Rates continue to fall as investors seek safe harbor in the U.S. Treasury market. This could help the housing market if one assumes that banks in the U.S. will continue to lend and consumers are not frightened by what is going on in Europe. That will be important, because if lending freezes up again, we could find ourselves revisiting the situation we came out of two years ago. U.S. futures are down sharply, and European shares are leading them so. Asia performed better, relatively, but they did not have the 'benefit' of Europe to lead them as the U.S. does.
Today is jobs Friday, with the most important economic figures out today being the jobs numbers. Investors need to be on the lookout for the Nonfarm Payrolls (Consensus 150k), Nonfarm Private Payrolls (Consensus168k), Unemployment Rate (Consensus 8.1%), Hourly Earnings (Consensus 0.2%), Average Workweek (Consensus 34.5), Personal Income (Consensus 0.3%), Personal Spending (Consensus 0.3%), PCE Prices - Core (Consensus 0.2%), ISM Index (Consensus 54.0) and Construction Spending (Consensus 0.5%). It will be a busy day, with a ton of data, but the jobs numbers shall carry the most weight.
Looking at Asian markets we see markets are lower:
All Ordinaries - down 0.41%
Shanghai Composite - up 0.05%
Nikkei 225 - down 1.20%
NZSE 50 - down 1.04%
Seoul Composite - down 0.49%
In Europe markets are lower:
CAC 40 - down 1.33%
DAX - down 1.99%
FTSE 100 - down 0.50%
OSE - down 1.22%
Technology
Renren (RENN) rose $0.20 (4.40%) on volume of 6.3 million shares to close at $4.75/share. Shares in the company have fallen since the Facebook IPO like all other social media stocks. This move upwards had to be a relief for investors, however one negative was the sell-off into the close. On strong days up you like to see stocks close up strongly rather than have profits taken right before the close - it is always nice to see fellow shareholders with conviction. Should social media stocks make a comeback or have a bounce off of these lows, Renren should be a top performer in the industry.
Facebook (FB) had a rather strong day rising $1.41 (5.00%) to close at $29.60/share. Volume spiked back to 111 million shares, which was good to see as we saw a strong move upwards on higher volume. We have been reading some of the notes coming out of the All Things D conference, and the fact that Facebook could be asked to work more closely with Apple intrigues us. Granted Steve Jobs is no longer around to give his stamp of approval, we still believe that Apple's approval as a company still carries weight and could boost investors' confidence in the business plan for Facebook's mobile business. Basically, we think that there is a possibility that Apple "teaches" Facebook how to do mobile via an agreement to optimize the company's website for the iPhone. This is just something to watch for in the near future.
Apple (AAPL) was essentially break-even yesterday having closed down $1.44 to finish at $577.75/share. Volume was 17 million in a day when the shares spent most of the day fighting to get back to even. We have always thought Mr. Cook to be a conservative businessman, so we were a bit taken aback by his recent statements regarding the short-term news to expect from the company being exciting and big. If he delivers, like we think he will, shares could go on one of their legendary runs - and in this case that could be another $100 move upwards. It will require him to deliver a new product or batch of new generations of products. Mr. Jobs was quite secretive, but when he promised something he delivered so it shall be interesting to see if Mr. Cook can develop a reputation of delivering on his statements.
Sirius XM (SIRI) saw shares close unchanged which leaves the shares within this nice little range they have recently traded in, and possibly setting itself up for a move one way or another in the next few days. Volume came in at 56 million and as the stock is hanging in there it looks like the battle with John Malone will rage on - and it appears the two sides are digging in for the long haul so investors will have something else to pay attention to now.
Retail
Talbots (TLB) spiked $1.15 (89.15%) to close at $2.44/share on volume of 48 million. The company is being bought for $193.3 million by Sycamore Partners, which is probably best for everyone as these retailers rarely come back from near death experiences as public companies. We said rarely, not never - but the probability that this succeeds under private money is greater, in our opinion, than if it remained public. The market is littered with many retailers which fell out of favor and after having risen dramatically or been a top performer now struggle. This acquisition merely continues a trend where the retailing sector is seeing M&A activity, which leads U.S. to believe that we are not too far off of a rebound in consumer spending barring another credit crisis.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
