S&P 500 1,109.74 -.37%
NASDAQ 1,926.11 -1.67%
Leading Sectors
Tobacco +.71%
Energy +.61%
Drugs +.46%
Lagging Sectors
Biotech -3.24%
Internet -3.79%
Networking -4.15%
Other
Crude Oil 37.40 +.24%
Natural Gas 5.86 -1.0%
Gold 387.50 +.10%
Base Metals 104.19 +.72%
U.S. Dollar 90.52 -.06%
10-Yr. Long-Bond Yield 4.50% -.76%
VIX 16.78 +1.39%
Put/Call .68 -28.42%
NYSE Arms 1.55 +17.42%
Market Movers
FDRY -20.2% after missing 1Q estimate and lowering 2Q forecast.
SONO +18.5% after meeting 1Q estimate and raising 04 guidance.
MCK + 9.43% after beating 4Q estimates and raising 04 guidance.
IM -26.24% after missing 1Q estimate and lowering 2Q guidance.
BOBJ -23.2% after missing 1Q estimate and lowering 2Q guidance.
SFNT -19.17% after missing 1Q estimate and lowering 2Q guidance.
CELL -18.4% after missing 1Q estimates.
APCC -18.4% after missing 1Q estimates.
Economic Data
Personal Income for March rose .4%, meeting expectations and down from a .5% rise in February.
Personal Spending for March rose .4% versus a .7% expected rise and .4% rise in February.
Univ. of Mich. Consumer Confidence came in at 94.2 versus expectations of 94.0 and 93.2 prior month.
Chicago Purchasing Manager Report for April came in at 63.9 versus expectations of 61.0 and 57.6 prior month.
Recommendations
Goldman Sachs reiterated Outperform on ROH, NFX, BIIB, MUR, ASN, SRE, AET, AVP, ACS, GCI, TRB, KRI, XOM, PFGC, MCK, DDR, AMIS, STZ, SNDK, KMI and KMR. GS reiterated Underperform on PHS, FHCC and LVLT. Citi SmithBarney upgraded FON to Buy, target $22. Citi strongly reiterated Buy on BG, target $47. MCK raised to Outperform at Bear Stearns.
Mid-day News
U.S. stocks are lower this afternoon on continued weakness in technology shares. Positive earnings surprises for the first quarter are averaging 8% above consensus expectations, leading to almost 300 basis points of upward revisions to 04 estimates. The new 04 earnings growth rate is 16.4% versus 12.7% expectations last month, Bloomberg reported. Russia's RTS Index, the world's second-best performing benchmark in the first quarter, had its sharpest monthly drop in three years amid concern over a slowdown in China and possible bankruptcy at OAO Yukos Oil. The NYSE is applying to delist Gucci(GUC) and suspend its common shares, Dow Jones reported. Donald Trump's Trump Hotels & Casino Resorts, whose auditor in March expressed doubts about its ability to survive, said it may miss a $73.1 million interest payment due Monday, Bloomberg reported.
BOTTOM LINE: The Portfolio is unchanged today as my longs are falling and shorts are mixed. The weakness in technology shares is spilling over into the entire market. I expect this weakness to continue in the short-run as investor complacency is still too high.
Friday, April 30, 2004
Thursday, April 29, 2004
Thursday Close
S&P 500 1,113.89 -.76%
NASDAQ 1,958.78 -1.55%
Leading Sectors
Telecom +.14%
Foods +.13%
Insurance +.03%
Lagging Sectors
Disk Drives -2.89%
Oil Service -3.35%
Networking -3.51%
Other
Crude Oil 37.53 +.56%
Natural Gas 5.94 +.27%
Gold 388.80 +.44%
Base Metals 103.45 +.57%
U.S. Dollar 90.44 -.80%
10-Yr. Long-Bond Yield 4.54% +.86%
VIX 16.60 +1.90%
Put/Call .95 +9.20%
NYSE Arms 1.32 -30.53%
After-hours Movers
CALM +17.45% after withdrawing proposed 5M share secondary.
FLML +6.43% after meeting 1Q estimates.
VTIV +5.41% after substantially beating 1Q estimates.
FDRY -26.86% after missing 1Q estimates and lowering 2Q forecast.
APCC -10.26% after missing 1Q estimates.
BOBJ -10.78% after missing 1Q estimate and lowering 2Q guidance.
GNSS -14.92% after meeting 4Q estimate and lowering 1Q forecast.
ITMN -16.71% after making negative comments on future drug prospects.
Recommendations
Goldman Sachs reiterated Underperform on UAL, BVF, AKS and MGM. GS reiterated Outperform on DOW, CMX, DNA and AET.
After-hours News
U.S. stocks finished lower Thursday on a below-expectations GDP report, rising interest rates and concerns over the Chinese economy. After the close, Bloomberg reported that automakers boosted the fuel economy of 2004 model-year vehicles for the second year in a row. Electronic Arts, the largest U.S. video game maker, said fourth-quarter profit surged as sales climbed 29%. Sequoia and Kleiner Perkins Caufield & Byers paid about $25 million combined in 1999 for a stake in Google. The 2 firms now stand to make a return of at least 150-fold from the investment, or about $4 billion, Bloomberg reported.
BOTTOM LINE: The Portfolio rose slightly today as my shorts fell more than my longs. I did not make any afternoon changes and the Portfolio is still 25% net short. One of the new short positions I initiated today is William Lyon Homes(WLS), a small-cap homebuilder. I am keeping a 90.5 stop-loss on this position. I think rising interest rates will continue to pressure this group short/intermediate-term. The tone of the market is still very poor. With my short-term trading indicators still giving sell signals and investor complacency still relatively high, I tend to think we have more to go on the downside before an oversold bounce.
NASDAQ 1,958.78 -1.55%
Leading Sectors
Telecom +.14%
Foods +.13%
Insurance +.03%
Lagging Sectors
Disk Drives -2.89%
Oil Service -3.35%
Networking -3.51%
Other
Crude Oil 37.53 +.56%
Natural Gas 5.94 +.27%
Gold 388.80 +.44%
Base Metals 103.45 +.57%
U.S. Dollar 90.44 -.80%
10-Yr. Long-Bond Yield 4.54% +.86%
VIX 16.60 +1.90%
Put/Call .95 +9.20%
NYSE Arms 1.32 -30.53%
After-hours Movers
CALM +17.45% after withdrawing proposed 5M share secondary.
FLML +6.43% after meeting 1Q estimates.
VTIV +5.41% after substantially beating 1Q estimates.
FDRY -26.86% after missing 1Q estimates and lowering 2Q forecast.
APCC -10.26% after missing 1Q estimates.
BOBJ -10.78% after missing 1Q estimate and lowering 2Q guidance.
GNSS -14.92% after meeting 4Q estimate and lowering 1Q forecast.
ITMN -16.71% after making negative comments on future drug prospects.
Recommendations
Goldman Sachs reiterated Underperform on UAL, BVF, AKS and MGM. GS reiterated Outperform on DOW, CMX, DNA and AET.
After-hours News
U.S. stocks finished lower Thursday on a below-expectations GDP report, rising interest rates and concerns over the Chinese economy. After the close, Bloomberg reported that automakers boosted the fuel economy of 2004 model-year vehicles for the second year in a row. Electronic Arts, the largest U.S. video game maker, said fourth-quarter profit surged as sales climbed 29%. Sequoia and Kleiner Perkins Caufield & Byers paid about $25 million combined in 1999 for a stake in Google. The 2 firms now stand to make a return of at least 150-fold from the investment, or about $4 billion, Bloomberg reported.
BOTTOM LINE: The Portfolio rose slightly today as my shorts fell more than my longs. I did not make any afternoon changes and the Portfolio is still 25% net short. One of the new short positions I initiated today is William Lyon Homes(WLS), a small-cap homebuilder. I am keeping a 90.5 stop-loss on this position. I think rising interest rates will continue to pressure this group short/intermediate-term. The tone of the market is still very poor. With my short-term trading indicators still giving sell signals and investor complacency still relatively high, I tend to think we have more to go on the downside before an oversold bounce.
Mid-day Update
S&P 500 1,120.48 -.17%
NASDAQ 1,973.20 -.82%
Leading Sectors
Insurance +.63%
Banks +.46%
Drugs +.42%
Lagging Sectors
Oil Service -2.48%
Homebuilders -2.41%
Semis -2.92%
Other
Crude Oil 37.05 -1.12%
Natural Gas 5.93 -.52%
Gold 387.10 +.36%
Base Metals 103.45 +.57%
U.S. Dollar 90.66 -.55%
10-Yr. Long-Bond Yield 4.55% +1.09%
VIX 16.35 +.37%
Put/Call .86 -1.15%
NYSE Arms 1.02 -46.32%
Market Movers
MACR +18.9% after substantially beating 4Q estimates, raising 1Q guidance and multiple upgrades.
MANT +15.4% after beating 1Q estimates, raising 2Q/04 guidance and multiple upgrades.
TARO -27.4% after disappointing 1Q earnings and multiple downgrades.
VAS -17.1% after missing 1Q estimates and JP Morgan downgrade to Underweight.
INSP -9.9% after disappointing 1Q and 2Q guidance.
ACH -6.2% on continued selling of Chinese commodity stocks.
Economic Data
1Q GDP was 4.2% versus 5.0% estimate and 4.1% last quarter.
1Q Personal Consumption was 3.8% versus 4.2% estimate and 3.2% prior quarter.
1Q GDP Price Deflator was 2.5% versus 2.0% estimate and 1.5% last quarter.
1Q Employment Cost Index was 1.1% versus .9% estimate and .8% prior quarter.
Initial Jobless Claims for last week were 338K versus estimate of 343K and 356K prior week.
Continuing Claims were 3013K versus estimates of 2987K and 3010K prior.
Help Wanted Index for March was 39 versus 41 estimate and 40 in February.
Recommendations
Goldman Sachs reiterated Underperform on TCO, LSI, STA, SYMC and QLGC. GS reiterated Outperform on AL, N, NUE, STLD, AKS, NEM, PDG, MO, AHC, ATG, AET, ACS, EMC and ATI. JP Morgan cut CUB and VAS to Underweight. ASD rated Buy at Bank of America, target $130. DOV rated Buy at Bank of America, target $50. GE rated Buy at Bank America, target $36. HON rated Buy at Bank of America, target $42. TYC rated Buy at Bank of America, target $36. MACR raised to Buy at Merrill, target $26. SPW cut to Sell at Bank of America, target $40. MANT raised to Buy at Legg Mason, target $29. Merrill Lynch cut ACAI to Sell. Jim Cramer, of TheStreet.com, thinks commodity stocks are overdone on the downside.
Mid-day News
U.S. stocks are lower mid-day on a relatively disappointing GDP report, interest rates worries and concerns over the possible slowing of Chinese economic growth. The U.S. government estimates that 41 million Americans have higher-than-normal levels of blood sugar, classifying them as having pre-diabetes and at greater risk of developing the disease, the AP reported. Microsoft is very close to reaching an agreement in its antitrust case with the European Commission, Dow Jones reported. Nokia's market share dropped to 29% in the first quarter, the lowest in at least three years, as competitors such as Siemens shipped more attractive models, Bloomberg reported. Dow Chemical, the largest U.S. chemical marker, said first-quarter profit rose more than 600% on higher prices and greater demand for its products, Bloomberg reported. The U.S. economy expanded at a slower-than-expected 4.2% annual rate in the first quarter, Bloomberg reported. Sinclair Broadcasting ordered its ABC affiliates to preempt "Nightline", saying the show appears to be motivated by an anti-war political agenda. Sinclair which owns 62 U.S. television stations said ABC is disguising political statements as news content, Bloomberg reported. U.S. Treasuries are falling, pushing the yield on the benchmark 10-yr note to a seven-month high, after a surge in measures of inflation tied to the first-quarter GDP report.
BOTTOM LINE: The Portfolio is up slightly today as my shorts are falling more than my longs. I added a few new shorts in the retail and homebuilding sectors in the morning, bringing the Portfolio's market exposure to 25% net short. I was very surprised by the very good, but below-expectations, GDP report and even more surprised by the bond market's reaction. Bond investors are focusing on the higher-than-expected inflation readings in the report rather than the actual report. This does not bode well for the short-term direction of interest rates. While the 4.2% GDP number was below expectations, it likely gives the Fed a little more room to hike rates at a gradual pace. As well, commodity prices continue to fall. Thus, the current higher-than-expected readings on inflation should be temporary and will likely decelerate throughout the remainder of the year. The semiconductor index(SOX) has now clearly breached its 200-day moving-average. This likely means more damage to the overall tech sector and the broader market to an extent. The daily drumbeat of negativity from the mainstream press has turned investor psychology very negative even as the sentiment indicators are not overly bearish. This usually indicates further downside with an eventual spike-up in fear indicators such as the VIX, ARMS and Put/Call ratio signaling a short-to-intermediate term bottom.
NASDAQ 1,973.20 -.82%
Leading Sectors
Insurance +.63%
Banks +.46%
Drugs +.42%
Lagging Sectors
Oil Service -2.48%
Homebuilders -2.41%
Semis -2.92%
Other
Crude Oil 37.05 -1.12%
Natural Gas 5.93 -.52%
Gold 387.10 +.36%
Base Metals 103.45 +.57%
U.S. Dollar 90.66 -.55%
10-Yr. Long-Bond Yield 4.55% +1.09%
VIX 16.35 +.37%
Put/Call .86 -1.15%
NYSE Arms 1.02 -46.32%
Market Movers
MACR +18.9% after substantially beating 4Q estimates, raising 1Q guidance and multiple upgrades.
MANT +15.4% after beating 1Q estimates, raising 2Q/04 guidance and multiple upgrades.
TARO -27.4% after disappointing 1Q earnings and multiple downgrades.
VAS -17.1% after missing 1Q estimates and JP Morgan downgrade to Underweight.
INSP -9.9% after disappointing 1Q and 2Q guidance.
ACH -6.2% on continued selling of Chinese commodity stocks.
Economic Data
1Q GDP was 4.2% versus 5.0% estimate and 4.1% last quarter.
1Q Personal Consumption was 3.8% versus 4.2% estimate and 3.2% prior quarter.
1Q GDP Price Deflator was 2.5% versus 2.0% estimate and 1.5% last quarter.
1Q Employment Cost Index was 1.1% versus .9% estimate and .8% prior quarter.
Initial Jobless Claims for last week were 338K versus estimate of 343K and 356K prior week.
Continuing Claims were 3013K versus estimates of 2987K and 3010K prior.
Help Wanted Index for March was 39 versus 41 estimate and 40 in February.
Recommendations
Goldman Sachs reiterated Underperform on TCO, LSI, STA, SYMC and QLGC. GS reiterated Outperform on AL, N, NUE, STLD, AKS, NEM, PDG, MO, AHC, ATG, AET, ACS, EMC and ATI. JP Morgan cut CUB and VAS to Underweight. ASD rated Buy at Bank of America, target $130. DOV rated Buy at Bank of America, target $50. GE rated Buy at Bank America, target $36. HON rated Buy at Bank of America, target $42. TYC rated Buy at Bank of America, target $36. MACR raised to Buy at Merrill, target $26. SPW cut to Sell at Bank of America, target $40. MANT raised to Buy at Legg Mason, target $29. Merrill Lynch cut ACAI to Sell. Jim Cramer, of TheStreet.com, thinks commodity stocks are overdone on the downside.
Mid-day News
U.S. stocks are lower mid-day on a relatively disappointing GDP report, interest rates worries and concerns over the possible slowing of Chinese economic growth. The U.S. government estimates that 41 million Americans have higher-than-normal levels of blood sugar, classifying them as having pre-diabetes and at greater risk of developing the disease, the AP reported. Microsoft is very close to reaching an agreement in its antitrust case with the European Commission, Dow Jones reported. Nokia's market share dropped to 29% in the first quarter, the lowest in at least three years, as competitors such as Siemens shipped more attractive models, Bloomberg reported. Dow Chemical, the largest U.S. chemical marker, said first-quarter profit rose more than 600% on higher prices and greater demand for its products, Bloomberg reported. The U.S. economy expanded at a slower-than-expected 4.2% annual rate in the first quarter, Bloomberg reported. Sinclair Broadcasting ordered its ABC affiliates to preempt "Nightline", saying the show appears to be motivated by an anti-war political agenda. Sinclair which owns 62 U.S. television stations said ABC is disguising political statements as news content, Bloomberg reported. U.S. Treasuries are falling, pushing the yield on the benchmark 10-yr note to a seven-month high, after a surge in measures of inflation tied to the first-quarter GDP report.
BOTTOM LINE: The Portfolio is up slightly today as my shorts are falling more than my longs. I added a few new shorts in the retail and homebuilding sectors in the morning, bringing the Portfolio's market exposure to 25% net short. I was very surprised by the very good, but below-expectations, GDP report and even more surprised by the bond market's reaction. Bond investors are focusing on the higher-than-expected inflation readings in the report rather than the actual report. This does not bode well for the short-term direction of interest rates. While the 4.2% GDP number was below expectations, it likely gives the Fed a little more room to hike rates at a gradual pace. As well, commodity prices continue to fall. Thus, the current higher-than-expected readings on inflation should be temporary and will likely decelerate throughout the remainder of the year. The semiconductor index(SOX) has now clearly breached its 200-day moving-average. This likely means more damage to the overall tech sector and the broader market to an extent. The daily drumbeat of negativity from the mainstream press has turned investor psychology very negative even as the sentiment indicators are not overly bearish. This usually indicates further downside with an eventual spike-up in fear indicators such as the VIX, ARMS and Put/Call ratio signaling a short-to-intermediate term bottom.
Thursday Watch
Earnings Announcements
Company/Estimate
APCC/.19
ANDW/.11
CELL/.20
BOBJ/.15
CE/.17
COX/.05
DOW/.43
DUK/.37
ERTS/.21
XOM/.75
FIC/.42
FDRY/.17
FLML/.03
GR/.36
IM/.24
KROL/.30
MCK/.65
MGM/-.08
NTES/.37
PTEN/.26
Splits
None of note.
Economic Data
1Q Gross Domestic Product estimated +5.0% versus 4Q growth of 4.1%.
1Q Personal Consumption estimated +4.2% versus 4Q growth of 3.2%
1Q Employment Cost Index estimated +.9% versus +.8% in 4Q.
Initial Jobless Claims last week estimated at 343K versus 353K prior week.
Continuing Claims estimated 2987K versus 3019K prior week.
Help Wanted Index for March estimated at 41 versus 40 in February.
Recommendations
Goldman Sachs reiterated Outperform on AG, KMT, PPL, WON, DRE, BIIB, STLD, MO, OG, and NUE. GS reiterated Underperform on NFG, EQR, GSIC and HRB.
Late-Night News
Asian indices are down across the board after the Chinese government called on its banks to restrict lending and stopped construction of a $1.3 billion steel plant, as it escalates attempts to slow the economy, Bloomberg reported. China has already raised banks' reserve ratio, restricted lending to the steel, cement and aluminum industries and banned new construction projects to slow the economy and prevent inflation. Still, the second-largest economy in Asia grew at a faster-than-expected 9.7% in the first quarter with investment jumping 53% in the first 2 months, including a 173% increase in money invested in the steel industry, Bloomberg reported.
Late-Night Trading
Asian Indices -3.25% to -.50%.
S&P 500 indicated -.08%.
NASDAQ indicated -.10%.
BOTTOM LINE: I expect U.S. stocks to open lower tomorrow as an exceptionally strong GDP report will likely push interest rates higher. I expect US 1st quarter GDP growth of around 6%, versus economists' expectations of 5%. Commodity-related stocks will probably remain under pressure as investors panic-sell any stock that has benefited from China. It is possible that the major U.S. indices could see a substantial sell-off tomorrow as bonds fall more than I currently anticipate. I will analyze the situation on the open and decide whether to increase or decrease market exposure.
Company/Estimate
APCC/.19
ANDW/.11
CELL/.20
BOBJ/.15
CE/.17
COX/.05
DOW/.43
DUK/.37
ERTS/.21
XOM/.75
FIC/.42
FDRY/.17
FLML/.03
GR/.36
IM/.24
KROL/.30
MCK/.65
MGM/-.08
NTES/.37
PTEN/.26
Splits
None of note.
Economic Data
1Q Gross Domestic Product estimated +5.0% versus 4Q growth of 4.1%.
1Q Personal Consumption estimated +4.2% versus 4Q growth of 3.2%
1Q Employment Cost Index estimated +.9% versus +.8% in 4Q.
Initial Jobless Claims last week estimated at 343K versus 353K prior week.
Continuing Claims estimated 2987K versus 3019K prior week.
Help Wanted Index for March estimated at 41 versus 40 in February.
Recommendations
Goldman Sachs reiterated Outperform on AG, KMT, PPL, WON, DRE, BIIB, STLD, MO, OG, and NUE. GS reiterated Underperform on NFG, EQR, GSIC and HRB.
Late-Night News
Asian indices are down across the board after the Chinese government called on its banks to restrict lending and stopped construction of a $1.3 billion steel plant, as it escalates attempts to slow the economy, Bloomberg reported. China has already raised banks' reserve ratio, restricted lending to the steel, cement and aluminum industries and banned new construction projects to slow the economy and prevent inflation. Still, the second-largest economy in Asia grew at a faster-than-expected 9.7% in the first quarter with investment jumping 53% in the first 2 months, including a 173% increase in money invested in the steel industry, Bloomberg reported.
Late-Night Trading
Asian Indices -3.25% to -.50%.
S&P 500 indicated -.08%.
NASDAQ indicated -.10%.
BOTTOM LINE: I expect U.S. stocks to open lower tomorrow as an exceptionally strong GDP report will likely push interest rates higher. I expect US 1st quarter GDP growth of around 6%, versus economists' expectations of 5%. Commodity-related stocks will probably remain under pressure as investors panic-sell any stock that has benefited from China. It is possible that the major U.S. indices could see a substantial sell-off tomorrow as bonds fall more than I currently anticipate. I will analyze the situation on the open and decide whether to increase or decrease market exposure.
Wednesday, April 28, 2004
Wednesday Close
S&P 500 1,122.41 -1.38%
NASDAQ 1,989.54 -2.12%
Leading Sectors
Utilities +.18%
Restaurants +.12%
Hospitals -.47%
Lagging Sectors
Homebuilders 3.15%
Nanotechnology -3.24%
Papers -3.58%
Other
Crude Oil 37.26 -.53%
Natural Gas 5.93 -.60%
Gold 384.80 -.29%
Base Metals 102.86 -4.18%
U.S. Dollar 91.17 +.84%
10-Yr. Long-Bond Yield 4.47% +1.94%
VIX 16.29 +8.10%
Put/Call .87 +22.54%
NYSE Arms 1.90 +62.39%
After-hours Movers
MACR +20.21% after beating 4Q estimates and raising 1Q guidance.
PHTN +6.13% after missing 2Q estimates, but raising 3Q guidance.
TWX +4.18% after beating 1Q estimates and raising 04 guidance.
JDSU -7.51% after meeting 3Q estimates and lowering 4Q guidance slightly
SWKS -7.75% on profit-taking after beating 2Q estimates and raising 3Q guidance.
Recommendations
Goldman Sachs reiterated Underperform on AKS, BMY, ACAI and Outperform on SYMC, ATI, FOX. GS says to Buy ROV on weakness. The Street.com has a positive column on PD, saying now is a good long-term entry point.
After-hours News
U.S. stocks finished sharply lower Wednesday on Nortel's ongoing scandal, higher interest rates and concerns about the health of the Chinese economy. After the close, Time Warner's CEO Richard Parsons told CNN that business is stabilizing and that "there's a lot more value there than we're getting credit for." Caterpillar forecast its China sales will grow 35% to $1 billion this year, the China Daily reported. The U.S. House voted to make permanent a tax cut for married couples that expires next year after retooling the legislation to allow more low-income Americans to claim a tax credit for working.
BOTTOM LINE: The Portfolio fell slightly today and I did not make any changes in the afternoon, leaving market exposure at 25% net long. Interest rates rose in anticipation of tomorrow's strong GDP report. Economists are expecting 1st quarter U.S. economic growth of 5.0%. I am expecting a number closer to 6.0%. Commodities continued their fall today on rising U.S. interest rates, a rising U.S. dollar and Chinese economic concerns.
NASDAQ 1,989.54 -2.12%
Leading Sectors
Utilities +.18%
Restaurants +.12%
Hospitals -.47%
Lagging Sectors
Homebuilders 3.15%
Nanotechnology -3.24%
Papers -3.58%
Other
Crude Oil 37.26 -.53%
Natural Gas 5.93 -.60%
Gold 384.80 -.29%
Base Metals 102.86 -4.18%
U.S. Dollar 91.17 +.84%
10-Yr. Long-Bond Yield 4.47% +1.94%
VIX 16.29 +8.10%
Put/Call .87 +22.54%
NYSE Arms 1.90 +62.39%
After-hours Movers
MACR +20.21% after beating 4Q estimates and raising 1Q guidance.
PHTN +6.13% after missing 2Q estimates, but raising 3Q guidance.
TWX +4.18% after beating 1Q estimates and raising 04 guidance.
JDSU -7.51% after meeting 3Q estimates and lowering 4Q guidance slightly
SWKS -7.75% on profit-taking after beating 2Q estimates and raising 3Q guidance.
Recommendations
Goldman Sachs reiterated Underperform on AKS, BMY, ACAI and Outperform on SYMC, ATI, FOX. GS says to Buy ROV on weakness. The Street.com has a positive column on PD, saying now is a good long-term entry point.
After-hours News
U.S. stocks finished sharply lower Wednesday on Nortel's ongoing scandal, higher interest rates and concerns about the health of the Chinese economy. After the close, Time Warner's CEO Richard Parsons told CNN that business is stabilizing and that "there's a lot more value there than we're getting credit for." Caterpillar forecast its China sales will grow 35% to $1 billion this year, the China Daily reported. The U.S. House voted to make permanent a tax cut for married couples that expires next year after retooling the legislation to allow more low-income Americans to claim a tax credit for working.
BOTTOM LINE: The Portfolio fell slightly today and I did not make any changes in the afternoon, leaving market exposure at 25% net long. Interest rates rose in anticipation of tomorrow's strong GDP report. Economists are expecting 1st quarter U.S. economic growth of 5.0%. I am expecting a number closer to 6.0%. Commodities continued their fall today on rising U.S. interest rates, a rising U.S. dollar and Chinese economic concerns.
Mid-day Update
S&P 500 1,126.34 -1.03%
NASDAQ 2,001.72 -1.52%
Leading Sectors
Restaurants +.77%
Utilities +.03%
Semis -.15%
Lagging Sectors
Biotech -2.33%
Nanotechnology -2.75%
Papers -2.83%
Other
Crude Oil 37.83 +.80%
Natural Gas 5.86 -.24%
Gold 386.00 -3.31%
Base Metals 102.86 -4.18%
U.S. Dollar 91.15 +.83%
10-Yr. Long-Bond Yield 4.45% +1.71%
VIX 16.15 +7.17%
Put/Call .86 +21.13%
NYSE Arms 1.87 +59.83%
Market Movers
NT -26.0% after saying it fired its CEO, former CFO an controller, all for cause. Also said it would restate three year's worth of financial results covering 2000-2003 and delay 1Q results.
SINA -13.0% on Chinese economic concerns after beating 1Q estimate and raising 2Q guidance.
FLEX -7.0% on NT concerns after beating 1Q estimate and raising 04 forecast.
NET -11.60% after missing 1Q estimates and lowering 2Q forecast substantially.
OSIP -10.0% on profit-taking.
CELG -11.16% after stopping a test of its Revlimid medicine after early results failed to show it helped skin-cancer patients live longer.
FTFC +22.69% after announcing it will be acquired by ASBC for $26.79/share.
ECLP +16.65% after meeting 1Q estimates.
GTRC +12.29% after beating 1Q estimate and raising 2Q forecast.
PLT +17.02% after beating 4Q estimate and raising 1Q forecast.
KSWS -20.14% after beating 1Q estimates and substantially lowering 2Q/04 forecast.
MAGS -20.4% after disappointing 1Q results.
INTL -16.14% after missing 1Q estimates.
COCO -12.0% after beating 3Q estimate and lowering 4Q guidance.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on AGR/A, CBL, NEM, CCE, AMLN, AHC, BSX, AL, STLD, PDG, X, HD, PETC, BHI and WON. GS raised NUE to Outperform. GS reiterated Underperform on F, BMY, HMT, ASH and RKY. Citi SmithBarney downgraded MU from Buy to Sell. Citi said to Buy APCC ahead of quarterly report, target $31. Citi upgraded MHP from Sell to Buy, target $90. Citi reiterated Buy on RCI, raised earning and target to $61. Citi reiterated Buy on BC, target $49. Citi rated AXL Buy, target $48. Citi rated BWA Buy, target $108. Citi rated MGA Buy, target $105. Citi rated SUP Sell, target $30. QLTI cut to Reduce at UBS. CIT raised to Buy at Legg Mason, target $44. ELX raised to Buy, target $20.50. CMCSA raised to Buy at Merrill, target $46. COL raised to Overweight at Morgan Stanley. CSGS raised to Raymond James, target $21. AXCA and Q removed from Focus List at JP Morgan. ETN raised to Outperform at Bear Stearns.
Mid-day News
U.S. stocks are sharply lower mid-day on concerns over the Chinese economy, rising interest rates and the continuing scandal at Nortel. VaxGen said it submitted a plan to the U.S. government to make 75 million doses of an experimental anthrax vaccine for a national stockpile. President Bush has approved measures to enhance the country's defenses against a biological weapons attack, including the creation of a surveillance system to track threats, the NY Times reported. IBM announced today it plans to build new server computers that act more like mainframes, the NY Times reported. Viacom's CBS was sued by Mohamed al-Fayed, the father of the man killed with Princess Diana in a 97 crash, for airing pictures of a dying Diana, Reuters reported. Comcast withdrew its $54.1 billion unsolicited bid for Walt Disney, Bloomberg reported. Boeing boosted its 2004-2005 profit forecasts because of better margins and higher-than-expected commercial-aircraft deliveries next year. Hilton Hotels first-quarter profit rose 400% because of increased business travel, Bloomberg reported. Copper futures fell to a 12-week low as some Chinese banks halted new loans in a government bid to slow the economy, signaling an erosion in demand for metal used in buildings, appliances and automobiles, Bloomberg reported.
BOTTOM LINE: The Portfolio is down slightly today on declines in technology and energy-related long positions. I trimmed a few more longs, leaving the Portfolio with 25% net long market exposure. Interest rates are increasing in anticipation of tomorrow's GDP report. If rates make new near-term lows tomorrow U.S. stocks will likely continue their recent sell-off. However, if rates fall on tomorrow's strong economic report, it may provide the catalyst for another upward thrust. There are two positives I see from today's mostly negative action. In a little over a month the CRB Index has now fallen over 5% as China's government continues to make comments about trying to slow recent torrid growth. Most of the Bear's inflation arguments revolve around rising commodity prices. A rising dollar and decelerating Chinese demand should continue to pressure commodity prices in the near-term. As well, it is positive that semiconductors are mostly unchanged today as the rest of tech is falling. Semis usually lead tech and this may be a sign that tech is trying to find a bottom. I expect stocks to remain under pressure in the afternoon as investors worry about the bond market's reaction to tomorrow's GDP report.
NASDAQ 2,001.72 -1.52%
Leading Sectors
Restaurants +.77%
Utilities +.03%
Semis -.15%
Lagging Sectors
Biotech -2.33%
Nanotechnology -2.75%
Papers -2.83%
Other
Crude Oil 37.83 +.80%
Natural Gas 5.86 -.24%
Gold 386.00 -3.31%
Base Metals 102.86 -4.18%
U.S. Dollar 91.15 +.83%
10-Yr. Long-Bond Yield 4.45% +1.71%
VIX 16.15 +7.17%
Put/Call .86 +21.13%
NYSE Arms 1.87 +59.83%
Market Movers
NT -26.0% after saying it fired its CEO, former CFO an controller, all for cause. Also said it would restate three year's worth of financial results covering 2000-2003 and delay 1Q results.
SINA -13.0% on Chinese economic concerns after beating 1Q estimate and raising 2Q guidance.
FLEX -7.0% on NT concerns after beating 1Q estimate and raising 04 forecast.
NET -11.60% after missing 1Q estimates and lowering 2Q forecast substantially.
OSIP -10.0% on profit-taking.
CELG -11.16% after stopping a test of its Revlimid medicine after early results failed to show it helped skin-cancer patients live longer.
FTFC +22.69% after announcing it will be acquired by ASBC for $26.79/share.
ECLP +16.65% after meeting 1Q estimates.
GTRC +12.29% after beating 1Q estimate and raising 2Q forecast.
PLT +17.02% after beating 4Q estimate and raising 1Q forecast.
KSWS -20.14% after beating 1Q estimates and substantially lowering 2Q/04 forecast.
MAGS -20.4% after disappointing 1Q results.
INTL -16.14% after missing 1Q estimates.
COCO -12.0% after beating 3Q estimate and lowering 4Q guidance.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on AGR/A, CBL, NEM, CCE, AMLN, AHC, BSX, AL, STLD, PDG, X, HD, PETC, BHI and WON. GS raised NUE to Outperform. GS reiterated Underperform on F, BMY, HMT, ASH and RKY. Citi SmithBarney downgraded MU from Buy to Sell. Citi said to Buy APCC ahead of quarterly report, target $31. Citi upgraded MHP from Sell to Buy, target $90. Citi reiterated Buy on RCI, raised earning and target to $61. Citi reiterated Buy on BC, target $49. Citi rated AXL Buy, target $48. Citi rated BWA Buy, target $108. Citi rated MGA Buy, target $105. Citi rated SUP Sell, target $30. QLTI cut to Reduce at UBS. CIT raised to Buy at Legg Mason, target $44. ELX raised to Buy, target $20.50. CMCSA raised to Buy at Merrill, target $46. COL raised to Overweight at Morgan Stanley. CSGS raised to Raymond James, target $21. AXCA and Q removed from Focus List at JP Morgan. ETN raised to Outperform at Bear Stearns.
Mid-day News
U.S. stocks are sharply lower mid-day on concerns over the Chinese economy, rising interest rates and the continuing scandal at Nortel. VaxGen said it submitted a plan to the U.S. government to make 75 million doses of an experimental anthrax vaccine for a national stockpile. President Bush has approved measures to enhance the country's defenses against a biological weapons attack, including the creation of a surveillance system to track threats, the NY Times reported. IBM announced today it plans to build new server computers that act more like mainframes, the NY Times reported. Viacom's CBS was sued by Mohamed al-Fayed, the father of the man killed with Princess Diana in a 97 crash, for airing pictures of a dying Diana, Reuters reported. Comcast withdrew its $54.1 billion unsolicited bid for Walt Disney, Bloomberg reported. Boeing boosted its 2004-2005 profit forecasts because of better margins and higher-than-expected commercial-aircraft deliveries next year. Hilton Hotels first-quarter profit rose 400% because of increased business travel, Bloomberg reported. Copper futures fell to a 12-week low as some Chinese banks halted new loans in a government bid to slow the economy, signaling an erosion in demand for metal used in buildings, appliances and automobiles, Bloomberg reported.
BOTTOM LINE: The Portfolio is down slightly today on declines in technology and energy-related long positions. I trimmed a few more longs, leaving the Portfolio with 25% net long market exposure. Interest rates are increasing in anticipation of tomorrow's GDP report. If rates make new near-term lows tomorrow U.S. stocks will likely continue their recent sell-off. However, if rates fall on tomorrow's strong economic report, it may provide the catalyst for another upward thrust. There are two positives I see from today's mostly negative action. In a little over a month the CRB Index has now fallen over 5% as China's government continues to make comments about trying to slow recent torrid growth. Most of the Bear's inflation arguments revolve around rising commodity prices. A rising dollar and decelerating Chinese demand should continue to pressure commodity prices in the near-term. As well, it is positive that semiconductors are mostly unchanged today as the rest of tech is falling. Semis usually lead tech and this may be a sign that tech is trying to find a bottom. I expect stocks to remain under pressure in the afternoon as investors worry about the bond market's reaction to tomorrow's GDP report.
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