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Thursday, April 03, 2014

THURSDAY’S MARKET: ECB Drag but Service Sector Data Dictates the Day

deflation
The ECB played Debbie Downer in the very early going this AM. It un- fortunately took no action to support the continent, and made things worse by reporting a sadly slow level of price increase in March of just 0.5%. The ECB complaints about inflation are worrying U.S. markets today, as they continue to reflect a struggling European marketplace. What’s worse is that this likely reflects black market pressures on legal markets as the people continue to rebel against governments across Europe in a less obvious manner. However, after 8:30 AM data releases, stock futures bounced slightly into the green. We received a mildly higher jobless claims number, but the trade deficit expanded. Be careful though, because the deficit with China narrowed significantly and Europe was hardly changed, while the deficit with OPEC narrowed. It’s hard to see what’s happening here, so the early presumption of the market may be based on false footing. Nevertheless, until we receive the service sector data after the market open, we should drift higher. The day will clearly be dictated by the yet to come service sector reports and Mario Draghi’s comments.

U.S. Markets


Market ETF
YTD
TTM
Vanguard S&P 500 (NYSE: VOO)
+2.3%
+21.8%
iShares Dow Jones (NYSE: IYY)
+2.6%
+22.5%
Fidelity NASDAQ  ETF (Nasdaq: ONEQ)
+2.1%
+32.4%
ProShares Ultra Gold (NYSE: UGL)
+13.6%
-36.0%
ProShares Ultra Real Estate (NYSE: URE)
+18.3%
-0.7%
ProShares Ultra Oil (NYSE: UCO)
+2.7%
+11.1%
WisdomTree US$  Bullish (NYSE: USDU)
-0.4%
0%
iShares 20+ Yr. Treasury (NYSE: TLT)
+5.3%
-9.8%


Stock futures indicated higher earlier this morning before dipping on ECB non-action. Then at 8:30 we saw an uptick on questionably good trade data. Stocks appear set to start the day about unchanged, so the service sector data will dictate trade today.

International Markets


EUROPE
%
ASIA/PACIFIC
%
iShares Europe (NYSE: IEV)
+0.0%
Japan Equity (NYSE: JEQ)
+0.6%
WisdomTree UK (Nasdaq: DXPS)
0.0%
China Fund (NYSE: CHN)
+0.1%
Societe Generale ADR (OTC: SCGLY)
+0.3%
Asia Tigers (NYSE: GRR)
+0.8%
WisdomTree Germany (Nasdaq: DXGE)
+0.3%
Korea Equity (NYSE: KEF)
-0.5%
National Bank Greece (NYSE: NBG)
+2.7%
India Fund (NYSE: IFN)
+0.9%


International markets should be led by the ECB non-action today and concern about low inflation levels. Our early check of Europe shows little change on the release, with the Euro STOXX 50 about unchanged just after 8:00 AM ET. France and Germany are a bit lower on both Russian concerns and the ECB action, but emerging markets in Europe are doing well on yesterday’s momentum. Asia was led by Japan today, with the NIKKEI 225 up 0.8% into the close. Korea is lower, thanks to tensions with its northern neighbors.

Economic Data


THURSDAY’S ECONOMIC REPORT SCHEDULE
Economic Data Point
Prior
Expected
Actual
THURSDAY
 
 
 
 
 
Unch.
-$39.3B R
-$38.8B
-$42.3
51.6
53.3
 
53.3
53.9
 
-31.5
 
 
-57 Bcf
 
 
41,835
 
34,399
310K R
320K
326K
 
 
 


There is plenty of economic data on tap for today. In its early meeting, the European Central Bank (ECB) kept rates unchanged, which was in line with expectations. However, that might be viewed negatively today, as traders in the States were hopeful for more measures. The ECB expressed concern about excessively low inflation, but they may not have to worry about that for long, given that energy costs are likely to increase due to issues with Russia.

In the early going, the American data offered Challenger’s Job-Cuts Report, which showed a lower level of job cuts than the prior month. That’s good news for the American economy. Weekly Jobless Claims deteriorated by about 16K week-to-week to 326K, worse than expected but hardly important.

The international trade deficit widened where economists expected it to narrow. Looking at the data, the deficit with China narrowed significantly and with OPEC as well, while the deficit with the EU widened just slightly. The data leaves the answer here cloudy, and will require research beyond the press release. Two important service sector measures remain to be reported, plus consumer sentiment. You will want to pay close attention to those releases, as they will weigh heavily today.

Commodity Markets (Yesterday’s Close)


United States Oil (NYSE: USO)
-0.1%
iPath SP Crude Oil (NYSE: OIL)
-0.1%
U.S. Natural Gas (NYSE: UNG)
+2.0%
U.S. Gasoline (NYSE: UGA)
+0.2%
SPDR Gold Trust (NYSE: GLD)
+0.7%
Market Vectors Gold Miners (NYSE: GDX)
+2.7%
iShares Silver Trust (NYSE: SLV)
+0.7%
iPath DJ UBS Industrial Metals (NYSE: JJM)
+1.0%
Teucrium Corn ETF (NYSE: CORN)
-2.3%
Teucrium Wheat Fund (NYSE: WEAT)
-2.7%
Teucrium Soybean Fund (NYSE: SOYB)
-2.2%
iPath DJ-UBS Cocoa (NYSE: NIB)
-0.9%
iPath DJ-UBS Sugar (NYSE: SGG)
-1.1%
ICE Orange Juice Conc.
+1.9%
CME Lumber
-0.1%
CME Live Cattle
+0.5%


Natural gas storage data should show a lighter draw on warming weather in the Northeast, and perhaps starting next week, will begin to show inventory build. The difference between WTO and Brent crude is narrowing, while gold and silver are diverging, and each is worth looking into. Talks with Libya are being pinpointed for the change in oil prices. With regard to the precious metals, gold is first to move and more volatile than silver over the short-term on event catalysts, and we’ve had some of those recently; look to that for your catalyst here. See our work Putin & Yellen Support Gold Outlook.

Today Russia is demanding NATO justify its deployment plans along its border, as NATO nations are reportedly extremely supportive of Ukraine and perhaps willing to defend it. Ironically, NATO’s strong stand may support moderated energy prices, because Russia had thus far been left unchecked. Perhaps now Russian aggression will reevaluate.

Crop prices dropped yesterday, as the weather begins to warm across the nation and adequately saturated ground conditions offer hope for a good production year across the plains. Also, trade issues and geopolitical concerns may leave more agricultural goods home, where prices would fall on excess supply. Orange juice concentrate rose sharply yesterday.

Stock Activity

The day’s earnings outlook offers a short list, including fashion designer Perry Ellis (Nasdaq: PERY), semiconductor maker Micron Technology (NYSE: MU), Schnitzer Steel (Nasdaq: SCHN) and Global Payments (NYSE: GPN). Yesterday’s most active list was led by MannKind’s (Nasdaq: MNKD) gain of 74% and Pegasystems (Nasdaq: PEGA) decline of 49%.


EPS REPORTS
Company
Ticker
THURSDAY
 
China Finance Online
Nasdaq: JRJC
Edap Tms SA
Nasdaq: EDAP
Emmis Communications
Nasdaq: EMMS
Five Star Quality Care
NYSE: FVE
Franklin Covey
NYSE: FC
Global Payments
NYSE: GPN
MagnaChip Semiconductor
NYSE: MX
Micron Technology
NYSE: MU
Perry Ellis
Nasdaq: PERY
RPM International
NYSE: RPM
Schnitzer Steel Industries
Nasdaq: SCHN
SeaChange Int’l
Nasdaq: SEAC
SYNNEX
NYSE: SNX
Tat Technologies
Nasdaq: TATT
The Greenbrier Cos.
NYSE: GBX



YESTERDAY’S MOST ACTIVE STOCKS
BIGGEST GAINERS
% Gain
MannKind (Nasdaq: MNKD)
+74%
The Rubicon Project (Nasdaq: RUBI)
+34%
Autobytel (Nasdaq: ABTL)
+25%
XTL Biopharmaceutical (Nasdaq: XTLB)
+22%
IsoRay (NYSE: ISR)
+19%
VisionChina Media (Nasdaq: VISN)
+18%
Supertel Hospitality (Nasdaq: SPPRP)
+17%
SGOCO Group (Nasdaq: SGOC)
+16%
Solitario Exploration (NYSE: XPL)
+15%
Mines Management (NYSE: MGN)
+15%
BIGGEST LOSERS
% Drop
Pegasystems (Nasdaq: PEGA)
-49%
NewLead (Nasdaq: NEWL)
-10%
UniFirst (NYSE: UNF)
-10%
Amyris (Nasdaq: AMRS)
-9%
Apollo Education (Nasdaq: APOL)
-9%
Schmitt Industries (Nasdaq: SMIT)
-7%
Criteo SA (Nasdaq: CRTO)
-8%
Benefitfocus (Nasdaq: BNFT)
-8%
Kingtone Wirelessinfo (Nasdaq: KONE)
-7%
Body Central (Nasdaq: BODY)
-7%


Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

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