The Hurricane in the Gulf does not appear to have caused much damage to infrastructure but it has caused some serious flooding. Today is 'Jobs Thursday' but one has to also be ready for news out of Jackson Hole, which will carry far more weight as the Fed provides guidance to the market as to how they expect to act in the coming months. We think at some point we get QE3, however sooner would be better in this case. This is not a 'Goldilocks' economy, but rather a slow growth one which needs a kick start.
We have economic news out today, and it is as follows (data set - consensus):
Initial Claims - 370k
Continuing Claims - 3300k
Personal Income - 0.3%
Personal Spending - 0.5%
PCE Prices - Core - 0.1%
Looking at Asian markets we see markets are mostly lower:
All Ordinaries - down 0.94%
Shanghai Composite - down 0.03%
Nikkei 225 - up 0.95%
NZSE 50 - up 0.03%
Seoul Composite - down 1.15%
In Europe markets are lower:
CAC 40 - down 0.14%
DAX - down 0.51%
FTSE 100 - down 0.06%
OSE - down 0.58%
Unlike most internet and social media companies which have come public in recent months, Yelp! (YELP) saw their shares increase after insiders were allowed to sell due to the lockup period expiration. Shares rose $4.11 (22.51%) to close at $22.37/share on volume of 8.7 million shares due to short covering which also resulted in other names climbing during the session as well. The company has a partnership with Apple (AAPL) which seems to be allowing the company to differentiate their product and provide avenues for distribution not enjoyed by others but at the end of the day this had more to do with a crowded trade on one side and not fundamentals. A short squeeze is not something that interests us as a way to play this one because eventually the insiders are going to start selling their shares and the float is going to increase rather dramatically.
Jos. A Bank (JOSB) saw shares increase by $5.81 (13.96%) to finish the session at $47.44/share. The company beat on earnings and provided an optimistic outlook for future earnings, something that all of the good names in retail have been saying during this earnings season. The company continues to draw customers with their weekly deals, and an improving employment picture will only help the company as more individuals have to buy suits for work or just for their personal wardrobe. As the economic picture improves so too shall sales and we really like this story in retail right now.
That is unlike the story at JC Penney (JCP) where the shares seem to defy gravity. Yesterday saw shares rise another $0.93 (3.68%) to close at $26.23/share on volume of 13.9 million shares. The company has begun giving itself a face lift, but the operating results cannot be fixed by a logo change and poorly planned changes. Thus far CEO Johnson has effectively been given a chance, but his star is not shining nearly as bright as it once was and with sales figures due out, we should get a glimpse into what has been taking place recently. We suspect that it is not good and the turnaround will take longer than many suspect.
Joy Global (JOY) reported earnings yesterday which disappointed again, but like we stated last quarter it was another solid quarter that missed estimates but still had double digit growth on the bottom line. The outlook deteriorated, but it also appears that we could be bottoming. One thing is for sure, we are closer now than in past quarters to that bottom and all of this is why shares ended the day up $1.36 (2.56%) to finish at $54.43/share. We are expecting economic growth to come back into the picture and think that Joy is an attractive prospect to play that growth moving forward at current prices.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.