Today's Market News To Trade On: Green Light For The Economy

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Includes: BCRX, CAT, DE, SBUX, USB
by: Matthew Smith

This morning US futures are down, marginally so as we see Asia and Europe green. Yesterday's economic news pushed markets up, and we have to admit that the February car sales figures were quite impressive. It seems that we are continuing down the road of recovery, but one would hope to see employment increase and wages start to rise - two indicators that will show we really have turned the corner to serious economic growth.

Looking at Asian markets we see that most are down:

All Ordinaries - up 0.42%

Shanghai Composite - up 1.43%

Nikkei 225 - up 0.72%

NZSE 50 - up 1.35%

Seoul Composite - up 0.22%

In Europe we see a mixed bag:

CAC 40 - up 0.14%

DAX - down 0.01%

FTSE 100 - down 0.12%

Contrary to what the DAX and FTSE indicate, Europe is as a whole stronger this morning.

Retailing

We see that Starbucks (NASDAQ:SBUX) is looking to step up expansion plans in Europe this morning. According to an interview given to Reuters (see here) the company wants to have 1,000 stores in Germany (currently there are about 150) and will be targeting Nestle's (OTCPK:NSRGY) instant coffee business. The company will be stepping up advertising in order to build the brand which could have an impact on earnings heading forward. New avenues of growth are what propel the great growth stories, and this appears to be Starbucks' next focus.

Manufacturing

Yesterday we talked about Deere (NYSE:DE) and Caterpillar (NYSE:CAT). The more we look at these two companies the more we like them. Deere seems to have lost its way and become much too conservative regarding future sales. Yes, the Section 179 expensing will revert to much lower figures next year, but if the economy is turning worldwide, we should see higher sales overseas. With Europe finally getting around to solving its problems, everyone could be surprised and see increased sales there as well. One would think when looking at all the metrics on the stock compared to the rest of the market (i.e., P/E) that much of this bad news is already priced in, so there is relatively little downside.

We also see in China where minimum wages are climbing, something we thought impossible until the last Chinese citizen was put to work. Well, it seems in the cities that we are now at that point, and some of China's largest metropolitan areas have been raising wages recently. This is good for the economy as it only marginally raises employers' cost but increases the ability of the country to create a consumer dominated economy. This could all help fuel another leg up in the housing market, which in turn would be quite positive for Caterpillar across its business line.

Technology

Based off of what Steve Wozniak said yesterday, it seems highly likely that an Apple TV is most certainly in the works. There is talk of $1,000/share for Apple's (NASDAQ:AAPL) stock price, and in an interview he basically stated that it would be a possibility because of what Apple TV would allow the company to do in regards to growing in a new segment and increasing sales via its current lineup. We anxiously await what will happen here, and admire how the company continues to crank out products which build upon their last blockbuster.

Biotechnology

We were asked yesterday if we had reentered our trade on BioCryst Pharmaceuticals (NASDAQ:BCRX), and the answer is a simple no. We do understand that the Hepatitis C drug may create a nice run up, but it is something we had neglected to look into, focusing rather on the flu vaccination. When you no longer have a handle on a trade, that is when you walk away, which we have done. The risk/return on the stock at current levels based solely on its flu vaccine is not rich enough to have us involved at this time.

Banking

Yesterday we found out that Europe lent out $500 billion+ Euros to banks under their program to help recapitalize banks. This morning it is now known that Barclays took $82 billion of that, which leads us to believe that other large European banks have done the same. This can only be good news for the major US banks, and thus we find US Bancorp (NYSE:USB) one of the top plays. The strong balance sheets allows them to do deals other banks cannot, and it has been on a tear lately, currently only $0.07 off of its 52-week high.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.