Asian markets turned higher last night as Japan's Prime Minister Abe discussed the possibility of corporate tax reform and investors found reason to push shares off of multi-week lows. The U.S. dollar turned higher against the Japanese yen, as is depicted in the "Chart of the Day", and the Nikkei turned higher as well as everything Japanese turned bullish.
Europe is higher as well on the news and on investors' hopes that the continent has turned the corner. There were positive comments from Ford's CEO this morning regarding the continent getting play on the European stations/programs we get and that is most certainly bullish.
Chart of the Day:
Source: Yahoo Finance
We have economic news due out today, and it is as follows:
- Retail Sales (8:30 a.m. ET): 0.2%
- Retail Sales - Ex Auto (8:30 a.m. ET): 0.3%
- Export Prices - Ex Ag (8:30 a.m. ET): N/A
- Import Prices - Ex Oil (8:30 a.m. ET): N/A
- Business Inventories (10:00 a.m. ET): 0.1%
Asian markets finished higher today:
- All Ordinaries -- up 0.94%
- Shanghai Composite -- up 0.23%
- Nikkei 225 -- up 2.57%
- NZSE 50 -- up 0.08%
- Seoul Composite -- up 1.50%
In Europe, markets are higher this morning:
- CAC 40 -- up 0.19%
- DAX -- up 0.59%
- FTSE 100 -- up 0.37%
- OSE -- down 0.02%
It appears that the Bill Ackman and J.C. Penney (JCP) feud is over as it was announced that Mr. Ackman will be leaving the board earlier this morning. Reports indicate that the board was looking at ways to quiet Mr. Ackman by either kicking him off of the board or getting him to walk away. Well he is walking away and doing it for no compensation which is a win for the company. Although there is no formal agreement regarding the position Mr. Ackman has, J.C. Penney told CNBC that it would be up to Mr. Ackman and his attorneys to decide when he could dispose of his shares and not run afoul of insider trading issues. Shares were up in pre-market trading, however when one looks at all of the names who were involved with the company simply because of the hedge fund titans who established positions we think that this might be a head fake and that the shares could have some more downside in the next few weeks/months as up to 20% of the shares could be liquidated.
The two year bull market continues in LOW shares and right now we see little reason for the rally to stop.
Source: Yahoo Finance
Rather than trying to buy J.C. Penney here, we would recommend going with a name like Lowe's (LOW) which continues to receive upgrades as others in retail languish. We have long said that the company would see better results later in the cycle as they have less of a focus on the building materials and more so on the appliances and fixtures for 'sprucing' up a home purchase or remodel. It appears that the beginning of that cycle has now begun and earlier this morning the company received its third upgrade in as many days as Goldman Sachs came out with bullish comments. This is a great play in the continued improvement in economic conditions as well as the recovery in housing.
We noticed 3D Systems (DDD) was moving yesterday and at the end of the day were disappointed that the shares were unable to take out the $50/share level as it appeared that the bulls had momentum yesterday and there was strong volume to go along with that strength. The big names in the industry were having good days yesterday as Stratasys (SSYS) was also up and up big. Shares in the name finished higher by $8.07 (8.49%) to close at $103.11/share on volume of 1.6 million as investors reacted to upgrades resulting from last week. Yes the earnings were a bit weaker than many wanted, but the results did reiterate what we all heard from 3D Systems' conference call where management basically said that the core business is strong and as healthy as it has been. We remain bullish of the 3D printing industry for trading purposes but still are not looking to this as a long-term investment.
Everyone in the 3D space is waiting for 3D Systems to breakout and with Stratasys having done so recently it sure feels as though 3D Systems is about to make that move, especially after yesterday's test of resistance.
Source: Yahoo Finance
All restaurant stocks have been solid performers since the depths of the 'Great Recession' and going bullish of the sector has been one of our greatest calls. One of the biggest winners, although one which we did not highlight, has been Krispy Kreme Donuts (KKD) which received another upgrade yesterday that pushed shares higher by $1.12 (5.23%) to close at $22.52/share on volume of 2.9 million shares. Even though the stock has had a spectacular run we believe that it could yet rise higher as the company implements expansion plans and continues to better manage the stores. It seems that every time we drive by the Krispy Kreme store in our city that the sign is always on, and the location is always busy. The better management of inventory and crowds has resulted in higher traffic and the company continues to roll out great new products. This is an attractive buy here.