There are a few important economic reports and some significant corporate earnings reports scheduled for release this week. Economic reports this week include Existing Home Sales, Durable Goods Orders, New Home Sales, Initial Jobless Claims, Preliminary 2Q GDP, Preliminary 2Q Personal Consumption, Preliminary 2Q Price Deflator, and the Final Univ. of Mich. Consumer Confidence reading for August. Home Sales, Durable Goods and the Preliminary 2Q GDP all have market-moving potential.
Toys "R" Us(TOY), H.J. Heinz(HNZ), Toll Brothers(TOL), H&R Block(HRB), OmniVision Tech(OVTI), SeaChange Intl.(SEAC), Williams-Sonoma(WSM), ADC Telecom(ADCT), The Sports Authority(TSA), Dollar General(DG) are some of the more important companies that release quarterly earnings this week. There are also several other events that have market-moving potential. The Fed's Guynn speaking to paper and pulp executives, Alan Greenspan's speech at the Kansas City Fed Symposium, the Raymond James Mid-west Mini-conference and the Novellus(NVLS) Mid-quarter update could also impact trading this week.
Bottom Line: I expect U.S. stocks to finish the week modestly higher as oil prices fall further, more than offsetting terrorism fears ahead of the Republican Convention. Technology shares, continuing to rebound from oversold levels, and homebuilders should lead the way. I would like to see volume accelerate on any further advance and measures of investor anxiety increase. My short-term trading indicators are still giving Buy signals and the Portfolio is 125% net long heading into the week.
Sunday, August 22, 2004
Market Week in Review
S&P 500 1,098.35 +3.15%
Click here for the Weekly Wrap by Briefing.com.
Bottom Line: Last week's market action was very positive, considering the violence in Iraq, rising oil prices, continuing terrorism fears and mixed economic reports. The advance/decline line was very constructive and most sectors turned in very good performances for the week. The Dow's 2.9% gain was its best weekly performance in 16 months. The big picture in Iraq continues to improve, notwithstanding the recent violence. Trading action Friday seemed to indicate that oil prices put in at the very least a short-term top. Each day and each event that passes without a serious terror act gives the market more confidence in our abilities to preemptively thwart acts of terrorism. This should also result in an erosion of the terror premium in oil over the next few months. Several economic and retail earnings reports last week disproved the bearish assumption that the U.S. consumer was retrenching in any significant way. Finally, it was positive to see the AAII % Bulls drop on the week in the face of such a strong rally. The key takeaway for the week is that market psychology seems to have shifted for the better. However, the lack of substantial volume and severely oversold technical condition of most stocks makes it harder to predict an end to the recent weakness. It is likely that one last correction will occur in September before the significant rally I envision begins in earnest during the fourth quarter. It is very possible that the lows for the year are in place and the weakness in September will not take the major indices to new lows for the year. Longer-term investors should use any extreme weakness in the coming weeks to add to favorite long positions.
Click here for the Weekly Wrap by Briefing.com.
Bottom Line: Last week's market action was very positive, considering the violence in Iraq, rising oil prices, continuing terrorism fears and mixed economic reports. The advance/decline line was very constructive and most sectors turned in very good performances for the week. The Dow's 2.9% gain was its best weekly performance in 16 months. The big picture in Iraq continues to improve, notwithstanding the recent violence. Trading action Friday seemed to indicate that oil prices put in at the very least a short-term top. Each day and each event that passes without a serious terror act gives the market more confidence in our abilities to preemptively thwart acts of terrorism. This should also result in an erosion of the terror premium in oil over the next few months. Several economic and retail earnings reports last week disproved the bearish assumption that the U.S. consumer was retrenching in any significant way. Finally, it was positive to see the AAII % Bulls drop on the week in the face of such a strong rally. The key takeaway for the week is that market psychology seems to have shifted for the better. However, the lack of substantial volume and severely oversold technical condition of most stocks makes it harder to predict an end to the recent weakness. It is likely that one last correction will occur in September before the significant rally I envision begins in earnest during the fourth quarter. It is very possible that the lows for the year are in place and the weakness in September will not take the major indices to new lows for the year. Longer-term investors should use any extreme weakness in the coming weeks to add to favorite long positions.
Saturday, August 21, 2004
Economic Week in Review
ECRI Weekly Leading Index 131.70 +.23%
The Empire Manufacturing Index fell to 12.57 in August versus estimates of 32.3 and a reading of 35.75 in July. Readings above zero indicate expansion. Thirty-four percent of the state's manufacturers, down from 46% in July, reported an increase in new orders, pushing the measure of new orders to the lowest in almost a year, Bloomberg said. "We've seen a little bit of a lull this month," said David Freund, vice president of operations at Selflock Screw Products in East Syracuse, New York. Selflock believes business will accelerate again after the Republican convention in September, Bloomberg reported.
International investors stepped up purchases of U.S. securities in June amid faster U.S. economic growth than in Europe and Japan, Bloomberg reported. "The purchases may alleviate concern about the attractiveness of U.S. assets after a government report Friday showed the U.S. trade deficit widened," said Stephen Jen, head of currency research at Morgan Stanley in London. "Some investors are too fixated on the U.S. deficit," said Jen, who used to work at the International Monetary Fund and Federal Reserve. "If you look at the demand for dollar assets and U.S. Treasuries, it's hard to say people have a lot of fears about financing the U.S. deficit."
The NAHB Housing Market Index rose to 71 in August versus expectations of 67 and a reading of 67 in July. A reading above 50 means that builders view market conditions as more positive than negative. The index has exceeded 60 for 15 months in a row, Bloomberg said. "With the ongoing favorable financing climate and solid house-price performance, we have good reason to expect continue strength in the housing market in the months ahead," said Bobby Rayburn, the NAHB President. A gauge of buyer traffic in the builders' survey rose to 57, the highest since May 1999. NAHB is forecasting housing starts of 1.9 million in 2004, the most since 1978, and record single-family starts of 1.56 million, Bloomberg said. Finally, the National Association of Realtors increased its estimate for home sales last week for the eighth time this year, saying low mortgage rates and an improving economy will spur the housing market to records for both existing home sales and new home sales, Bloomberg reported.
The Consumer Price Index for July fell .1% versus estimates of a .2% rise and a .3% increase in June. CPI Ex Food & Energy for July rose .1% versus estimates of a .2% gain and a .1% rise in June. The decline in the CPI was the first drop in eight months, as shoppers paid less for gasoline, clothing and transportation, Bloomberg reported. Slowing inflation underscores Federal Reserve policy makers' comments that recent price increases will prove temporary, Bloomberg said. Energy prices, which account for about a 14th of the index fell 1.9% in July, the first decline since November.
Housing Starts for July were 1.98M versus estimates of 1.9M and an upwardly revised 1.83M in June. The 8.3% increase was a result of builders responding to the best two months of home sales on record. Construction permits, a sign of future activity, also increased, Bloomberg reported. The pace has averaged 1.94M units so far in 2004, surpassing last year's 1.85M, the most in 25 years, Bloomberg said. This was a "much stronger than expected report as inventories of new homes are quite lean and housing affordability is still very high," said David Greenlaw, chief U.S. fixed income economist at Moran Stanley. However, August starts in the South may be weaker in the aftermath of Hurricane Charley, which caused at least $11 billion of damage in Florida, Bloomberg said.
Industrial Production for July rose .4% versus estimates of a .5% increase and a .5% fall in June. Capacity Utilization for July was 77.1% versus estimates of 77.5% and 76.9% in June. U.S. industrial production strengthened for the third time in four months, led by business equipment such as computers and semiconductors, Bloomberg said. "This part of the economy is on pretty sound footing," said John Hermann, chief U.S. economist at Cantor Fitzgerald. "It's not a blistering pace, but it's a relatively solid pace that fits in with Greenspan's view that the economy is poised to resume stronger growth."
Initial Jobless Claims for last week fell to 331K versus estimates of 335K and 334K the prior week. Continuing Claims were 2.9M versus estimates of 2.87M and 2.89M prior. Claims are "trending down to the lower part of the range and that's consistent with an underlying labor market that is still sound and stronger that what the payroll numbers suggest," said Michael Gregory, senior economist at BMO Nesbitt Burns.
Leading Indicators for July fell .3% versus estimates of a .1% fall and a .1% decline in June. The index of coincident indicators, a gauge of current economic conditions, rose .1% last month. It tracks payrolls, incomes, sales and production, Bloomberg said. A declining stock market, rising energy prices and a fall in the money supply contributed to the decline in the leading index, Bloomberg reported. "There's a lot of uncertainty right now with the presidential elections and oil prices and kind of the mixed economic numbers," Agilent Technologies DEO Barnholt said. A recent survey by the National Association for Business Economics(NABE) showed that forty percent of CEOs believe terrorism is the biggest near-term threat to the U.S. economy, more than twice the percentage concerned about terror in a March poll, Bloomberg reported.
The Philadelphia Fed's Index for August was 28.5 versus estimates of 30.0 and a reading of 36.1 in July. The index is "more an indication of a pause in rapid growth than anything else," said Michael Trebing, an economist at the Fed bank. "The overall conclusion is we are still seeing growth." The component of the index that measures the outlook for six months from now rose to 52.7, the highest since January, Bloomberg said. The increase in the expectations index is "telling us that any pullback in the Philadelphia area manufacturing sector should be temporary," said Joseph LaVorgna, chief U.S. fixed income economist at Deutsche Bank Securities.
Bottom Line: Overall, last week's economic data were mixed. Measures of manufacturing mostly weakened, but gauges of the future outlook remain relatively strong. Recent surveys say that terrorism worries ahead of the election are weighing heavily on executive purchasing decisions. Strong demand for U.S. securities by foreign investors continues to show that inflation and deficit fears perpetuated by the media and bears are overstated at this point. Many recent economic releases show inflation slowing, including the CPI last week. In my opinion, oil is at an intermediate-term high and will begin falling to the mid-30's within the next few months which bodes well for future inflation readings. As well, slowing demand from China should hold commodity prices in check. The U.S. housing market remains exceptionally strong. The supply of homes in the U.S. is relatively low compared to demand and future gauges of buying activity point to sustainable strength. I continue to believe overall U.S. economic activity will re-accelerate in the fourth quarter. Executive worries over terrorism and anti-business political rhetoric are the two main reasons U.S. growth has recently slowed from the torrid pace seen earlier in the year.
The Empire Manufacturing Index fell to 12.57 in August versus estimates of 32.3 and a reading of 35.75 in July. Readings above zero indicate expansion. Thirty-four percent of the state's manufacturers, down from 46% in July, reported an increase in new orders, pushing the measure of new orders to the lowest in almost a year, Bloomberg said. "We've seen a little bit of a lull this month," said David Freund, vice president of operations at Selflock Screw Products in East Syracuse, New York. Selflock believes business will accelerate again after the Republican convention in September, Bloomberg reported.
International investors stepped up purchases of U.S. securities in June amid faster U.S. economic growth than in Europe and Japan, Bloomberg reported. "The purchases may alleviate concern about the attractiveness of U.S. assets after a government report Friday showed the U.S. trade deficit widened," said Stephen Jen, head of currency research at Morgan Stanley in London. "Some investors are too fixated on the U.S. deficit," said Jen, who used to work at the International Monetary Fund and Federal Reserve. "If you look at the demand for dollar assets and U.S. Treasuries, it's hard to say people have a lot of fears about financing the U.S. deficit."
The NAHB Housing Market Index rose to 71 in August versus expectations of 67 and a reading of 67 in July. A reading above 50 means that builders view market conditions as more positive than negative. The index has exceeded 60 for 15 months in a row, Bloomberg said. "With the ongoing favorable financing climate and solid house-price performance, we have good reason to expect continue strength in the housing market in the months ahead," said Bobby Rayburn, the NAHB President. A gauge of buyer traffic in the builders' survey rose to 57, the highest since May 1999. NAHB is forecasting housing starts of 1.9 million in 2004, the most since 1978, and record single-family starts of 1.56 million, Bloomberg said. Finally, the National Association of Realtors increased its estimate for home sales last week for the eighth time this year, saying low mortgage rates and an improving economy will spur the housing market to records for both existing home sales and new home sales, Bloomberg reported.
The Consumer Price Index for July fell .1% versus estimates of a .2% rise and a .3% increase in June. CPI Ex Food & Energy for July rose .1% versus estimates of a .2% gain and a .1% rise in June. The decline in the CPI was the first drop in eight months, as shoppers paid less for gasoline, clothing and transportation, Bloomberg reported. Slowing inflation underscores Federal Reserve policy makers' comments that recent price increases will prove temporary, Bloomberg said. Energy prices, which account for about a 14th of the index fell 1.9% in July, the first decline since November.
Housing Starts for July were 1.98M versus estimates of 1.9M and an upwardly revised 1.83M in June. The 8.3% increase was a result of builders responding to the best two months of home sales on record. Construction permits, a sign of future activity, also increased, Bloomberg reported. The pace has averaged 1.94M units so far in 2004, surpassing last year's 1.85M, the most in 25 years, Bloomberg said. This was a "much stronger than expected report as inventories of new homes are quite lean and housing affordability is still very high," said David Greenlaw, chief U.S. fixed income economist at Moran Stanley. However, August starts in the South may be weaker in the aftermath of Hurricane Charley, which caused at least $11 billion of damage in Florida, Bloomberg said.
Industrial Production for July rose .4% versus estimates of a .5% increase and a .5% fall in June. Capacity Utilization for July was 77.1% versus estimates of 77.5% and 76.9% in June. U.S. industrial production strengthened for the third time in four months, led by business equipment such as computers and semiconductors, Bloomberg said. "This part of the economy is on pretty sound footing," said John Hermann, chief U.S. economist at Cantor Fitzgerald. "It's not a blistering pace, but it's a relatively solid pace that fits in with Greenspan's view that the economy is poised to resume stronger growth."
Initial Jobless Claims for last week fell to 331K versus estimates of 335K and 334K the prior week. Continuing Claims were 2.9M versus estimates of 2.87M and 2.89M prior. Claims are "trending down to the lower part of the range and that's consistent with an underlying labor market that is still sound and stronger that what the payroll numbers suggest," said Michael Gregory, senior economist at BMO Nesbitt Burns.
Leading Indicators for July fell .3% versus estimates of a .1% fall and a .1% decline in June. The index of coincident indicators, a gauge of current economic conditions, rose .1% last month. It tracks payrolls, incomes, sales and production, Bloomberg said. A declining stock market, rising energy prices and a fall in the money supply contributed to the decline in the leading index, Bloomberg reported. "There's a lot of uncertainty right now with the presidential elections and oil prices and kind of the mixed economic numbers," Agilent Technologies DEO Barnholt said. A recent survey by the National Association for Business Economics(NABE) showed that forty percent of CEOs believe terrorism is the biggest near-term threat to the U.S. economy, more than twice the percentage concerned about terror in a March poll, Bloomberg reported.
The Philadelphia Fed's Index for August was 28.5 versus estimates of 30.0 and a reading of 36.1 in July. The index is "more an indication of a pause in rapid growth than anything else," said Michael Trebing, an economist at the Fed bank. "The overall conclusion is we are still seeing growth." The component of the index that measures the outlook for six months from now rose to 52.7, the highest since January, Bloomberg said. The increase in the expectations index is "telling us that any pullback in the Philadelphia area manufacturing sector should be temporary," said Joseph LaVorgna, chief U.S. fixed income economist at Deutsche Bank Securities.
Bottom Line: Overall, last week's economic data were mixed. Measures of manufacturing mostly weakened, but gauges of the future outlook remain relatively strong. Recent surveys say that terrorism worries ahead of the election are weighing heavily on executive purchasing decisions. Strong demand for U.S. securities by foreign investors continues to show that inflation and deficit fears perpetuated by the media and bears are overstated at this point. Many recent economic releases show inflation slowing, including the CPI last week. In my opinion, oil is at an intermediate-term high and will begin falling to the mid-30's within the next few months which bodes well for future inflation readings. As well, slowing demand from China should hold commodity prices in check. The U.S. housing market remains exceptionally strong. The supply of homes in the U.S. is relatively low compared to demand and future gauges of buying activity point to sustainable strength. I continue to believe overall U.S. economic activity will re-accelerate in the fourth quarter. Executive worries over terrorism and anti-business political rhetoric are the two main reasons U.S. growth has recently slowed from the torrid pace seen earlier in the year.
Weekly Scoreboard*
Indices
S&P 500 1,098.35 +3.15%
Dow 10,110.14 +2.90%
NASDAQ 1,838.02 +4.60%
Russell 2000 547.92 +5.90%
S&P Equity Long/Short Index 953.09 +.19%
Put/Call .96 -8.57%
NYSE Arms .66 -45.0%
Volatility(VIX) 16.00 -11.01%
AAII % Bulls 34.88 -9.57%
US Dollar 88.12 +.25%
CRB 276.49 +2.71%
Futures Spot Prices
Gold 415.50 +3.54%
Crude Oil 46.72 +1.30%
Unleaded Gasoline 126.73 -5.46%
Natural Gas 5.55 +.22%
Base Metals 110.75 -.29%
10-year US Treasury Yield 4.23% unch.
Average 30-year Mortgage Rate 5.81% -.68%
Leading Sectors
Airlines +12.03%
Networking +9.17%
Biotechnology +8.98%
Lagging Sectors
Utilities +1.34%
Hospitals +1.10%
Energy +.92%
*% Gain or loss for the week
S&P 500 1,098.35 +3.15%
Dow 10,110.14 +2.90%
NASDAQ 1,838.02 +4.60%
Russell 2000 547.92 +5.90%
S&P Equity Long/Short Index 953.09 +.19%
Put/Call .96 -8.57%
NYSE Arms .66 -45.0%
Volatility(VIX) 16.00 -11.01%
AAII % Bulls 34.88 -9.57%
US Dollar 88.12 +.25%
CRB 276.49 +2.71%
Futures Spot Prices
Gold 415.50 +3.54%
Crude Oil 46.72 +1.30%
Unleaded Gasoline 126.73 -5.46%
Natural Gas 5.55 +.22%
Base Metals 110.75 -.29%
10-year US Treasury Yield 4.23% unch.
Average 30-year Mortgage Rate 5.81% -.68%
Leading Sectors
Airlines +12.03%
Networking +9.17%
Biotechnology +8.98%
Lagging Sectors
Utilities +1.34%
Hospitals +1.10%
Energy +.92%
*% Gain or loss for the week
Friday, August 20, 2004
Mid-day Update
S&P 500 1,094.53 +.30%
NASDAQ 1,827.50 +.42%
Leading Sectors
Oil Service +3.35%
Airlines +2.95%
Energy +1.48%
Lagging Sectors
Internet -.12%
Retail -.36%
Fashion -.85%
Other
Crude Oil 47.88 +.50%
Natural Gas 5.58 +1.33%
Gold 416.00 +1.64%
Base Metals 110.71 -.31%
U.S. Dollar 88.02 +.26%
10-Yr. T-note Yield 4.23% +.37%
VIX 16.38 -3.42%
Put/Call 1.16 +30.34%
NYSE Arms .74 -30.19%
Market Movers
CYBX +37.5% after announcing ANSI bought a 15% stake in the company last week and said it wants to discuss a merger. ANSI -5.1%.
RSE +40.0% after General Growth Properties agreed to buy it for about $7.2 billion in cash.
MRVL +6.7% after beating 2Q estimates and raising 3Q guidance.
ELBO +11.8% after beating 2Q estimates substantially and raising 3Q outlook.
CRDN +15.6% after announcing the receipt of a new 36-month Indefinite Delivery/Indefinite Quantity government contract for lightweight ceramic body armor with a maximum value of $461 million.
ADSK +9.8% after beating 2Q estimates and raising 3Q forecast.
BCSI -10.5% after Wachovia downgrade to Market Perform.
JWN -8.5% after missing 2Q forecast, lowering 3Q outlook, boosting 04 guidance and raising dividend.
SMRT -7.4% after beating 2Q estimates, raising 3Q outlook and downgrade to Neutral by SunTrust Robinson Humphrey.
Economic Data
None of note.
Recommendations
CREE rated Buy at Wells Fargo, target $31. FMX raised to Overweight at JP Morgan. RD raised to Buy at Merrill, target $53.27. BBA raised to Strong Buy, target $9. JNJ rated Overweight at Prudential, target $61. Goldman Sachs reiterated Outperform on BBY, STZ, MRVL, TRW, HD, PETC, AET, AIG, BIIB, PFE, NT, EXC, BSX and N. Goldman reiterated Underperform on GM, RAI, HCC, WIN and F. Citi SmithBarney raised HAIN to Buy, target $21. Citi upgraded PXLW to Buy, target $13. Citi reiterated Buy on WB, target $53. Citi rated IPXL Buy, target $18. Citi reiterated Buy on NT, target $5. Citi reiterated Buy on AMAT, target $22.
Mid-day News
U.S. stocks are modestly higher mid-day on improvements in the big picture in Iraq and falling oil prices. Home Depot's Canadian unit plans to open stores with about half the space of its warehouse-size outlets to compete against Rona Inc. and Canadian Tire Corp. in smaller communities, the National Post reported. Lehman Brothers lowered its estimates for inflation next year, cutting its forecast for the CPI from 2.5% to 2.0%, Bloomberg reported. Moqtada al-Sadr favors a political role in the nation's future rather than persisting with a military standoff, said Rime Allaf at London's Royal Institute of International Affairs, Bloomberg said. Anadarko Petroleum, a U.S. oil and natural-gas producer agreed to sell properties in the Gulf of Mexico to Apache Corp. and Morgan Stanley Capital Group for a combined $1.31 billion, Bloomberg reported. Rubina Muqimyar, the first Afghan woman to compete in track and field at the Olympics, set a national 100-meter record in her heat in Athens, Bloomberg said. The U.S. charged three men with supporting the Islamist terror group Hamas through a 15-year racketeering conspiracy, Bloomberg reported. Oil prices approaching levels that triggered past recessions are unlikely to cause a downturn this time because interest rates are so low, economists at NY-based Economic Cycle Research Institute said. The Arab Janjaweed militia continues to attack black Africans in the Darfur region of Sudan and 30,000 people might flee across the border to Chad, Bloomberg reported. Phelps Dodge, Canada's Teck Cominco and the U.K.'s Antofagasta Plc are profiting from record prices for molybdenum, a byproduct of copper mining, as stainless-steel mills buy more of the metal that prevents corrosion, Bloomberg said.
BOTTOM LINE: The Portfolio is substantially higher mid-day as my alternative energy, homebuilding and technology longs are rising and my Chinese ADR shorts are falling. I have not traded and the Portfolio is still 125% net long. The tone of the market is pretty good. Most sectors are higher and the advance/decline line is showing strength. As well, the Put/Call ratio is rising again. I expect U.S. stocks to rise modestly into the close. However, a significant reversal in oil prices could send shares meaningfully higher.
NASDAQ 1,827.50 +.42%
Leading Sectors
Oil Service +3.35%
Airlines +2.95%
Energy +1.48%
Lagging Sectors
Internet -.12%
Retail -.36%
Fashion -.85%
Other
Crude Oil 47.88 +.50%
Natural Gas 5.58 +1.33%
Gold 416.00 +1.64%
Base Metals 110.71 -.31%
U.S. Dollar 88.02 +.26%
10-Yr. T-note Yield 4.23% +.37%
VIX 16.38 -3.42%
Put/Call 1.16 +30.34%
NYSE Arms .74 -30.19%
Market Movers
CYBX +37.5% after announcing ANSI bought a 15% stake in the company last week and said it wants to discuss a merger. ANSI -5.1%.
RSE +40.0% after General Growth Properties agreed to buy it for about $7.2 billion in cash.
MRVL +6.7% after beating 2Q estimates and raising 3Q guidance.
ELBO +11.8% after beating 2Q estimates substantially and raising 3Q outlook.
CRDN +15.6% after announcing the receipt of a new 36-month Indefinite Delivery/Indefinite Quantity government contract for lightweight ceramic body armor with a maximum value of $461 million.
ADSK +9.8% after beating 2Q estimates and raising 3Q forecast.
BCSI -10.5% after Wachovia downgrade to Market Perform.
JWN -8.5% after missing 2Q forecast, lowering 3Q outlook, boosting 04 guidance and raising dividend.
SMRT -7.4% after beating 2Q estimates, raising 3Q outlook and downgrade to Neutral by SunTrust Robinson Humphrey.
Economic Data
None of note.
Recommendations
CREE rated Buy at Wells Fargo, target $31. FMX raised to Overweight at JP Morgan. RD raised to Buy at Merrill, target $53.27. BBA raised to Strong Buy, target $9. JNJ rated Overweight at Prudential, target $61. Goldman Sachs reiterated Outperform on BBY, STZ, MRVL, TRW, HD, PETC, AET, AIG, BIIB, PFE, NT, EXC, BSX and N. Goldman reiterated Underperform on GM, RAI, HCC, WIN and F. Citi SmithBarney raised HAIN to Buy, target $21. Citi upgraded PXLW to Buy, target $13. Citi reiterated Buy on WB, target $53. Citi rated IPXL Buy, target $18. Citi reiterated Buy on NT, target $5. Citi reiterated Buy on AMAT, target $22.
Mid-day News
U.S. stocks are modestly higher mid-day on improvements in the big picture in Iraq and falling oil prices. Home Depot's Canadian unit plans to open stores with about half the space of its warehouse-size outlets to compete against Rona Inc. and Canadian Tire Corp. in smaller communities, the National Post reported. Lehman Brothers lowered its estimates for inflation next year, cutting its forecast for the CPI from 2.5% to 2.0%, Bloomberg reported. Moqtada al-Sadr favors a political role in the nation's future rather than persisting with a military standoff, said Rime Allaf at London's Royal Institute of International Affairs, Bloomberg said. Anadarko Petroleum, a U.S. oil and natural-gas producer agreed to sell properties in the Gulf of Mexico to Apache Corp. and Morgan Stanley Capital Group for a combined $1.31 billion, Bloomberg reported. Rubina Muqimyar, the first Afghan woman to compete in track and field at the Olympics, set a national 100-meter record in her heat in Athens, Bloomberg said. The U.S. charged three men with supporting the Islamist terror group Hamas through a 15-year racketeering conspiracy, Bloomberg reported. Oil prices approaching levels that triggered past recessions are unlikely to cause a downturn this time because interest rates are so low, economists at NY-based Economic Cycle Research Institute said. The Arab Janjaweed militia continues to attack black Africans in the Darfur region of Sudan and 30,000 people might flee across the border to Chad, Bloomberg reported. Phelps Dodge, Canada's Teck Cominco and the U.K.'s Antofagasta Plc are profiting from record prices for molybdenum, a byproduct of copper mining, as stainless-steel mills buy more of the metal that prevents corrosion, Bloomberg said.
BOTTOM LINE: The Portfolio is substantially higher mid-day as my alternative energy, homebuilding and technology longs are rising and my Chinese ADR shorts are falling. I have not traded and the Portfolio is still 125% net long. The tone of the market is pretty good. Most sectors are higher and the advance/decline line is showing strength. As well, the Put/Call ratio is rising again. I expect U.S. stocks to rise modestly into the close. However, a significant reversal in oil prices could send shares meaningfully higher.
Friday Watch
Earnings of Note
Company/Estimate
None of note.
Splits
None of note.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on BSX, HD and BIIB.
Late-Night News
Asian indices are quietly mixed on strength in Australia and weakness in China. South Korea asked the U.S. to delay its troop reduction on the Korean peninsula by more than a year, the Korea Times newspaper said. Taiwan's AU Optronics, which makes flat-panel displays used in computers and televisions, forecasts flat-panel prices will stabilize after September on rising demand, the Economic Daily News said. A nationwide inventory by the U.S. Dept. of Energy has found that data involving nuclear weapons is missing from a regional office in Albuquerque, New Mexico, the AP reported. Moqtada al-Sadr ordered his militiamen to leave hold shrines in Najaf, Bloomberg reported. U.S. shrimp fishermen need to reduce the number of boats in their fleet and find a new way to market their product to combat falling prices and surging imports, Bloomberg said. California Governor Schwarzenegger reached agreements with five Indian tribes that will expand the gambling industry in the most-populous U.S. state and pave the way for California's first urban casino, Bloomberg reported.
Late-Night Trading
Asian Indices are -.50% to +.25% on average.
S&P 500 indicated -.03%.
NASDAQ 100 indicated -.22%
BOTTOM LINE: I expect U.S. equities to open modestly lower in the morning on fears of further oil supply disruptions over the weekend. However, stocks should rise later in the day on short-covering and optimism that the big picture in Iraq is improving. The Portfolio is 125% net long heading into tomorrow.
Company/Estimate
None of note.
Splits
None of note.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on BSX, HD and BIIB.
Late-Night News
Asian indices are quietly mixed on strength in Australia and weakness in China. South Korea asked the U.S. to delay its troop reduction on the Korean peninsula by more than a year, the Korea Times newspaper said. Taiwan's AU Optronics, which makes flat-panel displays used in computers and televisions, forecasts flat-panel prices will stabilize after September on rising demand, the Economic Daily News said. A nationwide inventory by the U.S. Dept. of Energy has found that data involving nuclear weapons is missing from a regional office in Albuquerque, New Mexico, the AP reported. Moqtada al-Sadr ordered his militiamen to leave hold shrines in Najaf, Bloomberg reported. U.S. shrimp fishermen need to reduce the number of boats in their fleet and find a new way to market their product to combat falling prices and surging imports, Bloomberg said. California Governor Schwarzenegger reached agreements with five Indian tribes that will expand the gambling industry in the most-populous U.S. state and pave the way for California's first urban casino, Bloomberg reported.
Late-Night Trading
Asian Indices are -.50% to +.25% on average.
S&P 500 indicated -.03%.
NASDAQ 100 indicated -.22%
BOTTOM LINE: I expect U.S. equities to open modestly lower in the morning on fears of further oil supply disruptions over the weekend. However, stocks should rise later in the day on short-covering and optimism that the big picture in Iraq is improving. The Portfolio is 125% net long heading into tomorrow.
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