We have some important economic data points out today, but most of the talk today will center around the first Presidential Debate in this election for U.S. president. It is still early in the cycle and a lot can happen, but much will be made of this debate over the next few days. The debate takes place in Colorado and will focus on domestic issues with the economy being one of the focuses and a leading question generator for those asking potential voters what they would ask the candidates.
We have economic news out today, it is as follows (data set - consensus).
- MBA Mortgage Index - N/A
- ADP Employment Change - 133K
- ISM Services - 53.0
- Crude Inventories - N/A
Looking at Asian markets we see markets are mixed:
- All Ordinaries - up 0.15%
- Shanghai Composite - CLOSED
- Nikkei 225 - down 0.45%
- NZSE 50 - up 0.47%
- Seoul Composite - CLOSED
In Europe markets are lower:
- CAC 40 - down 0.11%
- DAX - down 0.03%
- FTSE 100 - down 0.08%
- OSE - down 0.28%
The rally continues in Research In Motion (RIMM) and the shorts have been killed recently as investors have become bullish on the outlook for the maker of Blackberry smartphones after their most recent quarterly announcement. Shares closed yesterday at $8.27 after rising $0.41 (5.22%) on volume of 55.1 million shares. As the melt-up continues, we have to believe that much of the volume is the result of the machines moving in and trading for the penny per trade via high frequency trading. Shares are up about $2/share or 33% from before the announcement so it will be interesting to see just how far this momentum can take them and how many of the shorts will be forced to cover.
It became obvious yesterday why Sprint (S) shares had been so weak over the past few trading days and it had to be a result of the news that came out concerning MetroPCS (PCS) and T-Mobile looking at a tie-up. Bloomberg broke the news, and shares in Sprint fell $0.28 (5.41%) to close at $4.90/share on volume of 189 million shares. Investors are now speculating that Sprint may not be the one to lead the consolidation in the sector and in fact could get left out of the movement due to T-Mobile getting the dominoes to fall their way.
MetroPCS shares were up $2.05 (17.80%) to close at $13.57/share on volume of 37.7 million shares as the buyout rumor trade emerged again. Also up on the news was Leap Wireless (LEAP) as it is widely believed that whoever buys MetroPCS would find Leap Wireless as a natural bolt on acquisition - and that is where the worry is. If T-Mobile were to take out all of these players, it would leave Sprint and the new T-Mobile possibly too large to merge as it would effectively create a cellular market with only three huge players.
T-Mobile has the cash to do a deal from transactions over the past year and their recent transaction to offload towers, so this shall be an interesting story to watch moving forward. The telecom consolidation that investors have been waiting for may have finally arrived.
The retail sector is currently separated by the haves and have nots, and Express (EXPR) obviously finds itself in the have nots group after yesterday. Shares fell $3.33 (22.19%) to close at $11.68/share on volume of 12.8 million shares after the company said that they spent more on promotions and would miss on the 3rd quarter due to high inventory levels. Shares in Express set a new 52-week low yesterday, and that was by a very wide margin from the old one which is never good. With all of these negatives, we find it hard to justify putting capital to work here and would continue to urge readers to put capital to work in names which are having success right now. Do more of that which is working and less of that which is not is the motto for retail investing right now.