Monday, October 03, 2005

ISM strong, despite Katrina

"Take the course opposite to custom and you will almost always do well." - Jean-Jacques Rousseau

Morning News of Note:
  • GOOG: Google's Wireless Plan Underscores Threat to Telecom Free Internet Access Proposal In San Francisco Lets Users Bypass Phone, Cable Links Internet companies are making an aggressive and unprecedented push into services traditionally offered by phone and cable companies -- threatening to upend the business of transmitting voice and data. Google Inc. unveiled the latest such effort Friday with a proposal to provide free, wireless high-speed Internet access in the city of San Francisco. (Full Story) WSJ
  • WMT: Demand for hurricane recovery supplies like bottled water and clothing, as well as higher prices for the gasoline sold at its Sam's Club warehouse stores, boosted sales in the five weeks ended Friday. Excluding higher gasoline prices, sales at stores open at least a year -- or same-store sales -- would have been up 3.2 percent, Wal-Mart said. The world's biggest retailer had forecast a 2 percent to 4 percent increase in September same-store sales
  • EBAY: Heard on the Street... EBay Draws Skype Skeptics On Wall Street Wall Street is wondering just how eBay Inc. will get its $2.6 billion acquisition of Skype Technologies SA to pay off. Last month, the Internet auction company made its largest-ever acquisition by buying Skype, a Luxembourg start-up that enables telephone calls over the Internet. EBay painted the purchase as one that would help it generate new revenue from existing content, such as classified ads. (Full Story) NY Times
  • Managed Care: Managed Care: incorporating Medicare drug benefit accretion@PRUS The firm believes this will be an unprecedented earnings growth opportunity for most companies and are upgrading SIE & HNT, and raising target prices on CVH, UNH, WLP, CMX & MHS. However, PRUS is urging investors to avoid HUM, noting the company's ability to generate profits from the Part D program is almost non-existent.


Market Comments: The market opened higher, but is currently struggling to stay in positive territory. The ISM Index came in better-than-expected at 59.4 vs. 52.0 consensus. This is somewhat surprising given it includes post-Katrina data and shows that national conditions remain solid. Of course, the downside is that this strong report makes it less likely that the Fed will pause at its upcoming meeting.

I am surprised that LEN got added to the S&P and not GOOG. But I never understood how they picked their components anyway. Chip stocks are the strongest so far this morning, while big pharma stocks are lagging.

long GOOG, UNH, WMT

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