The economic numbers were awful on Friday, to put it kindly. We saw the jobs numbers come in at about half of the estimated numbers and a miss of that proportion is something which does not happen often. It is becoming clear to investors that China has serious problems as their numbers were awful on Friday too, and that Europe is standing on the proverbial cliff. The continent has a few options here, and none of which they like. Quantitative Easing, some sort of TARP, an FDIC function to insure deposits, and actually using their pots of money which they have already created are high on the list of things to do. When one lists what the continent needs to do it appears a daunting task as European leaders have had two years to try and do any number of these reforms and sadly they have little to show for it. But one thing to watch is the news out of Portugal where they injected money into a few of their banks for convertible securities.
Today's economic news will be light, as Factory Orders (Consensus 0.1%) will be the only bit of news traders get unless the Europeans decide to surprise us with something but we have little hope for that this morning.
Looking at Asian markets we see markets are lower:
All Ordinaries - down 2.03%
Shanghai Composite - up 2.73%
Nikkei 225 - down 1.71%
NZSE 50 - CLOSED
Seoul Composite - down 2.80%
In Europe markets are lower:
CAC 40 - up 0.27%
DAX - down 1.34%
FTSE 100 - CLOSED
OSE - down 1.89%
Technology
Apple (AAPL) is not even immune to the European news or bad economic numbers. The shares closed Friday at $560.99 down $16.74 (2.90%) on volume of 18.6 million. The stock has a bit of support around these levels, and if the bulls can keep the shares around these levels we could see a nice bounce once the company announces their new product lineup or whatever other exciting news the company's CEO Tim Cook was alluding to at the recent conference.
Sirius XM (SIRI) saw light volume again on Friday as the shares fell $0.05 (2.65%) to close at $1.84/share. We are right back at the support levels we had talked about earlier last month which gave shares a nice bounce once they hit these levels. The trade looks good based off of history, but in this market and when we look at the risk/reward ratio, making a buy now just does not make a whole lot of sense. Too much risk and not enough reward. In a different market, we would have a different answer, but in this market there is but one answer and that is to judiciously weigh trades and invest accordingly. So we are staying away from this even though it has approached the buy area we previously highlighted.
Housing
PulteGroup (PHM) had a rough day on Friday due to the economic numbers which came out. There were many, and fewer of which were good. The whole industry was down, but Pulte was hit hardest as shares fell $1.10 (11.75%) to close at $8.26/share. Volume came in at 18.5 million, which is 50% higher than the three month average volume for the company's shares. The housing market is recovering in parts of the country, but if a new financial crisis or recession is in the works one can reasonably expect whatever momentum has been built up to quickly dissipate. It is a fragile situation, and investors realize this.
Banking
Regions (RF) has headed lower than we anticipated, and that is due to our belief that the Europeans were not going to let their situation get to this point. Shares finished trading Friday at $5.88 which were down $0.41/share (6.52%). It is going to be rough here with "Grexit" having entered the financial lexicon, and even worse if that becomes an actual event. In the southeast the housing market is picking up, and across the country the mortgage refi market is picking up - but what matters most is that around the world bad news and fear are both ticking up and that will overwhelm even the best of markets. It seems interesting to us this morning that the Asians seemed to better handle their financial crisis than the Europeans have over the past few years.
Gold
Barrick Gold (ABX) was a solid performer on Friday as gold rose smartly by 3.7% which pushed the entire sector up. If one had looked for the highest percentage gainers on the New York Stock Exchange they would have seen many precious metals names. Barrick saw its shares rise $2.85 (7.30%) to close at $41.91/share. Gold was up just about $60/ounce which allowed it to close above $1600/ounce, and we are wondering if the bulls are going to make a stand here and take out their frustrations from the previous few months on the bears now that it appears the gold market at least may be positioning for a bull run.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
