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Friday, May 19, 2006
Thursday, May 18, 2006
Friday Watch
Late-Night Headlines
Bloomberg:
- Commodity prices are about 50% higher than they would be if they were based on the fundamentals of supply and demand, as a surge of investment sent prices for metals and energy to record highs, Merrill Lynch said. The “speculative premium” at the end of April rose from a record 30% in March, based on an analysis of commodities traded on futures exchanges and those bought and sold on physical markets, according to the report by Merrill strategist Richard Bernstein in NY.
- BellSouth(BLS) is demanding that USA Today, the largest US newspaper, retract a story saying the company gave customers’ records to the National Security Agency.
- Milberg Weiss Bershad & Schulman, the law firm that has won more than $45 billion for investors in securities-fraud cases, and two of its partners were charged with participating in a scheme to pay illegal kickbacks to clients.
- The Senate voted to make English the “national language” of the US as part of legislation overhauling immigration policy.
- Japan’s economy grew at an annual 1.9% pace in the three months ended March 31. US economic growth is estimated to have surged 5.8% during the same period.
Financial Times:
- Wyeth(WYE), maker of Advil pain pills, may bid for Pfizer’s(PFE) consumer product division, which could be sold for over $14 billion.
CNBC:
- Symantec(SYMC) filed an infringement lawsuit against Microsoft Corp.(MSFT).
China Business News:
- China may take more measures to control economic growth if lending continues to grow at a fast pace this month and next, citing a meeting between the central bank and commercial lenders yesterday.
Late Buy/Sell Recommendations
Goldman Sachs:
- Rated (JEC) and EME Outperform.
- Rated (GVA) Underperform.
CSFB:
- Raised (MU) to Outperform.
Business Week:
- The shares of Cerus Corp.(CERS) may rise as much as 150% in 12 months, citing Robert W. Baird’s Christopher Raymond.
- Medtronic(MDT) may rise as much as 26% within the next 12 months because earnings will rise as the economy is less vulnerable to swings in the cardiology industry than competitors, citing Harris Nesbitt’s Joanne Wuensch.
Night Trading
Asian Indices are -.75% to unch. on average.
S&P 500 indicated +.15%.
NASDAQ 100 indicated +.16%.
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
- (ASEI)/.76
- (ANN)/.40
- (POWI)/.16
Upcoming Splits
- None of note
Economic Releases
- None of note
Bloomberg:
- Commodity prices are about 50% higher than they would be if they were based on the fundamentals of supply and demand, as a surge of investment sent prices for metals and energy to record highs, Merrill Lynch said. The “speculative premium” at the end of April rose from a record 30% in March, based on an analysis of commodities traded on futures exchanges and those bought and sold on physical markets, according to the report by Merrill strategist Richard Bernstein in NY.
- BellSouth(BLS) is demanding that USA Today, the largest US newspaper, retract a story saying the company gave customers’ records to the National Security Agency.
- Milberg Weiss Bershad & Schulman, the law firm that has won more than $45 billion for investors in securities-fraud cases, and two of its partners were charged with participating in a scheme to pay illegal kickbacks to clients.
- The Senate voted to make English the “national language” of the US as part of legislation overhauling immigration policy.
- Japan’s economy grew at an annual 1.9% pace in the three months ended March 31. US economic growth is estimated to have surged 5.8% during the same period.
Financial Times:
- Wyeth(WYE), maker of Advil pain pills, may bid for Pfizer’s(PFE) consumer product division, which could be sold for over $14 billion.
CNBC:
- Symantec(SYMC) filed an infringement lawsuit against Microsoft Corp.(MSFT).
China Business News:
- China may take more measures to control economic growth if lending continues to grow at a fast pace this month and next, citing a meeting between the central bank and commercial lenders yesterday.
Late Buy/Sell Recommendations
Goldman Sachs:
- Rated (JEC) and EME Outperform.
- Rated (GVA) Underperform.
CSFB:
- Raised (MU) to Outperform.
Business Week:
- The shares of Cerus Corp.(CERS) may rise as much as 150% in 12 months, citing Robert W. Baird’s Christopher Raymond.
- Medtronic(MDT) may rise as much as 26% within the next 12 months because earnings will rise as the economy is less vulnerable to swings in the cardiology industry than competitors, citing Harris Nesbitt’s Joanne Wuensch.
Night Trading
Asian Indices are -.75% to unch. on average.
S&P 500 indicated +.15%.
NASDAQ 100 indicated +.16%.
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
- (ASEI)/.76
- (ANN)/.40
- (POWI)/.16
Upcoming Splits
- None of note
Economic Releases
- None of note
BOTTOM LINE: Asian indices are lower, weighed down by exporting stocks in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 25% net long heading into the day.
Stocks Finish Lower on Worries Over Future Growth
Indices
S&P 500 1,261.81 -.67%
DJIA 11,128.29 -.69%
NASDAQ 2,180.32 -.70%
Russell 2000 718.47 -1.02%
Wilshire 5000 12,726.68 -.70%
S&P Barra Growth 585.53 -.58%
S&P Barra Value 674.34 -.76%
Morgan Stanley Consumer 602.41 -.24%
Morgan Stanley Cyclical 831.01 -.63%
Morgan Stanley Technology 501.08 -.93%
Transports 4,627.33 -.93%
Utilities 393.25 +.16%
Put/Call 1.19 -19.05%
NYSE Arms 1.70 -9.99%
Volatility(VIX) 16.99 +4.49%
ISE Sentiment 108.00 -7.69%
US Dollar 84.52 -.39%
CRB 348.65 -.21%
Futures Spot Prices
Crude Oil 69.63 +.26%
Unleaded Gasoline 202.20 +.34%
Natural Gas 6.01 +.30%
Heating Oil 195.95 +.42%
Gold 679.20 -.25%
Base Metals 236.16 -.71%
Copper 368.50 -.70%
10-year US Treasury Yield 5.05% -1.76%
Leading Sectors
Airlines +.97%
Disk Drives +.96%
Computer Hardware +.45%
Lagging Sectors
Coal -1.60%
Biotech -1.78%
Oil Service -2.67%
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
Smith Barney:
- Reiterated Buy on PLCE.
Afternoon/Evening Headlines
Bloomberg:
- Prospects for “The Da Vinci Code” opening weekend dropped today after negative reviews labeled the religious thriller “clueless” and “long-winded.”
- Merck(MRK) told US advisers today its vaccine against a sexually transmitted virus that causes cervical cancer should be given to children as well as adults.
- Fed Governor Donald Kohn, a 36-year central bank veteran, will be picked by President Bush to be the board’s new vice chairman, a White House official said.
- The New Jersey State Senate approved a $250 million borrowing plan to create three stem-cell research centers, moving one step forward in the race against California to find funding and scientists for the controversial science.
- Dell Inc.(DELL) will use Advanced Micro Devices’(AMD) chips in some servers, ending its exclusive use of Intel Corp.’s(INTC) products after 22 years.
- Dell(DELL) also said first-quarter profit fell 18% and it will cut $3 billion in costs this year.
- Brazil canceled part of its weekly bond auction and Cablemas SA, Mexican cable company, postponed an IPO, a sign a global rout in stocks and bonds is reducing Latin America’s access to capital markets.
S&P 500 1,261.81 -.67%
DJIA 11,128.29 -.69%
NASDAQ 2,180.32 -.70%
Russell 2000 718.47 -1.02%
Wilshire 5000 12,726.68 -.70%
S&P Barra Growth 585.53 -.58%
S&P Barra Value 674.34 -.76%
Morgan Stanley Consumer 602.41 -.24%
Morgan Stanley Cyclical 831.01 -.63%
Morgan Stanley Technology 501.08 -.93%
Transports 4,627.33 -.93%
Utilities 393.25 +.16%
Put/Call 1.19 -19.05%
NYSE Arms 1.70 -9.99%
Volatility(VIX) 16.99 +4.49%
ISE Sentiment 108.00 -7.69%
US Dollar 84.52 -.39%
CRB 348.65 -.21%
Futures Spot Prices
Crude Oil 69.63 +.26%
Unleaded Gasoline 202.20 +.34%
Natural Gas 6.01 +.30%
Heating Oil 195.95 +.42%
Gold 679.20 -.25%
Base Metals 236.16 -.71%
Copper 368.50 -.70%
10-year US Treasury Yield 5.05% -1.76%
Leading Sectors
Airlines +.97%
Disk Drives +.96%
Computer Hardware +.45%
Lagging Sectors
Coal -1.60%
Biotech -1.78%
Oil Service -2.67%
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
Smith Barney:
- Reiterated Buy on PLCE.
Afternoon/Evening Headlines
Bloomberg:
- Prospects for “The Da Vinci Code” opening weekend dropped today after negative reviews labeled the religious thriller “clueless” and “long-winded.”
- Merck(MRK) told US advisers today its vaccine against a sexually transmitted virus that causes cervical cancer should be given to children as well as adults.
- Fed Governor Donald Kohn, a 36-year central bank veteran, will be picked by President Bush to be the board’s new vice chairman, a White House official said.
- The New Jersey State Senate approved a $250 million borrowing plan to create three stem-cell research centers, moving one step forward in the race against California to find funding and scientists for the controversial science.
- Dell Inc.(DELL) will use Advanced Micro Devices’(AMD) chips in some servers, ending its exclusive use of Intel Corp.’s(INTC) products after 22 years.
- Dell(DELL) also said first-quarter profit fell 18% and it will cut $3 billion in costs this year.
- Brazil canceled part of its weekly bond auction and Cablemas SA, Mexican cable company, postponed an IPO, a sign a global rout in stocks and bonds is reducing Latin America’s access to capital markets.
BOTTOM LINE: The Portfolio finished slightly higher today on gains in my Retail longs, (TLT) long, Energy-related shorts and Base metal shorts. I added to my (IWM), (EEM) and (QQQQ) shorts in the final hour, thus leaving the Portfolio 25% net long. The tone of the market was negative today as the advance/decline line finished lower, almost every sector fell and volume was above average. Measures of investor anxiety were mixed into the close. Overall, today's market performance was bearish. It appears that investors are spooked by the recent declines in commodities and rally in bonds. Future economic data may further pressure stocks as investors interpret strong data to mean more rate hikes and weak data to mean an economic slowdown is on the way. However, a Fed pause is increasing in probability. I expect any string of negative economic data or a continuation of the recent commodity decline will result in an end to the string of recent rate hikes. I continue to believe the major averages are very close to a tradable bottom.
Today's Headlines
Bloomberg:
- Emerging-market stocks dropped for an eighth day, set to round off their longest losing streak in more than a year, after US inflation report fanned concern interest rates will keep climbing in the world’s largest economy.
- Rising inflation makes a pause in the Fed’s series of 16 interest-rate increases “less likely,” said Richmond Fed President Lacker.
- The average rate on a 30-year fixed mortgage in the US rose to 6.6% this week, the highest in almost four years, according to Freddie Mac.
- Natural gas plunged to the lowest in 15 months in NY amid surging inventories that may fill US storage to capacity after mild winter and spring weather cut demand.
Wall Street Journal:
- Vonage Holdings faces a growing number of customer complaints as the Internet-based phone service prepares for a $494 million public offering that could come as early as next week.
- A US non-profit organization, Upwardly Mobile, is trying to direct professionally skilled immigrants to companies such as Google(GOOG), Wells Fargo(WFC) and Robert Half Intl.(RHI).
- Thomas Weisel Partners(TWPG) reached an agreement with Fidelity Investments to eliminate so-called “soft-dollar” practices in charging for research.
- GM’s(GM) employee buyout offer has attracted about 12,400 workers, citing the UAW.
NY Times:
- President Bush may hire military contractors including Lockheed Martin(LMT), Northrop Grumman(NOC) and Raytheon(RTN) to help provide better border security.
- The Palestinian government, led by Hamas, yesterday defied President Mahmoud Abbas by sending a new, largely Hamas security force to patrol the Gaza Strip.
- Electronic gizmos like photo-equipped cell phones, handheld computers and iPods loaded with recorded notes can facilitate cheating, forcing universities to take countermeasures.
Washington Post:
- Democratic Representative John Conyers wrote that he wouldn’t immediately begin impeachment proceedings against President Bush if the Democrats take control of the House and he becomes chairman of the House Judiciary Committee.
Die Welt:
- Siemens AG, Germany’s largest engineering company, plans to build new windmill factories in the US to meet rising demand.
USA Today:
- The Bush administration has briefed congressman 30 times on the National Security Agency’s surveillance programs since the Sept. 11 terrorist attacks.
- Emerging-market stocks dropped for an eighth day, set to round off their longest losing streak in more than a year, after US inflation report fanned concern interest rates will keep climbing in the world’s largest economy.
- Rising inflation makes a pause in the Fed’s series of 16 interest-rate increases “less likely,” said Richmond Fed President Lacker.
- The average rate on a 30-year fixed mortgage in the US rose to 6.6% this week, the highest in almost four years, according to Freddie Mac.
- Natural gas plunged to the lowest in 15 months in NY amid surging inventories that may fill US storage to capacity after mild winter and spring weather cut demand.
Wall Street Journal:
- Vonage Holdings faces a growing number of customer complaints as the Internet-based phone service prepares for a $494 million public offering that could come as early as next week.
- A US non-profit organization, Upwardly Mobile, is trying to direct professionally skilled immigrants to companies such as Google(GOOG), Wells Fargo(WFC) and Robert Half Intl.(RHI).
- Thomas Weisel Partners(TWPG) reached an agreement with Fidelity Investments to eliminate so-called “soft-dollar” practices in charging for research.
- GM’s(GM) employee buyout offer has attracted about 12,400 workers, citing the UAW.
NY Times:
- President Bush may hire military contractors including Lockheed Martin(LMT), Northrop Grumman(NOC) and Raytheon(RTN) to help provide better border security.
- The Palestinian government, led by Hamas, yesterday defied President Mahmoud Abbas by sending a new, largely Hamas security force to patrol the Gaza Strip.
- Electronic gizmos like photo-equipped cell phones, handheld computers and iPods loaded with recorded notes can facilitate cheating, forcing universities to take countermeasures.
Washington Post:
- Democratic Representative John Conyers wrote that he wouldn’t immediately begin impeachment proceedings against President Bush if the Democrats take control of the House and he becomes chairman of the House Judiciary Committee.
Die Welt:
- Siemens AG, Germany’s largest engineering company, plans to build new windmill factories in the US to meet rising demand.
USA Today:
- The Bush administration has briefed congressman 30 times on the National Security Agency’s surveillance programs since the Sept. 11 terrorist attacks.
Jobless Claims Rise, Leading Indicators Fall
- Initial Jobless Claims for last week rose 367K versus estimates of 319K and 325K the prior week.
- Continuing Claims rose to 2389K versus estimates of 2420K and 2381K prior.
- Leading Indicators for April fell .1% versus estimates of a .1% increase and an upwardly revised .4% rise in March.
- Continuing Claims rose to 2389K versus estimates of 2420K and 2381K prior.
- Leading Indicators for April fell .1% versus estimates of a .1% increase and an upwardly revised .4% rise in March.
BOTTOM LINE: The number of Americans filing first-time applications for unemployment benefits rose last week to the highest level since early October, primarily due to a government shutdown in Puerto Rico that has since been resolved, Bloomberg said. Excluding a 46,000 increase in claims from Puerto Rico, filing would have come in around 312,000. The four-week moving-average of claims rose to 333,250 from 317,500 the prior week. The unemployment rate among those able to receive benefits, which tracks the US unemployment rate, remained at 1.8%. I continue to believe the labor market will remain relatively healthy over the intermediate-term without generating substantial unit labor cost increases.
An index of US leading economic indicators unexpectedly declined in April, pointing to a slowdown from the fastest pace of growth in more than two years, Bloomberg said. The index was dragged down by declines in building permits and consumer sentiment. According to Bloomberg, the government will raise its first quarter GDP growth estimate to a booming 5.8%. I continue to believe US economic growth peaked during 1Q and will decelerate back to average levels through year-end.
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