All right, we are up nicely in pre-markets!
Mostly we can thank better-than-expected retail sales led by WMT with is 3.9% jump in same store sales – and that’s excluding fuel. WMT had forecast 2% so these numbers even surprised them, and they are pretty good forecasters (stimulus checks were the difference). COST was up 9% with a 15% gain in International sales and 7% in the US and BJ jumped 13%. Non-discount retailers were up about 0.9% on average but we’ll take what we can get right now and this is as good an excuse as any to rally the markets ahead of tomorrow’s jobs numbers.
CAL (who we cut and ran from yesterday) announced that they will be joining other airlines and reducing domestic departures by 16%, eliminating 3,000 jobs. As with the other airlines, CAL will be retiring gas-guzzling 737-300s and 500s with 67 planes being taken out of service. These will eventually be replaced by 787s but, shhhhh, don’t tell BA investors that, they think the company is worthless…
We’ve been buybuybuying BA on the dip and we are starting to feel silly about it as they plow through $80 all the way to $77.50 but we took out our callers yesterday and we’ll see what happens. Just yesterday BA took orders from Korean Air, Hawaiian Airlines and Romania’s Blue Air but you guys go ahead and drive the p/e below 10 on a company with an order backlog of $364Bn with the whole market cap of the company down to $58Bn. The stock is down a neat 27.5% from last year’s high at $107.80, AND THAT WAS WHEN WE THOUGH AIRBUS WAS A COMPETITOR!
Paul Price has two excellent option plays over at Seeking Alpha and they are great for the cautious investors. Our members have taken some decidedly less cautious trades but trades like Paul’s are excellent for long-term investors looking to make solid returns. For ourselves, the June $80s have turned a little risky (tick, tock) but the July $80s are looking good at $2.25.
Asia was mixed up again this morning, this time with the Hang Seng up (barely) 0.5% and the Nikkkei down (barely) 0.6%. Much like our market yesterday, they could have just taken the day off and saved the commissions. China got a 5.3 aftershock to their quake but it was oil companies that dragged down the Nikkei as well as brokers, in a near mirror of yesterday’s US action. Our pals at SHI jumped 5% as Chinese traders were smart enough to figure out that a refiner might do better with lower oil and still-high gas prices. We like the US refiners but we’re not going to be the first ones to test those waters…
Europe is not so excited even though the ECB and the BOE held rates steady, which is a real boost for the dollar. UK house prices took another sharp tumble, dropping 2.4% in May, the worst since April 1993 and quite a bit more than the 1% forecast by economists who didn’t read my column on this subject last week. "The decline in prices is caused by the difficulties created for potential house purchasers by the rapid rise in house prices in the last few years, a squeeze on spending power and the reduction in credit availability," Halifax chief economist Martin Ellis said in a statement. "However one tries to cut the current set of house price data, the message is clear — the decline in prices is at risk of turning into a rout," Malcolm Barr, U.K economist at J.P. Morgan Chase Bank, said in a research note.
We need to hold our levels today: Dow 12,450, S&P 1,385 and Nasdaq 2,500. If the Nasdaq fails 2,475 we have serious problems but any kind of positive day is all we can hope for in this choppy market. Oil must stay below $125 as well.
