The Republicans are now done with their convention and the Democrats will begin theirs this weekend. These are always heavy on rhetoric and light on facts, but we are far more interested in another convention going on this week. The Fed is in Jackson Hole and Ben Bernanke is giving a speech later today, so that should provide some fireworks and move the market one way or another. It is apparent, though, that the market is indicating to them that it does expect dovish comments and by now they should fully understand this.
We have economic news out today, and it is as follows (data set - consensus):
- Chicago PMI - 53.8
- Michigan Sentiment - Final - 73.6
- Factory Orders - 2.0%
Looking at Asian markets, we see markets are mostly lower:
- All Ordinaries - down 0.03%
- Shanghai Composite - down 0.25%
- Nikkei 225 - down 1.60%
- NZSE 50 - up 1.02%
- Seoul Composite - down 0.07%
In Europe, markets are higher:
- CAC 40 - up 0.60%
- DAX - up 0.35%
- FTSE 100 - up0.14%
- OSE - up 0.70%
Yesterday was an interesting day for Pandora (P), which saw shares rise $1.44 (14.39%) to close at $11.52/share on extremely heavy volume of 40.6 million shares. People are talking about the numbers the company reported, but the stock's reaction probably had less to do with the results and more to do with short interest. It seems that competition gets tougher in this industry as new players are constantly emerging and crowding the space. Due to this, we would much rather be investors of Sirius XM (SIRI) than Pandora. Sure Sirius shares have risen sharply and have the Liberty overhang, but at least their business is a lot harder and far more expensive to mimic.
Investors saw shares of Ciena (CIEN) fall $3.62 (19.50%) to close at $13.46/share on volume of 33.5 million shares after the company announced 3rd quarter results which disappointed. The top line figure barely exceeded the consensus, however earnings missed. The company discussed the next quarter and market conditions, and this is where the real problem was as their outlook left a lot to be desired. If you want to be in tech, this space is not where you want to be. There are far better places to be, and one would be wise to buy the growth segments of the industry which are not facing headwinds due to the economy.
We have been discussing Gap (GPS) over the past few months and pointing out how their sales are ramping up not just year over year, but quarter to quarter. The shares hit another 52-week high yesterday while closing above $36/share after rising over 2.5% on volume of 10 million shares. The company's Old Navy brand powered sales higher as they reported a 12% rise in same store sales. This helped the company post 9% higher same store sales, which beat the consensus of 5.4% growth which was expected. The company continues to outperform even our bullish projections, and they still have not ramped up the growth machine on their new segment for women's health/yoga.
StemCells (STEM) saw shares power higher by $0.35 (21.74%) to finish the day at $1.96/share as the company will present at a conference on Monday in London. The market cap here is miniscule, but it does trade some volume for those of our readers who are traders. We have watched this one's volatile moves, more due to its name and the type of research it does than its actual business prospects, and believe that it can be a decent trading vehicle, but do not confuse it for an investing vehicle…that can only lead to bad things.