Tuesday, January 31, 2006

Pre-Fed Selling

Morning News of Note:
  • NAPS GOOG: PLAY FOR NAPSTER Internet giant Google is considering an extensive alliance with Napster, which could include an outright acquisition, as it plots its move into the digital music world, The Post has learned. According to sources within the music industry, Google has been pushing to align with Napster — rather than build its own online music store — a sign that Google sees subscription services, rather than the individual download model that Apple's iTunes is built on, as the future of digital music. (Full Story) NY Post
  • AAPL: Marketers Aim New Ads At Video iPod Users Since Apple Computer Inc.'s video iPod made its debut less than four months ago, users have been able to download their favorite TV shows free from ads. Now, advertisers are scrambling for a way to subvert the sleek device for their own purposes. Some companies are attaching recycled TV spots to the beginning of video files, or podcasts, that can be downloaded from popular Web sites. (Full Story) WSJ
  • Energy: OPEC President said output cut at March meeting unlikely; said group remains fairly confident in 2006 economic view // UAE anncd plans to raise oil capacity to 2.9m bbl/day this yr from 2.7m bbl/day // Venezuela said some oil co's may need to revise reserves // Nigerian oil minister said ouput to resume in two weeks // Norwegian govt wars oil and gas co's of possible platform flaws; said flaws may impact other platforms in Norway and globally; design and/or matieral flaw cause Visund Gas blowout // Iran plans to invest $14bln to expand refinign capcity 50% to 2.5m bbl/day
  • L DISH: Liberty Media, EchoStar Invest In Start-Up for New TV Device Media giants Liberty Media Corp. and EchoStar Communications Corp. are investing in a small Silicon Valley company that lets people watch TV on their computers away from home. The high-profile start-up, Sling Media Inc. of San Mateo, Calif., said Liberty and EchoStar were two of the investors in a new, $46.6 million round of funding, which Sling Media will use for product development and international expansion. (Full Story) WSJ
  • Mad Money Summary: Jim Cramer believes the drugs ACP-103 and ACP-104, which are made by Acadia Pharma (ACAD), can make some "mad money." The drug company makes antipsychotic drugs which Cramer believes could change the way we treat schizophrenia and bipolar disorder. ACP-103 is in trials to treat Parkinson's disease, while ACP-104 is in trials as an antipsychotic that could be a better version of Clozapine. If the drugs make their trials, the stock could hit $50, says Cramer, but if it fails he warns it could drop 3 points. A caller asked about American Shared Hospital Services (AMS), which is also working on a treatment for Parkinson's. Cramer responded that the company is both interesting and profitable, but has too small a market cap, with a cap of $31M. He prefers companies with a minimum market cap of $200M to $250M. Although Cramer still likes gold plays Goldcorp (GG) and Anglo America (AAUK), he believes its time to look at silver, specifically Pan American Silver (PAAS). Cramer also recommended Trinity Industries (TRN) as a play on coal. He did not like the company's competitor American Railcar (ARII) because it does not have the margins Trinity does. Cramer also said he would "bless" both Carnival (CCL) and Royal Caribbean Cruises (RCL). In the Lightning Round, Cramer was bullish on SYMC, AAPL, BRCM, CHK, FRK, SU, DRQ, HRS, FSH, WMGI, ZOLT, COP, WMT, HXL, WFMI, NBR, OLN and COST, and was bearish on KOPN, GMXR, EAGL, ENCY, JNPR, NDN, UNFI and JJZ.


Market Comments: Despite some better-than-expected economic reports (ECI, Consumer Confidence), it looks like investors are taking some profits ahead of today's FOMC meeting. While it is pretty much a done deal that the Fed will raise rates by 25 basis points, it will be interesting to see how the language in the ensuing statement changes.

Bond yields are flat so far this morning. Most of the major stock sectors are trading lower, led by semis. Materials stocks are slightly positive.

There is also the State of the Union speech tonight by the President. I am skeptical that this has any meaningful effect on the market, unless something truly surprising comes out of it, but nonetheless expect to hear it talked about in the media.

4 Comments:

At 11:55 AM, Blogger Short Viking said...

I sort of expect a small rally if permanent tax cuts become a large part of the speech. Whether or not there is any correlation is strictly speculative.

I'm wondering about oil. Between Venezuela, Iran, and now record profits(but not margins, if I understand correctly) of Exxon, is this a stable time to get in? Or will a bubble laced with fear be created?

 
At 8:05 AM, Blogger J. Kahn said...

I think the oil service stocks still look attractive here.

 
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