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Daily State of the Markets Stocks had a rough outing yesterday, to say the least. Moving averages were broken, support levels snapped, lower-lows were put in, and the volume was strong. All of which suggests that there may be more pain ahead before this thing ends – or so the chart watchers tell us. The stock market is currently trading on fear, uncertainty, and the idea of portfolio managers de-risking their portfolios. However, for those of you keeping score at home, the real issue behind the current dance to the downside is growth, or, in this case, the potential for a lack thereof going forward. To be sure, there were lots of negatives in the market on Thursday. Traders complained about the lack of a coordinated effort by the EU to deal with the debt mess. Geopolitical risk reared its ugly head in Korea. Here at home, Jobless Claims unexpectedly surged higher for the first time in a while. The Conference Board reported that the Leading Economic Index fell for the first time in more than a year. And the prospects for Financial Regulatory Reform definitely took its toll. However, the real story behind the S&P’s drop of nearly 12% over the past month has to do with the prospect of the global economic recovery suddenly slowing down. Everybody knows that China is working hard to keep bubbles from continuing to build in their real estate markets and the worry has been that the People’s Bank of China would eventually impact growth in the process. And given the fact that Europe is China’s number one trading partner, it isn’t hard to see that this concept may be helped by the austerity measures being implemented in the Eurozone. What does the debt mess in Europe have to do with the U.S. you ask? Not much on a direct basis. However, the bears argue that the concept of slowing global growth will undoubtedly work its way to our shores eventually. And with the stock market discounting the potential slowdown on a daily basis lately, it is easy to see that the worries about a slowdown in economic growth may become a self fulfilling prophecy. Already we are hearing about companies putting hiring plans on hold. One staffing firm told CNBC yesterday that any “at the margin” plans to hire are sure to be shelved quickly if the current market environment continues. And if the public takes a peek at their 401(k) statements sometime soon, the concept of staying home and watching movies or playing video games in the man cave may make a comeback. Now toss in the idea of forced liquidations, more regulation coming out of Washington (and around the globe), and higher taxes on the horizon, it becomes tough to see where the growth is going to come from. And if you want to take this idea across the pond, the same question can be asked of Europe. With just about every country cutting back due to too much debt, how exactly is Europe going to grow its way out of its problems? Okay, that’s probably enough “Debbie Downer” talk for one morning. The good news is that none of the slower growth projections are showing up just yet. So, there is still time for things to improve. In addition, stocks are now oversold and due for a pretty strong bounce. So, as Bill Murray’s character in Caddy Shack once said, “we’ve got that going for us, which is nice.” Turning to this morning… we don’t have any economic data to review before the bell. And unfortunately, the pre-game indicators are pointing south once again. Finally, regardless of the gyrations on the screens, try to enjoy your Friday and have a pleasant weekend… Pre-Game Indicators Here are the important indicators we review each morning before the opening bell…
* Report includes items that make comparisons to the consensus estimate questionable Wall Street Research Summary Upgrades: |
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Royal Dutch Shell (RDS.A) – Barclays Knight Capital (NITE) – BMO Capital Carnival Corp (CCL) – Goldman Sachs MasterCard (MA) – Janney Capital Family Dollar (FDO) – JPMorgan Fred’s (FRED) – JPMorgan AvalonBay (AVB) – Keefe, Bruyette & Woods Vornado Realty Trues (VNO) – Keefe, Bruyette & Woods Frontline (FRO) – Lazard Camden Propterty (CPT) – Macquarie Research Public Storage (PSA) – Macquarie Research Simon Properties (SPG) – Macquarie Research Essex Property (ESS) – Macquarie Research Taubman Centers (TCO) – Macquarie Research KeyCorp (KEY) – RW Baird
Darden Restaurants (DRI) – Bernstein Orient-Express (OEH) – Goldman Sachs Brocade (BRCD) – Goldman Sachs DreamWorks Animation (DWA) – Goldman Sachs Portugal Telecom (PT) – JPMorgan Dollar Tree (DLTR) – Morgan Stanley
Long positions in stocks mentioned: none
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