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Syndicated from http://seekingalpha.com/by/type/market-outlook/feed – Market Outlook.

Market Outlook

1. Lessons From Japan: Why Home Prices Will Continue to Fall - Edward Harrison submits:

   A great article in this past weekend’s Washington Post highlighted many of the major issues affecting the US housing market and most of those issues point to lower house prices. In particular, the self-reinforcing psychology of price deflation has already set in. And that means prices will continue to fall.

   While the government is doing its best to prop up the housing sector and maintain credit growth, most common metrics suggest house prices are still elevated. This artificial prop buys banks time by preventing banks from taking losses and depleting capital while the yield curve is still steep.

   
   Complete Story »
2. Germany's Peak Oil Confession: Why They're So Worried... and How to Profit - Energy and Capital submits:

   By Ian Cooper

   We’re already running out of oil we can easily find… And that's only part of the reason that Germany is starting to freak out.

   
   Complete Story »
3. Bob Bronson on Chicago Fed National Activity Index - Doug Short submits:
   Yesterday, I posted some charts on the Chicago Fed National Activity Index (CFNAI). A few hours later I received an email from Bob Bronson, a market historian whose theory of market cycles — the Bronson Asset Allocation Cycle (BAAC)— I featured a few months ago.

   The email included the annotated chart below with the following comment:

   While Doug Short, who does excellent work, may be reluctant to draw any conclusions from the down sloping all-data linear best-fit line, with the addition of the currently much more negatively sloped midline (line arrows) of the high-low volatility envelope, we're prepared to claim that the sharply deteriorating growth rate combination pattern clearly shows the US economy is still in the grip of an an ultimately deflationary economic Supercycle Bear Market Period Winter, which we quantify both fundamentally and technically and forecasted more than 12 years ago. Track record and explanatory documentation are available on request from Bob Bronson.

   
   Complete Story »
4. Year-End Consensus S&P 500 Price Target Drops to 1,205 - Hickey and Walters (Bespoke) submit:

   A number of Wall Street strategists have recently lowered their year-end S&P 500 price targets in Bloomberg's weekly survey. This has caused the average target to drop to 1,205, which is 20 points below where it started the year. Five of the twelve strategists have now lowered their targets after raising them earlier in the year. At 1,205, the consensus is still looking for a gain of 9.47% from current S&P levels to the end of 2010. Have a look below at all the changes that have been made to the target throughout the year. It's bad enough to try to predict where the market will be a year from now, and now they have to go changing them all the time?

   (Click chart to enlarge.)

   
   Complete Story »
5. EUR's Recent Run Lacked Clear Catalysts: Was That Really the Starting Gun? - Macro Man submits:

   Nothing that has come out over the last couple of days on Europe is exactly new; it has been festering all summer. However, the speed and ferocity of the renewed EUR splurge, without a really good catalyst, has caught us by surprise. The WSJ article, I mentioned yesterday, is irrelevant, but the market has been fiercely rummaging through their June notes to recycle the obvious.

   In euros' defence, the Eurocrats have wheeled out the Clown-in-Chief at the European Central Bank (ECB) - “ECB's Quaden sees no double dip in Europe." Sounds great, but this is from the guy that didn’t even see the single dip coming.

   
   Complete Story »
6. Looking for Direction? Do Some Digging! - David Moenning submits:

   As we’ve been saying for the past couple of months, this market remains range bound and news-driven. And if you want to know which way this thing will go over the next few days, you would be well suited to invest in a crystal ball as most indicators haven’t been helpful in determining which way the news will flow.

   However, this too shall pass. At some point in the future (hopefully, the not-too distant future) the trading range that has kept both teams pulling their hair out, will end. And one team will claim a major victory. The question, of course, is which team will come out on top?

   
   Complete Story »
7. Lydon Talks Elections and Rallies on CNBC - Tom Lydon submits:

   By Heather Hayes

   Tom Lydon appeared on CNBC to talk all things ETFs and how they relate to the upcoming November mid-term elections. Lydon also talked about whether this market rally is sustainable.

   
   Complete Story »
8. TIPS on Expected Inflation: A Unique Dividends Buying Opportunity - Zacks.com submits:

   By Dirk van Dijk, CFA

   Interest rates have three major parts. The first is what is known as the real interest rate, or how much the market is willing to pay you to defer your consumption of goods and services into the future. The second part is an expected rate of inflation. After all, if you want to defer buying a car today so you can buy a better car in the future, it will not help you much if you earn 5% per year on your money if the price of cars goes up at 10% per year. The final part is to compensate you for the risk that you will not get paid back.

   
   Complete Story »
9. Wall Street Breakfast: Must-Know News -

   

   • Bristol-Myers buys ZymoGenetics. Bristol-Myers Squibb (BMY) agreed to buy biotech firm ZymoGenetics (ZGEN) for $9.75/share in cash, buying itself "full ownership of a promising investigational biologic that strengthens our very diversified hepatitis C portfolio." The total purchase price is $885M, or about $735M net of cash acquired. Bristol-Myers expects the purchase to lower earnings by $0.03/share in 2010 and by $0.07/share in 2011. In after-hours trading, ZGEN +84%, BMY +0.3%.
   • Vodafone to shed China Mobile stake. Vodafone (VOD) confirmed late yesterday that it will sell its 3.2% stake in China Mobile (CHL) via a public offering led by Goldman Sachs (GS), UBS (UBS) and Morgan Stanley (MS). The sale is expected to bring in £4.3B ($6.6B), and the company plans to use around 70% of the proceeds for a stock buyback and the rest to pay back debt. Analysts suggest several other stake sales could follow as Vodafone works to slim down, though disposals of its stakes in companies like France's SFR and Verizon Wireless (VZ) could be more difficult because of the limited number of possible buyers.
   • Foster's rejects $2.5B offer for wine unit. Foster's Group (FBRWY.PK) turned down an offer of as much as A$2.7B ($2.5B) for its struggling wine unit from an unidentified private equity firm. The company said it had considered the “indicative, non-binding” proposal, but ultimately decided that proceeding with its original plan of demerging its wine and beer businesses would provide the greatest shareholder value. In Aussie trading, Foster's closed +4.45%.
   • Hurd, now at Oracle, gets hit by H-P suit. Hewlett-Packard (HPQ) filed suit against Mark Hurd, its former CEO, for violating confidentiality agreements, one day after Hurd was named president of Oracle (ORCL). The lawsuit claims that Hurd's appointment to Oracle could cause H-P to lose customers, trade secrets and its competitive advantage, as it would be "impossible" for Hurd to serve as Oracle's president without using confidential information from his prior post. Oracle called the lawsuit "vindictive." Shares of Oracle rose 5.9% yesterday on news of Hurd's appointment; H-P closed down 1%.
   • Boeing open to a merger. Boeing (BA) said yesterday it will consolidate its military aircraft business to four divisions from six, likely resulting in work reductions, including a 10% cut in the unit's executive positions. Notably, Dennis Muilenburg, Boeing's head of defense, also said yesterday that the company is "actively" looking at potential acquisitions and would not rule out a merger with another large defense contractor.
   • BP accepts partial spill blame. BP (BP) will release its internal report today on the Deepwater Horizon disaster that led to the worst oil spill in U.S. history. Sources say BP shoulders some of the blame in the report, but it's unclear just how much; assuming too much blame potentially exposes the company to greater legal liability, while taking too little responsibility will prompt critics to accuse the company of shirking its responsibilities. BP has tried to position the report as an objective analysis of the events leading up to the spill. Premarket: BP +3.5% (7:00 ET).
   • SEC confirms 'quote stuffing' probe. The SEC's Mary Schapiro confirmed the agency is looking into "quote stuffing," the practice of placing an unusually large number of buy or sell orders for stocks in a fraction of a second, and then canceling the orders almost immediately. Schapiro said the SEC is considering requiring traders to hold orders open for minimum periods, and signaled more broadly that high-frequency traders will face new curbs in the aftermath of May's flash crash.
   • Coming soon: Google TV. Google (GOOG) CEO Eric Schmidt firmed up the company's plans to launch Google TV in the U.S. this fall and internationally in 2011. It's "very unlikely" Google will get into content production itself and the company has instead been focused on building partnerships with various content providers. The move is still likely to face opposition from a Hollywood worried about illegal content.

   Earnings: Tuesday After Close

   • Phillips-Van Heusen (PVH): Q2 EPS of $0.72 beats by $0.18. Revenue of $1.1B (+108%) in-line. Raises FY11 Revenue and EPS guidance to $4.44B - $4.47B and $3.70 - $3.80 respectively. Shares +1.9% AH. (PR)

   Today's Markets

   • In Asia, Japan -2.2% to 9024.6. Hong Kong -1.5% to 21089. China -0.1% to 2695. India +0.1% to 18667.
   • In Europe, at midday, London flat. Paris +0.2%. Frankfurt +0.2%.
   • Futures: Dow +0.2%. S&P +0.2%. Nasdaq +0.3%. Crude -0.4% to $73.79. Gold +0.1% to $1260.90.

   Wednesday's Economic Calendar

   • 7:00 MBA Mortgage Applications
     7:45 ICSC Retail Store Sales
     8:55 Redbook Chain Store Sales
     10:00 Quarterly Services Report
     11:00 Results of $21B, 10-Year Note Auction
     2:00 PM Fed's Beige Book
     3:00 PM Consumer Credit
   • Notable earnings before Wednesday's open: CIEN, SFD
   • Notable earnings after Wednesday's close: GAME

   Seeking Alpha's Market Currents team contributed to this post.

   
   Complete Story »
10. Bull Market in the Making -

    Bull markets are born in pessimism, grow in skepticism, mature on optimism and die on euphoria. Those are the immortal words of John Templeton which I have used on many occasion before. Now here is the application of those words. While CNBC, Bloomberg, the BBC, WSJ, Financial Times, Newsweek, Businessweek, Fortune - in fact just about every form of "news" medium and blog site - continues to bombard the crowd with economic problems and dramas and in so doing brainwashes Joe Average punter/fund manager/investor into believing that the end of the capitalistic world as we know it is near, the average stock in the world continues to advance and is now at a multi-week high. Yes that is right.

    The chart below is an equal weight version of the Bloomberg World Index (a mkt cap weighted index of 4500 stocks). If things are so bearish why is this index (representing the behavior of the average stocks in the world) trading at a multi-week high?

    
    Complete Story »

Syndicated from http://usmarket.seekingalpha.com/feed/ – US Market.

US Market

1. Pitney Bowes: A Very Attractive Yield and a Promising Future - Avi Morris submits:

   Pitney Bowes (PBI) is a Dividend Aristocrat with the highest yield at 7.3% and 4th highest yield in the S&P 500, so high it approximates yields on junk bonds. It became a Dividend Aristocrat 3 years ago but has only been lifting the annual dividend 2¢ or 4¢ annually in the last decade, reflecting a period of flattish earnings.

   PBI is well known for providing mail services (both incoming and outgoing) to businesses and has been hurt by substitution of email and computer related services for traditional mail business along with corporate budget cutbacks in the recession. PBI provides software, hardware and services that integrate physical and digital communications to make customers more productive, helping them grow their businesses. PBI works with leading companies, such as Hewlett-Packard (HPQ) and Kodak (EK), to help companies reduce paper volumes and improve productivity. Last year PBI announced a new distribution agreement with Digital China for bringing mailing solutions to businesses though more than 5000 resellers in 600 cities in China (after signing similar agreements in Japan and India).

   
   Complete Story »
   
2. 5 Quality Stocks Seeing Significant Institutional Buying - Kapitall submits:

   The following is a list of quality companies, as defined by the following screen:

   • Return on Assets (5 yr avg) > 20%
   • Return on equity (5 yr avg) > 20%
   • 5y revenue growth rate > 20%
   • 5y EPS growth rate > 20%
   • Return on investment (5 yr avg) > 20%
   • Gross margin > 20%

   In addition, all of these companies have seen significant institutional inflows over the last 3 months. Here is the output of the screen: (Click to enlarge)
   
   All data sourced from Reuters.com and Google Finance.

   
   Complete Story »
   
3. Why Greece Won't Turn Itself Around - Felix Salmon submits:

   If you haven’t yet read Michael Lewis’s fantastic piece on Greece, you should really carve out some time to do so. It’s almost impossible to summarize, but suffice to say that it serves as an utterly convincing and highly entertaining 11,500-word rejoinder to the IMF’s bullish case that Greece can somehow avoid default.

   Essentially, the only way that Greece can survive its current debt crisis without default and/or devaluation is by a concerted and nationwide pulling-together for the sake of the country as a whole, including an unprecedented willingness on the part of Greece’s citizens to pay their taxes. But that’s not going to happen.

   
   Complete Story »
   
4. Dave, What Should I Do? - David Merkel submits:

   I get requests from local friends fairly regularly for aid in understanding their finances. While coming home from church recently, I mentioned to her that many were seeking my opinion in our congregation. Her response was, “So what else is new?” Then I began to list it, family by family, and the congregations that were seeking my opinion for their building/endowment funds, and/or borrowing needs. As I went down the list, my wife’s responses were “Not them!”, and “Them too?!” and “No!”

   What can I say? My wife is the best wife I have ever heard of, but even married to me, economics is a distant topic. Her father was well-off, but humble, and I am well-off, and I try to be humble. You can be the judge there.

   
   Complete Story »
   
5. Stocks Take Back Some of Tuesday's Loss - Brooks McFeely submits:

   4:29 PM, Sep 8, 2010 --
   

   • DJIA up 46 (+0.5%) to 10,387
   • S&P 500 up 7 (+0.6%) to 1,099
   • Nasdaq up 20 (+0.9%) to 2,229

   
   GLOBAL SENTIMENT

   
   Complete Story »
   
6. Today in Commodities: Happy New Year - Matthew Bradbard submits:

   September 8th is a big day in 2010: Rosh Hashanah, the Jewish New Year, and the first official trade day of Galico Capital (Bradbard’s new CTA).

   Crude traded well above the 20 day MA but failed to settle above that level; in October at $74.60. We suggest light long exposure anticipating a trade above the down sloping trend line in the coming sessions. If so we would anticipate a quick gain of $3-4. The distillates, heating oil and RBOB also look like an interim bottom has formed and we should be trading higher from here. Continue to scale into November natural gas futures and to purchase November call spreads. We’re anticipating a 50-75 cent appreciation in the coming 30-45 days… trade accordingly.

   
   Complete Story »
   
7. Wednesday Options Recap - Frederic Ruffy submits:

   Sentiment

   Major averages are holding modest gains on another slow news day Wednesday. With no economic news to guide the action, focus remained on Europe’s banks and investors seemed to find solace in the fact that Portugal had a successful offering of 10-year bonds. European benchmarks moved higher and that set a positive tone of trading in the US. Later in the day, the Fed’s latest Beige Book was released and the qualitative assessment of the economy indicated widespread slowing of economic activity, which was not a surprise. However, investors did seem to respond favorably to tax and stimulus initiatives unveiled by the Obama administration Tuesday afternoon. Heading into the close, the Dow Jones Industrial Average has recaptured 60 of yesterday’s 107-point loss. The CBOE Volatility Index (.VIX) is down .60 to 23.20. Trading in the options market is running about the typical levels, with 6.05 million calls and 4.8 million puts traded so far.

   Bullish Flow

   Bullish flow detected in Micron Technology (MU), with 28216 calls trading, or 2x the recent avg daily call volume in the name. Shares are off 17 cents to $6.58 and top trade is a block of 17,500 April 9 calls at 42 cents on ISE, which is an opening buyer, according to ISEE data. In fact, data shows that 25K calls have been bought to open on the chipmaker so far today. April 9s are most actives, with 25K traded. Implied volatility is up 4 percent to 55. No news on the stock. Shares are down about 42 percent since April 14 and today’s call buyers might be anticipating a recovery over the next two quarters.

   
   Complete Story »
   
8. Wednesday Options Update: BAC, XRT, ZMH, GMCR, COF, YHOO, ZGEN, NYT - Andrew Wilkinson submits:

   Bank of America Corp. (BAC) – One massive options transaction on Bank of America today suggests one investor has made a bee-line for the hills. The trader observed ducking for cover appears to be expecting the recent rebound in the price of the financial firm’s shares to come to an abrupt end ahead of September expiration. Shares in BAC climbed 2.1% during the session to pin down an intraday high of $13.49. It looks like the options player sold shares of the underlying stock for approximately $13.35 each and purchased 100,000 calls at the September $14 strike for premium of $0.10 apiece. The trader, who is now short the stock and effectively long a stop loss, seems to be anticipating shares will falter ahead of expiration. Near-term pessimism by one trader was countered by longer-term bullish activity on BAC in the January 2011 contract where it looks like another investor put on a three-legged bullish combination strategy. The options optimist sold 10,000 puts at the January 2011 $12.5 strike at a premium of $0.84 each, purchased 10,000 calls at the January 2011 $14 strike for premium of $1.00 apiece, and sold 10,000 calls at the higher January 2011 $17.5 strike at a premium of $0.16 a-pop. The transaction nets out to $0.00 and positions the trader to make money if shares of the financial services firm rally above $14.00 by expiration day. Maximum potential profits of $3.50 per contract are secure in the trader’s piggy bank if the bank’s shares jump 29.7% to trade above $17.50 by expiration day in January. We note that open interest at each of the strikes described is sufficient to cover each of the three legs of the transaction. Therefore, it is possible that the seemingly bullish trade represents a closing transaction instead.

   SPDR S&P Retail ETF (XRT) – Options on the retail ETF were some of the most actively traded during the current session. The majority of the 171,000 contracts exchanged on the fund as of 2:50 pm ET were September contract puts and calls, but there were some longer-term positions established today, as well. Shares of the XRT, an exchange-traded fund designed to replicate the performance of the S&P Retail Select Industry Index, earlier rallied as much as 1.35% to an intraday high of $38.71. One big options player hoping to see the XRT’s shares increase substantially by December expiration initiated a large-volume debit call spread this afternoon. The investor appears to have purchased 20,000 calls at the December $41 strike for a premium of $1.25 each, and sold the same number of calls at the higher December $45 strike at a premium of $0.27 apiece. The net cost of the transaction amounts to $0.98 per contract. Thus, the call-spreader is positioned to make money if shares of the fund add 8.45% to today’s high of $38.71 to surpass the effective breakeven price of $41.98 by expiration day in the final month of 2010. Maximum potential profits of $3.02 per contract are available to the retail-bull should the XRT’s shares jump 16.25% in the next several months to trade above $45.00 by December expiration.

   
   Complete Story »
   
9. Lessons From Japan: Why Home Prices Will Continue to Fall - Edward Harrison submits:

   A great article in this past weekend’s Washington Post highlighted many of the major issues affecting the US housing market and most of those issues point to lower house prices. In particular, the self-reinforcing psychology of price deflation has already set in. And that means prices will continue to fall.

   While the government is doing its best to prop up the housing sector and maintain credit growth, most common metrics suggest house prices are still elevated. This artificial prop buys banks time by preventing banks from taking losses and depleting capital while the yield curve is still steep.

   
   Complete Story »
   
10. Good News for Job Seekers: Openings Are Up 30% in the Last Year - Mark J. Perry submits:
    
    (Click to enlarge)
    On Wednesday the BLS released its latest figures on Job Openings and Labor Turnover, and reported that job openings increased by 178,000 in July, following decreases of 75,000 in May and 363,000 in May. However, since the first of the year job openings have increased by 511,000, and by 704,000 since last July (+30%).
    Private-sector job openings have improved by 677,000 over the last year, from 2.04 million in July 2009 (the trough) to 2.72 million in July of this year, representing a 33% increase. Most sectors have registered large gains in jobs openings over the last, including construction (+69%), manufacturing (+109%), retail trade (+42%), professional and business services (+22.5%), and leisure/hospitality (+34%).
    As the chart above shows, the number of job openings typically lead the number of civilian jobs by about six months, so the ongoing gains in job openings over the last 12 months suggests corresponding, ongoing gains in employment through the rest of the year, and continuing into 2011.
    Disclosure: None
    
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