Ticonderoga: Strategy and Economics - Late Morning Radar Screen
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Rating Summary:
3 Buy, 0 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 0 | Down: 0 | New: 0
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Ticonderoga: Strategy and Economics - Late Morning Radar Screen by John Stoltzfus
Positive offsets from global M&A and modest improvements in economic data stateside last week helped stocks rally earlier today. Though Asia closed broadly higher, gains in Europe from this morning have faded, and the stateside U.S. benchmarks are lower in mid-morning trading.
It’s an M&A Monday, with eurozone-based Unilever (NYSE: UN) (NR) buying Chicago-based Albert Culver for $3.7 billion in cash. Also on the tape this morning, Southwest Airlines (NYSE: LUV) (NR) is offering to buy AirTran (NYSE: AAI) (NR) for around $1.4 billion, or $7.69 per share. AAI’s shares closed on Friday at $4.55.
Not only is M&A a poppin’ in the developed markets of late, but it’s happening in the emerging market space, as Wal-Mart (NYSE: WMT) (NR) is looking to buy Massmart, a South African retailer, in a proposed deal valued around $4.6 billion. Also in the media today, news extending from last week that Bright Food Group Co.—Shanghai’s largest dairy company— wants to buy U.K. household name United Biscuits from Blackstone and PAI Partners.
M&A activity, along with last week’s less worrisome, even if mixed, economic stateside data has increased investor confidence at the same time that prospects for the developed economies of the world to “double dip” their way into recession appear to be fading. The problem remains, however, that even as double-dip fears fade, they are replaced by expectations of a landscape left riddled with below-trend growth that leaves sufficient worry overhang over the developed markets and even emerging markets (as decoupling remains debunked) to keep any surge in stock index valuations likely to be tested in quick order.
Speaking of which, look to this week’s economic data to offer opportunity to test recent rally mode, with regional Fed activity reports, home prices and Q2 GDP metrics along with initial jobless claims.
From our perspective on the lookout at “the Fort,” the catalyst that could provide “legs” to the risk/growth recovery trade remains to appear on the landscape. We expect the midterm elections to prod politicians, incumbent and otherwise, of both parties to propose some substantial ideas to avoid yet another “jobless recovery.” “Jobs” remains the four-letter word that remains to be addressed in scale to turn the economy. Look for ideas to be forthcoming that include re-training, training and hiring financed by tax breaks to corporate entities as the most likely proposed solution.
Markets Today
Asian stocks moved broadly higher, driving the MSCI Asia Pacific Index up 1.3% to a five-month high after last week’s economic data from the U.S. showed a greater than expected increase in U.S. capital goods and today’s news showed an increase in big-name M&A activity around the world. MSCI Emerging markets added 0.8% overnight.
News that Japan may be on the verge of putting in place a $54.6 billion stimulus package to boost its economy further encouraged investors in Asia today, adding to the recent spate of investor confidence that a double dip in the developed markets will be averted.
In late afternoon, stocks in Europe gave up earlier gains, falling as shares of telecom and retailing establishments dragged the region’s benchmarks lower. The broad average for the region, the Stoxx 600, fell 0.4%. Among the major regional markets, only the Netherlands and Switzerland were showing gains as the afternoon across the pond grew long.
Stateside, stocks moved lower after the opening on some profit-taking and as investors pondered the worthiness of the recent rally that lifted the S&P 500, the S&P 400 (mid caps) and the Russell 2000 (small caps) higher by 9.47%, 10.34% and 11.45%, respectively, from the end of August through last Friday.
Bonds
Treasury prices moved higher as stock prices eased, with the 2-year yield nearly unchanged at 0.42% and the 10-year at 2.55%.
Commodities
Gold crossed above the $1,300 mark earlier, poised to extend its recent record-breaking run-up.
The dollar and the euro showed some weakness. Copper and oil prices eased lower.
Positive offsets from global M&A and modest improvements in economic data stateside last week helped stocks rally earlier today. Though Asia closed broadly higher, gains in Europe from this morning have faded, and the stateside U.S. benchmarks are lower in mid-morning trading.
It’s an M&A Monday, with eurozone-based Unilever (NYSE: UN) (NR) buying Chicago-based Albert Culver for $3.7 billion in cash. Also on the tape this morning, Southwest Airlines (NYSE: LUV) (NR) is offering to buy AirTran (NYSE: AAI) (NR) for around $1.4 billion, or $7.69 per share. AAI’s shares closed on Friday at $4.55.
Not only is M&A a poppin’ in the developed markets of late, but it’s happening in the emerging market space, as Wal-Mart (NYSE: WMT) (NR) is looking to buy Massmart, a South African retailer, in a proposed deal valued around $4.6 billion. Also in the media today, news extending from last week that Bright Food Group Co.—Shanghai’s largest dairy company— wants to buy U.K. household name United Biscuits from Blackstone and PAI Partners.
M&A activity, along with last week’s less worrisome, even if mixed, economic stateside data has increased investor confidence at the same time that prospects for the developed economies of the world to “double dip” their way into recession appear to be fading. The problem remains, however, that even as double-dip fears fade, they are replaced by expectations of a landscape left riddled with below-trend growth that leaves sufficient worry overhang over the developed markets and even emerging markets (as decoupling remains debunked) to keep any surge in stock index valuations likely to be tested in quick order.
Speaking of which, look to this week’s economic data to offer opportunity to test recent rally mode, with regional Fed activity reports, home prices and Q2 GDP metrics along with initial jobless claims.
From our perspective on the lookout at “the Fort,” the catalyst that could provide “legs” to the risk/growth recovery trade remains to appear on the landscape. We expect the midterm elections to prod politicians, incumbent and otherwise, of both parties to propose some substantial ideas to avoid yet another “jobless recovery.” “Jobs” remains the four-letter word that remains to be addressed in scale to turn the economy. Look for ideas to be forthcoming that include re-training, training and hiring financed by tax breaks to corporate entities as the most likely proposed solution.
Markets Today
Asian stocks moved broadly higher, driving the MSCI Asia Pacific Index up 1.3% to a five-month high after last week’s economic data from the U.S. showed a greater than expected increase in U.S. capital goods and today’s news showed an increase in big-name M&A activity around the world. MSCI Emerging markets added 0.8% overnight.
News that Japan may be on the verge of putting in place a $54.6 billion stimulus package to boost its economy further encouraged investors in Asia today, adding to the recent spate of investor confidence that a double dip in the developed markets will be averted.
In late afternoon, stocks in Europe gave up earlier gains, falling as shares of telecom and retailing establishments dragged the region’s benchmarks lower. The broad average for the region, the Stoxx 600, fell 0.4%. Among the major regional markets, only the Netherlands and Switzerland were showing gains as the afternoon across the pond grew long.
Stateside, stocks moved lower after the opening on some profit-taking and as investors pondered the worthiness of the recent rally that lifted the S&P 500, the S&P 400 (mid caps) and the Russell 2000 (small caps) higher by 9.47%, 10.34% and 11.45%, respectively, from the end of August through last Friday.
Bonds
Treasury prices moved higher as stock prices eased, with the 2-year yield nearly unchanged at 0.42% and the 10-year at 2.55%.
Commodities
Gold crossed above the $1,300 mark earlier, poised to extend its recent record-breaking run-up.
The dollar and the euro showed some weakness. Copper and oil prices eased lower.
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