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WJR November 2005 Reports

Please note that Ron Humenny and Starfire Investment Advisers, Inc. are not affiliated with, are not compensated by and do not endorse Flagstar Bank or any of the sponsors of our daily WJR reports
 
December 30, 2005
 
It looks like Santa Claus had a vacation planned, because he took off right after his day job was done last weekend. We started out the week with visions of Dow 11,000.  If this morning’s futures are any indication, it looks like 2005 may go in the books as a DOWN year for the Dow Jones Industrials.  The Dow closed last night up only 1 point for the year, and we’ll almost certainly open well below that this morning.
 
A lot of overseas markets are closed already.  The UK and Germany closed early, and all major foreign markets are down at this hour.  France is down over one percent.
 
One data point is on the way.  At 10 o’clock the November Chicago Purchasing Manager’s Index is expected to slip a little to a level of 60.
 
Lock in those capital losses today, if you need them.  Remember the bond market closes early.  They’ll be done at 2 o’clock. But the best thing to do for your financial health may be to use the weekend to review where your investments stand.  Make sure that your investments are diversified, make sure that you are spending within your means, and make sure that you a saving enough for your future goals.
 
As we head toward the final session of the year, adjusted for fair value, the S&P futures are down about 4, Dow futures are down 30 and the Nasdaq futures are about 5 points below fair value.  Happy New Year!
 
December 29, 2005
 
It should be a quiet day of trading as we wind down toward the end of the year.  Just remember, it’s today and tomorrow if you need to realize some tax losses before the end of the year.
 
The weekly jobless claims number should, once again, be roundly ignored at 8:30.  The big number of the day will be the report of just how many used homes were sold nationwide in November.  We’re expecting a slowdown of only 4 percent, which would still mean home sales are at a very high level.  That seems realistic.  Unless, of course you’re trying to sell your house around here nowadays.
 
Oil prices are backing off a bit this morning after a big run-up yesterday on fears that OPEC will start cutting production next year.  Light sweet crude is going for $59.64 per barrel.
 
European markets have a modest rally in progress.  They’re up about a quarter of a percent.  Our futures must have had a late night, as they are still sound asleep at this hour. The S&P, Dow and Nasdaq futures are all within a point or two of fair value. 
 
December 28, 2005
 
Japan is all done for the year.  Tomorrow and Friday are year end holidays, so the Nikkei Index closed out the year overnight at 16,194.  For the year 2005, the Nikkei rose more than 31 percent.  That’s a five-year high.
 
There are a lot of well respected warning signs on Wall Street.  One of them is called “the inverted yield curve.”  The “yield curve” is simply a line graph that depicts the current interest rate you receive by investing in Treasury bonds of different durations.  Normally, you’d expect that the longer-term the bond you buy, the higher the interest rate you receive.  So the line graph normally slopes up from bottom left to top right.  An INVERTED yield curve slopes the other way, meaning that short term yields are higher than long-term.  Just about all recessions are preceded by inverted curves.  However, not all inverted curves precede a recession.  No matter – yesterday the yield curve inverted ever so slightly several times through the trading day and it threw the market for a low-volume loop.  A lot of market watchers think an inverted curve is no big deal this time around, because of the generally low level of interest rates.  However, the three four most dangerous words in investing are “It’s different this time.”
 
Nothing remarkable in the overseas markets outside of the big rise in Japan.  We’ll get off the December Consumer Confidence number at 10 o’clock, but in front of that, we should get off on the right foot.
 
Right now, adjusted for fair value, S&P futures are up 3 points the Dow futures are up 31, and the Nasdaq futures are almost 4 points above fair value.
 
December 27, 2005
 
The week between Christmas and New Year’s Day is usually an interesting one.  Trading volumes are light, and a little good news can go a long way.  We’ll see if the Dow takes a run at the 11,000 mark by the end of the week.
 
Bristol-Myers Squibb got a little something in their stocking on Friday.  The Food and Drug Administration has approved Orencia, which is an intravenous drug for the treatment of rheumatoid arthritis.  Orencia has been effective for patients who haven’t responded to conventional treatments.  Bristol-Myers stock is responding very well so far, up almost 5% in the pre-market.
 
Depending on what survey you believe, it looks like Holiday season sales were up somewhere between 7 and 9 percent, although some retailers definitely took the lion’s share of the gains.
 
A lot of overseas markets are closed in observance of Boxing Day.  Japan was down overnight, but it looks like we will start to the upside at 9:30.  Right now, adjusted for fair value, S&P futures are up 3 points the Dow futures are up 29, and the Nasdaq futures are about 7 points above fair value.
 
December 23, 2005
 
The bond market closes at 2 o’clock this afternoon.  Japanese stocks did not trade at all overnight, and if there wasn’t a rule against keeping our financial markets closed for four days in a row, our stock market might just as well take the day off today as well.
 
If anything raises eyebrows today it may be the report on November New Home sales.  It’s expected to drop to an annualized rate of 1.31 million units.  That would be down from a rate of 1.42 million last month and set the tongue to wagging again about just how soft housing might get in 2006.
 
We’ll also get the December Durable Goods number in about 15 minutes and the University of Michigan’s final reading on Consumer Sentiment at 9:45.
 
Ford shares were 4 cents higher in the after-hours yesterday on word that the UAW rank and file did approve those health care concessions, albeit by a 51 to 49 majority.
 
The futures are barely awake at this hour.  Right now, adjusted for fair value, the S&P futures are up just a fraction, the Dow futures are up 2 and Nasdaq futures are just about even with fair value.
 
December 22, 2005
 
It’s a good day to finish up your Holiday shopping, or in my case, start it.  Not only that, it’s still a long walk to work if you work at the New York Stock Exchange.  Add it all up, and we’re probably in for a light day of stock trading today.
 
There’s somefinancial data coming out this morning, as well as the weekly oil, gasoline and distillate inventory numbers, but outside of that there’s just not a lot shaking.
 
“Four-tenths” appears to be the number of the day.  At 8:30, we should hear that personal income rose about 4 tenths of a percent in November, personal spending should rise 4 tenths of a percent. At 10 o’clock the Conference Board is expected to tell us that the Leading Economic Indicators are up – you guessed it – about 4 tenths of a percent.
 
Asian markets were down just a bit overnight – I’d like to say “4 tenths of a percent” -- but it’s not that much.  European markets are narrowly mixed at this hour.  Right now, adjusted for fair value, S&P futures are up about ¾ of a point, the Dow futures are up 7, but the Nasdaq futures are about 2 ½  points below fair value.
 
December 21, 2005
 
Oh Boy.  Now even Kirk Kirkorian is selling shares of General Motors.  Mr. Kirkorian, who not long ago, raised his stake to General Motors to 9.9%, mostly at a price of 31 bucks per share, has reportedly sold shares, which are now below 20 dollars to bring his stake to under 8 percent.  Not exactly one of those deft investment moves on which Mr. K built his reputation.
 
A bunch of deals this morning.  IBM is buying MicroMuse.  It’s a cash deal at a 38 percent premium.  How about a 60% premium?  Shareholders of Maxtor will be getting that in a buyout by Seagate Technology.  Allergan is also paying 3 billion to acquire Inamed.
 
Federal Express delivered its quarterly report about a half hour ago, and the quarter was a good one.  Earnings of $1.53 per share beat the dollar-forty estimate handily.  FedEx also reaffirmed guidance for their third quarter.
 
The final reading on 3rd quarter GDP is expected to come in unrevised at 4.3 percent.  We’ll find out at 8:30.
 
At 9:30, we should be seeing little green arrows.  Right now, adjusted for fair value, S&P futures are up almost 4 points, the Dow futures are up 30, and the Nasdaq futures are about 4 ½  points above fair value.
 
December 20, 2005
 
New York is an exciting place to be this time of year.  Wouldn’t you be excited if you had to walk to work this morning?  It will be interesting to see how smoothly the trading goes in light of the big transit strike in the City.  However, sales at New York City coffee shops will no doubt be up this morning.
 
Also going up is the price of shares of Morgan Stanley after a good earnings report this morning.  What may not be going up is the Producer Price Index.  We’ll find out just how prices are doing at the wholesale level in about 10 minutes. Due to a big drop in energy prices, it’s expected that the overall rate dropped about a half percent in November.
 
There’s word of a pending real estate purchase in central Tokyo.  AIG is said to be negotiating to buy a little spot for about 3.5 billion dollars.  That news set off a little real estate rally in Japan that took the Nikkei index up over a percent and a half overnight.
 
Most of the rest of the overseas markets and our futures look just downright uninteresting at this point.  Adjusted for fair value, S&P futures are up a point, the Dow futures are up 6, and the Nasdaq futures are just a touch more than a point above fair value.
 
December 19, 2005
 
The deal between FPL and Constellation Energy that we talked about last week is done.  It will be an 11 billion dollar merger with energy assets in about half of the states in the country.
 
If there are shareholders, outside of the auto industry shareholders, could use some good news, it’s the owners of big pharmaceutical companies.  And just in time for Christmas, a U.S. judge has issued a ruling that will protect Pfizer’s patent on Lipitor until 2011.  Pfizer shares, which were at $20.60 just over a week ago, should open north of 25 bucks per share this morning.  In fact, all the big pharmaceutical stocks should rally this morning.
 
Circuit City beat estimates of 4 cents by making 6 cents in the quarter gone by. Circuit City shares are looking to open up a buck or two as well. 
 
Pepsi Bottling reaffirmed their guidance this morning.
 
Asian markets rallied strongly overnight, but Europe is kind of a mixed bag at this hour. Adjusted for fair value, S&P futures are up more than 2 points, the Dow futures are up 23, and the Nasdaq futures are now about 5 points above fair value.
 
December 16, 2005
 
It seems odd this week to not have a big merger to talk about.  However, one is getting close.  Albertson’s is reportedly close to unloading its drug stores to CVS and selling off everything else to a consortium of buyers that includes Supervalu stores.  It will be close to a 10 billion dollar deal.
 
Rick Waggoner with some optimistic words about GM’s 2006 prospects last night at a holiday party.  Waggoner says that the rollout of a new line of big SUVs will help revenue early in the year.  Let’s hope he’s right, and wasn’t just spending a little too much time next to the egg nog.
 
It’s a quadruple witching Friday as options, futures and options on futures will expire.  That used to mean be volatility in prices, although things have quieted down a lot in recent months.  Things might even be quieter in New York as traders use a pending transit strike as a good excuse to get in a little Holiday shopping this afternoon.
 
The only economic report of the day will be the Current Account Deficit figure, and if you can get excited about that one, you really need a little vacation.
 
European markets are firmly in the green at this hour, and we should head higher at 9:30 as well.  Adjusted for fair value, S&P futures are up almost 3, the Dow futures are up 31, and the Nasdaq futures are now about 2 ½  points above fair value.
 
December 15, 2005
 
Another day, another big merger this morning, and whether you own the acquirer or the acquiree, your stock price is on the rise.  Biotech companies Amgen and Abgenics are getting together.  Abgenics stock was up 55% in the after hours on news of the deal, and Amgen, after a one percent sell-off late in the regular session, came rallying back more than 3 percent last night.
 
Everybody knows that the air is leaking out of the housing bubble, but it’s not yet obvious to home builder Lennar.  They reported $3.54 in earnings this morning versus an estimated $3.34 and the reiterated their 2006 guidance.
 
The big number of the day and the week will come in about 10 minutes with the release of the November Consumer Price Index.  Due to a big drop in gas prices, it’s expected that the headline number fell 4 tenths of a percent, which would be the biggest drop in almost 20 years.  The core rate is expected to rise 2 tenths of a percent.
 
The S&P 500 will start the day at a 4 ½ year high this morning.  Hong Kong was up a half percent, but most other overseas markets are down a bit.  Ahead of that important CPI data at 8:30 our futures are at a standstill. Adjusted for fair value, S&P futures are up a half point, the Dow futures are down 7, and the Nasdaq futures are now about 2 ½  points above fair value.
 
December 14, 2005
 
In you know anyone who does due diligence work for a mergers and acquisitions practice, don’t expect them spend a lot of time shopping for your Holiday gift. Word is that there are a lot of deals in the hopper as companies try to figure out what to do with all the cash that’s been piling up on their balance sheets.
 
Two new deals are in the spotlight this morning. General Dynamics is buying Anteon for $55.50 per share in cash, which is a 36 percent premium to yesterday’s closing price. Also FPL, the old Florida Power and Light is thinking of linking up with Constellation Energy, which is the old Baltimore power company. That would be an 11 billion dollar deal.
 
Short term rates moved up again yesterday, but the market loved the Federal Reserve’s statement yesterday.  Of course, truth be told, nobody really knows what it meant.  For the first time in memory, the Committee did not describe its monetary policy as “accommodative.”  Unfortunately, they didn’t promise that their policy wouldn’t get “un-accommodative.”  Nevertheless, Wall Street loves an excuse to rally and that’s what we got.
 
Tokyo was hit with a 2 percent decline on a disappointing Tankan survey of business conditions.  European markets are off a quarter-percent or so at this hour.  We should see a little profit taking at 9:30 as well.
 
Adjusted for fair value, S&P futures are down a point and a half, the Dow futures are down 6, and the Nasdaq futures are now about 3 points below fair value.
 
December 13, 2005
 
At 2:15 this afternoon, the Fed will announce yet another hike in short term interest rates.  Odds are it will be another quarter point, and odds are that the Fed’s statement will be changed very little, if at all from last month.  However, any hint in that statement that the Fed is near the end of the road for rate hikes would likely give stock prices a big boost.  This is the second-to-last meeting for Chairman Greenspan.  He may not want to wait for his finale to shift gears in that statement.
 
The potential ConocoPhillips acquisition of Burlington Resources is potential no more.  The 36 billion dollar deal is done and will create another mega-company in oil and natural gas.
 
Lehman Brothers announced earnings that beat estimates by 12 cents per share this morning. Best Buy with a miss and a warning this morning.
 
S&P doing General Motors no favors yesterday as they dropped GM’s credit rating 2 notches and said that a GM bankruptcy isn’t farfetched.
 
With those less-than-kind words, GM shares will open lower at 9:30, but the market should move a bit higher.  At this point, adjusted for fair value, S&P futures are up a fraction, Dow futures are up 20, and the Nasdaq futures are now about a point above fair value.
 
December 12, 2005
 
If you spend a lot of time on the road working for a big company, today’s announcement from Hewlett-Packard could mean that you’ll soon get to see what your spouse and your kids look like again.  Hewlett has partnered up with a Hollywood animation company, most probably Dreamworks, a soon-to-be division of Paramount Pictures, and will unveil a new high-end video conferencing system that is reportedly unlike anything else.  It will be somewhat short of “Beam-Me-Up, Scottie,” but is said to be so good, that the high-end corporate customer may be able to vaporize its corporate travel budget.
 
The two big economic events this week will be tomorrow’s meeting of the Federal Reserve Open Market Committee and Thursday’s release of the Consumer Price Index for November.  Although the CPI probably fell last month due to declining oil prices, short-term interest rates will no doubt be rising by another quarter percent tomorrow.  We’ll all be watching for any hint of a change in the wording of their Statement at 2:15 tomorrow.
 
There’s a potential 30 billion dollar deal cooking in the oil and natural gas sector.  ConocoPhillips is reportedly looking to buy Burlington Resources.
 
Japanese stocks were up over 2 percent once again overnight, and we’re looking to open with higher prices as well.  Adjusted for fair value, S&P futures are up 4, Dow futures are up almost 35, and the Nasdaq futures are now about 6 points above fair value.
 
December 9, 2005
 
The University of Michigan goes center stage at 9:45 with their preliminary reading on December Consumer Sentiment.  As the impact of the hurricanes fades, it’s expected that that reading will come in around 85, which would be a nice jump from last month’s 81.6.
 
Intel’s mid-quarter update wasn’t exactly the shot in the arm we were hoping for.  Intel narrowed its sales forecast with the midpoint falling a tad lower than analysts had hoped.  Gross margins are still in good shape at 63% and year-over year earnings growth is over 9%.  But, Intel shares are lower in Europe by 2 percent or so.
 
IBM was hit with a broker downgrade this morning, based on valuation.  And Merck will also be under pressure this morning after an article in the New England Journal of Medicine accused Merck scientists of playing fast and loose with the facts regarding Vioxx. Not exactly great PR when you have 700 lawsuits pending against you.
 
Stock futures, which were in pretty good shape early this morning, have been on the slide ever since.  If the market were to open right now, well, you probably wouldn’t notice.  Adjusted for fair value, S&P futures are up a point, Dow futures are flat, and the Nasdaq futures are now about a point and a half below fair value.
 
December 8, 2005
 
11,000 should be just another number on the Dow Jones Industrial Average.  Nothing special -- no big deal.  But every time prices threaten that 11,000 level, the bears seem to take over and push the Dow down into that 10,200 to 10,800 trading range that it seems we’ve been in for about a million years now.
 
Expect the day to start with another step backward on the heels of some pretty ugly results overseas.  The red-hot Japanese market, for instance, took a cold shower to the tune of about 2 percent overnight.
 
Yes, last quarter was great, but luxury home builder Toll Brothers is now uncertain about fiscal 2007 profits and admits that the real estate market is softening.  They beat last quarter’s estimates handily, but said that for 2007 they might “beat or miss” estimates.  How’s that for uncertainty?
 
Texas Instruments and Xilinx with great mid-quarter guidance last night in computer chip-land.  Intel will release its mid-quarter report card later today.
 
The futures are a little improved over the past half hour, but we’re still looking for little red arrows at 9:30.  At this point, adjusted for fair value, S&P futures are down 3, Dow futures are down 30, and the Nasdaq futures are now a little less than a point below fair value.
 
December 7, 2005
 
There’ll be a new resident at the Renaissance Center next month, or should I say a return resident, as Fritz Henderson will assume the CFO and Vice-Charman positions at General Motors.  Henderson has been the head of just about every other big GM unit worldwide over the years, most recently GM-Europe.  It’s a return to the Ren Cen because Fritz worked there years ago when he was with Price Waterhouse.  Actually he and I worked there together and I can tell you, he’s one sharp individual.
 
Texas Instruments stock is up almost 65% since January, and after the market closes today they’ll give us a mid-quarter update.  We’ll also get the weekly oil inventory numbers at 10:30 this morning.  But in the meantime, oil is again floating above 60 bucks per barrel.  Light sweet crude has been over 60 bucks every day this week, but hasn’t closed above 60.  Should it clear 60, we may see a little more bad news in short order.
 
Gold is at $516 an ounce this morning.  Outside of a slight downtick in the German DAX Index, all major overseas markets are in the green.  We’ll likely start off in the yellow this morning.  At this point, S&P, Dow and Nasdaq futures are all within a point or so of fair value.
 
December 6, 2005
 
For stock traders, it’s all about oil prices and interest rates. Oil prices are down a little this morning, on the news that the East Coast escaped a big winter storm, and a hint as to future interest rates is on the way at 8:30. 
 
Presumably, the Fed will stop raising interest rates when they perceive no threat of inflation.  The biggest component of inflation pressure is rising wages.  The most beneficial way to avoid inflation yet provide good wages is to increase productivity.  The Government’s final reading on third quarter productivity is expected to be revised upward to 4.6 percent.  Unit labor costs are expected to have fallen by almost one percent.   Anything higher on productivity or lower on unit costs will be good news.
 
Apple Computer gets a broker upgrade this morning and is likely to open higher.
 
It’s a split decision overseas, with Asian markets down and European markets up on the order of a half-percent or so. As long as the productivity report behaves itself, we should get off to a stronger start as well.  At this point, adjusted for fair value, S&P futures are up about 2, the Dow futures are up 20 and the NASDAQ futures are 4 points above fair value.
 
December 5, 2005
 
We’ll see if this is the week that the Dow Jones Industrial Average revisits the 11,000 level.  It teased us back in March before falling back.   The Dow starts this morning at 10,877.
 
Just when Johnson & Johnson thought that it had successfully renegotiated the price of Guidant, Boston Scientific is saying, “not so fast.”  Boston Scientific is offering 72 bucks in cash and stock for Guidant this morning.  That is 14% more than the J&J offer and 16 % higher than Guidant’s Friday close.
 
The ISM non-manufacturing index is the only scheduled data point of the morning.  It’s expected that the services industry expanded at a slower rate in November, but this time of year, that index is pretty volatile and hard to take too seriously.  The number that the market will be watching is the final revision to the 3rd quarter productivity numbers.  That report comes out tomorrow.
 
Wal-Mart continues to rack up some serious Holiday sales.  They reaffirmed their estimate of this morning for 2 to 4 percent same store sales growth in December.
 
Japan was up almost another one percent overnight.  Most other overseas markets are a little lower as they and our futures have been following oil prices around.  Light sweet crude is up over 60 bucks once again, and that has the stock futures pointing a little lower.  At this point, adjusted for fair value, S&P futures are down about a point, the Dow futures are down 10 ½ but the NASDAQ futures are a half point above fair value.
 
December 2, 2005
 
Like those five dollar coffees?  Starbucks’ November same store sales were up another 7 percent, as we just can’t seem to get caffeinated enough.
 
It’s all about the jobs report this morning.  At 8:30 we’ll get the report, and the expectation is that the U.S. economy added 223,000 new non-farm jobs.  It’s expected that the unemployment rate held steady at 5 percent.  Perhaps more eagerly watched will be the average hourly wage.  Last month it spiked up by a half percent.  Analysts expect an increase of a far more moderate 2 tenths of a percent in November.
 
You may not be able to afford a meal at Morton’s, but you will soon be able to buy a share or two of their stock and chew on that.  Morton’s, which has 69 restaurants nationwide, announced this morning that they will soon have an IPO on the menu.
 
Overseas, the screens are all green this morning.  We’re up another 2 percent in Japan over night, another one percent in Hong Kong, another half percent or so in European markets.  Although our futures have been positive all morning, they were below fair value until an hour or so ago.  But in front of the jobs report at 8:30, things are about as flat as flat can be.  Adjusted for fair value, S&P futures are down a quarter-point, the Dow futures are flat and the NASDAQ futures are a point and a half below fair value.
 
December 1, 2005
 
Retailers and the car companies are reporting November sales today and there’s another wave of economic data coming as well, we could get some twists and turns as the day unfolds.  But at least the open should be a turn to the positive after the big blue chips took a tumble yesterday.
 
The early retail numbers are a mixed bag.  Costco reported a 6 percent increase in same store sales.  That’s great.  Unfortunately, analysts were expecting more like 7.2 percent.  American Eagle Outfitters also missed their same store sales target by a bunch.  That’s the bad news.  The worse news is that there is widespread suspicion that the retailers that hit their sales targets did so by slashing prices.  So sales may be great, but profits may be hard to come by.
 
Speaking of which, car sales in November, spurred by incentives that supposedly weren’t needed anymore, are expected to have gone back up to an annualized rate of 15.7 million units from October’s 14.7.
 
Personal income and spending data at 8:30 and the November ISM index at 10 may influence the market a bit more than all that.  The ISM is expected to decline to a reading of 58.
 
The Nikkei in Japan closed above 15,000 for the first time in 5 years.  Europe is also positive at this hour.  Adjusted for fair value, S&P futures are up 5 1/2, the Dow futures are up 57 and the NASDAQ futures are 9 points above fair value.
Please note that Ron Humenny and Starfire Investment Advisers, Inc. are not affiliated with, are not compensated by and do not endorse Flagstar Bank or any of the sponsors of our daily WJR reports
 
November 30, 2005
 
The results for Cyber Monday are in, and they serve to prove that this whole computer and internet thing is really just a fad that will just fade away.  Right.
 
Visa spending on the internet was reportedly up 26 percent this Cyber Monday over last.  Ebay ruled the roost with the most distinct visitors.  Walmart.com and Target.com also drew a lot of traffic.
 
Traffic in shares of Google may have finally come to a “stop” sign.  Google is back down to 400 bucks from 435 on a couple analyst downgrades. Yahoo took its second downgrade this week this morning as well.
 
Lots of data points on the way today.  It’s Oil Inventory day.  The Chicago Purchasing Manager’s Index comes out at 10, and later today, the Fed’s Beige Book will be released.  The last time out that was a significant market mover.
 
The government’s second estimate of 3rd quarter Gross Domestic Product at 8:30 could set the early tone. It’s expected to be revised upward to 4.1% from the advance number of 3.8%. Too much of an upward revision could actually be a market drag, as traders continue to focus on future interest rate hikes.
 
Overseas markets are down at this hour.  In front of the GDP data, our futures are pretty much in wait-and-see mode.  S&P, Dow and NASDAQ futures are all just about even with fair value.
 
November 29, 2005
 
Yesterday the stock market’s winning streak ran into a disappointing home sales number like it was a brick wall.  It’s not news around these parts, but now it seems that nationally there are plenty of used homes on the market.  The thinking is that a slowdown in housing sales will likely trigger a slowdown in related consumer sales as well.
 
Today it could be déjà vu all over again.  The futures are up strongly at this hour, but at 10 o’clock we’ll get the October New Home Sales.  Early forecasts put the number at an annualized 1.2 million units, but given the used home data yesterday, we could fall well short of that.
 
Durable Goods Orders are expected to have risen 1.5 percent in October.  We’ll get that report in about 10 minutes.
 
Gold broke over the $500 dollar an ounce level over night, although it’s pulled back some at this point.  The last time gold spent any significant time above 500 bucks was about 22 years ago.
 
In front of that durable goods number, the futures are looking pretty good.  Adjusted for fair value, the S&P futures are up more than 6 points, the Dow futures are up 40, and the NASDAQ futures are more than 9 points above fair value.
 
November 28, 2005
 
There may be heavy pockets on area freeways, but there were evidently lighter pockets leaving area malls over the weekend.  According to the National Retail Federation, the average shopper spent more than $302 over the weekend, as Thanksgiving Holiday retail sales were up 22 percent over last year.  That number is questionable to some, and it may be an unbelievable number to a lot of autoworkers who are expecting tougher times ahead.  But, whether the figure is completely accurate or not, it’s a reminder that nationally at least, the consumer is feeling just fine, thank you.
 
Automakers aren’t the only manufacturers about to do some restructuring.  Drug-maker Merck will eliminate 7,000 jobs by 2008 and will close 5 of their 31 manufacturing facilities.
 
This week will be loaded with economic data.  Today, the October existing home sales number comes at 10 o’clock.  Sales are expected to have declined just a bit to an annualized rate of 7.2 million units.
 
The Wednesday before and the Friday and Monday after Thanksgiving are traditionally good days for the market, and it looks like 2005 will be no exception. 
 
Overseas markets are in rally mode, as we will be at 9:30. Adjusted for fair value, the S&P futures are up almost 2 points, the Dow futures are up 32, and the NASDAQ futures are about 3 points above fair value.
 
November 23, 2005
 
The futures are indicating a pretty flat open for stocks, but take heart – the Wednesday before and the Friday after Thanksgiving are traditionally pretty good days for the market.
 
We got a little Holiday gift yesterday when the minutes of the Federal Reserve Open Market Committee’s most recent meeting were released.  The minutes showed that the Committee members DID actually talk about the economy during their meeting, presumably because golf season was just about over.  Some Fed members expressed concern that they not go too far in raising interest rates.  That gave stocks an immediate shot in the arm, adding day number 5 to the current market rally.
 
At 9:45, the U of M’s Consumer Confidence number for November is expected to come in at 81, as investor depression over tropical depressions wears off.
 
Oil, gasoline, and distillate inventories are all expected to have risen in the past week.  We’ll find out at 10:30, and we’re also expecting a rise in natural gas inventories.  That’s fairly unusual for this time of year.  That data is coming out a day early due to the Thanksgiving Holiday.
 
Japanese markets were closed today, but outside of Belgium, where they must have bitten into some sour chocolate, overseas markets are up.  Adjusted for fair value, the S&P futures are down about a half point, the Dow futures are down 8 ½, and the NASDAQ futures are just about even with fair value. Happy Thanksgiving, everybody!
 
November 22, 2005
 
Xbox 360 hit the market at midnight.  Microsoft calls the new machine a critical component of its future strategy, so it’s an important product to watch.  Some analyst estimates that Microsoft will sell 2 million of them this year, but estimates vary widely as to how many will be available during the next few weeks.  Hey, maybe we can start building them at some of those auto plants we don’t need anymore.
 
For the market in general, the Dow Jones 30 Industrials Index finally closed in positive territory for the year yesterday.  The Nasdaq and the S&P 500 are at 4 ½ year highs.  But there are some uncomfortable little details rearing their ugly little heads.  Gold is just a smidgen below the $500 dollar an ounce level, as rising fast.  The Treasury Bond yield curve is about as flat as flat can be and will very likely invert before the end of the year.  An inverted yield curve is an almost certain indicator of an upcoming recession.  Finally, light sweet crude is up almost a buck today at $58.61 per barrel. 
 
Markets around the world are little changed at this hour, but in light of all those ugly little details, we’ll see lower stock prices at 9:30. Adjusted for fair value, the S&P futures are down almost 3, Dow futures are down 17 and the NASDAQ futures are about 5 points below fair value.
 
November 21, 2005
 
There was a day when General Motors could rally it stock by announcing some new models with big sales potential.  Last Friday, GM shares rallied 17 percent from their intra-day low, just because Rick Waggoner said “we’re not going bankrupt.”
 
In about 10 minutes, GM’s head honcho will have more to say.  At an 8:30 press conference, Mr. Waggoner is expected to announce some plant closings and possibly some other cost cutting measures that could help him keep last Friday’s promise.
 
Usually the mother names the child.  Today, the child will actually assume its mother’s name.  SBC will start using the AT&T name, assume the ticker symbol ‘T’ and will make a lot of sign makers and stationery suppliers very, very happy.
 
Cold weather is about to spread across the Midwest and Northeast, and surprise, surprise, oil and natural gas prices are again on the rise.  Light sweet crude is up 75 cents to just shy of 58 bucks per barrel.  That could weigh down the sleigh of the little Santa Claus rally we’ve been enjoying.
 
Asian markets were positive again overnight.  Mainland Europe is in the green, but London’s FSTE Index is down just a touch.  Our stock futures have been trying to climb back to even all morning, and they’re just about there. So, at this point, it looks like a pretty quiet open is on the way.  Adjusted for fair value, the S&P and Dow futures are flat but the NASDAQ futures are about 2 points below fair value.
 
November 18, 2005
 
There’s not much on the economic report calendar today, so it will likely be a deals, earnings and oil kind of day. 
 
Let’s take them in reverse order.  Light sweet crude is down 3 cents after a steep slide yesterday afternoon.  Yesterday’s drop gave a nice boost to overseas markets overnight.  Most of Europe is up about one percent at this hour.  Overnight, the Nikkei 225 in Japan was up almost a percent and a half.
 
Earnings reports are a mixed bag.   We’re looking at better than expected reports from Hewlett-Packard and Starbucks.  However, there are less than wonderful profits and/or forecasts from Gap, H&R Block and Disney.
 
A couple more big deals as companies continue to find ways to sop up all that darn cash lying around.  SwissRe is buying General Electric’s insurance business and Cisco Systems is buying Scientific Atlanta.  Both of those deals are in the 7 to 9 billion dollar range.  GE is also raising their dividend by 14%.
 
Stock futures have been positive all morning and have been quietly creeping even higher. Adjusted for fair value, S&P futures are up about 3 points, Dow futures are up 17 and the Nasdaq futures are about 6 points above fair value.
 
November 17, 2005
 
The story stock of the day nationwide has to be General Motors, and the story is not a comedy.  GM lost almost 6 percent of its value yesterday, and another 17 cents in the after-hours market.  Closing in on 21 bucks a share, you have to go back to the Crash of 1987 to remember GM trading much below that level.  The stock has lost almost 40 percent of its value over the past three months.
 
How about some happier stories?  It you’re long gold, it’s been a great year.  Gold is at 483 dollars an ounce mark this morning.  That’s an 18 year high.
 
Today is the last big data day of the week.  Weekly jobless claims are expected to have fallen by just 2,000.    October housing starts are expected to be down 2.8 percent.  Industrial production, on the other hand, is expected to show a one percent pickup as we recover from the hurricanes.  Finally, at noon, the Philly Fed survey will be closely watched.  Expect a decline of 3 tenths of a percent in that forecast.
 
Two broker downgrades this morning – one for Altria and one for ConocoPhillips.  Hewlett-Packard will report earnings later today.
 
It’s a great day to be invested overseas.  Hong Kong and European markets are up almost one percent, Japan closed up 1.7 percent.  We should get off on the right side of the sod as well.  Adjusted for fair value, S&P futures are up 4 ½ , Dow futures are up 28 and the Nasdaq futures are about 9 ½ points above fair value.
 
November 16, 2005
 
There’s been a lot of discussion and speculation about the health of the housing market lately.  Rising interest rates, the theory goes, have to start biting into sales soon, and may even cause people who can’t handle their suddenly-expensive ARM loans into an unexpected move.
 
The jury on this one is apparently still out. A few days ago, home builder Toll Brothers gave investors disappointing guidance for 2006.  However, this morning, D. H. Horton beat estimates for their fourth quarter by 14 cents, and guided toward the high end of expectations for next year. So, all may not be so horrible in house building land.  However, Horton did guide slightly lower for next quarter.
 
Tyco is also being cautious for next quarter, although last quarter’s earnings were pretty good.
 
It’s all about the CPI for traders this morning.  In 15 minutes the October Consumer Price Index is expected to come in unchanged.  The core rate, which excludes food and energy prices, is expected to have risen 2 tenths of a percent.
 
Asians markets were up a little overnight, European markets are down about ¾ of a percent.  Our direction will be taken from the CPI announcement at 8:30.  Right now S&P, Dow and Nasdaq futures are all within a point or two of fair value.
 
November 11, 2005
 
A big drop in oil prices didn’t help energy stocks yesterday, but it sure gave the rest of the market a shot in the arm.  This morning, light sweet crude is down another 16 cents per barrel in the mid-57’s, and that has European stock markets in a very good mood.
 
Bond traders in the U.S. should be in a good mood – they have the day off for Veteran’s Day.
 
If you hold shares in Dell…well…..maybe you won’t be in such a good mood.  Dell warned that earnings were going to disappoint.  So, their earnings number last night was no big surprise.  However, the revenue number for last quarter was also on the light side, and the outlook for next quarter was disappointing.  So, after gaining 19 cents in yesterday’s market, Dell lost 35 cents in the after-market and should open lower this morning.
 
Don’t look now, but after yesterday’s plunge in the stock price, the dividend yield on General Motors is over 8 ½ percent this morning.  Assuming, of course, that you believe the payout rate is sustainable.
 
It’s pretty much whatcha see is whatcha get with the futures, and at this point, watcha gonna get is a slightly positive open for stocks.  S&P futures are up a tiny fraction of a point, the Dow futures are up 2 and Nasdaq futures are now about 3 ½ points above fair value.
 
November 9, 2005
 
There will be a lot of hot oil-related news in the market today.  First hot data from the Energy Information Institute, then a lot of hot air from Capitol Hill.
 
At 10:30, the Energy Information industry will issue its weekly report on fuel inventories.  Crude oil, gasoline and distillate inventories are all expected to rise.  Perhaps most importantly, distillate inventories are expected to rise by about 600,000 barrels after a week of very mild weather in the Northeast, where a lot of residential heating oil is used.
 
If you are the head honcho of a big oil company, you will be tied to the whipping post in Washington today. Members of the Senate will hold a hearing to find out just how in the world the oil companies have collected so much money from everybody without actually having the power to raise taxes.
 
Big insurer AIG will be restating earnings again, as they seem to be having some trouble shaking their accounting problems.  Home Depot gets a brokerage firm upgrade this morning after losing over 2 percent of its value yesterday.
 
Stock futures were solidly positive earlier this morning, but have been on the slide for a while.  At this point, adjusted for fair value, they are indicating a very slightly positive open for the market.  S&P futures are up a almost a point, the Dow futures are still up 4 and Nasdaq futures are now about 2 ½ points above fair value.
 
November 4, 2005
 
This morning, it’s all about the October Jobs Report.  The consensus estimate calls for job growth of 124,000.  The employment picture is still a moving target given the thousands of jobs that were washed away by the hurricanes.  Of course, that’s probably offset by the millions of attorneys who have put themselves to work suing Merck over Vioxx.
 
Round 2 in the Vioxx war went to Merck yesterday as a New Jersey jury found Merck not guilty of evil doing. Merck stock popped up a bit midday, but gave up the bulk to that gain by 4 o’clock.  That’s two lawsuits done and about 6,400 to go. That is, if no new suits are filed.
 
Apple Computer took a downgrade from a major brokerage house this morning.  The analyst is arguing that it’s time to harvest some of Apple’s tremendous price appreciation.
 
The Japanese Nikkei Index shot up another 1.3 percent overnight, but markets elsewhere are decidedly undecided.
 
We will find out which way the U.S. market will decide to move this morning in about 10 minutes with the release of the October Unemployment Report. At this point, after you adjust for fair value, there is absolutely nothing going on.  S&P, Dow and Nasdaq futures are all within a couple points of fair value.
 
November 3, 2005
 
Lots of stuff going on today.  Retailers are reporting their October numbers this morning and generally, it looks like consumers continue to party like its 1999.  Walmart confirmed their earlier guidance that October same store sales were up 4.3%.  They see 3 to 5 percent growth in November as well.  Costco same store sales were up 10 percent.  Granted, without the big run-up in gasoline prices it would have only been 8 percent.  But that’s still a big number.
 
Comcast revenues for the quarter gone by came in as expected, but profits missed estimates by about 40%.  Comcast is also guiding lower for 2006.
 
At 10 o’clock, Alan Greenspan will be forced to sit through another visit with the Congressional Joint Economic Committee.  Say what you will about him, the man knows how to have a good time.
 
Also at 10 o’clock, the Durable Goods Report is expected to show a 1 percent decline. And lookout – light sweet crude is up above 60 bucks again at $60.48.
 
Asian markets were up slightly overnight.  European markets are up on the order of a half to one percent.  We should get off to a quietly positive start as long as the unemployment claims don’t throw us a curve.  At this point, adjusted for fair value, the S&P futures are up a fraction, the Dow futures are up a point, and the NASDAQ futures are about 3 points above fair value. 
 
November 2, 2005
 
Yesterday, the Federal Reserve Open Market Committee said rising energy costs and recent hurricanes have depressed economic growth and job growth.  Not to be outdone by those freaks of nature, the Fed raised short term rates another quarter percent, which should of course, depress economic growth and job growth even more.  The good news is that hurricane season is almost over.  Alan Greenspan will be around until February. 
 
October auto sales numbers were released yesterday and were scarier than anything you might have seen the night before.  DaimlerChrysler sales were off 3 percent, General Motors off 23 percent and Ford off 26 percent.  The annual combined car sales rate fell to 14.7 million units. A year ago, it was nearly 17 million.  Speaking of industries that are changing, Deutsche Telecom will cut 32,000 jobs over the next three years due to changes in the German communications industry.
 
This morning Time Warner beat earnings estimates and raised their share buyback program. EDS also beat estimates as that turnaround continues.  Oil distillate inventory data later this morning is expected to show a drawdown.  That’s a potential market mover.  But so far today – not much is moving anywhere.
 
Overseas markets are mixed.  Our futures started off the morning in good shape, but that was then and this is now.  Adjusted for fair value, the S&P futures are now down 2 points, the Dow futures are down 5, and the NASDAQ futures are about 5 ½ points below fair value. 
 
November 1, 2005
 
Later today, Treasury Secretary John Snow will finally receive a couple of proposals, developed by a special commission, on how to reform the income tax system in the U.S.  There’s a striking similarity of this exercise to the proposed Social Security reforms.  Two big wealth re-distribution systems, both horribly flawed.  And both will go “unreformed” for the foreseeable future.  Not that these new tax system proposals are bad – they’re actually very good.  Unfortunately, people don’t evaluate these things based on “right or wrong.”  They make up their mind based on “how will it effect me.”  That will likely render this proposal, like the badly needed Social Security reform, dead on arrival at Congress.
 
Short-term interest rates will head north by another quarter of a percent at 2:15 this afternoon.  That makes it 12 increases in a row, with at least one or two more to go.
 
The big earnings news of the morning is a big warning from Dell computer.  Sales and earnings for the quarter will come in at the low end of expectations and Dell shares, and by implication the NASDAQ, will be under some pressure.
 
Adjusted for fair value, the S&P futures are down about 2 points, the Dow futures are down 11, and the NASDAQ futures are almost 8 points below fair value. 
WJR December 2005 Reports
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