Wednesday, May 31, 2006

Market Gets A Bounce In Early Trading

Morning News of Note:
  • GS: Goldman Is Expected To Tap Blankfein as Leader With the departure of Chief Executive Henry Paulson Jr., Goldman Sachs is expected to turn to No. 2 Lloyd Blankfein -- replacing a classic, meet-and-greet investment banker with the sort of savvy trading manager who has been on the rise on Wall Street. Goldman's board of directors is expected to tap Mr. Blankfein, the firm's president, to succeed Mr. Paulson as soon as this week, according to people close to the firm. (Full Story) WSJ
  • Ethanol: Florida's sugar cane fields could become a major source of ethanol for fuel Deep green blades of sugar cane rise from the roadside approaching Belle Glade, growing in the shadow of refineries in western Palm Beach County. While local farmers will tell you sugar cane is far from the most lucrative crop, it nevertheless produces steady income because of its volume and resilience to dramatic swings in weather. (Full Story) Sun-Sentinel
  • VOD: Vodafone to Focus on Internet, Slow Expansion Vodafone Group PLC said it plans to expand into broadband Internet access and to slow the pace of international acquisitions, marking a strategic shift for a company that staked its reputation on being global and cellphone-focused. The new direction for Vodafone, the world's largest cellphone-service company by revenue, comes as Chief Executive Arun Sarin faces pressure from shareholders who are frustrated with stock-price declines and concerned about how the company will continue growing. (Full Story) WSJ
  • DIS: Disney films to be available for download from CinemaNow-Arizona Republic: Disney (DIS) and CinemaNow are expected to announce today that CinemaNow will sell computer downloads of Disney films, including "Glory Road" and "Chicken Little," for $19.95. The films will go on sale the same day they become available on DVD. They will also be able to be transferred to up to three portable devices
  • Mad Money Summary: Cramer opened his show discussing the Dow's drop of over 180 points. He said, "On the surface, this market looks completely incomprehensible, and that should scare you." He said the generals are dead, referring to former market catalysts Cisco (CSCO), Dell (DELL), Microsoft (MSFT), Intel (INTC), Broadcom (BRCM), Marvell (MRVL) and Google (GOOG). He also said General Motors (GM) and Wal-Mart (WMT) didn't have what it took to rescue the market. He recommended Clorox (CLX) as a good investment in the current "rudderless" environment. He also recommended Enbridge (ENB), which has the same upside potential as Kinder Morgan (KMI). Cramer also recommended Netgear (NTGR), a best-of-breed stock in the wireless sector. In the "Lightning Round," Cramer was bullish on Halliburton (HAL), URS (URS), ConocoPhillips (COP), Enbridge, Cedar Fair (FUN), Nektar Therapeutics (NKTR), Hain Celestial (HAIN), Comcast (CMCSA), Anheuser Busch (BUD), Pepsico (PEP), Bank of America (BAC), Citigroup (C), Crystallex International (KRY) and VeriFone Holdings (PAY), and was bearish on Maverick Tube (MVK), eBay (EBAY), Marvell Technology, Oil States International (OIS), Six Flags (PKS), XM Satellite Radio (XMSR), Sealy (ZZ), Falconbridge (FAL), SunOpta (STKL), Marshall & Ilsley (MI) and IndyMac Bancorp (NDE).

Market Comments: The market is getting a bounce in the first half hour of trading. This is positive only if it holds for the session. You know how skeptical I usually am of rallies near the open.

The Chicago PMI came in stronger than expected this morning (61.5 vs. 56.0 consensus). This caused a small pop in bond yields, which are still lower on the session to 5.08%.

The minutes from the last FOMC minutes will be released today, so you can expect some volatility to surface around then as traders will likely be hanging on every nuance contained in the minutes.

There is definitely a clear lack of leadership in this market right now. When this correction eventually runs it course, I think it will be interesting to see which group leads us out of the morass. That will likely be the group to look to for long exposure.

long GS


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