David Moennings Daily State of the Markets: 08/31
Tweet
Share
E-mail
Just Right?
Good morning. Stocks wound up little changed yesterday in light pre-holiday trading as the day�s economic data provided little reason to take action. However, the Preliminary Q2 GDP report DID appear to provide enough ammo to keep the bulls happy and the bears at bay � for now.
The government�s report on the growth of the economy came in �just right� as the growth rate of +2.9% for the second quarter was better than the prior reading of +2.5%, yet below the consensus estimate of 3.0%. The bulls have argued recently that fears of the economy slowing too fast are overblown and can now point to yesterday�s data as proof. And then, while appearing to talk out of both sides of their mouths, they also suggested that the below-consensus result should keep the Fed on the sidelines.
And while both of the arguments from the bull camp appear valid, the bears point to the inflation data as the primary reason not to get too fired up right now. Sure, the Core PCE (Personal Consumption Expenditures), which is perhaps the Fed favorite measure of inflation, came in a smidge below expectations at 2.8% versus 2.9%. But, the bottom line is that the Core PCE remains WELL above the Fed�s stated comfort zone of 1% to 2%.
So, traders looking for data to support the idea that the Fed is out of the way for good were disappointed. In short, there was really no new or incremental data found in the report or clues as to what to expect next. Thus, the report, which initially gave a �just right� appearance wasn�t enough to get either team up off the beach yesterday.
Turning to this morning, we have some more economic data to sift through. The report on Personal Income and Spending came in pretty much in line with expectations, although there was some good news on the inflation front. Personal Income for July rose by +0.5%, while Spending rose by +0.8%, both of which argue for a healthy economy. The positive in the report was the Core PCE, which came in with an increase of just +0.1%, which was a tenth below the consensus. However, on a year-over-year basis, the Core PCE increased to 2.4%, which may garner some attention going forward.
And while trading may indeed continue to be light today, as anyone not currently on vacation thinks about the long holiday weekend ahead, there will be a good bit of activity outside the pits. At 10:00 am, we�ll get reports on Factory Orders and the Chicago Purchasing Managers Index. It�s also Deadline Day in Iran, although the country has shown no willingness to comply with U.N. demands. And finally, we�ll get some �Fedspeak� from William Poole and Chairman Bernanke at noon.
Running through the rest of the pre-game indicators, the overseas markets are split by region as Asia was higher and Europe is fractionally lower at the moment. Gold futures are moving higher by more than $7 this morning and are currently exchanging hands at $633.50. Crude futures are back above the key $70 level and are trading up by $0.58 to $70.61 at the moment. Interest rates are little changed this morning with the 2-year currently quoted at 4.80% while the 10-yr is trading with a yield of 4.75% right now. And finally, with about an hour before the bell, stock futures in the U.S. once again modestly higher. The Dow futures are currently ahead by 15, the S&Ps are up +2.20, and the NASDAQ is sporting an advance of about 4 points.
Stocks �In Play� This Morning:
Goldcorp (GG) � To merge with Glamis Gold
Ciena (CIEN) � Reports $0.02 vs. $0.01
Pepsi Bottling Group (PBG) � UBS raises price target
Cooper Cos (COO) � Mentioned positively in Barron�s
Safeway (SWY) � Downgraded at BofA
Check Point Software (CHKP) � Upgraded at Jefferies
McAfee (MFE) � Upgraded at Jefferies
HCA Inc (HCA) � Downgraded at Prudential
Aetna (AET) � Downgraded at Prudential, also HNT, CVH, UHS
New Century Financial (NEW) � Downgraded at UBS
Nordstrom (JWN) � August Same Store Sales +7.1% vs. StreetAccount est +3.1%
Heinz (HNZ) � Reports $0.58 vs. $0.54
United Dominion Realty (UDR) � Downgraded at Stifel, Nicolaus
Brown Forman (BF.B) � Reports $0.76 vs. $0.71
Apple (AAPL) � MarketWatch speculates on a GOOG/AAPL merger
Ethan Allen (ETH) � Price target reduced at Goldman Sachs
JC Penney (JCP) � August SSS -0.5% vs StreetAccount estimate +1.9%
Wal-Mart (WMT) � August SSS +2.7% vs. +2.7%
Federated Dept Stores (FD) � August SSS +3.8% vs. StreetAccount estimate +3.9%
Costco (COST) � Estimates reduced at BofA
Target Corp (TGT) � August SSS +2.8% vs. StreetAccount estimate +3.1%
ST Microelectronics (STM) � Downgraded at Citigroup
Long positions in stocks mentioned: BF.B, JCP
** 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. Stocks wound up little changed yesterday in light pre-holiday trading as the day�s economic data provided little reason to take action. However, the Preliminary Q2 GDP report DID appear to provide enough ammo to keep the bulls happy and the bears at bay � for now.
The government�s report on the growth of the economy came in �just right� as the growth rate of +2.9% for the second quarter was better than the prior reading of +2.5%, yet below the consensus estimate of 3.0%. The bulls have argued recently that fears of the economy slowing too fast are overblown and can now point to yesterday�s data as proof. And then, while appearing to talk out of both sides of their mouths, they also suggested that the below-consensus result should keep the Fed on the sidelines.
And while both of the arguments from the bull camp appear valid, the bears point to the inflation data as the primary reason not to get too fired up right now. Sure, the Core PCE (Personal Consumption Expenditures), which is perhaps the Fed favorite measure of inflation, came in a smidge below expectations at 2.8% versus 2.9%. But, the bottom line is that the Core PCE remains WELL above the Fed�s stated comfort zone of 1% to 2%.
So, traders looking for data to support the idea that the Fed is out of the way for good were disappointed. In short, there was really no new or incremental data found in the report or clues as to what to expect next. Thus, the report, which initially gave a �just right� appearance wasn�t enough to get either team up off the beach yesterday.
Turning to this morning, we have some more economic data to sift through. The report on Personal Income and Spending came in pretty much in line with expectations, although there was some good news on the inflation front. Personal Income for July rose by +0.5%, while Spending rose by +0.8%, both of which argue for a healthy economy. The positive in the report was the Core PCE, which came in with an increase of just +0.1%, which was a tenth below the consensus. However, on a year-over-year basis, the Core PCE increased to 2.4%, which may garner some attention going forward.
And while trading may indeed continue to be light today, as anyone not currently on vacation thinks about the long holiday weekend ahead, there will be a good bit of activity outside the pits. At 10:00 am, we�ll get reports on Factory Orders and the Chicago Purchasing Managers Index. It�s also Deadline Day in Iran, although the country has shown no willingness to comply with U.N. demands. And finally, we�ll get some �Fedspeak� from William Poole and Chairman Bernanke at noon.
Running through the rest of the pre-game indicators, the overseas markets are split by region as Asia was higher and Europe is fractionally lower at the moment. Gold futures are moving higher by more than $7 this morning and are currently exchanging hands at $633.50. Crude futures are back above the key $70 level and are trading up by $0.58 to $70.61 at the moment. Interest rates are little changed this morning with the 2-year currently quoted at 4.80% while the 10-yr is trading with a yield of 4.75% right now. And finally, with about an hour before the bell, stock futures in the U.S. once again modestly higher. The Dow futures are currently ahead by 15, the S&Ps are up +2.20, and the NASDAQ is sporting an advance of about 4 points.
Stocks �In Play� This Morning:
Goldcorp (GG) � To merge with Glamis Gold
Ciena (CIEN) � Reports $0.02 vs. $0.01
Pepsi Bottling Group (PBG) � UBS raises price target
Cooper Cos (COO) � Mentioned positively in Barron�s
Safeway (SWY) � Downgraded at BofA
Check Point Software (CHKP) � Upgraded at Jefferies
McAfee (MFE) � Upgraded at Jefferies
HCA Inc (HCA) � Downgraded at Prudential
Aetna (AET) � Downgraded at Prudential, also HNT, CVH, UHS
New Century Financial (NEW) � Downgraded at UBS
Nordstrom (JWN) � August Same Store Sales +7.1% vs. StreetAccount est +3.1%
Heinz (HNZ) � Reports $0.58 vs. $0.54
United Dominion Realty (UDR) � Downgraded at Stifel, Nicolaus
Brown Forman (BF.B) � Reports $0.76 vs. $0.71
Apple (AAPL) � MarketWatch speculates on a GOOG/AAPL merger
Ethan Allen (ETH) � Price target reduced at Goldman Sachs
JC Penney (JCP) � August SSS -0.5% vs StreetAccount estimate +1.9%
Wal-Mart (WMT) � August SSS +2.7% vs. +2.7%
Federated Dept Stores (FD) � August SSS +3.8% vs. StreetAccount estimate +3.9%
Costco (COST) � Estimates reduced at BofA
Target Corp (TGT) � August SSS +2.8% vs. StreetAccount estimate +3.1%
ST Microelectronics (STM) � Downgraded at Citigroup
Long positions in stocks mentioned: BF.B, JCP
** 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 Stock Movers: NFLX, ISRG, KO, AA, RGNX
- Netflix, Intuitive Surgical tumble premarket
- PayPal jumps on reported takeover bid, Aehr Test soars
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!
