Japan continues to battle deflation and their government passed another $182 billion stimulus package overnight. The big Asian markets that we follow were all lower on the session, led by Japan's Nikkei which fell by 1.50% on the session. Vice President Biden has been in Asia and it seems that he is handling the muscle flexing by China quite well. Their military moves were planned knowing the Vice President would be in Asia and all this is probably for propaganda purposes.
The weakness in Asian markets over the past year has been a good time to buy and with the recent weakness readers might find this an opportunity to put some capital to work in either China or Japan.
Chart of the Day:
Readers might also find Germany an interesting opportunity with the recent pullback. The euro will face downward pressure as the U.S. dollar gains strength and that will only further drive German exports, and thus the DAX, to higher levels.
We have economic news today and it is as follows:
- Challenger Job Cuts (7:30 a.m. EST): Est: N/A Actual: -20.6%
- Initial Claims (8:35 a.m. EST): Est: 330k Actual: 298k
- Continuing Claims (8:30 a.m. EST): Est: 2850k Actual: 2744k
- GDP - 2nd Est (8:30 a.m. EST): Est: 3.0% Actual: 3.6%
- GDP Deflator - 2nd Est (8:30 a.m. EST): Est: 1.9% Actual: 2.0%
- Factory Orders (10:00 a.m. EST): Est: -1.0% Actual: -0.9%
- Natural Gas Inventories (10:30 a.m. EST): Est: N/A
Asian markets finished lower today:
- All Ordinaries -- down 1.44%
- Shanghai Composite -- down 0.21%
- Nikkei 225 -- down 1.50%
- NZSE 50 -- UNCH
- Seoul Composite -- down 0.10%
In Europe, markets are trading higher this morning:
- CAC 40 -- up 0.04%
- DAX -- up 0.18%
- FTSE 100 -- down 0.01%
- OSE -- up 0.21%
Deal, Or No Deal...?
That is the big question this morning as The Wall Street Journal reported that China Mobile (CHL) and Apple (AAPL) had reached an agreement to have Apple's iPhones carried on China Mobile's wireless network. After both companies initially declined comment to other sources questions arose and now Reuters is reporting that there is no deal in place but that the companies are finalizing a deal that has been rumored all week, per a China Mobile spokesperson (see article here).
Both companies' shares are moving higher on the news and this could very well be a game changer for Apple shares heading into 2014, especially as they may want to defend against the moves of their hedge fund shareholders, most notably Carl Icahn who proposed a $50 billion buyback in one year that he will ask shareholders to vote on. This is one of the few value names in tech that we see right now with bright growth prospects and we are still bullish of this name. Once a China Mobile deal is in place, and assuming the company does not disappoint on any release dates in 2014, we think that this could easily be a 20% mover in 2014.
Apple has fought back to turn green for the year and we believe that this is setting up the stock to perform strongly in 2014...especially with the closing of a deal in China appearing imminent.
Source: Yahoo Finance
S&P Not Friending Facebook ...
It turns out that Facebook (FB) will not be entering the S&P 500 Index as was the strong rumor, but instead General Growth Properties (GGP). Facebook shares were seeing a nice bid and some excitement over this rumor but yesterday many began to report that the rumors were not true.
Although Facebook missed out on the invite this go around, the company has to be on the short list of companies that could be moved up once another spot becomes available. With the technology sector attracting a lot of investment dollars and becoming a larger portion of the overall economy we think more and more tech names will find their way into the S&P 500, and Facebook is among one of the better options in the 'up-and-coming' companies.
General Growth Properties will replace Molex (MOLX) in the index after the market closes on Monday December 9th. The change in the index is occurring because Molex is being acquired in a $7.2 billion deal with privately held Koch Industries.