World markets are looking stronger this morning with U.S. markets set to open higher by a strong margin assuming the job numbers do not disappoint. China sparked the rally after reporting strong numbers in their imports and exports for the month which caught many by surprise. We continue to have strong earnings coming out and some of the best performers are the young technology names, which is always worth pointing out because those are the exciting stories which really get the animal instincts going.
Chart of the Day:
Watch the numbers here because as they have fallen many have found that the new jobs being created are lower paying and not up to par with the jobs which have been eliminated. Yes the number going down is good, but it is important to track the jobs people are getting hired to do in relation to the previous job they lost.
We have economic news due out today, and it is as follows:
- Initial Claims (8:30 a.m. ET): 340k
- Continuing Claims (8:30 a.m. ET): 2975k
- Natural Gas Inventories (10:30 a.m. ET): N/A
Asian markets finished mixed today:
- All Ordinaries -- up 1.01%
- Shanghai Composite -- down 0.09%
- Nikkei 225 -- down 1.59%
- NZSE 50 -- down 0.15%
- Seoul Composite -- up 0.30%
In Europe, markets are trading higher this morning:
- CAC 40 -- up 0.69%
- DAX -- up 0.83%
- FTSE 100 -- up 0.43%
- OSE -- up 0.67%
Although the shares finished lower by 5.57% yesterday during the regular trading session, Tesla (TSLA) shares rebounded strongly in after hours trading after the company announced a surprise beat. The shares are trading above $152/share in pre-market trading as the company announced a $0.20 EPS figure (adjusted) when many were expecting a loss. Tesla CEO Musk also stated that he thought the company would sport a 25% gross margin for the 4th quarter and with revenues continuing to grow this gave investors plenty of solid guidance and further reason to be bullish.
A bubble is forming, make no mistake, but one should ride it until the trend stops. It appears that the company expects to see good times continue at least through the end of the year, so for now it appears that is the timetable to stay bullish - assuming no market pullbacks.
Source: Yahoo Finance
With all of the attention on fees paid to broadcasters and cable channels we thought it interesting that more attention was not paid to Twenty-First Century Fox (FOXA) and their earnings. The company reported a strong quarter and a lot of the success was due to higher fees paid by cable companies for their channels. The company is also launching new channels, such as FXX and their new national sports channel which will compete with NBC Sports and ESPN. These fees are not going to go anywhere in the near future and shall continue to increase, but we think investors need to start paying attention to exactly what content providers have in their portfolio to offer cable providers because it certainly seems that those who possess sports packages and popular channels among young adults tend to do better in these negotiations than those companies with portfolios consisting of content geared towards older audiences.
Rumors began circulating again yesterday that Amgen (AMGN) and Onyx Pharmaceuticals (ONXX) were close to a deal. This is the same rumor many probably remember popped up a few weeks ago which pushed Onyx shares higher and saw investors rush into the biotech industry as a whole to gobble up shares in other companies which could be potential targets. If this rumor is true and a deal is announced around the $130/share level then Amgen will have done well in holding its ground and not overpaying for an asset. Investors like the parameters of the rumored deal, Amgen investors that is, and this can be highlighted by the fact that Amgen shares rallied nearly 7% once the rumors began to circulate during the day. Amgen is one of the big cap biotech names we like right now but for those wanting to gain more exposure to the sector we would recommend one of the ETFs which cover a broader spectrum, even at these levels.
Shares in Amgen turned higher yesterday after the rumors broke with the $130/share price being thrown out there as the agreed-upon deal price between the company and Onyx.
Source: Yahoo Finance
We point out our good calls plenty but we also like to highlight those calls we make which do not pan out for whatever reason as we view them as learning experiences. We were correct for some time on Groupon (GRPN) and not wanting anything to do with the company, but over the past few months the shares have actually been strong performers, with shares up big after yesterday's close due to earnings and the announcement of the new CEO and Chairman. While we were wrong in not wanting to be bullish, we would play it the same way in hindsight because of the history of these young internet companies (especially retailers) initially failing and then taking years to correct their mistakes. There are far too many to count, but usually the timeframe to turn a story such as that around takes longer than a quarter or two which was not the case here. This is the exception and not the rule but at the end of the day we were wrong saying that one should be on the sidelines and staying away from this name.