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Tuesday, January 07, 2014

TUESDAY PREVIEW: Stocks Have Reason to Burst Higher Today

street light
We might have a positive day Tuesday, and we have Germany to thank for it. Unemploy- ment improved the most since 2011 over there, and an improving Europe is good for US exports. It also helps support Asia, and thereby stabilizes the global economy. Record cold is having all sorts of impact on the prices of U.S. agricultural and energy goods today, but will it stymie shopping? US economic data is light today, but we will get a look at some recent consumer spending data; it should be poor, considering it follows Christmas. Anyway, look for stocks to get some relief today, and possible turn green on the year as a result. Follow us at the blog, and also, please find a link to our latest write-up on Bank of America (NYSE: BAC), published exclusively elsewhere.

Securities Markets Preview


Market ETF
January 6
Year-to-Date
Last 12 Mos.
SPDR S&P 500 (NYSE: SPY)
+0.3%
-1.0%
+25.3%
SPDR Dow Jones (NYSE: DIA)
-0.3%
-1.0%
+22.8%
PowerShares (Nasdaq: QQQ)
-0.4%
-1.9%
+29.5%
SPDR Gold Shares (NYSE: GLD)
+0.2%
+2.9%
-25.0%
iShares US Real Estate (NYSE: IYR)
+0.4%
+0.8%
-3.9%
United States Oil (NYSE: USO)
-0.5%
-5.0%
-1.0%
PowerShares DB US$  Bullish (NYSE: UUP)
-0.3%
+0.7%
-1.1%
PIMCO Total Return ETF (NYSE: BOND)
+0.1%
+0.2%
-3.6%

Stocks should benefit from positive German employment data. Germany did not set the world on fire with its unemployment rate holding steady, but the reduction in its jobless count was still the best in recent times. European shares are climbing and set a good tone for US trading today. Also, President Obama is expected to push for a renewal of extended unemployment benefits, though support may not be there for him. Even so, it’ll be hard for Congressmen to accept the bad guy role on this one among the great majority of the public. Expect Obama to avoid swallowing the hard pill so as to give the next Democrat an edge with the poor.

US stocks are still down year-to-date, despite the S&P 500 gain yesterday. I forewarned of stock market decline for the start of 2014 in my article published on December 31st entitled, Sell Stocks on Likely January Ill-Effects. Money continues to flow into last year’s losers, including gold and silver (see The GLD is a Short-Term No-Brainer, but You Must be Nimble).

Economic Events

ECONOMIC REPORT SCHEDULE

Economic Data Point
Prior
Expected
Actual
TUESDAY



-$40.6 B
-$39.9 B




-12


Obama Push to Extend Jobless Benefits



6.9%

6.9%
-Unemployed Change
+9K R

-15K
+1.0%


-Year-to-Year Pace
+3.0%


+4.5%





 -R symbolizes “revised”

The economic data schedule today is not of the type that tends to move markets. The international trade deficit is expected to narrow a bit. That’s a bad sign actually, as we want to see burgeoning US demand for Chinese goods, which was a prevalent characteristic of the last boom. Think about how a strengthening dollar plays here though.

US economic confidence seems to be improving, and rightly so, but we’ll get a good test of it this Friday with the monthly Employment Situation Report release due that day. Today, look for more Fed speak to influence stocks, with two Fed heads set to face audience. Over the weeks ahead, it’ll be interesting to see if Janet Yellen reins in some of the loose cannons saying contradicting things to official Fed policy.

Overseas Markets

EUROPE
6:19 AM ET
ASIA/PACIFIC
CLOSE
EURO STOXX 50
+0.8%
NIKKEI 225
-0.6%
FTSE 100
+0.4%
Hang Seng
+0.1%
CAC 40
+0.4%
S&P/ASX 200
-0.2%
German DAX
+0.6%
Korean KOSPI
+0.3%
Athens ASE
+0.7%
BSE India SENSEX
-0.5%

European markets are higher today after German employment figures showed the best job growth in 2+ years. German unemployment remained at 6.9%, but the number of unemployed fell by 15K in December, versus November’s increase of 9K (revised). German markets were markedly higher on the day. The iShares MSCI Germany ETF (NYSE: EWG) has yet to open, but is likely to improve upon its half-point gain of Monday. Greek investors will brightly note their high beta stocks up more than German shares, benefiting from the news.

Commodity Markets (6:26 AM ET)

WTI Crude
+0.5%
Brent Crude
+0.6%
NYMEX Natural Gas
+0.7%
RBOB Gasoline
+0.9%
Gold Spot
+0.1%
Silver Spot
-0.4%
COMEX Copper
-0.1%
CBOT Corn
-0.1%
CBOT Wheat
-0.3%
CBOT Soybeans
-0.4%
ICE Cocoa
+0.8%
ICE Sugar
+0.1%
ICE Orange Juice Conc.
+2.8%
CME Lumber
+0.3%
CME Live Cattle
+0.2%

Weather is driving higher domestic agricultural prices, with orange juice especially jumping on news of historical low temperatures across the U.S. today. Deep freeze as far south as Florida is not a good thing for the citrus trees. Take note that foreign sourced agricultural goods like cocoa and sugar are moving higher, benefiting from capital flowing out of US commodities, in my view. Improving economic data is helping offset a strengthening dollar for energy prices, as is the cold. Expect Exxon Mobil (NYSE: XOM) to catch a break today.

Corporate Events

Earnings season starts this week, but the flow of reports remains light with just four companies scheduled to report today. See also yesterday’s most active list below and some of our recent work on select stocks.

HIGHLIGHTED EPS REPORTS
Company
Ticker
TUESDAY

Family Dollar Stores
NYSE: FDO
Apollo Education
Nasdaq: APOL
Micron Technology
NYSE: MU
Commercial Metals
NYSE: CMC

YESTERDAY’S MOST ACTIVE STOCKS
BIGGEST GAINERS
% Gain
Tecnoglass (Nasdaq: TGLSW)
+43%
Origin Agritech (Nasdaq: SEED)
+39%
Superconductor Technologies (Nasdaq: SCON)
+39%
Altair Nanotechnologies (Nasdaq: ALTI)
+21%
LightIn The Box (Nasdaq: LITB)
+20%
Fonar Corp. (Nasdaq: FONR)
+20%
Taomee Holdings (Nasdaq: TAOM)
+18%
LiveDeal (Nasdaq: LIVE)
+17%
Oxygen Biotherapeutics (Nasdaq: OXBT)
+16%
Ceres (Nasdaq: CERE)
+15%
BIGGEST LOSERS
% Drop
Great Northern Iron Ore (NYSE: GNI)
-47%
Professional Diversity Network (Nasdaq: IPDN)
-27%
Gyrodyne (Nasdaq: GYRO)
-27%
Turkish Investment Fund (NYSE: TKF)
-21%
Brightcove (Nasdaq: BCOV)
-20%
Select Comfort (Nasdaq: SCSS)
-19%
WSP Holdings (NYSE: WH)
-13%
China Natural Resources (Nasdaq: CHNR)
-13%
VisionChina Media (Nasdaq: VISN)
-12%
Net Element (Nasdaq: NETE)
-11%

Other Reports for Your Review:

Why 2014 Can Turn the Tide for Annaly (NYSE: NLY)
Apple Can Unlock 68% More Value by Emulating Google in this Way (Nasdaq: AAPL, Nasdaq: GOOG)

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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