Today is the day of reckoning for Europe, the European Central Bank and Mario Draghi. World markets will find out today exactly if Draghi can deliver on his promises and that will be quite important moving forward, because if he cannot deliver today the market shall have little faith that he will be able to deliver tomorrow. Some may think that this is not important, but he is the face of the ECB, and his failure is their failure so the two are attached and shall be viewed as one. US futures are following the lead set by Asia and especially Europe this morning, one can only hope that this price action follows through after the announcement - we would caution investors to be on the lookout for a sell on the news situation, although we think that is more likely to take place in following sessions and not today.
We have economic news out today, and it is as follows (data set - consensus):
Challenger Job Cuts - N/A
ADP Employment Change - 143K
Initial Claims - 373K
Continuing Claims - 3300K
ISM Services - 52.4
Crude Inventories - N/A
Looking at Asian markets we see markets are higher:
All Ordinaries - up 0.79%
Shanghai Composite - up 0.70%
Nikkei 225 - up 0.01%
NZSE 50 - up 0.65%
Seoul Composite - up 0.38%
In Europe markets are sharply higher:
CAC 40 - up 1.16%
DAX - up 1.32%
FTSE 100 - up 0.74%
OSE - up 0.55%
We want to highlight Sprint (S) this morning as shares were up $0.15 (3.13%) yesterday to close at $4.95/share. The shares were able to climb back up to $5/share however could not break above that level, so that shall be something to watch in today's session - whether shares can break through that milestone and possibly test new 52-week highs. The company has done a great job selling the iPhone 4s and we suspect that this will only have set the stage for the company to beat expectations when it comes to sales of the iPhone 5 now that they have a knowledgeable customer base and a marketing strategy which has been making inroads on the company's larger rivals. We still like shares here, and see the opportunity to play for a 10% game in the short-term.
Monster Worldwide (MWW) rose as takeover speculation began to swirl around the shares once again yesterday. The company announced months ago that they were exploring a possible sale and shares rallied before selling off once the market realized that there were no suitors out there. We doubt anything has changed, other than the fact that the company's shares have become much cheaper than they were around that time. As we have said numerous times, we do not play takeover speculation and would steer clear of franchises which are not premier and the only reason to buy would be to try to front run a potential acquirer. Shares closed at $7.55/share after having risen by $0.45 (6.34%) on Wednesday. We recommend not buying here as it is still highly unlikely any suitors are out there at this time.
Peregrine Pharmaceuticals (PPHM) has been rallying strongly over the past few days and yesterday hit another fresh 52-week high of $3.21 early in the morning before backing off. Although the shares finished a good bit off of their highs, we did see she shares hold $3/share which could provide a base for moving higher. It will be interesting to see how the stock reacts today, but investors should be aware that the company reports their quarterly results on September 10th, so that will be something to watch in the coming week. At this point we would utilize this as only a trading vehicle, however we are doing some more research into the company to see what we think about its long-term prospects but after the recent run-up we felt the need to mention it this morning so readers knew we were at least doing some research into it.
Heckmann Corporation (HEK) has had a great week so far, rising on news early in the week and having a Cramer influenced follow through yesterday. Since they were on his show we have noticed numerous other financial news websites giving space to the company and their story (and no, the irony that we are doing this same this morning is not lost on us!). The company is embarking on a new growth strategy and we suspect that it shall pay off, as does the market by the stock's reaction over the past few days. Volume remains strong, with 15.7 million shares having been traded yesterday as the shares rose $0.16 (4.31%) to close at $3.87/share.
Yesterday we found out that Safeway (SWY) would be creating further value for shareholders by spinning out its gift card business in 2013. Volume increased to 19.9 million shares and the stock rose by $0.68 (4.30%) to close at $16.50/share on the news. If one finds themselves wanting to own either of these entities after the spin-off, we would recommend waiting until after the transaction has occurred. The stock most likely is not going to move much higher between now and then, and will have its price adjusted once the spin-off does occur. Plenty of shareholders will be selling the new stand alone business at first too, so there will be plenty of opportunity to purchase those without the shares getting away from you. This is our experience with transactions such as these, and if we were so inclined to play this, that is how we would do it - by waiting until the split had already occurred.