World markets have come under pressure again as Spanish borrowing rates have now surpassed the 7% threshold. This is where problems have arisen for other members in the EU, and there is no reason to believe it will be any different for Spain. Investors should view it as a matter of when they will need another bailout, not a matter of if.
The day may not be lost as it is Job Thursday here in the United States. The economic news to watch for today is Initial Claims (Consensus 375k), Continuing Claims (3275k), CPI (Consensus -0.2%), and the Core CPI (Consensus 0.1%).
Looking at Asian markets we see markets are mixed:
All Ordinaries - down 0.53%
Shanghai Composite - down 0.99%
Nikkei 225 - down 0.22%
NZSE 50 - up 1.02%
Seoul Composite - up 0.65%
In Europe markets are lower:
CAC 40 - down 0.80%
DAX - down 0.98%
FTSE 100 - down 0.85%
OSE - down 0.16%
Verizon (VZ) finished yesterday up $0.05 (0.12%) to close at $42.99/share on volume of 11.3 million. The company closed above its old 52-week high, and during trading set a new 52-week high of $43.25/share before closing lower. CNBC pointed out that all of the company's revenue is derived from the United States and Verizon does not face issues with Europe or other foreign issues (think currency now that the US dollar is rising). The shares have been moving higher recently and even at these prices the yield is still attractive for investors in our opinion.
Dendreon (DNDN) saw their shares rise $0.86 (13.76%) to close at $7.11/share on volume of 23.4 million. Coverage was initiated on the company by Summer Street Research with a Buy rating and a price target of $18/share. Obviously they see a future for the company's drug which many on Wall Street have recently been talking down. The results have been abysmal, and the company lowered guidance more than once so we would need to see some improvement before venturing into this one. They do have a leg up on the competition though and from their experience there is quite a bit of legwork to getting acceptance and a footprint.
Arena Pharmaceuticals (ARNA) had another big day. The closing price does not tell the whole story as there were fireworks early before the stock tapered off. The high was $8.65/share which was a new 52-week high for the stock. It appears that options traders might be trying to peg this one around $8/share as we have options expiration on Friday. Volume was once again huge as 57.3 million exchanged hands and if history is any guide, then we can expect above normal volume for a few days after we see it peak - nothing to worry about yet as we have the FDA news to wait for.
Our attention is drawn to Pepsi (PEP) which had volume of 4.9 million shares yesterday and shares closed at $68.55/share after rising $0.15 (0.22%). Let us start out by saying that we do not think that the company will be forced to split up. The diversified revenue streams are what has made this such a great growth stock over the decades and throughout that time various segments have stumbled only to recover and help the company prosper, and this will once again be the case if the company is given time. For those with money who are searching for a bit of yield and growth, this is a pretty good play for you. We were in it at $63/share.
Regions Financial (RF) rose $0.01 (0.16%) to close at $6.19/share on volume of 16.7 million. The financials were mixed yesterday, but overall performed much better than other sectors we follow. The Senate panel went easy on Dimon, which leads many to believe this will blow over without serious hurtful action coming out of Washington via new regulations. We always thought that highly unlikely as it is an election year and Dimon is the best in the business. If it had happened to anyone else we would have been worried for everyone in the sector, including Regions but this is simply not the case. We are not bullish here, not bearish…and as much as we hate to say it, we are simply neutral.