Bloomberg:
- NYSE Group(NYX) wants to increase the cost of trading on the floor of the NYSE as part of an effort to drive more transactions to its electronic market.
- Hedge fund managers gave up about half of this year’s gains in May as prices for stocks, oil and metals fell, investors said.
- Pulte Homes(PHM) cut its forecast for 2006 earnings after orders for April and May fell 29% from a year earlier.
- US Treasuries surged after a government report showed employers added fewer workers than forecast for a second month, prompting traders to pare bets the Federal Reserve will raise interest rates at its next meeting.
- Federal Reserve Bank of Chicago President Michael Moskow said interest rate decisions won’t be a “mechanical reaction” to inflation or job figures and that smaller employment gains can support sustained economic growth.
- Crude oil is rising more than a $1/bbl. because of an attack on a Nigerian oil rig and doubts that Iran will embrace new US-backed efforts to rein in the country’s nuclear research.
Wall Street Journal:
- Microsoft(MSFT) and Adobe Systems(ADBE) may confront each other over software used for creating electronic documents.
- Experimental gene-based drugs nearing sales approval may offer strong competition to existing cancer treatments that have been among the fastest-growing medications on the market.
- CVS Corp.(CVS) CEO Tom Ryan said he isn’t worried by credit-rating companies’ recent downgrades of CVS debt, and the drugstore company is planning more acquisitions.
- Experimental gene-based drugs nearing sales approval may offer strong competition to existing cancer treatments that have been among the fastest-growing medications on the market.
NY Times:
- School performance in NYC’s Harlem neighborhood has improved during the past seven years as more privately operated charter schools are opened.
NY Post:
- NY’s Metropolitan Transportation Authority plans to start testing next month a program sponsored by MasterCard and Citigroup(C) that uses smart cards to pay for subway rides.
Boston Herald:
- Fidelity Investments may create as many as 4,000 jobs in North Carolina as part of a plan for a new office complex in the Raleigh area.
Telegraph:
- India’s government, faced with the prospect of accelerating inflation, may allow interest rates to rise and curb prices.
Globe and Mail:
- Newfoundland has increased by 40% its estimate of the amount of oil and gas at two offshore fields.
Friday, June 02, 2006
Job Growth Slows, Manufacturing Pulls Back after Surge
- The Change in Non-farm Payrolls for May was 75K versus estimates of 170K and 126K in April.
- The Change in Manufacturing Payrolls for May fell 14K versus estimates of 5K and 19K in April.
- The Unemployment Rate for May fell to 4.6% versus estimates of 4.7% and 4.7% in April.
- Average Hourly Earnings for May rose .1% versus estimates of a .3% increase and a .6% gain in April.
- Factory Orders for April fell 1.8% versus estimates of a 2.1% decline and a 4.0% gain in March.
- The Change in Manufacturing Payrolls for May fell 14K versus estimates of 5K and 19K in April.
- The Unemployment Rate for May fell to 4.6% versus estimates of 4.7% and 4.7% in April.
- Average Hourly Earnings for May rose .1% versus estimates of a .3% increase and a .6% gain in April.
- Factory Orders for April fell 1.8% versus estimates of a 2.1% decline and a 4.0% gain in March.
BOTTOM LINE: The US economy added fewer jobs than expected for a second month in May and wage growth slowed, Bloomberg reported. Smaller wage gains increase the probability of a Fed “pause” as unit labor costs make up two-thirds of inflation. The labor force participation rate remained at 66.1% for the fourth consecutive month. I continue to believe the labor market is slowing, but will remain relatively healthy without generating substantial unit labor cost increases.
Orders placed with US factories fell 1.8% in April, led by aircraft and computers, Bloomberg reported. Excluding transportation equipment, orders rose .2%. Orders for capital goods excluding aircraft, a gauge of future business activity, fell 1.7% versus a 3.4% gain the prior month. The inventory-to-shipments ratio rose to 1.17 months, the highest since July 2005. I continue to believe manufacturing is slowing to more average rates.
Thursday, June 01, 2006
Friday Watch
Late-Night Headlines
Bloomberg:
- The US, China, Russia and three European powers have agreed on “far-reaching proposals” in an attempt to persuade Iran to curtail its nuclear program.
- NYSE Group(NYX) agreed to buy Euronext NV for $9.96 billion, forming the first transatlantic stock exchange and edging out a rival bid by Deutsche Boerse AG.
- Japanese shares declined after Nikkei English News said prosecutors in Tokyo are examining whether an investment fund overseen by shareholder activist Yoshiaki Murakami violated Japanese securities law.
- Vonage Holdings(VG) customers who want to back out of last week’s IPO by the Internet phone company may have a legal basis for doing so.
- Copper futures in Shanghai fell for a third day on concern a Chinese government agency may sell as much as 100,000 metric tons of the metal from its stockpiles.
- Crude oil may decline for a second week on signs that rising inventories and higher refinery output will meet gasoline demand during the US summer driving season, a Bloomberg survey showed.
Financial Times:
- GlaxoSmithKline Plc(GSK), Europe’s largest drugmaker, plans to bid over $15 billion for Pfizer’s(PFE) consumer health care unit.
Late Buy/Sell Recommendations
ThinkEquity Partners:
- Rated (AIRN) Buy, target $8.
- Rated (MTLK) Buy, target $9.
Merrill Lynch:
- Raised (AUO) to Buy.
Business Week:
- IPass Inc.(IPAS) shares may climb as shareholders urge the software maker to improve corporate governance, citing Eric Appell, an analyst at Merriman Curhan Ford & Co.
- Forest Labs(FRX), maker of drugs for depression, pain and cardiovascular and respiratory disorders, is poised to grow after declining 8.7% this year, citing Kavita Thomas of First Global Markets.
Night Trading
Asian Indices are -.50% to +.50% on average.
S&P 500 indicated -.16%.
NASDAQ 100 indicated -.12%.
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
- None of note
Upcoming Splits
- (BRY) 2-for-1
- (MFC) 2-for-1
- (SCSC) 2-for-1
Economic Releases
8:30 am EST
- The Change in Non-farm Payrolls for May is estimated at 170K versus 138K in April.
- The Change in Manufacturing Payrolls for May is estimated at 5K versus 19K in April.
- The Unemployment Rate for May is estimated at 4.7% versus 4.7% in April.
- Average Hourly Earnings for May are estimated to rise .3% versus a .5% gain in April.
10:00 am EST
- Factory Orders for April are estimated to fall 2.1% versus a 4.1% gain in March.
Bloomberg:
- The US, China, Russia and three European powers have agreed on “far-reaching proposals” in an attempt to persuade Iran to curtail its nuclear program.
- NYSE Group(NYX) agreed to buy Euronext NV for $9.96 billion, forming the first transatlantic stock exchange and edging out a rival bid by Deutsche Boerse AG.
- Japanese shares declined after Nikkei English News said prosecutors in Tokyo are examining whether an investment fund overseen by shareholder activist Yoshiaki Murakami violated Japanese securities law.
- Vonage Holdings(VG) customers who want to back out of last week’s IPO by the Internet phone company may have a legal basis for doing so.
- Copper futures in Shanghai fell for a third day on concern a Chinese government agency may sell as much as 100,000 metric tons of the metal from its stockpiles.
- Crude oil may decline for a second week on signs that rising inventories and higher refinery output will meet gasoline demand during the US summer driving season, a Bloomberg survey showed.
Financial Times:
- GlaxoSmithKline Plc(GSK), Europe’s largest drugmaker, plans to bid over $15 billion for Pfizer’s(PFE) consumer health care unit.
Late Buy/Sell Recommendations
ThinkEquity Partners:
- Rated (AIRN) Buy, target $8.
- Rated (MTLK) Buy, target $9.
Merrill Lynch:
- Raised (AUO) to Buy.
Business Week:
- IPass Inc.(IPAS) shares may climb as shareholders urge the software maker to improve corporate governance, citing Eric Appell, an analyst at Merriman Curhan Ford & Co.
- Forest Labs(FRX), maker of drugs for depression, pain and cardiovascular and respiratory disorders, is poised to grow after declining 8.7% this year, citing Kavita Thomas of First Global Markets.
Night Trading
Asian Indices are -.50% to +.50% on average.
S&P 500 indicated -.16%.
NASDAQ 100 indicated -.12%.
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
- None of note
Upcoming Splits
- (BRY) 2-for-1
- (MFC) 2-for-1
- (SCSC) 2-for-1
Economic Releases
8:30 am EST
- The Change in Non-farm Payrolls for May is estimated at 170K versus 138K in April.
- The Change in Manufacturing Payrolls for May is estimated at 5K versus 19K in April.
- The Unemployment Rate for May is estimated at 4.7% versus 4.7% in April.
- Average Hourly Earnings for May are estimated to rise .3% versus a .5% gain in April.
10:00 am EST
- Factory Orders for April are estimated to fall 2.1% versus a 4.1% gain in March.
BOTTOM LINE: Asian indices are mixed as losses in commodity stocks are being offset by gains in exporters in the region. I expect US equities to open modestly lower and to rise into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.
***Alert***
Due to a scheduling conflict I am unable to post the Thursday Close. I will post the Friday Watch later this evening. Sorry for the inconvenience.
Stocks Sharply Higher into Final Hour on Falling Commodity Prices, Declining Inflation Concerns, Bargain Hunting and Short-Covering
BOTTOM LINE: The Portfolio is substantially higher into the final hour on gains in my Internet longs, Semiconductor longs, Retail longs and Networking longs. I covered some of my (IWM), (QQQQ) shorts and added to my (TLT) and various commodity shorts today, thus leaving the Portfolio 75% net long. The tone of the market is positive as the advance/decline line is higher, most sectors are higher and volume heavy. Measures of investor anxiety are mostly lower. Today’s overall market action is very bullish given the mostly weaker economic data and decline in commodity prices. For the month of May, the energy industry saw the greatest amount of net insider selling in the S&P 500. Insiders purchased $65,417,391 worth of stock. They sold $2,229,633,318 worth. This is the largest amount of insider selling in energy this cycle. This is especially significant considering it comes ahead of the hurricane season, and most expect to see another spike higher in energy prices during this time. I expect stocks to maintain gains into the close as declining inflation worries, short-covering, bargain hunting and a reversal lower in oil prices offset weaker economic data.
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