The fiscal saga goes on in Washington. Reading the wires,
it seems the political standoff between the Democrats and
Republicans has not worsened overnight with a few stories about new
debt ceiling legislation floating around; however, resolution is
still a long road. The 1 month T-bill yield was quoted at 29
bps at writing down from 35 bps yesterday. Default risk
premium has eased somewhat.
There were a number of potentially market moving events overnight
which would normally find more attention if there was no fiscal
crisis. Here are a few items to chew on:
1) It looks like Janet Yellen will be nominated for Fed
Chair. The move is not a surprise, and argues for the status
quo on monetary policy. However, it does show the
Administration finally trying to inject some stability into the
2) Profit news in the consumer sector is mostly cool. Costco
(COST) reported earnings short of estimate at $1.40/share against a
forecast of $1.46/share. FX and gasoline were a headwind to
same store sales growth. Family Dollar (FDO) guided down for its
coming quarter projecting EPS of $0.65 to $0.75 against an estimate
of $0.76. Del Frisco's Restaurant (DFRG) reported weak
results. Likewise, YUM Brands (YUM) continues to struggle in
China. Beyond the profits, Men's Wearhouse (MW) is being courted by
Jos A Bank (JOSB) for $48/share. MW closed just above $35
Tuesday and appears to be rejecting the offer.
3) The industrial sector looks generally solid. Along with
reporting stronger than expected result, Alcoa (AA) is raising its
outlook for the heavy truck market due to improved conditions in
Europe and China. RPM International (RPM) posted a strong
profit on 9.1% organic growth. It noted improvement in Europe
and its roofing business. It also suggested momentum in
all aspects of its consumer segment. This is offset by a
profit and revenue short fall at Fastenal (FAST).
4) Knight Trucking (KNX) guided its outlook lower for Q3 and
Q4. The company noted slow volumes early in the quarter, but
highlighted regulatory burden and a shortage of drivers as cost
factors. The driver shortage is an interesting
footnote. Weakness in the sector is not a surprise given peer
5) Monthly sales data from semiconductor foundries United Micro
(UMC) and Advanced Semiconductor (ASX) were healthy up 14.9% y/y
and 19.5% y/y respectively.
6) The VIX is approaching one year highs at 21.91 and 23.23.
These levels may provide some support to stock prices on a
technical and fear basis.
: Pretended Washington is a non-factor for the momentum:
Which of these factors grab your attention as most important to
stock market pricing? Let me know your thoughts below:
ADV SEMICON ADR (ASX): Free Stock Analysis
COSTCO WHOLE CP (COST): Free Stock Analysis
DEL FRISCOS RST (DFRG): Free Stock Analysis
FASTENAL (FAST): Free Stock Analysis Report
FAMILY DOLLAR (FDO): Free Stock Analysis Report
JOS A BANK CLTH (JOSB): Free Stock Analysis
MENS WEARHOUSE (MW): Free Stock Analysis Report
UTD MICROELECTR (UMC): Free Stock Analysis
YUM! BRANDS INC (YUM): Free Stock Analysis
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