David Moenning�s Daily State of the Markets: 06/05
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The Fun Proves Fleeting
Good Monday morning and welcome back. >From a bigger picture standpoint, Friday was a microcosm of the current environment, which can be described as difficult at best. What started out looking like a celebration, once again ended in disappointment as investors began to fret that too much of a bad thing may indeed be bad.
While stocks took off to the upside in response to the headline jobs number, the fun was definitely fleeting. Traders initially embraced the report, which showed that the economy produced less than half the number of jobs that had been expected. However, after taking some time to sift through the details of the report, the strength in the Household survey wound up being problematic.
Although the Nonfarm payroll numbers were much weaker than expected, the drop in the unemployment rate and the number of people calling themselves both employed and unemployed was actually much stronger than analysts had anticipated. In short, the dichotomy of the data contained in Friday�s jobs report will likely promote an atmosphere of uncertainty at the next Fed meeting, which is scheduled for June 28th. And we all know how the market loves uncertainty.
The jobs report, when coupled with the drop in Factory Orders, spurred concerns over the outlook for the economy. Up to this point, bad economic news had been considered good for stocks as it implied that the Fed could stop raising rates sooner rather than later. However, it appears that the thought process may have shifted a bit on Friday as there was a good deal of talk about a slower economy and the impact on profits.
In the end, the data and the market wound up being a push as there was no evidence presented that could make the case for either more or less Fed activity.
Looking ahead to this week, while we will get a healthy dose of Fedspeak, the economic calendar is fairly light. This afternoon we will hear from Mr. Bernanke at 2:15pm, on Tuesday Fed Governor Susan Bies is expected to speak, on Wednesday we will hear from Jack Guynn, and then also on Wednesday, Alan Greenspan is scheduled to give his thoughts on oil.
In terms of the economic calendar:
- Monday: ISM Non-Manufacturing at 10:00am
- Wednesday: Consumer Credit
- Thursday: Wholesale Inventories
- Friday: Trade Balance and Import Prices
Turning to this morning, it may be an uneven start for the markets as comments out of Iran have stirred up the oil market. Iran warned that the U.S. �could seriously endanger the energy flow in the region� with any �wrong move� aimed at halting Iran�s nuclear program. This perceived threat to interrupt the flow of oil has pushed oil prices up significantly this morning and stocks have responded by moving a bit lower.
Running through the rest of the pre-game indicators, overseas markets are mixed with Japan down and Hong Kong up, while across the pond France and Germany are both down and the UK is currently a little higher. Oil futures are moving up this morning and are trading higher by $1.07 to $73.40 right now. Gold is also moving higher this morning and is currently quoted up $8.10 to $649.10. Interest rates are moving up a smidge with the 2-year currently trading at 4.92% while the 10-yr is quoted at 5.00% right now. And finally, with about an hour before the bell, stock futures in the U.S. are moving a little lower. The Dow futures are currently off by 37 points; the S&Ps are down 3.30, while the NASDAQ is sporting a drop of 5.5 points.
Stocks �In Play� This Morning:
Goldman Sachs (GS) � Mentioned positively in Barron�s
Micron Technology (MU) � Mentioned positively in Barron�s
Northrop Grumman (NOC) � Mentioned positively in Barron�s
Cypress Semi (CY) � Mentioned positively in Barron�s
Microsoft (MSFT) � Mentioned positively in Barron�s
Newmont Mining (NEM) � Upgraded at Citigroup
Circuit City � Upgraded at Piper Jaffray
Anglo American (AAUK) � Downgraded at Lehman
Texas Instruments (TXN) � Upgraded at Lehman
Paychex (PAYX) � Upgraded at Citigroup
American Eagle Outfitters (AEOS) � Upgraded at UBS
Administaff (ASF) � Upgraded at Credit Suisse
BMC Software (BMC) � Upgraded at Goldman Sachs
Chicago Bridge & Iron (CBI) � Downgraded at Stanford Group
Unibanco (UBB) � Upgraded at UBS
Freeport McMoRan (FCX) � Reduces copper output forecast for second quarter
Research in Motion (RIMM) � Mentioned cautiously at Deutsche
Positions in stocks mentioned: GS, JPM, CC, LEH, FCX
** 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 Monday morning and welcome back. >From a bigger picture standpoint, Friday was a microcosm of the current environment, which can be described as difficult at best. What started out looking like a celebration, once again ended in disappointment as investors began to fret that too much of a bad thing may indeed be bad.
While stocks took off to the upside in response to the headline jobs number, the fun was definitely fleeting. Traders initially embraced the report, which showed that the economy produced less than half the number of jobs that had been expected. However, after taking some time to sift through the details of the report, the strength in the Household survey wound up being problematic.
Although the Nonfarm payroll numbers were much weaker than expected, the drop in the unemployment rate and the number of people calling themselves both employed and unemployed was actually much stronger than analysts had anticipated. In short, the dichotomy of the data contained in Friday�s jobs report will likely promote an atmosphere of uncertainty at the next Fed meeting, which is scheduled for June 28th. And we all know how the market loves uncertainty.
The jobs report, when coupled with the drop in Factory Orders, spurred concerns over the outlook for the economy. Up to this point, bad economic news had been considered good for stocks as it implied that the Fed could stop raising rates sooner rather than later. However, it appears that the thought process may have shifted a bit on Friday as there was a good deal of talk about a slower economy and the impact on profits.
In the end, the data and the market wound up being a push as there was no evidence presented that could make the case for either more or less Fed activity.
Looking ahead to this week, while we will get a healthy dose of Fedspeak, the economic calendar is fairly light. This afternoon we will hear from Mr. Bernanke at 2:15pm, on Tuesday Fed Governor Susan Bies is expected to speak, on Wednesday we will hear from Jack Guynn, and then also on Wednesday, Alan Greenspan is scheduled to give his thoughts on oil.
In terms of the economic calendar:
- Monday: ISM Non-Manufacturing at 10:00am
- Wednesday: Consumer Credit
- Thursday: Wholesale Inventories
- Friday: Trade Balance and Import Prices
Turning to this morning, it may be an uneven start for the markets as comments out of Iran have stirred up the oil market. Iran warned that the U.S. �could seriously endanger the energy flow in the region� with any �wrong move� aimed at halting Iran�s nuclear program. This perceived threat to interrupt the flow of oil has pushed oil prices up significantly this morning and stocks have responded by moving a bit lower.
Running through the rest of the pre-game indicators, overseas markets are mixed with Japan down and Hong Kong up, while across the pond France and Germany are both down and the UK is currently a little higher. Oil futures are moving up this morning and are trading higher by $1.07 to $73.40 right now. Gold is also moving higher this morning and is currently quoted up $8.10 to $649.10. Interest rates are moving up a smidge with the 2-year currently trading at 4.92% while the 10-yr is quoted at 5.00% right now. And finally, with about an hour before the bell, stock futures in the U.S. are moving a little lower. The Dow futures are currently off by 37 points; the S&Ps are down 3.30, while the NASDAQ is sporting a drop of 5.5 points.
Stocks �In Play� This Morning:
Goldman Sachs (GS) � Mentioned positively in Barron�s
Micron Technology (MU) � Mentioned positively in Barron�s
Northrop Grumman (NOC) � Mentioned positively in Barron�s
Cypress Semi (CY) � Mentioned positively in Barron�s
Microsoft (MSFT) � Mentioned positively in Barron�s
Newmont Mining (NEM) � Upgraded at Citigroup
Circuit City � Upgraded at Piper Jaffray
Anglo American (AAUK) � Downgraded at Lehman
Texas Instruments (TXN) � Upgraded at Lehman
Paychex (PAYX) � Upgraded at Citigroup
American Eagle Outfitters (AEOS) � Upgraded at UBS
Administaff (ASF) � Upgraded at Credit Suisse
BMC Software (BMC) � Upgraded at Goldman Sachs
Chicago Bridge & Iron (CBI) � Downgraded at Stanford Group
Unibanco (UBB) � Upgraded at UBS
Freeport McMoRan (FCX) � Reduces copper output forecast for second quarter
Research in Motion (RIMM) � Mentioned cautiously at Deutsche
Positions in stocks mentioned: GS, JPM, CC, LEH, FCX
** 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
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