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Friday, January 06, 2006
Thursday, January 05, 2006
Friday Watch
Late-Night Headlines
Bloomberg:
- Israeli Prime Minister Ariel Sharon is in an induced coma after brain surgery while his new party prepares for a successor who can win the national election in March and advance Sharon’s efforts to resolve the Middle East conflict.
Edaily:
- Samsung Electronics plans to begin mass production at a new liquid-crystal display factory geared for 52-inch televisions next year.
China Daily:
- Casino revenue in Asia will increase 20% this year to $13 billion, driven by growth of Macau’s gaming industry, citing Las Vegas-based consultant Globalysis.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on (ENTG), (IBM) and (SBUX).
- Reiterated Outperform on (GOOG), raised 05, 06 and 07 estimates with aggressive valuation target boosted to $556.
- Reiterated Outperform on (YHOO), raised 06 and 07 estimates with new implied value of $50.
- Reiterated Underperform on (DRI).
Business Week:
- Shares of Genesee & Wyoming(GWR) may surge almost 60% in 18 months because of increased earnings from acquisitions.
- The shares of Anadarko Petroleum(APC) may rise because the company may be a takeover target, citing Oppenheimer’s Fadel Gheit.
- The shares of Cogent(COGT) may rise on increased sales.
Night Trading
Asian Indices are -.25% to +.50% on average.
S&P 500 indicated -.02%.
NASDAQ 100 indicated -.06%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
(DLP).13
(GAP)-.49
(SGR).36
Upcoming Splits
(PTC) 3-for-2
Economic Releases
8:30 am EST
- The Change in Non-farm Payrolls for December is estimated at 200K versus 215K in November.
- The Change in Manufacturing Payrolls for December is estimated at 0K versus 11K in November.
- The Unemployment Rate for December is estimated at 5.0% versus a 5.0% rate in November.
- Average Hourly Earnings for December are estimated to rise .2% versus a .2% gain in November.
Bloomberg:
- Israeli Prime Minister Ariel Sharon is in an induced coma after brain surgery while his new party prepares for a successor who can win the national election in March and advance Sharon’s efforts to resolve the Middle East conflict.
Edaily:
- Samsung Electronics plans to begin mass production at a new liquid-crystal display factory geared for 52-inch televisions next year.
China Daily:
- Casino revenue in Asia will increase 20% this year to $13 billion, driven by growth of Macau’s gaming industry, citing Las Vegas-based consultant Globalysis.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on (ENTG), (IBM) and (SBUX).
- Reiterated Outperform on (GOOG), raised 05, 06 and 07 estimates with aggressive valuation target boosted to $556.
- Reiterated Outperform on (YHOO), raised 06 and 07 estimates with new implied value of $50.
- Reiterated Underperform on (DRI).
Business Week:
- Shares of Genesee & Wyoming(GWR) may surge almost 60% in 18 months because of increased earnings from acquisitions.
- The shares of Anadarko Petroleum(APC) may rise because the company may be a takeover target, citing Oppenheimer’s Fadel Gheit.
- The shares of Cogent(COGT) may rise on increased sales.
Night Trading
Asian Indices are -.25% to +.50% on average.
S&P 500 indicated -.02%.
NASDAQ 100 indicated -.06%.
Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
(DLP).13
(GAP)-.49
(SGR).36
Upcoming Splits
(PTC) 3-for-2
Economic Releases
8:30 am EST
- The Change in Non-farm Payrolls for December is estimated at 200K versus 215K in November.
- The Change in Manufacturing Payrolls for December is estimated at 0K versus 11K in November.
- The Unemployment Rate for December is estimated at 5.0% versus a 5.0% rate in November.
- Average Hourly Earnings for December are estimated to rise .2% versus a .2% gain in November.
BOTTOM LINE: Asian indices are mixed as losses in commodity producing companies in the region are being offset by gains in technology shares. I expect US equities to open mixed and to rally into the afternoon. The Portfolio is 100% net long heading into the day.
***Alert***
I am unable to post the Thursday Close due to a scheduling conflict. I will post the Friday Watch later this evening.
Stocks Mixed in Final Hour as Natural Gas Continues to Plunge
BOTTOM LINE: The Portfolio is higher into the final hour of trading on gains in my Internet longs, Semi longs, Software longs, Biotech longs energy-related shorts. I added NBR short and added to a couple of existing longs today, thus leaving the Portfolio 100% net long. The tone of the market is slightly positive as the advance/decline line is modestly higher, sector performance is mixed and volume is above average. Measures of investor anxiety are mostly higher. The AAII % Bulls fell to 29.35% this week from 37.30% the prior week. This reading is approaching depressed levels and has declined 29.25 percentage points in eight weeks. The AAII % Bears rose to 40.22% from 36.51% the prior week. This reading is now approaching elevated levels and has increased 24.21 percentage points in six weeks. I expect bullish sentiment to rise next week. As I said a few weeks ago, the fact that bullishness has declined to this extent with the market near a four-year high bodes very well for another meaningful push higher during this quarter. I expect US stocks to trade mixed from current levels into the close as weakness in the energy sector and apprehension ahead of the jobs report offsets lower energy prices and short-covering.
Today's Headlines
Bloomberg:
- Fannie Mae(FNM) investigators haven’t found anything new about the mortgage finance company’ $10.8 billion in accounting errors that goes significantly beyond those already revealed, said Warren Rudman, who is heading the internal probe.
- US retailers posted December sales gains as department stores and luxury merchants beat analysts’ sales forecasts.
- Natural gas is plunging after a report showed inventories last week rose, the first time a January report showed an increase since the government began tracking fluctuations in storage in 1994.
- Israeli Prime Minister Sharon will be under deep sedation for at least 24 hours after all-night brain surgery for a second stroke that three Israeli politics into disarray.
- The US economy will add about 2.1 million new jobs this year and the unemployment rate will remain at 5.0%, a White House economist said.
- Boeing’s(BA) commercial-aircraft orders more than tripled to a record 1,002 last year on demand from Asian and Middle Eastern carriers, likely overtaking Airbus SAS for the first time in five years.
Wall Street Journal:
- BASF AG, the world’s largest chemical maker, might see its $4.9 billion bid for Englehard Corp.(EC) thwarted if the US company used a “poison-pill” defense, the BASF CEO said.
- Google(GOOG) plans to begin a service that will allow consumers to buy videos including television programs from content partners such as CBS Corp.
- Blackstone Group LP and Hewlett-Packard are considering making an offer for Computer Sciences(CSC).
- Palm’s(PALM) new version of its Treo mobile phone with Microsoft(MSFT) software isn’t as capable as its Treo 650 phone that uses Palm’s operating system, Walter Mossberg wrote.
- Wyeth(WYE) CEO Essner said the company plans to seek regulatory approval for as many as five drugs this year.
- Sony Corp.(SNE) and Sling Media plan today to announce technology that will let customers use wireless phones to watch cable or satellite television shows being delivered to their homes or stored on digital-video recorders.
- Nokia Oyj(NOK) plans to increase production of its 770 wireless Internet device to meet an unexpected surge in demand.
- Television makers including Sony(SNE) and Samsung Electronics are using light-emitting diodes in more expensive sets to provide brighter, more colorful pictures.
- AT&T Inc.(T) is offering television channels over the Internet in San Antonio, a first step in its plan to challenge cable TV this year.
- General Motors’(GM) China sales rose 35% to a record last year as discounts and a wider model range attracted buyers, putting the company on course to surpass Volkswagen AG in the market.
NY Times:
- Lawmakers in 30 US states plan to introduce legislation to make corporations such as Wal-Mart Stores(WMT) spend more on employee health insurance.
Washington Post:
- Washington D.C. Council gave final clearance yesterday to a ban on smoking in bars, restaurants and other public places.
Jornal de Negocios:
- Brisa-Auto Estradas de Portugal SA is considering investing in highways in the US, where more states plan concessions for private companies to build and operate toll roads.
Yonhap News:
- Samsung Electronics is targeting sales of digital TVs to climb to a record $10 billion in 2007, citing the head of the company’s consumer electronics division.
Optima:
- Copper prices will average just over $1 a pound over the next decade as supply from mines and scrap rises and Indian demand fails to match that of China, Richard Wilson, managing director of Brook Hunt said.
- Fannie Mae(FNM) investigators haven’t found anything new about the mortgage finance company’ $10.8 billion in accounting errors that goes significantly beyond those already revealed, said Warren Rudman, who is heading the internal probe.
- US retailers posted December sales gains as department stores and luxury merchants beat analysts’ sales forecasts.
- Natural gas is plunging after a report showed inventories last week rose, the first time a January report showed an increase since the government began tracking fluctuations in storage in 1994.
- Israeli Prime Minister Sharon will be under deep sedation for at least 24 hours after all-night brain surgery for a second stroke that three Israeli politics into disarray.
- The US economy will add about 2.1 million new jobs this year and the unemployment rate will remain at 5.0%, a White House economist said.
- Boeing’s(BA) commercial-aircraft orders more than tripled to a record 1,002 last year on demand from Asian and Middle Eastern carriers, likely overtaking Airbus SAS for the first time in five years.
Wall Street Journal:
- BASF AG, the world’s largest chemical maker, might see its $4.9 billion bid for Englehard Corp.(EC) thwarted if the US company used a “poison-pill” defense, the BASF CEO said.
- Google(GOOG) plans to begin a service that will allow consumers to buy videos including television programs from content partners such as CBS Corp.
- Blackstone Group LP and Hewlett-Packard are considering making an offer for Computer Sciences(CSC).
- Palm’s(PALM) new version of its Treo mobile phone with Microsoft(MSFT) software isn’t as capable as its Treo 650 phone that uses Palm’s operating system, Walter Mossberg wrote.
- Wyeth(WYE) CEO Essner said the company plans to seek regulatory approval for as many as five drugs this year.
- Sony Corp.(SNE) and Sling Media plan today to announce technology that will let customers use wireless phones to watch cable or satellite television shows being delivered to their homes or stored on digital-video recorders.
- Nokia Oyj(NOK) plans to increase production of its 770 wireless Internet device to meet an unexpected surge in demand.
- Television makers including Sony(SNE) and Samsung Electronics are using light-emitting diodes in more expensive sets to provide brighter, more colorful pictures.
- AT&T Inc.(T) is offering television channels over the Internet in San Antonio, a first step in its plan to challenge cable TV this year.
- General Motors’(GM) China sales rose 35% to a record last year as discounts and a wider model range attracted buyers, putting the company on course to surpass Volkswagen AG in the market.
NY Times:
- Lawmakers in 30 US states plan to introduce legislation to make corporations such as Wal-Mart Stores(WMT) spend more on employee health insurance.
Washington Post:
- Washington D.C. Council gave final clearance yesterday to a ban on smoking in bars, restaurants and other public places.
Jornal de Negocios:
- Brisa-Auto Estradas de Portugal SA is considering investing in highways in the US, where more states plan concessions for private companies to build and operate toll roads.
Yonhap News:
- Samsung Electronics is targeting sales of digital TVs to climb to a record $10 billion in 2007, citing the head of the company’s consumer electronics division.
Optima:
- Copper prices will average just over $1 a pound over the next decade as supply from mines and scrap rises and Indian demand fails to match that of China, Richard Wilson, managing director of Brook Hunt said.
Jobless Claims Plunge, Service Sector Strong, Pending Home Sales Fall, Natural Gas Supplies Rise
- Initial Jobless Claims fell to 291K versus estimates of 320K and 326K the prior week.
- Continuing Claims rose to 2718K versus estimates of 2675K and 2705K prior.
- ISM Non-Manufacturing for December rose to 59.8 versus estimates of 59.0 and a reading of 58.5 in November.
- Pending Home Sales for November fell 2.5% versus estimates of a 1.0% fall and a 3.3% decline in October.
- The EIA reported a crude drawdown of 1,013,000 barrels vs. estimates of a 1,250,000 barrel drawdown. Gasoline supplies rose 1,406,000 barrels vs. estimates of a 400,000 barrel rise. Distillate inventories rose 2,114,000 barrels vs. estimates of a 300,000 barrel increase. Refinery utilization increased 1.03% vs. estimates of a 0.4% increase. Natural gas storage increased 1 bcf versus estimates of a 51 bcf decline.
- Continuing Claims rose to 2718K versus estimates of 2675K and 2705K prior.
- ISM Non-Manufacturing for December rose to 59.8 versus estimates of 59.0 and a reading of 58.5 in November.
- Pending Home Sales for November fell 2.5% versus estimates of a 1.0% fall and a 3.3% decline in October.
- The EIA reported a crude drawdown of 1,013,000 barrels vs. estimates of a 1,250,000 barrel drawdown. Gasoline supplies rose 1,406,000 barrels vs. estimates of a 400,000 barrel rise. Distillate inventories rose 2,114,000 barrels vs. estimates of a 300,000 barrel increase. Refinery utilization increased 1.03% vs. estimates of a 0.4% increase. Natural gas storage increased 1 bcf versus estimates of a 51 bcf decline.
BOTTOM LINE: The number of Americans filing first-time claims for jobless benefits fell last week to the lowest level since September 2000, suggesting employers are adding more than enough positions to keep unemployment near a four-year low, Bloomberg reported. The four-week moving average fell to 316,750 from 326,000 the prior week. The jobless rate among those eligible for benefits, which tracks the US unemployment rate, remained at 2.1%. I still expect the labor market to remain healthy without generating substantial unit labor cost increases over the intermediate-term.
US service industries expanded at a faster pace last month as job growth and rising incomes gave Americans the means to increase their spending, Bloomberg said. The Prices Paid component of the index fell to 69.5 from 74.2 the prior month. The New Orders component of the index rose to 61.9 from 59.5 the prior month. I expect the service sector of the US economy to remain healthy as a good labor market, low interest rates, rising stock prices, better consumer confidence and falling energy prices more than offset a slowing housing market.
Contracts to buy previously owned US homes fell in November, a third straight decline that adds to evidence the US housing market is slowing heading into 2006, Bloomberg reported. I continue to believe the housing market is slowing to more healthy sustainable levels, which should benefit US stocks this year.
The EIA weekly energy inventory numbers were very bearish for the energy complex. I continue to believe energy prices are being driven by fear, not fundamentals. I still expect substantial declines energy prices over the course of the year.
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