David Moenning's Daily State of the Markets: 06/29
Tweet
Share
E-mail
On Hold
Good morning and welcome to the last day of the second quarter – my, how time flies when you are having fun. The stock market, like the Fed, appears to be on hold at the present time as traders are being pushed and pulled in different directions with no one theme being able to hold sway. Yesterday was a microcosm of this idea as investors were forced to deal with ongoing concerns about the state of the housing market, worries that liquidity provided by M&A might dry up, a weaker than expected GDP report, oil over $70, and of course, Mr. Bernanke and Company’s view of inflation.
While the Fed meeting got most of the attention yesterday, another batch of reports highlighting the possibility of an end to the buyout boom helped keep the bulls in check. Although there is no shortage of opinions on this matter and there has been no new information to support any of the negative theories, it is important to note that the dynamic of liquidity continues to be favorable at the present time. However, every experienced investor knows that all good things must come to an end at some point, so it only makes sense to be on the lookout for a change to the M&A game.
Traders also had to deal with another round of cutting and pasting from the FOMC yesterday. For the 8th consecutive meeting, Mr. Bernanke kept the Fed Funds rate steady at 5.25%, which was an outcome that just about everyone on the planet had expected. But what analysts were really interested in seeing yesterday were the revisions, if any, to the accompanying statement.
While the editing of the FOMC statement wasn’t particularly dramatic, the subtle changes did provide confirmation that the Fed IS paying attention and IS willing to adapt to the environment. For example, gone from the statement was the term ‘elevated’ in describing the level of Core inflation. However, Mr. Bernanke did note that headline inflation continues to be a bit of a problem. This, of course, fuels speculation that the Fed is changing the rules in the middle of the game. Remember, up until this point, the FOMC has concerned itself primarily with the level of core inflation. However, we’d advise that investors wait at least a month or two before jumping on the Fed bashing bandwagon.
And finally, although it almost went unnoticed, the price of oil is likely to attract some attention again soon as crude futures briefly pushed through the $70 level yesterday. While the consumer has been remarkably resilient to rising gasoline prices over the past few years, there is a line in the sand that has caused consumers angst, and our guess is that we rapidly approaching it. So, once again, this is an issue that definitely bears watching.
Turning to this morning, as expected, the futures moved a little lower in response to reports that a car bomb was defused this morning in London. In addition, oil trading over $70 isn’t exactly a positive. However, as you know, the economic news is the focus these days and we’ve got the Personal Income and Spending report from May to review.
Both incomes and spending came in a bit lighter than expectations at +0.4% and +0.5% respectively last month. However, the inflation components were in line with expectations, so it looks like the Fed may have it right at the present time.
Running through the rest of the pre-game indicators, with the exception of Japan, the foreign markets are mostly lower. Gold futures are moving up this morning by $1.30 to $651.70. In the oil pits, crude futures are moving up, up, and away with the latest quote up $0.70 at $70.27. Interest rates are moving lower this morning with the yield on the 10-year currently trading at 5.07% level. And finally, with about an hour before the bell, stock futures in the U.S. are improving. The Dow futures are currently ahead by about 5 points; the S&P’s are about 2 points ahead, while the NASDAQ looks to be about 8 points above fair value at the moment.
Stocks “In Play” This Morning:
News, Upgrades/Downgrades/Brokerage Research:*
Research In Motion (Nasdaq: RIMM) – Upgraded at BofA
Federal Natl Mortgage (NYSE: FNM) – Upgraded at Citi
Palm Inc (Nasdaq: PALM) – Downgraded at Deutsche Bank
Rohm & Haas (NYSE: ROH) – Upgraded at Deutsche Bank
Komag (Nasdaq: KOMG) – Downgraded at Deutsche Bank, JP Morgan, Piper Jaffray, RW Baird
American Home Mortgage (NYSE: AHM) – Downgraded at Friedman Billings Ramsey
Priceline.com (Nasdaq: PCLN) – Upgraded at Goldman Sachs
Fluor Corp (NYSE: FLR) – Upgraded at JP Morgan
Cemex (NYSE: CX) – Downgraded at Morgan Stanley
Mr. Moenning holds Long positions in stocks mentioned: GS, MS
Note: All earnings reports compared to Reuter’s consensus estimates
** For More of David Moenning’s Market Analysis, Stock Portfolios, and Trading Ideas, visit: www.TopGunsTrading.com
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management and Co-Founder of TopGunsTrading.com 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.
Good morning and welcome to the last day of the second quarter – my, how time flies when you are having fun. The stock market, like the Fed, appears to be on hold at the present time as traders are being pushed and pulled in different directions with no one theme being able to hold sway. Yesterday was a microcosm of this idea as investors were forced to deal with ongoing concerns about the state of the housing market, worries that liquidity provided by M&A might dry up, a weaker than expected GDP report, oil over $70, and of course, Mr. Bernanke and Company’s view of inflation.
While the Fed meeting got most of the attention yesterday, another batch of reports highlighting the possibility of an end to the buyout boom helped keep the bulls in check. Although there is no shortage of opinions on this matter and there has been no new information to support any of the negative theories, it is important to note that the dynamic of liquidity continues to be favorable at the present time. However, every experienced investor knows that all good things must come to an end at some point, so it only makes sense to be on the lookout for a change to the M&A game.
Traders also had to deal with another round of cutting and pasting from the FOMC yesterday. For the 8th consecutive meeting, Mr. Bernanke kept the Fed Funds rate steady at 5.25%, which was an outcome that just about everyone on the planet had expected. But what analysts were really interested in seeing yesterday were the revisions, if any, to the accompanying statement.
While the editing of the FOMC statement wasn’t particularly dramatic, the subtle changes did provide confirmation that the Fed IS paying attention and IS willing to adapt to the environment. For example, gone from the statement was the term ‘elevated’ in describing the level of Core inflation. However, Mr. Bernanke did note that headline inflation continues to be a bit of a problem. This, of course, fuels speculation that the Fed is changing the rules in the middle of the game. Remember, up until this point, the FOMC has concerned itself primarily with the level of core inflation. However, we’d advise that investors wait at least a month or two before jumping on the Fed bashing bandwagon.
And finally, although it almost went unnoticed, the price of oil is likely to attract some attention again soon as crude futures briefly pushed through the $70 level yesterday. While the consumer has been remarkably resilient to rising gasoline prices over the past few years, there is a line in the sand that has caused consumers angst, and our guess is that we rapidly approaching it. So, once again, this is an issue that definitely bears watching.
Turning to this morning, as expected, the futures moved a little lower in response to reports that a car bomb was defused this morning in London. In addition, oil trading over $70 isn’t exactly a positive. However, as you know, the economic news is the focus these days and we’ve got the Personal Income and Spending report from May to review.
Both incomes and spending came in a bit lighter than expectations at +0.4% and +0.5% respectively last month. However, the inflation components were in line with expectations, so it looks like the Fed may have it right at the present time.
Running through the rest of the pre-game indicators, with the exception of Japan, the foreign markets are mostly lower. Gold futures are moving up this morning by $1.30 to $651.70. In the oil pits, crude futures are moving up, up, and away with the latest quote up $0.70 at $70.27. Interest rates are moving lower this morning with the yield on the 10-year currently trading at 5.07% level. And finally, with about an hour before the bell, stock futures in the U.S. are improving. The Dow futures are currently ahead by about 5 points; the S&P’s are about 2 points ahead, while the NASDAQ looks to be about 8 points above fair value at the moment.
Stocks “In Play” This Morning:
News, Upgrades/Downgrades/Brokerage Research:*
Research In Motion (Nasdaq: RIMM) – Upgraded at BofA
Federal Natl Mortgage (NYSE: FNM) – Upgraded at Citi
Palm Inc (Nasdaq: PALM) – Downgraded at Deutsche Bank
Rohm & Haas (NYSE: ROH) – Upgraded at Deutsche Bank
Komag (Nasdaq: KOMG) – Downgraded at Deutsche Bank, JP Morgan, Piper Jaffray, RW Baird
American Home Mortgage (NYSE: AHM) – Downgraded at Friedman Billings Ramsey
Priceline.com (Nasdaq: PCLN) – Upgraded at Goldman Sachs
Fluor Corp (NYSE: FLR) – Upgraded at JP Morgan
Cemex (NYSE: CX) – Downgraded at Morgan Stanley
Mr. Moenning holds Long positions in stocks mentioned: GS, MS
Note: All earnings reports compared to Reuter’s consensus estimates
** For More of David Moenning’s Market Analysis, Stock Portfolios, and Trading Ideas, visit: www.TopGunsTrading.com
The opinions and forecasts expressed are those of David Moenning, President of Heritage Capital Management and Co-Founder of TopGunsTrading.com 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.
You May Also Be Interested In
- After-Hours Movers: AMAT, DLO, GLOB, YSS, ETON
- After-Hours Movers: CRWV, NBIS, SMCI, LITE, CAVA, HRB
- After-Hours Movers: CSCO, COHR, HLIT, CBRS, STUB, ENS
Create E-mail Alert Related Categories
Contributors, Special ReportsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
