Asia had a strong day on the heels of the market rally that took place here in the U.S. yesterday. Looking to Europe this morning we see markets under pressure due to China's economic numbers being weak this morning (funny how an 8.1% growth rate on the second largest economy in the world can be considered a disappointment). This has U.S. futures down as well, but we think this is good news as it will require China to seek to implement measures to increase growth.
Looking to the economic news today, we see that the CPI (Consensus 0.3%), Core CPI (Consensus 0.2%), and Michigan Sentiment (Consensus 76.1) are due out today.
Looking at Asian markets we see markets are higher:
All Ordinaries - up 0.97%
Shanghai Composite - up 0.35%
Nikkei 225 - up 1.19%
NZSE 50 - up 0.00%
Seoul Composite - up 1.12%
In Europe markets are lower:
CAC 40 - down 0.93%
DAX - down 0.99%
FTSE 100 - down 0.60%
OSE - down 0.63%
Apple (AAPL) was an underperformer yesterday, which seems odd considering that it has been a leader for so long and led the market. One idea that popped up over a conversation we were having yesterday was that Apple has become a safe haven for investor money and people sock their money away in Apple shares rather than risk it in the general market during times of duress. So yesterday was simply an outflow of funds seeking more risk. It was an interesting conversation and something to think about - especially if investors really are viewing Apple as the Treasuries of the stock market.
Renren (RENN) rose $0.69 or 11.18% to close at $6.86/share. Yesterday's volume was over 25 million shares, and the chart looked great from open to close. The company has to deal with China's internet rules and China has recently cracked down and deleted a lot of content, but in that environment many internet companies have thrived. As the Chinese adopt social networking, Renren could be a big winner. The stock closed at a 5 month high according to Bloomberg (see here).
Deere (DE) has been forgotten it seems, and we think this is wrong. The stock is at $79/share and yielding 2.4% all while the farm economy is in the biggest bull market in a generation or two. Yes certain tax laws are disappearing next year, but machinery will still be sold and we suspect that Deere will surprise many moving forward. Europe will undoubtedly be weak, yet we think that the developing markets will pick up this slack moving forward.
Las Vegas Sands (LVS) hit a new 52-week high of $62.09 early in yesterday's trading. The stock finished off of its high by the close, by about $1 but this has been a momentum play as of late. The new casino opened in Macau early this week and this should supply some good news in the near-term for shareholders. It will also supply growth moving forward and allow Las Vegas Sands to accumulate a larger share of the fast growing Macau and Asian gambling markets.
Regions Financial (RF) could be an interesting play this morning as JP Morgan has earnings out. Regions has held near its 3 month highs, and appears to have done pretty well considering some of the carnage out there in other sectors recently. This was one of our favorites a few months ago and we had advised to sell half of the position after the initial run-up. We would recommend holding what is left and waiting for the next leg up, for which we think that the catalyst will be earnings.