By Carlos Guillen
Stocks markets here at home are having a great trading session, reflected by the Dow Jones Industrial Average reaching yet another intraday-high, as most economic data points presented today, combined with positive comments from Fed Chairman Ben Bernanke, have served to motivate investors on the sidelines to get in the game.
For starters, the Initial Claims data posted earlier today was encouraging and continued to fuel the overall positive attitude toward an improving jobs market. According to the Department of Labor, initial claims during the week ended July 13 totaled 334,000, decreasing from the 358,000 revised figure reported for the prior week and landing below the Street's estimate of 348,000. The level of new claims continues to bounce around the 350,000 level, which economists say is consistent with moderate labor market growth of about 150,000 net new jobs a month. The initial claims' four-week moving average was 346,000, decreasing from the prior week's average of 351,250. Despite the fact that there are normally difficulties in getting the number right given the July 4 holiday, the overall perception is still encouraging.
A bit mixed today was that another report showed that the indexes of leading indicators held on to its highs and appears to be maintaining a favorable short term uptrend, signaling that the stronger housing and job markets are helping the U.S. economy make more progress in the first half of 2013. According to the Conference Board, its Leading Economic Index (LEI) during June remained unchanged month-over-month at 95.3, worse than the Street's consensus estimate calling for a 0.3 percent month-over-month rise. Declines in building permits, new orders and stock prices were offset by gains in consumer expectations and initial claims for unemployment insurance. More encouraging was that LEI's six-month growth rate remains positive, suggesting the economy will continue expanding through the end of the year.
Also motivating investors was that manufacturing in the Philadelphia region suddenly expanded this month. According to the Federal Reserve Bank of Philadelphia, its diffusion index of current activity July result landed at 19.8, higher than the Street's consensus estimate of 5.3, increasing from the 12.5 reached in June. Given that a level above zero indicates an economic expansion, this represents the largest expansion since March 2011 in the region covering eastern Pennsylvania, southern New Jersey, and Delaware. On Monday, manufacturing data from the New York region also showed expansion as the general business conditions index July result landed at 9.46, higher than the Street's consensus estimate of 3.6.
Putting the icing on the cake were positive comment from Ben Bernanke before the Senate Banking Committee where he stressed that the central bank's timetable for pulling back on its $85 billion-a-month bond-buying program isn't on a "preset course" and that it could be delayed if the economy weakens. While Bernanke did say that the Fed could also speed up its tentative schedule for winding down the program if the economy performs better than expected, his testimony emphasized that headwinds for the economy and tepid inflation might keep the easy-money policies in place longer than the Fed indicated last month. And this of course invigorated market further, leading the Dow to new highs, making this a great trading session.
Chinese Internet M&A Heats as Usage Expands
By David Urani
The China Internet Network Information Center reported yesterday that China's internet user population is now up to 591 million as of the end of June. Not only is that significantly larger than the entire population of the US, but it's also growing at a good pace. For the first six months of this year Chinese internet users are 26 million, or 4.6%. Moreover, the penetration of internet among the total population in China is just 44% (up from 38% in 2011); it's 85% in the US.
That means the opportunities in the Chinese web space remain very strong. What also remains a reality in the Chinese web industry is that it's notably more fragmented than that of the US which has had more time to mature. A few big names that come to mind that are on the prowl include Baidu (NASDAQ:BIDU), the #1 search engine; Tencent, the largest web portal; and Alibaba, the largest online retail market.
Just this week, a couple of big deals were made, including Baidu's $1.9 billion acquisition of 91 wireless, a popular app store, which was the largest ever purchase of a Chinese internet company. Alibaba also invested into online travel company Qyer for an undisclosed amount (in April Alibaba also took an 18% stake in Twitter-like service Sina (NASDAQ:SINA) for $586 million). Just yesterday, popular online dating company Jianyuan.com (NASDAQ:DATE) was subject of a takeover rumor of alleged talks from both Tencent and Alibaba; DATE jumped 15% yesterday.