Monday, March 20, 2006

Monday Morning Musings

Morning News of Note:
  • AAPL: Apple reserves room for changes atop iPod line Without explicitly stating so, Apple has taken measures to allow itself room to make changes at the top of its iPod product line this spring, if it chooses to do so. The Cupertino, Calif.-based company recently informed some of its partners and big box retailers that it has placed the top-of-the-line 60GB fifth-generation iPod on its 60-day "at risk" list. The 30GB iPod was not placed on the list. (Full Story) Apple Insider
  • VZ: While AT&T Does Deals, Verizon Spends to Hone Its Networks Ivan Seidenberg is known in the telecommunications industry as a chief executive who makes all-or-nothing bets. Since the late 1990's he has often been the man to beat, having created Verizon Communications — for a time America's largest phone company — by merging Nynex with Bell Atlantic and then buying GTE. (Full Story) NY Times
  • BRL MYL TEVA WPI RDY: Generic Pharmaceuticals: Anticipate global consolidation to continue-Attract@GSCO The firm ascertained that there is more opportunity than threat for global expansion within the Indian generics industry following their meetings with leading Indian manufacturers. With the amount of products coming off of US patent protection in the next 2-3 years, it was obvious Indian manufacturers are quite focused on pipeline growth. Expectations are for recent consolidation trends to continue inside and outside the U.S
  • DNA: Genentech-DNA overreaction to higher guidance from Analyst Day-Neutral@MLCO The firm said DNA's higher guidance was from higher sales to collaborators, which has low margins and growth, and not from higher product sales. The firm also believes investment income will be higher due to biotech stock gains
  • Mad Money Summary: Jim Cramer opened Friday's show discussing L'Oreal's purchase of Body Shop for over $1B. He says the way to make money off of this story is to buy Limited Brands (LTD), which is "kind of like the company that got the bid today." Then Cramer praised Barnes & Noble (BKS), which he called a "Starbucks for the literate" because of its atmosphere. He said to wait for a pullback to buy the stock, however, because the stock just jumped 10% on a good quarter. Cramer then discussed a BusinessWeek article that mentioned Hershey (HSY) as a takeover target. He said Hershey's stock could fall because the head of the company denied the story, which could be a chance to buy. Aqua America's (WTR) CEO Nicholas DeBenedictis phoned in to explain the company's poor performance, saying the company is in good shape because "water is no less precious than it was a quarter ago." In the Lightning Round, Cramer was bullish on Encore Medical (ENMC), Valero (VLO), Transocean (RIG), Nabors (NBR), Schlumberger (SLB), Dow Chemical (DOW), Constellation Energy (CEG), Essex (KEYW), Manulife Financial (MFC), Watsco (WSO), Hexcel (HXL) and Airgas (ARG), and was bearish on Holly (HOC), Parker Drilling (PKD), Helix Energy Solutions (HELX), Intel (INTC), NYSE Group (NYX), CyberSource (CYBS), Homestore (HOMS) and CarrAmerica Realty (CRE).

Market Comments: The market opens slightly higher this morning, despite the possibility of an options expiration hangover about which many were worried. Bond yields are trading lower, with the 10-year around 4.65%.

The sectors are mixed in early trading, with semis higher and biotechs lower. But it's still very early in the day.

Also, I was surprised to see how bearish some of the sentiment indicators came in last week. Especially given that the market was making new yearly highs, and the SPX was up every day last week. I will go into some of these sentiment indicators a bit later.

long AAPL


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