Data Feed

Posted: September 14, 2007 in Charts, Forex, Futures, Lifestyle, Psychology, Stocks, Technical Analysis, Trading

S&P futures vs fair value: -9.9. Nasdaq futures vs fair value: -16.2.
Futures dip following the slightly weaker than expected retail sales numbers. Total August sales were up 0.3%, below an expected 0.5% gain, but the July increase was revised upward 0.2% to a 0.5% gain. Lower gas prices also led to a decline in that category, which is not such a bad thing. Overall consumer spending remains on track and the impact should be limited.

Economic Perspective: No sign of consumer cutback in August
August retail sales rose 0.3%. This was about in line with expectations of a 0.5% increase. The gain was boosted by strong auto related sales, as the excluding autos figure was -0.4%. That was weaker than expected. The numbers were also held back by lower gasoline sales, caused in part by lower gas prices. That is good news, not bad news. This is an ambiguous reading that overall indicates that consumer spending is steady and consistent with the consensus 2% real GDP growth forecast for the third quarter. On the other hand, the decline in ex-auto sales could be taken as a modest sign of weakness that leaves open the argument that consumer spending will weaken over time due in part to the housing slump. The July gain was revised to a 0.5% increase from an originally reported 0.3% gain, and excluding autos the July gain was revised to +0.7% from +0.4%. Retail sales is a much smaller data point than personal consumption expenditures, and we would caution about placing too much emphasis either way on this figure. In our opinion, the trend in retail sales shows steady overall consumer spending and no sign of an impending recession.

U.S. Brokerage Stocks Indicated Lower In Reaction To Overnight News Out Of Europe
The U.K.’s third-largest lender, Northern Rock, declined 26% in European trading after it announced receiving emergency funding from the BoE to raise liquidity. Also, AXP shares saw a selloff in Europe after Merrill Lynch downgraded the shares, citing ‘slowing US economic trends,’ while both Deutsche Bank & Credit Suisse were also lower after Societe Generale downgraded the stocks. In turn, this is putting pressure on brokerage stocks before the open of US stock markets. In electronic pre~mkt trade BSC is trading @ 113.53 -0.80%, GS @ 187.00 -0.75%, JPM @ 45.20 -0.75%, & MS @ 66.15 -0.75% . Other names indicated lower include AXP, BAC, C, & LEH.

BSX Boston Scientific says releases remote monitoring data from its wireless Latitude patient mgmt system (13.17 )
Co announces it has released data reflecting experience from the first 15K patients monitored wirelessly on the LATITUDE Patient Management System. Of the nearly 106K monitoring months included in the 15,000-patient population, over a mean follow-up of seven months, the LATITUDE Patient Management system detected 948 patients with at least one event of sustained atrial arrhythmia for more than 24 hours. Patients with atrial fibrillation, particularly those with heart failure, are at risk of stroke. By identifying this arrhythmia earlier, physicians can intervene with treatments to lessen this risk. The LATITUDE Patient Management system also detected 1,516 patients who received at least one event of shock therapy for potentially life threatening arrhythmias. The LATITUDE Patient Management system will be demonstrated during the Heart Failure Society of America Conference

Import Prices y/y 1.9% , prior +2.8%
Current Account Balances -$190.8 bln vs -$190 bln consensus
Import Prices ex-oil -0.1%
Import Prices m/m -0.3% vs +1.5% consensus
Retail Sales ex-auto -0.4% vs +0.2% consensus
Retail Sales +0.3% vs +0.5% consensus

Jefferies sees Energy Conversion Devices (ENER 24.03) as a near-term “turnaround” play and expect the shares to rally in response to an ongoing corporate realignment plan, the commercialization of PRAM and ramp progress at Unisolar. Longer-term, they believe Unisolar needs to improve its cost structure and broaden its market appeal to remain competitive… Wachovia estimates that the threat of internalization of Intercontinental Exchange’s (ICE 129.07) U.K. futures business driven by an upcoming European Union directive are overblown. They note that MiFID is a EU directive that will replace existing provisions on November 1, 2007 and will attempt to introduce a single market and regulatory regime for investment services across the 27 member states of the European Union. They note that essentially, there is no practice of internalization within futures markets as brokerage intermediaries are not allowed to stand in between a buyer and a seller as that trade would miss a futures exchange compliance system, quote tape, and open interest computation. The upcoming MiFID directive does not change that.

Bond Watch: Tripping Higher
More shake-ups in the mortgage world, this time from the UK, are giving bonds a bid heading into a data-driven day. News of Northern Rock’s plea for help from the Bank of England hit late yesterday giving trade a wild ride through the night, sending stocks lower & bonds higher. Yesterday’s slow, uneventful grind lower has been nearly completely erased with NY only now beginning to trade on the news. The 2-10-yr yield spread has shrunk to 42.4 with curve trade mostly waiting on the FOMC next week. Bond prices in the EuroZone flew higher as equities sunk & consumer prices recorded slightly slower growth while in Japan, bonds were hit by a jump in stocks. Treasuries have been given a gift to begin the session & with data due not expected to be bond friendly, the market will take anything it can get at this point. Prices have been launched into mid-orbit & this week’s paring back of longs was expected. A rally today, however reasserts the upward bias & reminds investors that there is still value being found, even at such lofty levels. The buck just chopped through euro bids around 1.3860 but follow-through has not been a kind as expected with support for the common currency found around 1.3855. If the dollar is on some kind of recovery path from record lows on the euro, it appears to have a lot of work ahead of it. The yen strengthened on unwinds with any tremors in the credit world providing the much anticipated reflexive buy yen trade. Spot gold got another light shave to 705.80 (-2.50) while crude oil is down at 79.59 (-0.50). Today has retail sales, import/export prices & current account (8:30), followed by industrial production/capacity utilization (9:15), business inventories & UofM sentiment (10). The euro is at 1.3875 & the yen is at 114.8900 while the 10-yr is +05/32nds yielding 4.445%

Gapping up: BRLC +2.0%, JRJC +2.0%, SNDK +1.5%, RIMM +1.3%… Gapping down: SHPGY -5.1%, BCS -4.8%, REP -3.0%, GFI -2.9%, BBL -2.7%, CFC -2.7%, GOLD -2.6%, RTP -2.4%, BOBJ -2.3%, CCL -2.3%, LEH -2.1%, INTC -2.0%, CS -2.0%, GM -1.9%, BP -1.8%, HBC -1.8%, ALU -1.8%, DB -1.7%, GSK -1.6%, BHP -1.4%.

Buyers: ZymoGenetics (ZGEN 11.92) 10% Owner Warburg Pincus Equity Partners bought 223,783 shares at $11.62… ImmuCell (ICCC 4.08) Director bought 13,340 shares at $3.95… Source Interlink (SORC 3.57) President bought 100K shares at $3.73… Caribou Coffee (CBOU 5.82) CFO bought 5K shares at $5.86… TerreStar (TSTR 9.74) 10% Owner Harbinger Capital Partners Special Situations Fund bought 495K shares at $8.96… GMX Resources (GMXR 31.31) 10% Owner Centennial Energy Partners bought 15K shares at $31.65… International Coal Group (ICO 4.38) 10% Owner Fairfax Financial Holdings bought 193,200 shares at $4.07… General Finance (GFN 7.86) 10% Owner Ahab Capital Mgmt bought 100K shares at $7.92… PeopleSupport (PSPT 11.11) Director bought 10K shares at $10.84… Geokinetics (GOK 22.52) 10% Owner Avista Capital Partners bought 26K shares at $21.25… Opko Health (OPK 4.06) Chairman bought 26K shares at $4.02… Barnes & Noble (BKS 34.23) Chairman bought 100K shares at $32.95… Collective Brands (PSS 21.11) Officer bought 7K shares at $21.19… Command Security (MOC 3.18) 10% Owner Trinad Advisors bought 65K shares at $3.25… Nautilus (NLS 8.55) 10% Owner Sherborne Investors bought 300K shares at $8.66. Sellers: SEI Investments (SEIC 25.12) Chairman sold 104K shares at $25.04… MKS Instruments (MKSI 20.57) Chairman sold 50K shares at $20.65… Inergy LP (NRGY 32.38) Officer sold 22,058 shares at $32.68… Park-Ohio Holdings (PKOH 26.59) Chairman sold 24,156 shares at $27.09… Omniture (OMTR 26.03) Directors (2) sold 300K shares at $23.77 – $24.50… Campbell Soup (CPB 35.45) 10% Owners (2) H. Van Beuren sold 301,268 shares at $35.19 and J. Van Beuren sold 232,233 shares at $35.19… Occidental Petroleum (OXY 62.10) Officer sold 12,905 shares at $60.89… Flotek Industries (FTK 39.33) Director sold 20K shares at $39.22… MOD-PAC (MPAC 9.58) 10% Owner Osmium Capital sold 60K shares at $9.25… LB Foster (FSTR 43.08) 10% Owner Tontine Capital Mgmt sold 105,700 shares at $41.56… Astec Industries (ASTE 54.44) former 10% Owner Tontine Capital Mgmt sold 264,443 shares at $53.65.

BBW Build-A-Bear Workshop: Stock up on last-minute conference cancellation; sources say books just out, bidders mostly financial – FT Mergermarket (17.86 )
FT Mergermarket reports the sale books for the co were distributed last week, according to three sources familiar with the process. Despite weakening credit mkts, the bidders contacted were mostly if not all financial, according to two sources. With BBW’s $383 mln market cap, the deal would not likely have the same financing issues as large cap deals, one source explained. A buy-side source said bidders were valuing the co at around 6X EBITDA in today’s mkts. The company’s 12-month trailing EBITDA is $70.86 mln, which at 6X is USD $425 mln. However an analyst report today cited Build-A-Bear’s last-minute cancellation of a Susquehanna Financial conference as a sign that “something may be brewing.” The analysts speculated that strategic buyers such as children’s apparel retailers like Children’s Place and Gymboree (GYMB) would not bring much strategic advantage to acquiring Build-A-Bear. Toy manufacturers like Hasbro (HAS) or Mattel (MAT) do not have the retail competency to operate such a business, either, they added. Build-A-Bear is undervalued by the market because of a tough year, said one analyst, yet the co still generates a solid cash flow and could be turned around by a PE buyer.

Jefferies says their channel checks lead them to believe that Rigel’s (RIGL 9.84) R788 may be showing signs of activity in the P2 RA trial. P2 results in both RA and ITP are expected in December. They believe positive RA data would come as a surprise to the Street and drive significant share appreciation… ThinkEquity raises their BioCryst Pharmaceuticals (BCRX 11.58) tgt to $15 from $12, as they believe room for upside remains. Specifically, they look for value creation within the Peramivir program to catalyze momentum. Their analysis of enrollment in an ongoing Phase II study of Peramivir for seasonal flu suggests encouraging trends, and they believe an interim look at data before YE07 is likely.

Banks flock to discount window – WSJ
WSJ reports borrowing from the Federal Reserve’s discount window soared in recent days, which some analysts said may have been the result of the Fed’s efforts to restore overnight interest rates to the Fed’s target level. Discount borrowing under the Fed’s primary credit program for banks surged to more than $7.1 bln outstanding as of Wednesday, up from about $1 bln a week earlier, the central bank said yesterday.

JNJ Johnson & Johnson’s stent’s heart risk less than Boston Scientific’s – (63.11 ) reports that JNJ’s drug-coated stent was linked to fewer complications than BSX’s device for propping open arteries, European researchers reported. Patients with JNJ’s Cypher stent had fewer heart attacks and didn’t have to return to the hospital for repeat procedures as often, according to a study published today in the U.K. medical journal The Lancet. The risk of dying was the same for all stents, the scientists found. Questions about drug-coated stents arose after researchers in 2006 found an association between the devices and blood clots, which can lead to heart attacks and strokes.

CFC Countrywide: Mortgage production estimates lowered at Wachovia (18.93 )
Wachovia notes that CFC reported August operational Data yesterday of $34.4 bln, down 16% YoY and 12% versus last month. Due to difficult secondary mortgage market conditions for non-agency mortgages, Wachovia expects the co to report a loss in its mortgage banking segment for the quarter. The firm has lowered their mortgage production estimates to reflect tighter consumer credit conditions generally and for CFC’s mortgage production specifically. They expect CFC’s loan production to decline by roughly 10% in 2007 and 20% in 2008.

GM General Motors: UAW talks extended; GM target for strike – (33.29 ) reports the UAW has selected GM to be the lead negotiating partner, also known as a strike target, in the year’s national contract talks, leading workers, analysts and labor experts to believe the union has agreed — in principle — to establish the retiree health care trust that the nation’s largest automaker so desperately wants. The union has agreed to indefinite contract extensions with Ford Motor (F) and Chrysler, those cos acknowledged. Labor experts and automotive industry analysts say the announcement is great news for GM and could mean the parties are willing to negotiate the retiree health care trust — known as a Voluntary Employee Beneficiary Association, or VEBA. UAW communications to local leaders earlier Thursday said things were not progressing as well as expected. But people with knowledge of the talks said there had been signs of progress. Harley Shaiken, labor expert at the University of California at Berkeley, said the UAW likely believes it can craft the best deal with GM that can then be applied to Chrysler and Ford. “GM is the furthest along on the road to recovery,” Shaiken said, “and GM has pushed hard on the issue of the VEBA — which offers some possibilities for the union — and has the greatest need for the VEBA, given that it has four retirees for every active worker.” While little progress may have been evident in the main negotiations, people familiar with them said that the union was privately working toward the VEBA. Local leaders at all three automakers told the Free Press that they have already created strike assignments and picket signs, though most believe a strike is unlikely.

China raises rates for fifth time to cool economy – reports that China raised interest rates for the fifth time since March to curb the fastest inflation since 1996 and cool a surging stock market. The benchmark one-year lending rate will increase to a nine- year high of 7.29% from 7.02%, starting tomorrow, the People’s Bank of China said today on its Web site. The one- year deposit rate will rise to 3.87% from 3.6%. Premier Wen Jiabao is trying to prevent overheating without triggering a sudden slowdown that may cost jobs and leave factories idle.

What will mortgage banks do when the fed cuts rates?- FBR
With the expectation of a Fed Funds rate cut next week, Friedman Billings weighed in on the impact of the easing monetary policy on mortgage banks. The firm says while mortgage stocks valuations have already figured in on a 25 bps rate cut, they do believe the stocks will react positively to an easing monetary policy. The positive reaction will be short-lived, maybe a couple of months, and they believe the stocks will ultimately give up their gains as rising credit cost, de-leveraging of balance sheets, and a tougher origination environment will continue to weigh on future earnings. The firm says a Fed rate cut will help net interest margins, but the Fed cannot fix the problem of the impaired housing collateral, which will lead to lower house prices and higher credit cost.

CELG Celgene profiled in New America section of IBD (69.01 )
IBD reports the co’s flagship drug Revlimid has been approved in the U.S. for treating multiple myeloma, a cancer of plasma cells. Now the co is going global, with approvals in Europe and elsewhere. Those Revlimid sales helped deliver record second-quarter revenue for the CELG. The drug is in clinical trials now for other potential uses alone, and in combination with other compounds. Sales of the drug surged 187% in the second quarter from a year earlier, to $181 mln. Overall, Celgene’s net income was up more than 76%, to $247.9 mln. William Blair analyst John Sonnier thinks Revlimid sales could grow almost 50% a year, to $2.5 bln in 2010, as it’s approved for other types of tumors. Multiple myeloma is the second most common hematologic, or blood cancer, according to the Multiple Myeloma Research Foundation. Rachel McMinn, analyst with Cowen, notes Revlimid’s potential for other diseases as well. It has shown promise in clinical trials for non-Hodgkin’s lymphoma and chronic lymphocytic leukemia. The company posted 26 cents earnings per share in the quarter that ended June 30. That was up from 11 cents a year earlier, and 13% more than analysts surveyed by Thomson Financial had expected. The company earned 53 cents per share last year. Analysts expect the co to double that this year, to $1.06. Next year, they’re looking for $1.67.

Certainly would not be surprised if the FOMC cut the fed funds target rate by 50 basis points – FBR
While Friedman Billings certainly would not be surprised if the FOMC cut the fed funds target rate by 50 basis points next Tuesday, in their view, a 25 basis point cut by a slim margin seems the more likely outcome. Even though the FOMC appears to be trying to move toward greater transparency, they think that this Tuesday’s FOMC statement may be a situation in which the less said, the better. The firm thinks that there could be an unusually brief FOMC statement in which the overall tone leaves the impression of an easing “bias,” but the formal assessment of risks (forward-looking guidance) section is omitted.

Upgrades: Credit Suisse upgrades Calamos Asset Management (CLMS 23.51) to Outperform from Neutral and raises their tgt to $29 from $27 based on improved fund performance and net flow expectations, while they believe the recent style shift from Growth vs. Value will benefit CLMS’s growth dominated strategies… BofA upgrades Weyerhaueser (WY 69.04) to Buy from Neutral. Downgrades: Bear Stearns downgrades Vimplecom (VIP 27.57) to Peer Perform from Outperform

Upgrades: Credit Suisse upgrades Georgia Gulf (GGC 14.09) to Neutral from Underperform based on valuation. Downgrades: Friedman Billings downgrades Roper Industries (ROP 63.73) to Market Perform from Outperform and maintains their $66 tgt, based on valuation… First Albany downgrades Business Objects (BOBJ 43.80) to Neutral from Buy, based on valuation and channel checks that suggest their Americas business could be slowing subtly at the margin… Morgan Stanely downgrades National Cinemedia (NCMI 24.11) to Underweight from Equal Weight… Merrill downgrades American Express (AXP 60.60) to Neutral from Buy. Miscellaneous: BofA initiates Hexcel (HXL 20.72) with a Neutral… BMO Capital initiates Kodiak Oil and Gas (KOG 3.57) with an Outperform and a $6 tgt… BofA initiates Nektar Therapeutics (NKTR 8.45) wih a Neutral and a $10 tgt… Jefferies initiates Aegean Marine Petroleum (ANW 22.59) with a Buy and a $42 tgt saying they believe the shares of Aegean Marine Petroleum Network are attractively valued given the company’s significant built-in growth prospects and the attractive outlook for the marine fuel logistics industry… Jefferies initiates FMC Technologies (FTI 53.65) with a Buy and sets a $62 tgt, as they expect the strong secular growth for subsea equipment to persist over at least the next several years, fueled by rising deepwater drilling activity over the next few years…. Wachovia resumes Community Health Systems (CYH 32.64) with an Outperform, as they believe CYH can grow EPS at a CAGR of at least 30% for the next three years, given syergies from the Triad acquisition, continued improvements at other recently acquired facilities, and paying down debt.

NOK Nokia profiled in Inside Wall Street – BusinessWeek Online (33.88 )
BusinessWeek Online reports the relatively modest p/e at Nokia (NOK) and the stock being 50% below its all-time high of 62.50 show that Nokia remains undervalued, according to Bernie Schaeffer, chairman of Schaeffer’s Investment Research, which owns shares. He also thinks the big short-seller interest in the stock is a plus. The options traders have been “heavily playing the put [sell] side lately despite the strong price action of the stock,” he notes. The bears are fighting the upward trend in the options market, and this is placing a very high put/call ratio on such a strong-performing stock, adds Schaeffer. The ratio between open puts and calls is almost even, “which is highly unusual,” he says. Ordinarily, the calls significantly outnumber the puts in a stock that’s sharply rising, he explains. Schaeffer figures that when this negative bet unwinds, as Nokia’s stock continues to rise, it will add to the stock’s upward momentum. Schaeffer sees the stock at 50 in a year or so.

NPD: Madden NFL ’08 scores big –
According to, the NPD Group has released the US hardware and software sales figures for August 2007, with EA’s (ERTS) Madden NFL ’08 dominating the charts. The Xbox 360 (MSFT)version of the game was number one, with 896,600 units sold, followed by the PlayStation 2 version, with 643,600 units sold. The PlayStation 3 (SNE) version of the game sold 336,200 units, which was good enough for fourth place overall. The Wii, Xbox, and PSP versions of Madden NFL ’08 were in eleventh, twelfth, and eighteenth place, respectively. Bioshock (TTWO), which is atop the charts in other countries, came in third with 490,900 units sold. Hardware-wise, Nintendo continues to dominate, with an estimated 403,600 Wii consoles and 383,300 DS handhelds sold in the US in August. Microsoft sold 276,700 Xbox 360 consoles on the strength of a price cut, with Sony selling 130,600 PlayStation 3 consoles. Sony also sold 202,000 PlayStation 2 consoles and 151,200 PSP handhelds. Overall, videogame hardware and software sales were up 46 per cent from the same period last year.

Upgrades: Morgan Keegan upgrades Palm (PALM 14.91) to Outperform from Market Perform, as they believe new product launches in US and Europe are set for Q4, and expect normal seasonal strength in Treo sell-through… Wachovia upgrades BreitBurn Energy Partners LP (BBEP 32.80) to Outperform from Market Perform following the announcement of its $1.45 bln acquisition of Quicksilver’s Antrim Shale assets… BofA assumes Triumph Group (TGI 76.46) and upgrades to Buy from Neutral and raises their tgt to $88 from $78, as they believe the co has proven over the last two years that execution has improved and are now less conservative on their outlook for margins and have increased estimates accordingly. Downgrades: Baird downgrades Avery Dennison (AVY 55.75) to Neutral from Outperform and lowers their tgt to $64 from $75, based on weakness in N. American high-end clear films, a challenging price environment and unexpected weakness in Europe… Citigroup downgrades Fluor (FLR 134.11) to Hold from Buy… Friedman Billings downgrades Imclone (IMCL 43.48) to Market Perform from Outperform and cut their tgt to $45 from $64 saying they are tempering their expectations for Erbitux sales in lung cancer due to feedback from practitioners. The firm says the doctor panelists on their call last night were unmoved by the FLEX announcement and doubted that they would use Erbitux with Carbo-Tax.

Miscellaneous: Montgomery initiates AuthenTec (AUTH 10.53) with a Buy and sets a $14 tgt, based on the co’s position as one of the leading players in fingerprint authentication, as it has a solid share in both the PC and mobile device markets, and they expect this strength to continue over the next several years… BofA initiates Hexcel (HXL 20.72) with a Neutral and sets a $23 tgt, based on valuation coupled with potentially choppy results in the near-term yet favor the long-term outlook for the co’s composite business in aerospace and defense… Deutsche Bank initiates Airvana (AIRV 6.18) with a Hold and sets $7 tgt, as the co offers investors exposure to secular trends in the growing demand from wireless carriers to increase the capacity of their data capacity yet the firm awaits traction in the femto cell market… JMP Securities initiates TorreyPines Therapeutics (TPTX 5.88) with a Strong Buy and sets a $13 tgt, as the co currently has seven drugs in development, and its lead product candidate, tezampanel, will yield data from a recent fully enrolled Phase IIb in Q407 that could enhance investor conviction on a first-in-class drug for the treatment of migraine and possibly other chronic pain conditions, a $750 mln to $1 bln annual sales opportunity… Baird initiates EastGroup Properties (EGP 42.13) with an Outperform and sets a $50 tgt, based on a high-quality industrial portfolio consisting of properties with a well-defined geographic focus, knowledgeable and experienced management, a conservative balance sheet and valuation.

Sensex ends down 6pts at 15,608 – The Business Standard
The Business Standard reports that backed by firm US cues the Sensex opened with a positive gap of 100 points at 15,714. Fresh buying, thereafter, saw the index rally to a high of 15,825 – just 43 points shy of an all-time high. Selling emerged in noon deals following weakness in the European markets as a result of which the index began to pare gains. Sustained selling saw the index slip into red to a low of 15,568 – down 257 points from the day’s high. The Sensex finally ended (provisional) with a marginal loss of six points at 15,608.

Asian stocks climb on signs credit woes easing; banks advance – reports Asian stocks rose the most this month after the largest U.S. mortgage lender obtained new financing and Macquarie Bank forecast record profit, easing concern global credit conditions will hurt earnings. Japan’s Nikkei 225 Index gained 1.9% to 16,127.42 while the broader Topix index added 1.4%. All markets open for trading climbed, except Pakistan and Sri Lanka… Hong Kong’s Hang Seng Index rose 1.5% to a new high.

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