Thursday, May 25, 2006

1Q GDP Revised Higher

Morning News of Note:
  • MSFT: MSN Is in Talks To Buy Provider Of Wireless Ads In a sign that the nascent market for advertising on cellphones is gaining momentum, Microsoft Corp.'s MSN unit is in talks to acquire a small private company that provides ads for the wireless Web sites of several major content providers, say people familiar with the situation. Acquiring Third Screen Media, whose clients include USA Today and The Weather Channel, would give MSN immediate access to technology that serves up ads on cellphones, as well as a network of relationships with leading advertisers. (Full Story) WSJ
  • C MA JPM: Credit-Card Issuers' Problem: People Are Paying Their Bills The credit-card industry has a problem: Although Americans are deeper in debt than ever, they are paying off bigger portions of their monthly credit-card bills. For card issuers, which profit by collecting interest on unpaid balances, that's bad news. In the past, when interest rates crept up, as they are doing now, fewer cardholders could afford to pay down balances. (Full Story) WSJ
  • Stock-Options Probe: Heard on the Street... Analysts Dig for Clues Amid Options Inquiries As investigations into stock-option practices heat up, investors are being inundated with a flood of reports from analysts looking for companies that may come under the microscope. The methodologies behind the studies vary, making it difficult to independently verify the conclusions. Still, shares of some companies are suffering even though there isn't any indication that they acted inappropriately. Others are tumbling, though the abuses might not affect their businesses. So some investors, rather than shying away, are trying to figure out if the scrutiny is creating some bargains. (Full Story) WSJ
  • WiMAX: Digitimes reports Chunghwa Telecom, Alcatel Taiwan and First International Telecom expressed their concerns about promoting WiMAX in Taiwan, at a strategic forum on May 24 in Taipei. Issues raised at th forum included regulation, competition between WiMAX and 3G services, operators' return on investment and the cost of WiMAX infrastructure. The forum focused on new business opportunities expected to be generated by the government-promoted Mobile Taiwan (M-Taiwan) Program, for which WiMAX is one of the target technologies. Duei Tsai, deputy chief of the Ministry of Transportation and Communications, indicated at the forum that the technological development of WiMAX is feasible in the view of equipment suppliers, service operators and promotional retail channels, but the lack of a customer-oriented business model for the whole supply chain currently constitutes the key risk
  • Mad Money Summary: Cramer opened his show last night evaluating oil plays. "Expensive oil is here to stay and is not going away any time soon," he said. He recommended National Oilwell (NOV), Nabors Industries (NBR), Rowan (RDC), and GlobalSantaFe (GSF). He also liked drill bit maker Smith International (SII), drill pipe maker Grant Prideco (GRP) and wellhead equipment/blow-out preventer Hydril (HYDL). He then recommended oil industry players Amcol (ACO), Weatherford (WFT), Superior Energy Services (SPN), FMC Technology (FTI) and Tetra Technologies (TTI). "You now have a quality company for each step of the oil business," he said. In the "Lightning Round," Cramer was bullish on Microsoft (MSFT), Pantry (PTRY), Valero Energy (VLO), Nordstrom (JWN), Abercrombie & Fitch (ANF), Qwest (Q), Southwestern Energy (SWN) and Eastman Chemical (EMN), and was bearish on XM Satellite Radio (XMSR), Delek (DK), Carpenter Technologies (CRS), NYSE Group (NYX), Level 3 Communications (LVLT), and Eastman Kodak (EK).

Market Comments: The market is trading higher so far this morning, as 1Q GDP was revised higher to +5.3%. While this is higher than the initial reports of +4.8%, it is actually below expectations for revisions to get up to +5.8%. But what is a few basis points between friends?

The inflation components of the report were mild, with core PCE rate unchanged at +2.0%. This is within Bernanke's comfort zone, and should not spook the markets.

For its part, the bond market is relatively flat, with bond yields at 5.04%.

Chip stocks are extremely weak, as the selling there has been relentless. I am hearing that this whole options scandal might be a bigger deal that at first blush, and that some of the chip companies could get dragged down by it.

long C, MSFT


Post a Comment

<< Home