Highlights
The S&P500 made it biggest move of the year rising 1.1% ongreat news all around. Starting with theUS, Housing starts came in above the consensus showing that there may be lifein the housing market after all. Joblessclaims also came in at a much better than expected 348k compared to a consensus365k showing that the labor market it also heating up. The PPI numbers less food and energy also roseabove the expectations showing that inflation is starting to potential creep inon the supply side. Lastly from the US,the Philadelphia Fed Survey blew out the estimates following the Empire Statenumber yesterday showing that this market may have much more room to run.
I think the most important news on the day came on rumor that theEU will give approval to start the Greek debt swap by Monday. The Euro, which dropped in the high 1.29sfinished the day at 1.313. There stillis some debate on how an escrow account will collect revenues to make sure thedebt gets paid, but all in all the market loves certainty and as soon as theGreeks "fix" their problems, the better off we will be.
Equities
Markets rose on the day on good news from around the world. NASDAQ took the biggest leap of the large indiceswith a 1.5% pop. In individual names, GMposted its highest profit ever and even though they missed profit estimates,they finished the day up 9% at $27.17. I still think GM is a great buy at theselevels moving forward. Nordstrom's (JWN) profits rose 1.7% as the affluentcustomer continues to spend. This was in line with wall street estimates,however the company issued cautious guidance dropping the shares heavily inafter hours before a recovery in the stock.
Cabela's (CAB) finished the day up nearly 14% on better thanexpected earnings, revenues and expectations moving forward. Advanced AutoParts (AAP) was another name I would follow as they rose over 8% on the day onpositive earnings results. I am stillvery bullish on my Ford (F) pick moving forward and the auto sector in general. In terms of volume, Bank of America was themost active stock with a 4% gain followed by Sprint, Citigroup, and Ford.
Rates and Fx
In FX news, the Euro finished the day off strong on the Greek news. I feel the move will continue until at least1.33 on continued progress. The Yencontinued its decline against the dollar moving towards 78.93. Other than that, the Dollar finished down tothe majority of currencies on the day. Most notable were the AUD at 1.0755/$, CHF at .9191/$, and the GBP at1.5801.
In fixed income news, rates sold off across the curve. The 30 year was off 5.8bp moving to 3.15% andthe 10 year sold off 6.4bp finished at 1.99, still under the 2% mark. I wouldlook at shorting rates especially on news of a Greek resolution as a risk ontrade should push yields higher.
Commodities
As a potential conflict with Iran becomes closer and closer andthe economy continues to heat up, I would pay close attention to oil. WTI finished at $102.44 and natural gasfinished at $2.55. I still in bullishNG, but if a war with Iran sparks, there are predictions of oil crossing the $200mark until we can clear the Strait of Hormuz where some 20% of the world's oilpasses through. Gold rose slightly to finish at $1,733.
Tomorrow
Major economic news tomorrow includesthe CPI data and a leading indicators number. The CPI should be telling on how the fed will monitor its ratesexpectations. I think rates will risesooner than we think on continued strength in the US economy and the inevitableinflation on the horizon. In terms ofmarkets, I am bullish into the weekend as a lot of people missed out on therally and will want to put money to work in hopes that the Greek situation isgetting better.
After an earnings miss, I still believeCLF is a great buy as they finished the day flat. At these levels the stock trades at 6xtrailing earnings. Most importantly,most of the management team bought large amounts of shares showing thatmanagement believes the company has strong prospects moving forward.
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