David Moenning�s Daily State of the Markets: 03/27
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How Many More?
Stocks closed out the week with modest gains Friday on hopes that the punk economic data of the day would convince Mr. Bernanke and friends to take it easy from here. And while it was nice to see green on the screen, with most everyone waiting on tomorrow�s Fed announcement, the day�s activity didn�t really amount to much.
It was Friday�s economic numbers that moved both bond and stock traders to the buy side as the reports on sales of new homes and durable goods were rather lackluster. New Home Sales fell 10.5% in February to an annual rate of 1.08 million units. This was much lower than analysts had expected and represented the lowest rate since May 2003. It was also the biggest drop in almost nine years and the fourth decline in sales over the past six months. The inventory of new homes for sale spoke volumes on the state of the housing market as the number swelled to the highest level in over 10 years. On the pricing front, prices fell 2.9% versus this time last year, which was the first decline since January 2003. So it will suffice to say that the housing market is no longer in danger of being termed in �bubble� mode.
The other piece of economic data was also a bit discouraging. While the headline for sales of Durable Goods rose by 2.6%, which was above expectations for an increase of 1.5%, the ex-Transportation numbers actually fell by -1.3%. And the Nondefense Capital Goods ex-Aircraft (this one really needs a catchier title) category fell by -2.3%. On a year-over-year basis, durable goods orders are up just about 10%, but the ex-aircraft numbers are in danger of rolling over at this point.
The crummy economic data however, was music to the ears of bond traders. With numbers suggesting the economy might be slowing just a touch, the bond market caught a bid which sent yields lower on the day. While it wasn�t a huge move, the yield on the 10-year did close at 4.67%.
So with bond yields falling and Google flying on word that it will be soon added to the S&P 500, stocks moved up on the day. But in reality, the key question on everyone�s minds right now is: How many more rate hikes will we have to endure? While we�d love to say that we�ll find out on Tuesday, we should probably brace for the Fed using more �data dependent� language and attempting to leave the door open for more hikes.
Looking ahead to this week, all eyes and ears will be fixated on Mr. Bernanke�s statement on Tuesday at 2:15 eastern. However, there will be some additional news disseminated during the week.
- Tuesday: Consumer Confidence
- Thursday: Q4 GDP (Final Revision)
- Friday: End of 1st Quarter, Personal Income and Spending, University of Michigan Consumer Sentiment, Chicago Purchasing Managers Index, Factory Orders
Turning to this morning, traders are basically on their own today as there is no economic data to sift through. In the early going, the market is flat to mildly higher with most everyone waiting on the Fed.
Running through the pre-game indicators about an hour before the bell, overseas markets are mixed with Asian markets higher and European bourses down. Gold is trading higher this morning by $3 to $563.50. Oil futures are down a little this morning with crude currently trading at $64.15. Natural Gas is also trading lower at $7.10 right now. Bond yields are little changed this morning with the 2-year quoted at 4.73% while the 10-yr currently is currently trading at 4.69%. And finally, stock futures in the U.S. are up a bit at the moment with the DJIA up +10, the S&Ps are higher by +1.10, and the NASDAQ futures are stronger by +5.
Stocks �In Play� This Morning:
CC � Upgraded at Lehman
GOOG � WSJ says S&P 500 may see weakness 3/30 due to weighting differential
TWX � NY Times reports company considering a replay service for most popular shows
INTC � Upgraded at First Albany
SIRI � Upgraded at JP Morgan
BP � Venezuela continues to implement retroactive taxes
ZMH � Downgraded at JP Morgan
ENCY � Received FDA Approval Letter for Thelin with stipulations
FSL � Barron�s says MOT may add second chip supplier
CSCO � RBC Capital says near-term upside may be limited
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: CC, CSCO
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) and may not actually come to pass. Mr. Moenning�s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM�s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.
Stocks closed out the week with modest gains Friday on hopes that the punk economic data of the day would convince Mr. Bernanke and friends to take it easy from here. And while it was nice to see green on the screen, with most everyone waiting on tomorrow�s Fed announcement, the day�s activity didn�t really amount to much.
It was Friday�s economic numbers that moved both bond and stock traders to the buy side as the reports on sales of new homes and durable goods were rather lackluster. New Home Sales fell 10.5% in February to an annual rate of 1.08 million units. This was much lower than analysts had expected and represented the lowest rate since May 2003. It was also the biggest drop in almost nine years and the fourth decline in sales over the past six months. The inventory of new homes for sale spoke volumes on the state of the housing market as the number swelled to the highest level in over 10 years. On the pricing front, prices fell 2.9% versus this time last year, which was the first decline since January 2003. So it will suffice to say that the housing market is no longer in danger of being termed in �bubble� mode.
The other piece of economic data was also a bit discouraging. While the headline for sales of Durable Goods rose by 2.6%, which was above expectations for an increase of 1.5%, the ex-Transportation numbers actually fell by -1.3%. And the Nondefense Capital Goods ex-Aircraft (this one really needs a catchier title) category fell by -2.3%. On a year-over-year basis, durable goods orders are up just about 10%, but the ex-aircraft numbers are in danger of rolling over at this point.
The crummy economic data however, was music to the ears of bond traders. With numbers suggesting the economy might be slowing just a touch, the bond market caught a bid which sent yields lower on the day. While it wasn�t a huge move, the yield on the 10-year did close at 4.67%.
So with bond yields falling and Google flying on word that it will be soon added to the S&P 500, stocks moved up on the day. But in reality, the key question on everyone�s minds right now is: How many more rate hikes will we have to endure? While we�d love to say that we�ll find out on Tuesday, we should probably brace for the Fed using more �data dependent� language and attempting to leave the door open for more hikes.
Looking ahead to this week, all eyes and ears will be fixated on Mr. Bernanke�s statement on Tuesday at 2:15 eastern. However, there will be some additional news disseminated during the week.
- Tuesday: Consumer Confidence
- Thursday: Q4 GDP (Final Revision)
- Friday: End of 1st Quarter, Personal Income and Spending, University of Michigan Consumer Sentiment, Chicago Purchasing Managers Index, Factory Orders
Turning to this morning, traders are basically on their own today as there is no economic data to sift through. In the early going, the market is flat to mildly higher with most everyone waiting on the Fed.
Running through the pre-game indicators about an hour before the bell, overseas markets are mixed with Asian markets higher and European bourses down. Gold is trading higher this morning by $3 to $563.50. Oil futures are down a little this morning with crude currently trading at $64.15. Natural Gas is also trading lower at $7.10 right now. Bond yields are little changed this morning with the 2-year quoted at 4.73% while the 10-yr currently is currently trading at 4.69%. And finally, stock futures in the U.S. are up a bit at the moment with the DJIA up +10, the S&Ps are higher by +1.10, and the NASDAQ futures are stronger by +5.
Stocks �In Play� This Morning:
CC � Upgraded at Lehman
GOOG � WSJ says S&P 500 may see weakness 3/30 due to weighting differential
TWX � NY Times reports company considering a replay service for most popular shows
INTC � Upgraded at First Albany
SIRI � Upgraded at JP Morgan
BP � Venezuela continues to implement retroactive taxes
ZMH � Downgraded at JP Morgan
ENCY � Received FDA Approval Letter for Thelin with stipulations
FSL � Barron�s says MOT may add second chip supplier
CSCO � RBC Capital says near-term upside may be limited
Disclosure: At the time of publication Mr. Moenning and/or related companies are long the following positions: CC, CSCO
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management (HCM) and may not actually come to pass. Mr. Moenning�s opinions and viewpoints regarding the future of the markets should not be construed as recommendations of any specific security or Heritage Capital program. No part of this material is intended as an investment recommendation. Neither the information nor any opinion expressed constitutes a solicitation to purchase or sell securities or any of HCM�s programs. Do NOT ever purchase any security without doing sufficient research. There is no guarantee that investment objectives outlined will actually come to pass. Investors should consult an Investment Professional before investing in any investment program. Neither Mr. Moenning or Heritage Capital Management nor any of their employees shall have any liability for any loss sustained by anyone who has relied on the information contained herein. Mr. Moenning and employees of HCM may at times have positions in the securities referred to and may make purchases or sales of these securities while this publication is in circulation. The analysis contained is based on both technical and fundamental research. Although the information contained is derived from sources which are believed to be reliable, they cannot be guaranteed.
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