Monday, May 15, 2006

Monday Morning Musings

Morning News of Note:
  • GM: Hummer H1 Reaches The End of the Road The Hummer H1, the biggest, toughest sport-utility vehicle on the road, could crush anything in its way -- except poor sales. Cheering just about every other driver on the road, General Motors Corp. yesterday said it was ditching the H1 by June. (Full Story) Washington Post
  • WMT KSS TGT JCP: Will Discount Retailers Bounce Back? The dollar is weakening, the housing market is cooling, and consumers are reining in their spending. That doesn't sound like the ideal backdrop for investing in the stock of retail companies. But for those who are willing to take a little risk -- and who have better-than-average patience -- now might be the right time to latch on to discount retailers (Full Story) WSJ
  • SNDK: SanDisk's Hope: Flash Chips Everywhere SANDISK WAS IN TOWN LAST WEEK, to pick up $1 billion for its flash- memory factories. In a sit-down with your favorite tech-stock columnist, SanDisk CEO Eli Harari said it was unbelievably easy for SanDisk to sell the convertible notes offering. He's got a use for the money. (Full Story) BARRONS
  • N RIO RTP BHP: Heard on the Street... Mining for the Canadian Jewels Think of it as the mining industry's version of "The Great Game," a high-stakes international chess match for sector supremacy. As prices soar for copper, nickel, zinc and other base metals, big mining companies are jockeying to gain control of some of the industry's crown jewels: Canadian mining companies with huge production of suddenly hot metals. (Full Story) WSJ
  • GOOG: BusinessWeek reports a small team inside the co for two years has been zeroing in on an entirely different audience: corporate IT departments. By hooking into the co's search appliance, such companies as Cognos (COGN), (CRM) and S.A.S. can bring the co's familiar search functions to business apps that have traditionally been anything but user friendly. The linchpin for the co's software partnerships is its so-called "OneBox" function, which has been deployed in recent months across its consumer search engine. OneBox is an attempt by the co to pull out relevant information and answer the user's query immediately above the search results. The co clearly wants to sell more than enterprise search appliances to companies. It is already finetuning versions of Gmail and its desktop-search offering for businesses and universities. The co hasn't yet decided how it will attempt to make money on these enterprise versions of its consumer products. They won't command lofty license fees like its search appliances, and instead may end up being ad supported. In addition, the co has taken a hands-off approach to selling corporate-search products, offering less in the way of professional services or ongoing customer-support contracts.
  • Mad Money Summary: Cramer opened his show on Friday discussing PetroChina (PTR), a huge oil company that is unloved in America because Americans are wary of Chinese companies cooking the books. But Warren Buffett bought into PetroChina and is now a major stakeholder in the company. Cramer believes PetroChina could replace ExxonMobil (XOM) as the granddaddy of oil companies. Cramer then discussed an alternative energy play that is not solar or wind related, called the Fischer-Tropsch process, which turns coal into gas. He recommended Rentech (RTK), but noted that it is a very speculative stock. Cramer then discussed an upgrade of Office Depot (ODP) from Citigroup, which raised the price target of the company to $60. In the note, the analyst also noted that Office Depot will probably buy Buhrmann (BUH), which Cramer called either "very brave or very stupid." He said the speculation should be taken seriously and added that Buhrmann had good fundamentals. In the "Lightning Round," Cramer was bullish on Tenaris (TS), PetroChina (PTR), Openwave Systems (OPWV), Votorantim Celulose e Papel (VCP), Fluor (FLR), McDermott (MDR), Pacific Ethanol (PEIX), Crocs (CROX) and Foster Wheeler (FWLT), and was bearish on Powerwave Technologies (PWAV), Petroleo Brasileiro (PBR), Sirius Satellite (SIRI) and Goldcorp (GG).

Market Comments: The market has already been pretty volatile this morning, and that's just in the first hour of trading. After opening lower, the market made a stab higher, then broke back below its early lows, only to rise again. If this keeps up, traders will need more maalox.

This is options expiration week, so we should expect to see some higher volatility. The commodity stocks have gapped lower at the open. I expect these stocks to bounce before heading lower again, so I have not shorted my basket yet.

Financials and healthcare look solid in the early going, while tech and energy are weak.

The NAR's report on metropolitan home prices came out this morning. I will be back with some of the highlights in a bit.



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