The futures here in the U.S. are up slightly this morning as markets in Asia and Europe are for the most part trending higher. It is obvious that this earnings season has pleased investors and with the macroeconomic news as of late the risk-on trade is returning with many of the riskier trades in the market getting extra attention. We do have jobs numbers today, but as we said yesterday we are not expecting a big beat or anything like that, rather a result which is in the neighborhood at best.
We have our first set of economic news out today, and it is as follows (data set - consensus):
Initial Claims - 375k
Continuing Claims - 3290k
Trade Balance - -$47.5 Billion
Wholesale Inventories - 0.3%
Looking at Asian markets we see markets are mostly higher:
All Ordinaries - down 0.06%
Shanghai Composite - up 0.61%
Nikkei 225 - up 1.10%
NZSE 50 - up 0.05%
Seoul Composite - up 1.96%
In Europe markets are mixed:
CAC 40 - up 0.06%
DAX - down 0.30%
FTSE 100 - down 0.01%
OSE - up 0.47%
Clearwire (CLWR) continued its march higher yesterday as news surfaced that Dish Network has accumulated a large chunk of debt and/or equity in one entity. Dish would not disclose who the entity was, but that their new holdings were highly concentrated in one entity and attention immediately focused on Clearwire. The shares rallied and finished strongly as the shares moved higher by $0.278 (18.53%) to close at $1.778/share on volume of 28.9 million shares. This reminds us of the Liberty Media transaction which brings us to….
Sirius XM (SIRI), which rose strongly on the news that Liberty was planning on spinning off Starz, which the market expects would free up cash that the company could redeploy for a possible Sirius acquisition or other type of transaction. Volume spiked on the news with the company leading the exchanges with the most volume traded by far with 323.5 million shares traded. Shares finished at $2.475/share after rising by $0.175 (7.61%). Sirius has its groove back, and investors have been well rewarded for sticking around.
Shares in MEMC (WFR) rose $0.22 (10.68%) to close at $2.28/share on volume of 31.5 million shares after the company reported quarterly earnings. Investors cheered as cash flow rose due to a rise in sales of solar projects. An analyst at Jefferies told Bloomberg that bankruptcy risk has decreased after this quarter's results, and that is probably why investors were so pleased with the quarter - it insured that the company will still be in business going forward. Management at the company stated that it is on track to meet its goal for production for the entire year and is in fact already over half way there at the close of the second quarter.
We really like the strength being shown in shares of Gap (GPS) with the shares hitting another 52-week high. Shares rose $0.70 (2.06%) to close at $34.64/share on volume of 9.3 million shares. We have focused more on the results of the company's current big brand stores, while also explaining that we thought that the company would find a new concept, which would catch on and potentially drive growth. It appears that the company's new concept store Athleta will be opening 5 more stores, as reported by the San Francisco Business Times. The store is a women's active wear brand and currently has 22 stores in large metropolitan cities with plans to have at least 50 stores by 2013. This appears that it could be a big winner for Gap, and we want to pay attention to this moving forward.
Dean Foods (DF) rose by $5.04 (40.58%) to close at $17.46/share with volume rising to 30.4 million shares after the company announced its quarterly results. Investors were more interested in the company's plans for an initial public offering for its Whitewater unit, a maker of organic and soy milk products under the brand names of Horizon and Silk. Dean will sell a 20% stake in the entity, valued at about $300 million in total, and it will effectively revalue one of the faster growing segments in the company's portfolio. Obviously investors liked the plan, so it will be interesting to watch the transaction moving forward.