any extreme strength to lighten market exposure ahead of several key inflation reports.
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