Upgrades / Downgrades for 3 Jan 07

CHANGES IN RATINGS

Chesapeake Energy downgraded at Goldman Sachs - Downgraded to Neutral from Buy based on less credit for unbooked resource profit and drilling rig ownership. Also noted that company closed out some hedges in mid-December and has greater risk exposure. GS also cut its price target to $35 from $40.

Seagate downgraded at Goldman Sachs - Goldman said it is downgrading STX to Neutral from Buy due to concern over weak tape during seasonally slow period. See notebook demand running ahead of expectations for December quarter. Price target at $28.

T. Rowe Price upgraded at UBS - TROW upgraded to Buy rating from Neutral at UBS. Price target lifts to $52 from $50. Also, introduces 2008 eps estimate of $2.55.

 

CHANGES IN ESTIMATES

Baidu.com numbers raised at Piper - Piper said it is raising its target price on BIDU to $131 from $110 due to increased confidence in expanding margins.

Chicago Board of Trade target price raised at Credit Suisse - Credit Suisse said it is raising its target price on BOT to $169 from $159 following strong December volume growth.

Google target price raised at Piper - Piper said it is raising its target price on GOOG from $600 to $630 due to increased adoptions of non-search products and increasing brand affinity.

 

On another completely different topic: football.  Recently, an economics professor at Cal Berkley put a study together that suggests that Pro Football teams should "go for it" on fourth down a lot more often than they currently do.  Here it is:  http://elsa.berkeley.edu/~dromer/papers/PAPER_NFL_JULY05_FORWEB_CORRECTED.pdf

DJIA Surges Over 100 Points!

Good News, Good News! Stocks are trading higher after investors receieved better-than-expected manufacturing and construction spending data.  The December ISM Manufacturing Index number came in at 51.4 versus the 50 that was expected, due to gains in new orders and production.  Construction spending declined 0.2% in November, but that was less than analysts were expecting.

But temper your enthusiasm.  A bad report by the FOMC this afternoon could throw this market into a downward tail spin.  We shall know soon enough.

Opening Bell: 3 Jan 07

I hope everyone had a good time during the recent holidays.  I sure did.  Now its time to get back in the saddle.  While we only have three trading days left this week, we have enough action on the calendar to, potentially, create an interesting trading environment.  Here's a rundown:

Wednesday - Release of the minutes from the Federal Open Market Committee's (FOMC) last meeting.  During the Dec 12th meeting, the Fed kept rates unchanged at 5.25% for the fourth consecutive time but it appears some on the board are concerned with inflation.  This release should give us a clue in what the Fed believes may or may not be happening in the near-term economic front.

Thursday - Reports on construction spending for November and auto sales for December from General Motors, Ford and Toyota.  I guess we get to see Toyota (once again) increase their market share!  Also on deck this Thursday is the Initial Jobless Claims. 

Friday - Nonfarm Payroll Data will be the headliner.  Economists project that roughly 110,000 jobs were added during the month, down from about 130,000 in November.  The unemployment rate is expected to remain steady at approx. 4.5% and the average workweek is predicted to stay at 33.9 hours. Finally, hourly earnings are forecasted to rise 0.3%, compared with growth of 0.2% in November.  I would expect any significant deviation in either direction could have a significant impact on Friday's trading.

Stay tuned!