Monday, February 27, 2006

Monday Morning Musings

Morning News of Note:
  • AAPL DIS: Could Apple Make a Bid for Disney? COULD WALT DISNEY BE the apple of Steve Jobs' eye? Not that long ago, Apple Computer shares were treading water -- and downloading digital music over the Internet was largely an illicit activity confined to college dormitories. But a lot has happened since company co-founder Steve Jobs returned to Cupertino and launched the iPod craze. (Full Story) BARRONS
  • GRMN: Finding True North THINK BACK TO WHEN CELLPHONES, DVD players and big-screen plasma TVs became popular. In each case, when prices fell just far enough, the products moved from being the play things of wealthy early-adopters to hot-selling mass-market items. This year, there's a very good chance it will be the turn of portable satellite-based navigation devices for cars, boats and hiking trails. (Full Story) BARRONS
  • GOOG: Google-GOOG finance site may be coming soon-Search Engine Journal. The website Search Engine Journal is reporting that it has noticed some "interesting referrals from" over the past 3-4 hours. The site drops five hints to why they believe Google will be launching a much anticipated financial site soon: There have been referrals from, referrals from URL search strings, referrals are Google News related, the referrals were tracked back to computers with Google IPs and Google's upcoming analyst day on March 2nd would be a perfect time to announce a Google Financial website.
  • US Economy: NABE 1Q survey est 1Q GDP 4.5% vs pev est 3.4%, CPI up 2.5%; sees 2H GDP +3%; sees FOMC cont to raise interest rates to 5%, due to higher energy prices // Fed Gov Bernanke said low inflation an end and a means of policy; low inflation leads to virtuous circle; low national savings rate is a problem, savings to rise from current levles as housing mkt slows down; important to bring down budget deficit (Friday)
  • WMT: Wal-Mart Stores-WMT sees February SSS up approximately 3.2%

Market Comments: The market (SPX) has broken into new high ground for the year. The recent consolidation of the SPX above the 1280 level served as good support, and now the market looks like it wants to make a move on the 1300 level.

Retailers are higher this morning, on the heels of strong earnings from LOW, and same-store sales forecast from WMT. Utilities are also higher due to increased M&A activity in the sector. NGG confirmed its $42 bid for KSE. Homebuilders are lower due to the larger than expected drop in new home sales (-5%). And the energy sector is down across the board, despite oil holding above $60 and Al Qaida threatening more attacks on Saudi oil properties.

I think a lot of this is money flows and sector rotation. Profits are being taken in energy and redistributed to financials, tech, healthcare, etc. But if the energy sector is in a secular bull market, then these types of pullbacks should offer attractive buying opportunities. I am particularly attracted to the services stocks and Canadian energy trusts.



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