Friday, February 15, 2013
The backdrop for today's market action remains favorable, with
the New York Fed's Empire State manufacturing index coming in
better than expected. The regional manufacturing index reversed
seven months of negative readings to reach its best level since
May 2012. Other data on tap for release a little later includes
the University of Michigan's preliminary Consumer Sentiment
survey for February and the January Industrial Production data.
The sentiment data is expected to have improved from the prior
month's level, with momentum in the stock market and gains in
jobs expected to offset the income drag from higher payroll taxes
resulting from the Fiscal Cliff deal.
But stocks may not do much today ahead of the President's Day
weekend, particularly after reaching milestone levels the day
before. The market's gains on Thursday were notable as they came
in the face of distressing news out of Europe and Japan. This has
been the norm lately, with investors using every pullback as a
buying opportunity. With money flows indicating that mom and pop
investors are flocking back to the market, it appears that nobody
wants to miss out on this rally. Retail investors' sense of
timing doesn't inspire much confidence, but let's hope that they
don't get disappointed again.
Over the weekend, we will get the official statement from the
Group of 20 (G-20) finance officials meeting in Moscow. The
meeting is pondering ways to avoid 'begger thy neighbor' currency
actions, an issue that has take center stage after the activist
policies of Japan's new government has taken effect. The value of
Japan's currency relative to that country's trading partners has
been sharply coming down in recent days, while that of Euro has
been going up. With every major developed country pursuing
unconventional monetary policies at present, the G-20 meeting is
not expected to come out with anything tangible, though there
wouldn't be any shortage of nice-sounding words and commitments
in the final statement.
In corporate news, we got better looking results from
Campbell Soup
(
CPB
) and
J.M. Smucker
(
SJM
), while
Kraft Foods
(
KRFT
) came up short. The drama surrounding
Herbalife
(
HLF
) took another interesting turn yesterday, after Carl Icahn
announced that he has accumulated a 13% stake in the company,
opposite the well publicized short position in the company by
rival hedge fund manager Bill Ackman. Given Icahn's feelings for
Ackman, some may wonder whether his Herbalife stake is his way of
getting back Ackman. We will know more in the coming days, but
this clash of the titans is no doubt very interesting.
Sheraz Mian
Director of Research
CAMPBELL SOUP (CPB): Free Stock Analysis
Report
HERBALIFE LTD (HLF): Free Stock Analysis
Report
KRAFT FOODS GRP (KRFT): Free Stock Analysis
Report
SMUCKER JM (SJM): Free Stock Analysis Report
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