Friday, May 12, 2006

Market Opens On A Weak Note

Morning News of Note:
  • Airports / Airlines: Cleared for Landing The Federal Aviation Administration has begun opening "express lanes" for planes into and out of airports nationwide that could mean fewer canceled or diverted flights. These new flight paths, following successful test runs in Alaska, California, Oregon and Washington, D.C., result from technical advances in navigation that allow planes to take off and land in poor weather, even at airports near mountains or other obstacles on the ground. (Full Story) WSJ
  • UVN: Televisa Forms Investor Group for Univision Bid Grupo Televisa SA plans to join with Venezuelan billionaire Gustavo Cisneros and four buyout firms to bid for Univision Communications Inc., the largest U.S. Spanish- language television network, two people with knowledge of the situation said. Mexico's Televisa, the world's largest Spanish-language broadcaster, hasn't decided how much to offer for Univision, whose market value is $10.9 billion, said the people, who declined to be identified before a bid is made public. (Full Story) Bloomberg
  • WMT: Wal-Mart Eyes Organic Foods Starting this summer, there will be a lot more organic food on supermarket shelves, and it should cost a lot less. Most of the nation's major food producers are hard at work developing organic versions of their best-selling products, like Kellogg's Rice Krispies and Kraft's macaroni and cheese. (Full Story) NY Times
  • PG: Will Audience Stomach Coffee Pitch? How do you market a product as strong and weak at the same time? That's Procter & Gamble's challenge as it launches a new line of Folgers coffee this week that it promises is both gentle on stomachs and packs the same taste and caffeine punch as its regular brew. (Full Story) WSJ
  • Mad Money Summary: Cramer opened his show finding the bull markets for his viewers. He said to remember the acronym BRIC, which stands for Brazil, Russia, India and China. Cramer said to look at Brazilian steel company Gerdau (GGB), which trades on the NYSE. Then Cramer suggested "worldwide power merchant" AES (AES), which has business in Chile, Brazil, India, China, Pakistan and Vietnam. He said the stock was burned by the Enron scandal and is now cheap and undervalued. Cramer then recommended Triumph Group (TGI), which supplies both Boeing and Airbus. Cramer then discussed microprocessors, speaking to Advanced Micro Devices (AMD) CEO Hector Ruiz. Cramer said he likes AMD, but would be a seller of Intel (INTC). In the "Lightning Round," Cramer was bullish on Sysco (SYY), KFX (KFX), Qwest (Q), Level 3 (LVLT), Hexcel (HXL), Matria (MATR), Baidu (BIDU), Eastman (EMN), First Data (FDC), News Corp (NWS), and Union Pacific (UNP), and was bearish on Empire Resources (ERS), Spartan Stores (SPTN), (NTES), Ashland (ASH), Lightbridge (LTBG) and Medtronic (MDT).

Market Comments: The market has opened under some pressure this morning, following yesterday's schmeissing. Volume rose yesterday, making for a strong distribution day. That is number 5 or 6 for the Nazz in the last several weeks.

I am surprised to see KSS down, considering how strong the quarter was, but maybe it just needs to mark time for a little.

The semis are bouncing. BRCM and MRVL were down at the open, but have reversed sharply higher. And many financial stocks on my screen have done the same this morning.

Bond yields are moving higher, which is a headwind. And the plunge in the dollar is likely disconcerting to some as well. Every time the dollar swoons, you have people who come out and start talking about 1987 all over again. But the strength of the corporate bond market should comfort them, as tight spreads signal confidence.

The SPX is testing support at its 50-day, while the COMP has gapped down even further this morning.

long PG, WMT; net long MRVL


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