BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Biotech longs, Retail longs and Semi longs. I added to my PLAY long and NBR short, thus leaving the Portfolio 75% net long. The tone of the market is positive as the advance/decline line is higher, most sectors are gaining and volume is above average. Measures of investor anxiety are mostly lower. The Johnson Redbook same-store sales index rose 3.3% year-over-year last week vs. a 3.1% rise the prior week. This week's gain is up from a 1.5% increase in late April, and it's the 38th week in a row that the index has risen 3% or more. Retail sales continue to remain healthy, despite higher oil prices. A healthy labor market, low long-term interest rates, falling energy prices and rising stock prices should cushion any weakness this year related to a slowing housing market. I expect US stocks to trade modestly higher from current levels into the close on short-covering.
Tuesday, January 24, 2006
Stocks Higher Into Final Hour as Oil Declines and Irrational Pessimism Over Earngings Subsides
Today's Headlines
Bloomberg:
- FedEx Corp.(FDX) will buy its joint venture partner in China for $400 million as the country’s economic expansion boosts demand for the transport of goods.
- ImClone Systems(IMCL) may put itself up for sale after it replaced CEO Frost and said its fourth-quarter earnings were half as much as analysts estimated.
- Janus Capital(JNS) named David Corkins to run its $11.2 billion flagship Janus Fund, which has trailed rivals under manager Blaine Rollins.
- The US Senate Judiciary Committee, voting 10-8, cleared the way for the full Senate to consider confirming Supreme Court nominee Samuel A. Alito Jr. to succeed retiring Justice Sandra Day O’Connor.
- Steve Klinsky, a former partner at buyout firm Forstmann Little, is raising $750 million for a hedge fund to invest in companies and lobby for changes to boost their share prices.
Wall Street Journal:
- DaimlerChrysler AG(DCX) is likely to say today that it plans to reduce management staff by about a fifth.
- NY-based Pfizer(PFE) finds the task of seeking to stem the tide of counterfeit drugs coming out of China without alienating officials there to be a careful balance.
- US forces in Iraq are working to build up the confidence and efficiency of Iraqi troops as part of an administration effort to hand over military control to local units.
NY Times:
- Walt Disney(DIS) may announce today plans to acquire Pixar Animation(PIXR) for $7 billion in stock.
Focus-Money:
- Volkswagen AG is working on a hybrid diesel engine that will be ready for market in 2008, citing an unidentified Volkswagen manager.
Moscow Times:
- Boeing Co.(BA) expects to do $3 billion worth of business in Russia in the next five years, 20% more than in the last five years, citing Michael Cave, Boeing vp for airplane programs.
Xinhua News Agency:
- About two-thirds of Chinese aluminum producers lost money in the first eleven months of 2005 because of a domestic glut and rising costs of alumina, the main raw material, citing the National Development and Reform Commission.
Interfax:
- Russia replaced 61% of the oil it extracted last year and 110% of the gas it produced, the first time in 15 years that gas reserves grew faster than output, citing the resources agency.
- OAO Gazprom will invest $1.5 billion in oil and gas projects with Uzbekistan’s state energy company, citing Uzbek President Karimov.
- FedEx Corp.(FDX) will buy its joint venture partner in China for $400 million as the country’s economic expansion boosts demand for the transport of goods.
- ImClone Systems(IMCL) may put itself up for sale after it replaced CEO Frost and said its fourth-quarter earnings were half as much as analysts estimated.
- Janus Capital(JNS) named David Corkins to run its $11.2 billion flagship Janus Fund, which has trailed rivals under manager Blaine Rollins.
- The US Senate Judiciary Committee, voting 10-8, cleared the way for the full Senate to consider confirming Supreme Court nominee Samuel A. Alito Jr. to succeed retiring Justice Sandra Day O’Connor.
- Steve Klinsky, a former partner at buyout firm Forstmann Little, is raising $750 million for a hedge fund to invest in companies and lobby for changes to boost their share prices.
Wall Street Journal:
- DaimlerChrysler AG(DCX) is likely to say today that it plans to reduce management staff by about a fifth.
- NY-based Pfizer(PFE) finds the task of seeking to stem the tide of counterfeit drugs coming out of China without alienating officials there to be a careful balance.
- US forces in Iraq are working to build up the confidence and efficiency of Iraqi troops as part of an administration effort to hand over military control to local units.
NY Times:
- Walt Disney(DIS) may announce today plans to acquire Pixar Animation(PIXR) for $7 billion in stock.
Focus-Money:
- Volkswagen AG is working on a hybrid diesel engine that will be ready for market in 2008, citing an unidentified Volkswagen manager.
Moscow Times:
- Boeing Co.(BA) expects to do $3 billion worth of business in Russia in the next five years, 20% more than in the last five years, citing Michael Cave, Boeing vp for airplane programs.
Xinhua News Agency:
- About two-thirds of Chinese aluminum producers lost money in the first eleven months of 2005 because of a domestic glut and rising costs of alumina, the main raw material, citing the National Development and Reform Commission.
Interfax:
- Russia replaced 61% of the oil it extracted last year and 110% of the gas it produced, the first time in 15 years that gas reserves grew faster than output, citing the resources agency.
- OAO Gazprom will invest $1.5 billion in oil and gas projects with Uzbekistan’s state energy company, citing Uzbek President Karimov.
Monday, January 23, 2006
Tuesday Watch
Late-Night Headlines
Bloomberg:
- The United Nations is investigating about 200 allegations of fraud in its purchase of “tens of millions” of dollars of equipment, supplies and services for 18 peacekeeping operations.
- Shares of Japan’s Liverdoor Co. are poised to fall by their daily limit for a sixth day after Takafumi Horie, the Internet company’s 33-year-old president, was arrested on allegations of violating securities laws.
- BHP Billiton(BHP), the world’s biggest mining company, had record copper and nickel production in the second quarter.
- Stephen Harper led Canada’s Conservatives to their first national election win in 18 years over the Liberal Party, according to projections from three television networks.
International Oil Daily:
- India’s oil demand in the year to March 2006 may decline .5% because of lower naphtha consumption as substitution to natural gas occurs.
Financial Times:
- Advertised job vacancies in London’s financial district increased 52% in the first two weeks of 2006, citing research by recruiter Morgan McKinley Ltd.
Business Standard:
- Tata Consultancy Services Ltd. is in talks to buy software developers in the US specializing in health-care and pharmaceutical services.
AFP:
- Kuwait’s Emir Sheikh Saad al-Abdullah al-Sabah will abdicate and the Prime Minister Sheikh Sabah al-Ahmad al-Sabah will take over as the country’s ruler, citing a government official.
Sing Tao Daily:
- China may ban private investment in the automobile industry due to overcapacity and plans to restrict approvals for new factories as well as expansion plans, citing the Economic Observer.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on (SGMS), (BAC), (SYMC), (TYC), (DKS) and (EBAY).
Night Trading
Asian Indices are unch. to +1.25% on average.
S&P 500 indicated +.03%.
NASDAQ 100 indicated -.09%.
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
(MMM)/1.03
(AVB)/.86
(AVY)/.84
(BJS)/.47
(EAT)/.46
(BNI)/1.16
(CDWC)/.84
(CTX)/2.48
(CKFR)/.41
(CNF)/1.00
(COH)/.44
(CA)/.24
(CVG)/.14
(GLW)/.22
(CSX)/.90
(EMC)/.17
(EXC)/.73
(GDW)/1.24
(HMA)/.34
(IMCL)/.28
(JNJ)/.73
(KMB)/.95
(LM)/1.03
(LXK)/.50
(LU)/.04
(MCD)/.48
(NOC)/.83
(NFLX)/.18
(RYL)/3.12
(SAFC)/1.28
(TDW)/.95
(UTX)/.70
(WAT)/.64
Upcoming Splits
- None of note
Economic Releases
10:00 am EST
- The Richmond Fed Index for January is estimated to rise to 5 versus a reading of -2 in December.
Bloomberg:
- The United Nations is investigating about 200 allegations of fraud in its purchase of “tens of millions” of dollars of equipment, supplies and services for 18 peacekeeping operations.
- Shares of Japan’s Liverdoor Co. are poised to fall by their daily limit for a sixth day after Takafumi Horie, the Internet company’s 33-year-old president, was arrested on allegations of violating securities laws.
- BHP Billiton(BHP), the world’s biggest mining company, had record copper and nickel production in the second quarter.
- Stephen Harper led Canada’s Conservatives to their first national election win in 18 years over the Liberal Party, according to projections from three television networks.
International Oil Daily:
- India’s oil demand in the year to March 2006 may decline .5% because of lower naphtha consumption as substitution to natural gas occurs.
Financial Times:
- Advertised job vacancies in London’s financial district increased 52% in the first two weeks of 2006, citing research by recruiter Morgan McKinley Ltd.
Business Standard:
- Tata Consultancy Services Ltd. is in talks to buy software developers in the US specializing in health-care and pharmaceutical services.
AFP:
- Kuwait’s Emir Sheikh Saad al-Abdullah al-Sabah will abdicate and the Prime Minister Sheikh Sabah al-Ahmad al-Sabah will take over as the country’s ruler, citing a government official.
Sing Tao Daily:
- China may ban private investment in the automobile industry due to overcapacity and plans to restrict approvals for new factories as well as expansion plans, citing the Economic Observer.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on (SGMS), (BAC), (SYMC), (TYC), (DKS) and (EBAY).
Night Trading
Asian Indices are unch. to +1.25% on average.
S&P 500 indicated +.03%.
NASDAQ 100 indicated -.09%.
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
(MMM)/1.03
(AVB)/.86
(AVY)/.84
(BJS)/.47
(EAT)/.46
(BNI)/1.16
(CDWC)/.84
(CTX)/2.48
(CKFR)/.41
(CNF)/1.00
(COH)/.44
(CA)/.24
(CVG)/.14
(GLW)/.22
(CSX)/.90
(EMC)/.17
(EXC)/.73
(GDW)/1.24
(HMA)/.34
(IMCL)/.28
(JNJ)/.73
(KMB)/.95
(LM)/1.03
(LXK)/.50
(LU)/.04
(MCD)/.48
(NOC)/.83
(NFLX)/.18
(RYL)/3.12
(SAFC)/1.28
(TDW)/.95
(UTX)/.70
(WAT)/.64
Upcoming Splits
- None of note
Economic Releases
10:00 am EST
- The Richmond Fed Index for January is estimated to rise to 5 versus a reading of -2 in December.
BOTTOM LINE: Asian indices are higher, boosted by Internet companies in the region. I expect US equities to open mixed and to rally later in the day, finishing modestly higher. The Portfolio is 75% net long heading into the day.
Stocks Finish Modestly Higher as Energy Prices Fall and Tech Leaders Rebound
Indices
S&P 500 1,263.82 +.18%
DJIA 10,688.77 +.20%
NASDAQ 2,248.47 +.03%
Russell 2000 707.82 +.46%
S&P Barra Growth 604.41 +.07%
S&P Barra Value 655.08 +.31%
Morgan Stanley Consumer 596.68 +.21%
Morgan Stanley Cyclical 774.16 +1.09%
Morgan Stanley Technology 532.77 +.05%
Transports 4,175.75 +.42%
Utilities 421.74 +.10%
Put/Call .87 -17.92%
NYSE Arms 1.04 -50.58%
Volatility(VIX) 13.93 -4.33%
ISE Sentiment 184.00 +3.95%
US Dollar 87.90 -1.20%
CRB 344.78 -.11%
Futures Spot Prices
Crude Oil 67.86 -.35%
Unleaded Gasoline 178.87 -.25%
Natural Gas 8.54 -.34%
Heating Oil 184.05 -.02%
Gold 558.70 unch.
Base Metals 163.80 +2.0%
Copper 212.25 +.14%
10-year US Treasury Yield 4.35% +.13%
Leading Sectors
Steel +3.39%
Oil Service +2.30%
Airlines +1.68%
Lagging Sectors
HMOs -.74%
Biotech -.87%
Gaming -1.03%
Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play
Afternoon Recommendations
Goldman Sachs:
- Upgraded (WMT) to Outperform.
- Reiterated Outperform on (ECL).
Afternoon/Evening Headlines
Bloomberg:
- ThyssenKrupp AG, Germany’s largest steelmaker, pulled out of the bidding for Dofasco Inc., leaving Arlelor SA poised to buy Canada’s biggest steel producer for $4.7 billion.
- American Express(AXP) said quarterly profit rose 12% as consumers bought more goods and services using its cards, boosting fees from merchants.
- Microsoft(MSFT) is failing to move quickly enough to comply with its antitrust settlement with the government, the Bush administration said in its strongest show of impatience with the company since they reached their agreement in 2001.
- Symantec Corp.(SYMC) said President Gary Bloom plans to leave the company by the end of March.
- Avaya Inc.(AV) said first-quarter profit more than doubled to $71 million, boosted by acquisitions and demand for gear to make calls over the Internet.
- E*Trade(ET) said profit jumped 44% as stock-trading volume rose following the purchase of two rival firms.
- Texas Instruments(TXN) said fourth-quarter profit rose 34% even as sales disappointed investors.
- Walt Disney(DIS) may have its debt rating raised by Moody’s Investors Service, which cited Disney’s improving balance sheet and comfort with CEO Iger’s strategic plans.
S&P 500 1,263.82 +.18%
DJIA 10,688.77 +.20%
NASDAQ 2,248.47 +.03%
Russell 2000 707.82 +.46%
S&P Barra Growth 604.41 +.07%
S&P Barra Value 655.08 +.31%
Morgan Stanley Consumer 596.68 +.21%
Morgan Stanley Cyclical 774.16 +1.09%
Morgan Stanley Technology 532.77 +.05%
Transports 4,175.75 +.42%
Utilities 421.74 +.10%
Put/Call .87 -17.92%
NYSE Arms 1.04 -50.58%
Volatility(VIX) 13.93 -4.33%
ISE Sentiment 184.00 +3.95%
US Dollar 87.90 -1.20%
CRB 344.78 -.11%
Futures Spot Prices
Crude Oil 67.86 -.35%
Unleaded Gasoline 178.87 -.25%
Natural Gas 8.54 -.34%
Heating Oil 184.05 -.02%
Gold 558.70 unch.
Base Metals 163.80 +2.0%
Copper 212.25 +.14%
10-year US Treasury Yield 4.35% +.13%
Leading Sectors
Steel +3.39%
Oil Service +2.30%
Airlines +1.68%
Lagging Sectors
HMOs -.74%
Biotech -.87%
Gaming -1.03%
Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play
Afternoon Recommendations
Goldman Sachs:
- Upgraded (WMT) to Outperform.
- Reiterated Outperform on (ECL).
Afternoon/Evening Headlines
Bloomberg:
- ThyssenKrupp AG, Germany’s largest steelmaker, pulled out of the bidding for Dofasco Inc., leaving Arlelor SA poised to buy Canada’s biggest steel producer for $4.7 billion.
- American Express(AXP) said quarterly profit rose 12% as consumers bought more goods and services using its cards, boosting fees from merchants.
- Microsoft(MSFT) is failing to move quickly enough to comply with its antitrust settlement with the government, the Bush administration said in its strongest show of impatience with the company since they reached their agreement in 2001.
- Symantec Corp.(SYMC) said President Gary Bloom plans to leave the company by the end of March.
- Avaya Inc.(AV) said first-quarter profit more than doubled to $71 million, boosted by acquisitions and demand for gear to make calls over the Internet.
- E*Trade(ET) said profit jumped 44% as stock-trading volume rose following the purchase of two rival firms.
- Texas Instruments(TXN) said fourth-quarter profit rose 34% even as sales disappointed investors.
- Walt Disney(DIS) may have its debt rating raised by Moody’s Investors Service, which cited Disney’s improving balance sheet and comfort with CEO Iger’s strategic plans.
BOTTOM LINE: The Portfolio finished slightly higher today on gains in my Semi longs, Internet longs and Computer longs. I did not trade in the final hour, thus leaving the Portfolio 75% net long. The tone of the market was modestly positive today as the advance/decline line finished slightly higher, sector performance was mixed and volume was above average. Measures of investor anxiety were lower into the close. The major averages and breadth finished slightly higher on decent volume. This is likely disappointing to the bulls and bears alike. Natural gas showed little ability to bounce throughout the day, finishing down 7.7%. As I have said before, natural gas inventories are set to hit all-time highs at the end of winter. I would like to see U.S. stocks display more underlying strength before adding further market exposure.
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