BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Retail longs, Medical longs and Telecom longs. I added to my (BRCM) long this morning and took profits in another trading long, thus leaving the Portfolio 100% net long. The tone of the market is modestly positive as the advance/decline line is slightly higher, sector performance is mixed and volume is average. NYSE short interest, from mid-February through mid-March, surged 10% to a record 10,510,000,000 shares. The second-largest short interest position on the NYSE, behind Ford Motor (F), is in iShares Russell 2000 Index (IWM) at 158,727,133 shares. The IWM is 3.0% higher ytd. and is 21.2% higher since the July bottom last year. Record short interest is playing a major role in recent record margin debt readings. The beginning of the "mother of all short-covering rallies" grows closer by the day, in my opinion. Weekly retail sales are trending higher, jobless claims are trending lower and mortgage applications have been trending higher. After two years of substantial slowing in housing, there is still little evidence of any significant consumer-related weakness as Americans' net worth remains at record high levels.
Here are the 20 NYSE stocks with the largest percentage increase in short interest relative to their float from mid-February through mid-March:
1. AVR +52.6%
2. FMT +28.1%
3. FED +19.7%
4. DSL +19.2%
5. NDE +18.9%
6. WY +14.2%
7. IMH +11.5%
8. NFI +10.1%
9. NYX +9.8%
10. GGC +8.5%
11. AHM +8.1%
12. SGK +8.0%
13. FBC +7.6%
14. CBS +7.6%
15. MTH +7.5%
16. SPC +7.4%
17. MHO +7.4%
18. MTG +7.0%
19. SIX +6.9%
20. CHB +6.9%
I expect US stocks to trade mixed-to-lower into the close on higher energy prices and apprehension ahead of tomorrow morning’s likely weaker-than-expected existing home sales report.
Thursday, March 22, 2007
Stocks Mixed into Final Hour, Consolidating Yesterday's Sharp Gains
Today's Headlines
Bloomberg:
- Corn prices in Chciago are falling after a government report indicated that high prices have slowed demand for the biggest US crop.
- Michael Shaoul, CEO of investment research firm Oscar Gruss & Son Inc. in NY said the recent rally in copper is driven by speculative financial flows to investment funds rather than any improvements in the supply/demand situation for the metal.
- Oil is rising $2/bbl. as investment fund speculation increases on the belief that demand will improve later this year.
- KB Home(KBH) said fiscal first-quarter profit fell 84%, however this exceeded analysts’ estimates and the company’s cancellation rate fell to 31% from 48% in the fourth quarter. The shares are .50 higher on the report.
Wall Street Journal:
- Iberdrola SA’s success in persuading regulators worldwide to support investments in biodiesel, solar and wind power may spur bigger investments in alternative energy.
- Bear Stearns Cos.(BSC) is the latest financial group to apply to start an activity managed exchange-traded fund.
- Banks are using video face-recognition systems developed by 3VR Security Inc. to thwart people trying to pass fraudulent checks.
- The SEC is exploring ways to prevent possible manipulation of corporate elections by improper voting.
NY Times:
- Illegal immigrants in the US are increasingly stealing the identities of their legal counterparts and citizens to help get jobs. Employers, prosecuted for hiring illegal immigrants, are increasing applicant scrutiny, pushing illegal immigrants to abandon fake papers in favor of stealing identities or buying them from traffickers.
LA Times:
- News Crop.(NWS) and NBC Universal plan to create an online video site to compete against Google’s(GOOG) popular YouTube.
Star-Ledger:
- New Jersey lawmakers have introduced a bill to ban the use of mobile phones or other wireless communication devices to send text messages while driving.
USA Today:
- Congress has added $3.7 billion to the emergency spending bill to reward farm interests that make large contributions to Democrats. The proposed bill includes $74 million for storage fees for peanut growers, $25 million for spinach growers, $252 million for mild subsidies, and $3.3 billion for crop and livestock losses. Republicans said the provisions are designed to gain support from moderate Democrats for a US pullout from Iraq.
AP:
- A federal judge today struck down a 1998 US law that made it a crime for Web site operators to let children access porn. In the ruling, a setback to government efforts to rein in online pornography, US District Judge Lowell Reed Jr. of Pennsylvania said parents can protect children through software filters and less restrictive means that do not limit the free speech rights of others. The law was challenged by sexual health sites, the online magazine Salon.com and other Web sites backed by the American Civil Liberties Union.
Frankfurter Allgemeine Zeitung:
- A Muslim woman, whose request for a fast-track divorce was rejected, successfully argued her case should be reheard because the judge said the Koran allows a man to beat his wife.
Facts:
- Angel Gurria, secretary general of the OECD, said the cooling US housing market doesn’t constitute a crisis and he’s optimistic about the global economic outlook.
Le Temp:
- Switzerland sent a senior diplomat to Tehran to offer the Iranian government help in ending the dispute over its nuclear program.
Valor Economico:
- Norse Energy Corp. ASA, an oil and gas explorer, is among 29 Norwegian investors spending $170 million to for a venture with Brazil’s Grupo Albertina to expand ethanol production.
Ultimas Noticias:
- Venezuelans spend as much as 12 hours a month looking for foodstuffs in supermarkets, suggesting that shortages of basic foods are eroding living conditions mostly for the poor, citing a poll.
- Corn prices in Chciago are falling after a government report indicated that high prices have slowed demand for the biggest US crop.
- Michael Shaoul, CEO of investment research firm Oscar Gruss & Son Inc. in NY said the recent rally in copper is driven by speculative financial flows to investment funds rather than any improvements in the supply/demand situation for the metal.
- Oil is rising $2/bbl. as investment fund speculation increases on the belief that demand will improve later this year.
- KB Home(KBH) said fiscal first-quarter profit fell 84%, however this exceeded analysts’ estimates and the company’s cancellation rate fell to 31% from 48% in the fourth quarter. The shares are .50 higher on the report.
Wall Street Journal:
- Iberdrola SA’s success in persuading regulators worldwide to support investments in biodiesel, solar and wind power may spur bigger investments in alternative energy.
- Bear Stearns Cos.(BSC) is the latest financial group to apply to start an activity managed exchange-traded fund.
- Banks are using video face-recognition systems developed by 3VR Security Inc. to thwart people trying to pass fraudulent checks.
- The SEC is exploring ways to prevent possible manipulation of corporate elections by improper voting.
NY Times:
- Illegal immigrants in the US are increasingly stealing the identities of their legal counterparts and citizens to help get jobs. Employers, prosecuted for hiring illegal immigrants, are increasing applicant scrutiny, pushing illegal immigrants to abandon fake papers in favor of stealing identities or buying them from traffickers.
LA Times:
- News Crop.(NWS) and NBC Universal plan to create an online video site to compete against Google’s(GOOG) popular YouTube.
Star-Ledger:
- New Jersey lawmakers have introduced a bill to ban the use of mobile phones or other wireless communication devices to send text messages while driving.
USA Today:
- Congress has added $3.7 billion to the emergency spending bill to reward farm interests that make large contributions to Democrats. The proposed bill includes $74 million for storage fees for peanut growers, $25 million for spinach growers, $252 million for mild subsidies, and $3.3 billion for crop and livestock losses. Republicans said the provisions are designed to gain support from moderate Democrats for a US pullout from Iraq.
AP:
- A federal judge today struck down a 1998 US law that made it a crime for Web site operators to let children access porn. In the ruling, a setback to government efforts to rein in online pornography, US District Judge Lowell Reed Jr. of Pennsylvania said parents can protect children through software filters and less restrictive means that do not limit the free speech rights of others. The law was challenged by sexual health sites, the online magazine Salon.com and other Web sites backed by the American Civil Liberties Union.
Frankfurter Allgemeine Zeitung:
- A Muslim woman, whose request for a fast-track divorce was rejected, successfully argued her case should be reheard because the judge said the Koran allows a man to beat his wife.
Facts:
- Angel Gurria, secretary general of the OECD, said the cooling US housing market doesn’t constitute a crisis and he’s optimistic about the global economic outlook.
Le Temp:
- Switzerland sent a senior diplomat to Tehran to offer the Iranian government help in ending the dispute over its nuclear program.
Valor Economico:
- Norse Energy Corp. ASA, an oil and gas explorer, is among 29 Norwegian investors spending $170 million to for a venture with Brazil’s Grupo Albertina to expand ethanol production.
Ultimas Noticias:
- Venezuelans spend as much as 12 hours a month looking for foodstuffs in supermarkets, suggesting that shortages of basic foods are eroding living conditions mostly for the poor, citing a poll.
Jobless Claims Fall Again, Leading Indicators Decline
- Initial Jobless Claims for last week fell to 316K versus estimates of 323K and 320K the prior week.
- Continuing Claims fell to 2501K versus estimates of 2550K and 2570K prior.
- Leading Indicators for February fell -.5% versus estimates of a -.4% decline and a -.3% fall in January.
- Continuing Claims fell to 2501K versus estimates of 2550K and 2570K prior.
- Leading Indicators for February fell -.5% versus estimates of a -.4% decline and a -.3% fall in January.
BOTTOM LINE: First-time claims for jobless benefits in the US unexpectedly fell last week to the lowest in more than a month, signaling strength in the labor market, Bloomberg said. The four-week moving average of claims fell to 326,000 from 329,750 the prior week. The unemployment rate among those eligible for benefits, which tracks the US unemployment rate, fell to 1.9% from 2.0% the prior week. Almost half of CEOs surveyed at small and mid-sized companies said they were raising pay and benefits to gain and retain employees, according to a survey by Vistage Intl. last week. I continue to believe the labor market will remain healthy over the intermediate-term without generating substantial unit labor cost increases.
Leading indicators fell last month as consumer sentiment declined and builders scaled back construction plans, Bloomberg reported. The decline in the index was muted by higher stock prices, an increase in the money supply and gains in factory orders for capital goods and consumer goods. The ECRI weekly leading index has moved back to near cycle highs this month. I expect US growth to come in substantially below trend this quarter on significant inventory de-stocking. However, I expect growth to begin accelerating again next quarter on inventory rebuilding, rising auto production and increased consumer spending.
Thursday Watch
Late-Night Headlines
Bloomberg:
- The US stock market posted its biggest gain in eight months, after the Federal Reserve indicated it is no longer biased toward higher interest rates. The S&P 500 is now 1.6% higher for the year.
- Short interest on the NYSE surged 10% to an all-time high of 10,510,000,000 shares from mid-February through mid-March.
- The ABX-HE-BBB-07-1 sub-prime index, which has been the source of much angst, rose again yesterday to 71.09. It is up from a low of 62.25 a couple of weeks ago.
- Imports of crude oil by Japan, the world’s largest user of the fuel after the US and China, fell for the 10th consecutive month in February, dropping 5.5% from a year earlier. Imports of liquefied natural gas jumped 15% to 5.35 million metric tons.
- Andy Lipow, president of Lipow Oil Assoc. LLC, expects oil to fall to $55.
- Fording Canadian Coal Trust, the world’s second-largest exporter of coal used to make steel, plans to sell coal at an average $91 ton in the year starting April 1, down 15% from a year earlier.
- Farallon Capital Management LLC held talks buy Accredited Home Lenders Holding(LEND) before agreeing this week to give the subprime mortgage company a loan.
- Motorola Inc.(MOT) said profit and sales will be “substantially” below its forecast this year because of falling mobile-phone prices. The company also named a new president and detailed a plan to step up its share buyback program amid a proxy fight with shareholder Carl Icahn. The shares fell 4.8% in after-hours trading.
- Wells Fargo(WFC), whose stock has languished this year amid investor concern about rising defaults at US mortgage lenders, may buy back up to 2.2% more of its shares.
- Roaring 40s Renewable Energy Pty., a venture between Hydro Tasmania and CLP Holdings Ltd. agreed to build three wind farms in China in a joint venture with Guohua Energy Investment, a unit of China Shenhua Energy.
- Japan’s trade surplus unexpectedly widened in February after exports to China and the US grew more than economists anticipated.
Financial Express:
- The Securities & Exchange Board of India may approve short selling of stock by institutional investors.
Efe:
- Cuba, which has increased oil production 700% since 1995, plans to increase drilling another 40% this year, according to a adviser at the Ministry of Basic Industries.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (EQIX), target $115.
- Reiterated Buy on (ROST), target $41.
- Reiterated Buy on (WYE), target $63.
- Raised (SKS) to Buy, target raised to $24.
- Reiterated Buy on (LMT), target $108.
Night Trading
Asian Indices are +.75% to +1.25% on average.
S&P 500 indicated -.09%.
NASDAQ 100 indicated -.10%.
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
- (COMS)/.01
- (ATU)/.70
- (BKS)/1.88
- (BGP)/1.60
- (CAG)/.30
- (FRED)/.26
- (GIS)/.70
- (KBH)/.32
- (NKE)/1.32
- (PALM)/.11
- (SCHL)/-.06
- (WSM)/1.04
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- Initial Jobless Claims for last week are estimated to rise to 323K versus 318K the prior week.
- Continuing Claims are estimated to fall to 2545K versus 2576K prior.
10:00 am EST
- Leading Indicators for February are estimated to fall -.4% versus a .1% increase in January.
Bloomberg:
- The US stock market posted its biggest gain in eight months, after the Federal Reserve indicated it is no longer biased toward higher interest rates. The S&P 500 is now 1.6% higher for the year.
- Short interest on the NYSE surged 10% to an all-time high of 10,510,000,000 shares from mid-February through mid-March.
- The ABX-HE-BBB-07-1 sub-prime index, which has been the source of much angst, rose again yesterday to 71.09. It is up from a low of 62.25 a couple of weeks ago.
- Imports of crude oil by Japan, the world’s largest user of the fuel after the US and China, fell for the 10th consecutive month in February, dropping 5.5% from a year earlier. Imports of liquefied natural gas jumped 15% to 5.35 million metric tons.
- Andy Lipow, president of Lipow Oil Assoc. LLC, expects oil to fall to $55.
- Fording Canadian Coal Trust, the world’s second-largest exporter of coal used to make steel, plans to sell coal at an average $91 ton in the year starting April 1, down 15% from a year earlier.
- Farallon Capital Management LLC held talks buy Accredited Home Lenders Holding(LEND) before agreeing this week to give the subprime mortgage company a loan.
- Motorola Inc.(MOT) said profit and sales will be “substantially” below its forecast this year because of falling mobile-phone prices. The company also named a new president and detailed a plan to step up its share buyback program amid a proxy fight with shareholder Carl Icahn. The shares fell 4.8% in after-hours trading.
- Wells Fargo(WFC), whose stock has languished this year amid investor concern about rising defaults at US mortgage lenders, may buy back up to 2.2% more of its shares.
- Roaring 40s Renewable Energy Pty., a venture between Hydro Tasmania and CLP Holdings Ltd. agreed to build three wind farms in China in a joint venture with Guohua Energy Investment, a unit of China Shenhua Energy.
- Japan’s trade surplus unexpectedly widened in February after exports to China and the US grew more than economists anticipated.
Financial Express:
- The Securities & Exchange Board of India may approve short selling of stock by institutional investors.
Efe:
- Cuba, which has increased oil production 700% since 1995, plans to increase drilling another 40% this year, according to a adviser at the Ministry of Basic Industries.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (EQIX), target $115.
- Reiterated Buy on (ROST), target $41.
- Reiterated Buy on (WYE), target $63.
- Raised (SKS) to Buy, target raised to $24.
- Reiterated Buy on (LMT), target $108.
Night Trading
Asian Indices are +.75% to +1.25% on average.
S&P 500 indicated -.09%.
NASDAQ 100 indicated -.10%.
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
- (COMS)/.01
- (ATU)/.70
- (BKS)/1.88
- (BGP)/1.60
- (CAG)/.30
- (FRED)/.26
- (GIS)/.70
- (KBH)/.32
- (NKE)/1.32
- (PALM)/.11
- (SCHL)/-.06
- (WSM)/1.04
Upcoming Splits
- None of note
Economic Releases
8:30 am EST
- Initial Jobless Claims for last week are estimated to rise to 323K versus 318K the prior week.
- Continuing Claims are estimated to fall to 2545K versus 2576K prior.
10:00 am EST
- Leading Indicators for February are estimated to fall -.4% versus a .1% increase in January.
BOTTOM LINE: Asian indices are higher, boosted by technology shares in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.
Wednesday, March 21, 2007
Subscribe to:
Posts (Atom)