U.S. markets reacted to the jobs data which came out on Friday yesterday, ending the day lower - much as we had suspected. Europe is reacting today as they were closed yesterday for holiday, so one should not read too much into the fact that markets are down hard across the continent this morning. We did see strength among the market leaders yesterday in the U.S. and that is a positive as it shows that investors still have faith in the stocks which have led, and in some cases pulled, the market higher.
This morning China surprised with a $5 billion + trade surplus led by exports, leaving some to speculate this morning that the world economy may be picking up steam just as China's internal growth begins to slow and thus avoiding a 'hard-landing'. The U.S. futures are higher this morning ahead of the economic news we have coming out today, the Wholesale Inventories (Consensus 0.5%).
Looking at Asian markets we see markets are mixed:
All Ordinaries - down 0.65%
Shanghai Composite - up 0.88%
Nikkei 225 - down 0.09%
NZSE 50 - up 0.21%
Seoul Composite - down 0.13%
In Europe markets are lower:
CAC 40 - down 1.24%
DAX - down 0.85%
FTSE 100 - down 0.87%
OSE - down 1.28%
Technology
AOL (AOL) was the big news early in the morning as they sold a patent portfolio to Microsoft. The portfolio of 800 patents fetched $1 billion, which was much higher than many had previously estimated as the value. AOL shares rose $7.98/share, or 43.32%, to $26.40/share. No one is sure at this time what patents this deal covers, but it does give AOL a ton of cash to work with and the company indicated that this would be returned to shareholders. You can read more on the deal here.
We said yesterday that if Apple (AAPL) could hang in there during the selling which would be inevitable in yesterday's market that this would not be a serious correction, but rather a small pullback in a greater bull market. Apple was down early on thinking that iPhone sales could be slowing and got as low as $625.30 but never falling below that level and actually turned positive to test $640/share. The shares ended up finishing at $636.23/share for a new closing high. Until the leaders breakdown, it is hard to say that the market's move higher is over.
Baidu (BIDU) appears to be heating up again and is approaching $150/share once again. The company is now near 3 month highs, and trading at $148.80 after finishing yesterday up $0.55/share, it appears that $150 could be the next level which is taken out. The Chinese internet company has long been a Wall Street darling, but from time to time it gets mentioned in the accounting scandals which has rocked many Chinese firms trading in the US. We think that this is one of the better run Chinese companies and has many following it on Wall Street and 'vetting' the numbers for investors. Like Apple, Baidu is a market leader right now, and tech is leading the market higher. This is one to watch as it moves through $150/share as the momentum could take shares even higher from that level.
Entertainment
Great Wolf Resorts (WOLF) moved higher yesterday to $7.44/share. Shares were up 13% or $0.86/share as KSL Partners rose their offer to $7/share from $6.25. Obviously investors expect a higher price than that to prevail, and this shall be an interesting situation to watch. KSL did not say their offer was a final offer, but with the dramatic rise in the shares thus far, one has to question how close we are to trading at their maximum offer. This is something for investors to think about this morning, and to adjust accordingly.
Biotechnology
Arena Pharmaceuticals (ARNA) is once again grabbing our attention as a 3 month extension was issued for Qnexa. This delays the drug by that much longer, opening up the door for Arena to maybe leapfrog and get their drug to market first. It is all highly speculative at this time, but as we have stated previously, Arena's drug is the least effective but the safest overall. That is what should help their drug get to market and have less issues with the FDA, but as always it is the FDA that these companies must deal with and that in-and-of-itself is never a straightforward proposition.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
