David Moenning�s Daily State of the Markets 06/21
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Biding Time
Good morning. In the bigger picture, stocks appear to be doing little more than biding time in front of next week�s Fed meeting right now. Stocks attempted to rebound from two days of selling yesterday on the back of better-than expected housing numbers and solid sales results from Caterpillar. But, as usual, some late selling thwarted the bulls� efforts.
It would also appear that unless some new data arises before next Thursday�s meeting, stocks may continue to waffle as prices may have finally found an equilibrium point. With the S&P 500 now almost 7% lower than it was before all the tough talk on inflation began, the bulls argue that prices have sufficiently discounted another rate hike or two. However, the bears will suggest that an environment of rising rates and a weakening economy isn�t exactly the stuff that bull markets are made of.
To try and settle the score, let�s look at what we know. Everyone knows that the Fed has become data dependent. Everyone knows that inflation has perked up a bit in the short-term, but remains well contained from a longer-term perspective. Everyone knows the FOMC is going to raise rates again next week. Everyone knows that the economy is expected to slow down in the second half of the year. And everyone knows that Mr. Bernanke and the gang are trying to talk down inflation expectations by taking a tough-guy tack.
But what we don�t know, and this is what is keeping the market on edge right now, is what Mr. Bernanke�s crew is planning to do when they return from their summer vacation. Since the FOMC takes the month of July to spend some time at the beach, the markets will be left to watch the data and ponder the Fed�s next move.
Speaking of interest rate expectations, at least a portion of yesterdays late afternoon selloff can be attributed to the fact that a couple of major brokerage firms provided us with their view of what to expect for the rest of the year in terms of interest rates and inflation. Without boring you with all the details, it will suffice to say that expectations for additional rate-hikes are now on the rise and the numbers 5.5% and 5.75% are being bandied about quite frequently. Thus, it would appear that the big boys on Wall Street aren�t looking for a pause any time soon.
And while it might be unrealistic to hope that the Fed will provide us with any hints as to their future plans next Thursday, hope is what the bulls are left with right now. So in short, traders are forced to grab a crystal ball and bet on the outcome of the incoming data if they want to put money to work these days. Thus, we should probably get used to a market that will be a bit skittish for a while.
Turning to this morning, things are pretty quiet so far. However, central banks around the globe are starting to join the rate hike chorus. This morning, the WSJ says that the BOJ is likely to raise rates in the coming months and the ECB President today has promised to do whatever it takes to contain inflation. But here in the U.S., there is no economic news on tap for today so traders will essentially be left to fend for themselves.
Running through the rest of pre-game indicators, overseas markets are lower in Europe and mixed in Asia. Gold is moving a little lower so far today and trading off by $3.00 right now to $577.50. Oil is doing little this morning and August crude futures are currently trading down by $0.04 to $69.30. Interest rates are little changed this morning as the 2-year is currently trading at 5.20% while the 10-yr is quoted at 5.15% right now. And finally, with about an hour before the bell, stock futures in the U.S. aren�t showing much movement. The Dow futures are currently off by 14 points; the S&Ps are down 1.80, and the NASDAQ is sporting an decline of about a point.
Stocks �In Play� This Morning:
Google (GOOG) � Mentioned positively at Bear Stearns
Morgan Stanley (MS) � Reports $1.85 vs. $1.44, Revenues $8.94B vs. $7.87B
FedEx (FDX) � Reports $1.82 vs. $1.77, Revenues $8.49B vs. $8.44B, Raises guidance
Gilead Sciences (GILD) � Mentioned positively at Bernstein
Intersil (ISIL) � Upgraded at HSBC
Kroger (KR) � Upgraded at BofA
Coca Cola Enterprises (CCE) � Upgraded at Morgan Stanley
Pepsico (PEP) � Upgraded at Stifel
JP Morgan (JPM) � Downgraded at Prudential
Anheuser Busch (BUD) � Considering moving into wine and spirits
Darden Restaurants (DRI) � Reports $0.60 vs. $0.59
Flextronics (FLEX) � Citigroup says to buy weakness
Remember to take time to enjoy your day and until next time, �may the bulls be with you!�
Positions in stocks mentioned: CCE, FDX, GILD, KR
** 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. In the bigger picture, stocks appear to be doing little more than biding time in front of next week�s Fed meeting right now. Stocks attempted to rebound from two days of selling yesterday on the back of better-than expected housing numbers and solid sales results from Caterpillar. But, as usual, some late selling thwarted the bulls� efforts.
It would also appear that unless some new data arises before next Thursday�s meeting, stocks may continue to waffle as prices may have finally found an equilibrium point. With the S&P 500 now almost 7% lower than it was before all the tough talk on inflation began, the bulls argue that prices have sufficiently discounted another rate hike or two. However, the bears will suggest that an environment of rising rates and a weakening economy isn�t exactly the stuff that bull markets are made of.
To try and settle the score, let�s look at what we know. Everyone knows that the Fed has become data dependent. Everyone knows that inflation has perked up a bit in the short-term, but remains well contained from a longer-term perspective. Everyone knows the FOMC is going to raise rates again next week. Everyone knows that the economy is expected to slow down in the second half of the year. And everyone knows that Mr. Bernanke and the gang are trying to talk down inflation expectations by taking a tough-guy tack.
But what we don�t know, and this is what is keeping the market on edge right now, is what Mr. Bernanke�s crew is planning to do when they return from their summer vacation. Since the FOMC takes the month of July to spend some time at the beach, the markets will be left to watch the data and ponder the Fed�s next move.
Speaking of interest rate expectations, at least a portion of yesterdays late afternoon selloff can be attributed to the fact that a couple of major brokerage firms provided us with their view of what to expect for the rest of the year in terms of interest rates and inflation. Without boring you with all the details, it will suffice to say that expectations for additional rate-hikes are now on the rise and the numbers 5.5% and 5.75% are being bandied about quite frequently. Thus, it would appear that the big boys on Wall Street aren�t looking for a pause any time soon.
And while it might be unrealistic to hope that the Fed will provide us with any hints as to their future plans next Thursday, hope is what the bulls are left with right now. So in short, traders are forced to grab a crystal ball and bet on the outcome of the incoming data if they want to put money to work these days. Thus, we should probably get used to a market that will be a bit skittish for a while.
Turning to this morning, things are pretty quiet so far. However, central banks around the globe are starting to join the rate hike chorus. This morning, the WSJ says that the BOJ is likely to raise rates in the coming months and the ECB President today has promised to do whatever it takes to contain inflation. But here in the U.S., there is no economic news on tap for today so traders will essentially be left to fend for themselves.
Running through the rest of pre-game indicators, overseas markets are lower in Europe and mixed in Asia. Gold is moving a little lower so far today and trading off by $3.00 right now to $577.50. Oil is doing little this morning and August crude futures are currently trading down by $0.04 to $69.30. Interest rates are little changed this morning as the 2-year is currently trading at 5.20% while the 10-yr is quoted at 5.15% right now. And finally, with about an hour before the bell, stock futures in the U.S. aren�t showing much movement. The Dow futures are currently off by 14 points; the S&Ps are down 1.80, and the NASDAQ is sporting an decline of about a point.
Stocks �In Play� This Morning:
Google (GOOG) � Mentioned positively at Bear Stearns
Morgan Stanley (MS) � Reports $1.85 vs. $1.44, Revenues $8.94B vs. $7.87B
FedEx (FDX) � Reports $1.82 vs. $1.77, Revenues $8.49B vs. $8.44B, Raises guidance
Gilead Sciences (GILD) � Mentioned positively at Bernstein
Intersil (ISIL) � Upgraded at HSBC
Kroger (KR) � Upgraded at BofA
Coca Cola Enterprises (CCE) � Upgraded at Morgan Stanley
Pepsico (PEP) � Upgraded at Stifel
JP Morgan (JPM) � Downgraded at Prudential
Anheuser Busch (BUD) � Considering moving into wine and spirits
Darden Restaurants (DRI) � Reports $0.60 vs. $0.59
Flextronics (FLEX) � Citigroup says to buy weakness
Remember to take time to enjoy your day and until next time, �may the bulls be with you!�
Positions in stocks mentioned: CCE, FDX, GILD, KR
** 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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