BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Retail longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is slightly negative as the advance/decline line is modestly lower, most sectors are declining and volume is about average. The last seven trading days have seen the major averages make their daily lows early in the day and then surge modestly into the close. This is healthy consolidating action. My intraday gauge of investor angst has been elevated all day, considering the mild losses in the broad market. Given a stabilizing 10-year and a reversal lower in oil, I wouldn't be surprised to see day No. 8 of this type of action. I continue to believe cyclicals, which have been this years' best performers, will underperform for a few months as gains are digested, 4Q economic growth is revised lower and 1Q growth comes in below average rates. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, lower long-term rates, stable energy prices and more optimism in the technology sector.
Friday, February 23, 2007
Stocks Continue Healthy Consolidation, Slightly Lower into Final Hour
Today's Headlines
Bloomberg:
- Home prices are likely to remain around current levels rather than drop, according to Morgan Stanley economists.
- US Treasuries are rising, pushing the benchmark 10-year note’s yield to a five-week low.
- Motorola’s(MOT) biggest shareholders increased their stakes in recent months, signaling confidence in a company that is grappling with the exit of its mobile-phone unit head and demands by activist Carl Icahn.
- Goldcorp. Inc.(GG), the world’s third-largest gold producer by market value, said gold production in 2007 will rise 54% to 2.6 million ounces.
Wall Street Journal:
- Nymex Holdings(NMX), which operates the NY Merc, palns a share sale that might raise more than $1 billion for its owners.
- A growing number of US doctors are using computer software and getting rid of nurses, receptionists and waiting rooms to curtail costs to maintain basic traditional practices on their own.
- Global terrorism has added legal tactics to its armory to gain an edge in national and international courts and a moral advantage over opponents, David Rivkin and Lee Casey wrote. An al-Qaeda training manual instructs detained fighters to claim torture or abuse, a tactic used by detainees at Guantanamo Bay to generate demands from European and other officials to close the camp and release the inmates. So-called “lawfare” is also being used to discredit the legality of US military action and undermine domestic support for the war on terror, Rivkin and Casey wrote.
- Vietnam’s stock market index rose 145% in 2006 and it’s up another 44% so far this year, bringing the total market value of quoted companies in the Southeast Asian country to more than $15 billion. That’s still not much, but it’s been enough to attract the attention of a swarm of hedge funds. The funds have been buying into Vietnam-oriented closed-end funds, pushing some premiums above 50%. Vietnam’s stock boom is, however, showing signs of a bubble and foreign purchases of stocks in Vietnam last month exceeded those in Taiwan.
- Some mutual fund companies are hunting for leveraged buyout candidates, a practice which lets small investors profit from the private-equity boom.
NY Times:
- Air conditioners in India and southern China, which use refrigerants banned in Europe and being phased out in the US, are causing the ozone hole to remain larger than it otherwise would.
Washington Post:
- US Democrats want to ask the Senate next week to repeal the 2002 resolution authorizing the ousting of dictator Saddam Hussein and use of force in Iraq.
- Former US President Bill Clinton got paid $40 million in speaking fees during the past six years, citing financial disclosure statements.
NY Daily News:
- Crime in NYC has declined 10% this month, which may make it the safest February since monthly tracking began 13 years ago, citing Police Commissioner Raymond Kelly.
Times-Picayune:
- Marathon Oil(MRO) announced the contractors who will expand its Garyville, Louisiana, refinery’s capacity by 180,000 barrels a day to 425,000 barrels a day.
- Home prices are likely to remain around current levels rather than drop, according to Morgan Stanley economists.
- US Treasuries are rising, pushing the benchmark 10-year note’s yield to a five-week low.
- Motorola’s(MOT) biggest shareholders increased their stakes in recent months, signaling confidence in a company that is grappling with the exit of its mobile-phone unit head and demands by activist Carl Icahn.
- Goldcorp. Inc.(GG), the world’s third-largest gold producer by market value, said gold production in 2007 will rise 54% to 2.6 million ounces.
Wall Street Journal:
- Nymex Holdings(NMX), which operates the NY Merc, palns a share sale that might raise more than $1 billion for its owners.
- A growing number of US doctors are using computer software and getting rid of nurses, receptionists and waiting rooms to curtail costs to maintain basic traditional practices on their own.
- Global terrorism has added legal tactics to its armory to gain an edge in national and international courts and a moral advantage over opponents, David Rivkin and Lee Casey wrote. An al-Qaeda training manual instructs detained fighters to claim torture or abuse, a tactic used by detainees at Guantanamo Bay to generate demands from European and other officials to close the camp and release the inmates. So-called “lawfare” is also being used to discredit the legality of US military action and undermine domestic support for the war on terror, Rivkin and Casey wrote.
- Vietnam’s stock market index rose 145% in 2006 and it’s up another 44% so far this year, bringing the total market value of quoted companies in the Southeast Asian country to more than $15 billion. That’s still not much, but it’s been enough to attract the attention of a swarm of hedge funds. The funds have been buying into Vietnam-oriented closed-end funds, pushing some premiums above 50%. Vietnam’s stock boom is, however, showing signs of a bubble and foreign purchases of stocks in Vietnam last month exceeded those in Taiwan.
- Some mutual fund companies are hunting for leveraged buyout candidates, a practice which lets small investors profit from the private-equity boom.
NY Times:
- Air conditioners in India and southern China, which use refrigerants banned in Europe and being phased out in the US, are causing the ozone hole to remain larger than it otherwise would.
Washington Post:
- US Democrats want to ask the Senate next week to repeal the 2002 resolution authorizing the ousting of dictator Saddam Hussein and use of force in Iraq.
- Former US President Bill Clinton got paid $40 million in speaking fees during the past six years, citing financial disclosure statements.
NY Daily News:
- Crime in NYC has declined 10% this month, which may make it the safest February since monthly tracking began 13 years ago, citing Police Commissioner Raymond Kelly.
Times-Picayune:
- Marathon Oil(MRO) announced the contractors who will expand its Garyville, Louisiana, refinery’s capacity by 180,000 barrels a day to 425,000 barrels a day.
Thursday, February 22, 2007
Friday Watch
Late-Night Headlines
Bloomberg:
- The yen headed for the biggest weekly drop in more than two years against the euro after the Bank of Japan suggested it won’t accelerate the pace of interest-rate increases this year.
- H&R Block(HRB) posted a fiscal third-quarter after setting aside an additional $111 million to cover losses on sub-prime loans made by its Option One mortgage business. The stock surged 4.4% after-hours.
- Osaka-based Sanyo Electric Co., bailed out last year by Goldman Sachs(GS) and two Japanese banks, said regulators are investigating whether it failed to fully disclose losses. The shares plunged 29% in Tokyo trading.
- South Korean President Roh Moo Hyun said he will leave the ruling Uri Party this month to help members settle conflicts before December’s presidential election.
- Gold sold by mining companies in forward contracts in 2006 fell the most in two years, Mitsui & Co. said in its annual global survey of 118 producers. Sales dropped 13.4 million ounces, or 25%, to 40.2 million ounces, led by a reduction in hedges by Barrick Gold Corp.(ABX) “Barrick continues to set the pace in de-hedging,” said Edel Tully, head of precious metals research at Mitsui. “While de-hedging in 2007 is not expected to be of a similar magnitude, little appetite exists for new hedging.”
- Exxon Mobil(XOM) will take a 10% stake in Qatar’s Barzan gas field.
- Tractor Supply(TSCO), a retail farm-supply chain with 676 stores in 37 states, said it plans to buy back as much as $200 million of common stock over a three-year period.
- New government rules limiting emissions of carbon-dioxide aren’t likely to hurt Canadian oil-sands projects, according to Suncor Energy(SU), the world’s second-largest producer of oil from the tar-like deposits.
- Billionaire investor Carl Icahn says a preference for “out-of-favor” companies led him to buy shares of Lear Corp.(LEA) and WCI Communities(WCI), burning so-called short sellers who bet the stocks would fall.
- The Bank of Japan will gradually raise interest rates as the economy expands, Governor Toshihiko Fukui said, two days after his policy board increased the key lending rate to .5% to prevent investment bubbles.
- Billionaire Warren Buffett said Berkshire Hathaway will keep its stake in PetroChina Co., rejecting appeals to sell because of China’s investments in Sudan, accused by the US of human rights abuses.
- Rio Tinto Group(RTP) will invest $2 billion in Indonesia for its first nickel-mining project in the country.
Wall Street Journal:
- DaimlerChrysler AG’s(DCX) Chrysler unit plans to spend as much as $6 billion a year to develop new products.
CNBC:
- Billionaire real estate mogul Sam Zell, who just sold Equity Office Properties, the nation's largest office landlord, to Blackstone for $39 billion, said the office property market is still going strong and the broader housing market is also in good shape. "The overall market is much better than the press portrays it as." Zell said.
Guardian:
- The UK government will say Feb. 26 it plans to deploy over 1,000 extra troops and equipment to Afghanistan.
Late Buy/Sell Recommendations
Business Week:
- UnitedHealth Group(UNH) was popular with analysts before Warren Buffett’s Berkshire Hathway(BRK/A) bought 1 million shares of the largest US medical insurer earlier this month. Sarat Sethi of investment firm Douglas C. Lande & Assoc. said the company should trade at $70.
- Epix Pharmaceuticals(EPIX) shares may more than double in a year, citing George Fulop of Needham & Co.
Night Trading
Asian Indices are -.50% to +.25% on average.
S&P 500 indicated -.05%.
NASDAQ 100 indicated -.03%.
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
Conference Calendar
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
- (CCO)/.16
- (DPZ)/.49
- (LOW)/.37
- (GAS)/.97
- (CCU)/.40
- (CTV)/.37
- (DDS)/1.08
Upcoming Splits
- None of note
Economic Releases
- None of note
Bloomberg:
- The yen headed for the biggest weekly drop in more than two years against the euro after the Bank of Japan suggested it won’t accelerate the pace of interest-rate increases this year.
- H&R Block(HRB) posted a fiscal third-quarter after setting aside an additional $111 million to cover losses on sub-prime loans made by its Option One mortgage business. The stock surged 4.4% after-hours.
- Osaka-based Sanyo Electric Co., bailed out last year by Goldman Sachs(GS) and two Japanese banks, said regulators are investigating whether it failed to fully disclose losses. The shares plunged 29% in Tokyo trading.
- South Korean President Roh Moo Hyun said he will leave the ruling Uri Party this month to help members settle conflicts before December’s presidential election.
- Gold sold by mining companies in forward contracts in 2006 fell the most in two years, Mitsui & Co. said in its annual global survey of 118 producers. Sales dropped 13.4 million ounces, or 25%, to 40.2 million ounces, led by a reduction in hedges by Barrick Gold Corp.(ABX) “Barrick continues to set the pace in de-hedging,” said Edel Tully, head of precious metals research at Mitsui. “While de-hedging in 2007 is not expected to be of a similar magnitude, little appetite exists for new hedging.”
- Exxon Mobil(XOM) will take a 10% stake in Qatar’s Barzan gas field.
- Tractor Supply(TSCO), a retail farm-supply chain with 676 stores in 37 states, said it plans to buy back as much as $200 million of common stock over a three-year period.
- New government rules limiting emissions of carbon-dioxide aren’t likely to hurt Canadian oil-sands projects, according to Suncor Energy(SU), the world’s second-largest producer of oil from the tar-like deposits.
- Billionaire investor Carl Icahn says a preference for “out-of-favor” companies led him to buy shares of Lear Corp.(LEA) and WCI Communities(WCI), burning so-called short sellers who bet the stocks would fall.
- The Bank of Japan will gradually raise interest rates as the economy expands, Governor Toshihiko Fukui said, two days after his policy board increased the key lending rate to .5% to prevent investment bubbles.
- Billionaire Warren Buffett said Berkshire Hathaway will keep its stake in PetroChina Co., rejecting appeals to sell because of China’s investments in Sudan, accused by the US of human rights abuses.
- Rio Tinto Group(RTP) will invest $2 billion in Indonesia for its first nickel-mining project in the country.
Wall Street Journal:
- DaimlerChrysler AG’s(DCX) Chrysler unit plans to spend as much as $6 billion a year to develop new products.
CNBC:
- Billionaire real estate mogul Sam Zell, who just sold Equity Office Properties, the nation's largest office landlord, to Blackstone for $39 billion, said the office property market is still going strong and the broader housing market is also in good shape. "The overall market is much better than the press portrays it as." Zell said.
Guardian:
- The UK government will say Feb. 26 it plans to deploy over 1,000 extra troops and equipment to Afghanistan.
Late Buy/Sell Recommendations
Business Week:
- UnitedHealth Group(UNH) was popular with analysts before Warren Buffett’s Berkshire Hathway(BRK/A) bought 1 million shares of the largest US medical insurer earlier this month. Sarat Sethi of investment firm Douglas C. Lande & Assoc. said the company should trade at $70.
- Epix Pharmaceuticals(EPIX) shares may more than double in a year, citing George Fulop of Needham & Co.
Night Trading
Asian Indices are -.50% to +.25% on average.
S&P 500 indicated -.05%.
NASDAQ 100 indicated -.03%.
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
Conference Calendar
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/EPS Estimate
- (CCO)/.16
- (DPZ)/.49
- (LOW)/.37
- (GAS)/.97
- (CCU)/.40
- (CTV)/.37
- (DDS)/1.08
Upcoming Splits
- None of note
Economic Releases
- None of note
BOTTOM LINE: Asian indices are slightly higher, boosted by technology and commodity shares in the region. I expect US equities to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.
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