Wednesday, April 26, 2006

Housing Strong, Yields Higher

Morning News of Note:
  • GE: Heard on the Street... GE's Challenge: Make Stock Jump Like Profit General Electric Co. is in Wall Street purgatory. The Fairfield, Conn., conglomerate increased income from continuing operations by 14% in the recently completed first quarter. Its cash flow from operations more than doubled in the first period. It is buying back billions of dollars in stock. And Chairman and Chief Executive Jeffrey Immelt has been dumping slow and volatile businesses for what he views as faster-growing ones. (Full Story) WSJ
  • AMZN: Amazon's Brighter Horizon? Higher spending on new technology has been doing a number on's profit in recent quarters. But the company -- and its investors -- may be seeing the light at the end of the tunnel. Amazon executives said on Apr. 25 that spending growth on new tech and content initiatives will slow considerably later this year. "It's going to be substantially lower in the second half," Amazon Chief Financial Officer Tom Szkutak said on conference calls with the press and analysts. (Full Story) Business Week
  • MSFT: Microsoft's 'Massive' Move Into Game Ads Microsoft Corp. plans to acquire Massive Inc., a closely held start-up that places ads in videogames, in a deal that highlights the growing flow of advertising into nontraditional media. Massive, a two-year-old start-up with 80 employees, is one of several companies pioneering the business of placing ads in videogames. (Full Story) WSJ
  • SIRI: Mark Cuban, the billionaire owner of the Dallas Mavericks, is the latest high-profile personality to join Sirius Satellite Radio's programming lineup. Cuban, who made his fortune when he sold to Yahoo! in 1999 for $4 billion, is launching his own weekly talk show on Sirius beginning this summer. The company described the show as "a weekly discussion on sports, business and everyday life." Cuban said, "I'm fired up about doing the show on Sirius. I plan on raising hell and covering any and all topics that I think are interesting and taking no prisoners along the way." The show, which will be called "Radio Maverick," will air on Sundays between 12 noon and 2 p.m. - NY Post
  • Mad Money Summary: Last night Jim Cramer broadcast from Michigan as part of his "Back to School" tour. He opened his show discussing footwear maker Wolverine World Wide (WWW). He said to buy Wolverine after its earnings report on the pullback, after investors take profits. Cramer then welcomed University of Michigan alumnus and Domino's Pizza (DPZ) CEO David Brandon. Cramer noted that Domino's grows earnings at 11% and has an 18 multiple, considerably lower than Papa John's (PZZA) 26 multiple. Cramer then evaluated Comfort Systems (FIX), determining the company was undervalued. Cramer also said he would look at SPX (SPW), which makes cooling towers. A student then asked Cramer to recommend a stock that was cheaper than Google (GOOG). Cramer said he'd rather own one share of Google than many shares of a lesser company, but said if even one share is not possible, to look at Yahoo (YHOO). In the "Lightning Round," Cramer was bullish on Cisco Systems (CSCO), Wells Fargo (WFC), Abercrombie & Fitch (ANF), Occidental Petroleum (OXY), Nabors (NBR), GameStop (GME), Anglo American UK (AAUK), Lehman Brothers (LEH), Bear Stearns (BSC) and Goldman Sachs (GS), and was bearish on Wachovia (WB), Pacific Sunwear (PSUN), Royal Dutch Shell (RDS.A), BP (BP), Diamond Offshore Drilling (DO), North American Palladium (PAL) and Dick's Sporting Goods (DKS).

Market Comments: New home sales came in much stronger than expected this morning. That's good if you're worried about a pop in the so-called housing bubble, but it's not good if you want the Fed to stop raising rates.

The odds of a June rate hike grew to 66% today, and yields on the 10-year rose another 3 basis points to 5.10%. That's the highest level since June 2002.

That said, it hasn't had much effect so far on the stock market. The DOW is up 90 pts so far, and the SPX is back at the 1310 level, after bouncing off its 20-day moving average.

The earnings reports that came out last night were pretty solid, and plenty of stocks are moving higher today (see GLW, MNST, UARM, JCOM, etc).



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