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Friday, January 20, 2006
Thursday, January 19, 2006
***Alert***
Due to a scheduling conflict I am unable to post through tomorrow's close. I will post the weekly scoreboard tomorrow evening.
Stocks Sharply Higher Heading into Final Hour Despite Today's Headwinds
BOTTOM LINE: The Portfolio is slightly higher heading into the final hour on gains in my Semi longs, Medical longs and Networking longs. I added to my (AAPL) long and exited my IWM and QQQQ shorts, thus leaving the Portfolio 100% net long. The tone of the market is very positive as the advance/decline line is substantially higher, almost every sector is gaining and volume is heavy. Measures of investor anxiety are lower. Today, we have seen new threats from Bin Laden, higher energy prices, higher long-term rates, a $15 rise in gold, weaker-than-expected housing and manufacturing numbers and some "disappointing" earnings reports. All these perceived negatives and the major averages and breadth are at session highs on heavy volume. Small caps are especially strong as the Russell 2000 makes another all-time high. This is one of the most underreported stories around. The vast majority of U.S. companies are strong and getting stronger. This is what is fueling the best string of 3%+ GDP quarters since 1986. I expect US stocks to trade modestly higher from current levels into the close on short-covering.
Today's Headlines
Bloomberg:
- Office vacancies in US cities dropped to a four-year low of 12.5% in the fourth quarter as companies added space for workers they’re hiring, real estate services firm Cushman & Wakefield said.
- France will maintain and develop its nuclear forces to counter states that might resort “to terrorist means” by using weapons of mass destruction, President Chirac said.
- Lehman Brothers Holdings(LEH) increased its annual dividend by 20% and said it may buy back as much as a fifth of its own shares this year.
- A man identified as al-Qaeda lead Osama Bin Laden warned of more attacks against the US, in an audiotape aired today on al-Jazeera television.
- US Treasures are falling as a government report showed new claims for unemployment benefits dropped to the lowest since April 2000, a sign job creation may accelerate.
- Manufacturing in the Philly area expanded less than economists forecast this month amid elevated energy costs and concerns about consumer spending.
CNBC:
- Nasdaq Stock Market(NDAQ) has held discussions to purchase the London Stock Exchange.
Wall Street Journal:
- Taiwan’s Q-ware Systems is spending $93 million to set up the world’s first citywide wireless Internet network in Taipei and give the city a competitive edge in communications.
- Walt Disney(DIS) is talking seriously to Pixar Animation(PIXR) studios about an acquisition for slightly more than the company’s current $6.7 billion market value.
- Amazon.com(AMZN) said it will start broadcasting a weekly show on the Web featuring left-wing comedian Bill Maher.
NY Times:
- RJ Reynolds Tobacco will today open a new upscale, luxury tobacco lounge in Chicago, where a smoking ban took effect this week.
- Officials from President Bill Clinton’s administration hampered an investigation into allegations that former US Housing Secretary Henry G. Cisneros evaded income tax.
- Cingular Wireless’s new wireless broadband service, known as BroadbandConnect, is fast and reliable, Walter Mossberg wrote.
- The NY Metropolitan Transportation Authority received four bids for free installation of a cellular network in underground subway stations.
USA Today:
- A US missile strike in Pakistan last week may have killed at least three top al-Qaeda operatives, including an explosives expert on America’s “Most Wanted” list and a relative of second-in-command al-Zawahiri.
NY Post:
- Starbucks Corp.(SBUX) plans to give away $10 gift cards to people who register on Yahoo’s(YHOO) Internet dating service to help generate business before Valentine’s Day.
al-Hayat:
- The US and Oman will today sign a free trade agreement that covers the exchange of goods and services.
- Office vacancies in US cities dropped to a four-year low of 12.5% in the fourth quarter as companies added space for workers they’re hiring, real estate services firm Cushman & Wakefield said.
- France will maintain and develop its nuclear forces to counter states that might resort “to terrorist means” by using weapons of mass destruction, President Chirac said.
- Lehman Brothers Holdings(LEH) increased its annual dividend by 20% and said it may buy back as much as a fifth of its own shares this year.
- A man identified as al-Qaeda lead Osama Bin Laden warned of more attacks against the US, in an audiotape aired today on al-Jazeera television.
- US Treasures are falling as a government report showed new claims for unemployment benefits dropped to the lowest since April 2000, a sign job creation may accelerate.
- Manufacturing in the Philly area expanded less than economists forecast this month amid elevated energy costs and concerns about consumer spending.
CNBC:
- Nasdaq Stock Market(NDAQ) has held discussions to purchase the London Stock Exchange.
Wall Street Journal:
- Taiwan’s Q-ware Systems is spending $93 million to set up the world’s first citywide wireless Internet network in Taipei and give the city a competitive edge in communications.
- Walt Disney(DIS) is talking seriously to Pixar Animation(PIXR) studios about an acquisition for slightly more than the company’s current $6.7 billion market value.
- Amazon.com(AMZN) said it will start broadcasting a weekly show on the Web featuring left-wing comedian Bill Maher.
NY Times:
- RJ Reynolds Tobacco will today open a new upscale, luxury tobacco lounge in Chicago, where a smoking ban took effect this week.
- Officials from President Bill Clinton’s administration hampered an investigation into allegations that former US Housing Secretary Henry G. Cisneros evaded income tax.
- Cingular Wireless’s new wireless broadband service, known as BroadbandConnect, is fast and reliable, Walter Mossberg wrote.
- The NY Metropolitan Transportation Authority received four bids for free installation of a cellular network in underground subway stations.
USA Today:
- A US missile strike in Pakistan last week may have killed at least three top al-Qaeda operatives, including an explosives expert on America’s “Most Wanted” list and a relative of second-in-command al-Zawahiri.
NY Post:
- Starbucks Corp.(SBUX) plans to give away $10 gift cards to people who register on Yahoo’s(YHOO) Internet dating service to help generate business before Valentine’s Day.
al-Hayat:
- The US and Oman will today sign a free trade agreement that covers the exchange of goods and services.
Housing Starts Slow, Labor Market Remains Healthy
- Housing Starts for December fell to 1933K versus estimates of 2035K and 2121K in November.
- Building Permits for December fell to 2068K versus estimates of 2100K and 2163K in November.
- Initial Jobless Claims for last week fell to 271K versus estimates of 315K and 307K the prior week.
- Continuing Claims are estimated to fall to 2534K versus estimates of 2686K and 2692K prior.
- Building Permits for December fell to 2068K versus estimates of 2100K and 2163K in November.
- Initial Jobless Claims for last week fell to 271K versus estimates of 315K and 307K the prior week.
- Continuing Claims are estimated to fall to 2534K versus estimates of 2686K and 2692K prior.
BOTTOM LINE: US housing starts fell to a nine-month low in December as rising interest rates and prices make buying less affordable and builders pull back after the second-best year in history, Bloomberg reported. Starts declined 24% in the Midwest, 22% in the West and 14% in the Northeast. Starts rose 5.2% in the South. It is a positive that housing starts are slowing as sales slow. This should help ensure the market slows to a healthy sustainable level.
The number of Americans filing first-time claims for unemployment benefits unexpectedly fell last week to the lowest since April 2000, evidence that companies are holding on to workers to meet demand, Bloomberg reported. The four-week moving average of initial claims fell to 299,000, the lowest since October 2000. The unemployment rate among people eligible for benefits, which tracks the US unemployment rate, fell to 2% versus 2.1% the prior week. I continue to believe the labor market will remain healthy over the intermediate-term without generating substantial unit labor cost increases.
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