Thursday, May 18, 2006

Looking For A Bounce

Morning News of Note:
  • YHOO: Yahoo to Roll Out New Ad-Ranking Technology Yahoo Inc. is making several strategic "big bets" for the next five years that embrace new technologies and new ways to squeeze revenue from them, Chief Executive Terry Semel said. The Sunnyvale, Calif., Internet company also plans to start rolling out its new search-advertising ranking technology in the fourth quarter, a move that the company hopes will help it close the "monetization" gap with search-engine company Google Inc. (Full Story) WSJ
  • GM: GM's Recent Share Gains Don't Add Up WHEN IT COMES TO General Motor's stock, things just haven't been adding up. Despite declining market share and a debilitating cost structure, the stock is up about 26% since mid-April while the Standard & Poor's 500 index fell 2% in the same period. If you are scratching your head, asking what has changed, so are GM short sellers. (Full Story) BARRONS
  • MMM CSCO GLW QCOM: Hardware firms oppose Net neutrality laws Some of the largest hardware makers in the world, including 3M, Cisco, Corning and Qualcomm, sent a letter to Congress on Wednesday firmly opposing new laws mandating Net neutrality--the concept that broadband providers must never favor some Web sites or Internet services over others. That view directly conflicts with what many software and Internet companies have been saying for the last few months. (Full Story) CNET
  • OII: Oceaneering Intl Inc-OII announces largest services contract in company's history: The company announced today that it was awarded the largest Inspection & Corrosion Mgt Services contract in their history. The contract was awarded by BP Exploration Operating Company Ltd and is expected to generate $90M over a three year term.
  • Mad Money Summary: Cramer opened his show addressing the struggling stock market. He said what is important to remember is that some stocks are done suffering. He recommended Qualcomm (QCOM), which dropped on a possible patent infringement with Broadcom (BRCM). Then he recommended Oceaneering International (OII), a company which provides drilling support, technology services and hardware to oil companies and drillers that operate in "harsh areas," which Cramer noted were the only places left with new oil. Then Cramer recommended Chico's FAS (CHS), which he believes is a best of breed stock. Cramer then spoke to the CEO of Earthlink (ELNK), and gave the stock "one thumb up." In the "Lightning Round," Cramer was bullish on Koppers (KOP), Cheesecake Factory (CAKE), Yum! Brands (YUM), Darden (DRI), BP (BP), Chevron (CVX), ConocoPhillips (COP), Exelon (EXC), VF Corp (VFC), TD Ameritrade (AMTD), Toyota (TM), General Motors (GM), Apple (AAPL), The Children's Place (PLCE), Men's Wearhouse (MW), Abercrombie & Fitch (ANF) and Akamai Technologies (AKAM), and was bearish on IBM (IBM), Krispy Kreme (KKD), Emcore (EMKR), Red Robin Gourmet Burgers (RRGB), Energy Transfer Partners (ETP), Exxon Mobil (XOM), Northgate Minerals (NXG), Under Armour (UARM), Lithia Motors (LAD) and Paccar (PCAR).

Market Comments: The market is getting a small bounce at the open, but it's nothing to get excited about. It might have been better for the market to open down, and shake out the last of the weak holders. Nonetheless, if bond yields continue to decline, and oil stays under $70, I expect the market to build on its gains.

The market has become increasingly jittery about inflation, but I think these concerns are overblown. If energy and commodity prices are topping, the housing market is cooling, and the economy is slowing down a bit, inflationary pressures will naturally moderate.

Moreover, a few years ago everyone was worried about deflation. But the Fed assured us that they could reflate the economy. So now that we are indeed seeing a little inflation, maybe we should accept it as a victory for the Fed that they were able to stave off deflation like they said. All growing economies exhibit some measure of inflation.

long GLW


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