Morning Market Update: Japan, Gold, Italy

Stocks head into Monday morning on a four-week winning streak, but the futures are showing small losses heading into the opening bell.

The Japanese stock market continues its unfathomable rally overnight with the Nikkei up 1.5% after positive remarks from the government and a better than expected manufacturing number. The Nikkei is now up 47% in 2013.

ETFs to Watch: EWJ, DXJ, FXY

Both Gold and Silver continue their ominous slide overnight with silver down as much as 3% at one point. Both metals have bounced well off the lows, but the trend is clearly not in the favor of precious metals. I continue to have steer clear of the sector until a bottom is formed and the end of the selling is evident.

ETFs to Watch: GLD, SLV, GDX, IAU

In another sign that investors are believing the Eurozone situation is improving, the yields on Italian debt fell as the country’s industrial orders number beat expectations. The spread between the 10-year German Bunds and the comparable Italian government debt has narrowed to the lowest level since January. Even Slovenia saw its yields fall overnight after a downgrade by Fitch.

ETFs to Watch: ITLY, BUND, BWX

Patience vs. Go-For-It – The market is sitting at an all-time go begin the new week and therefore chasing performance is never the best strategy. That being said, investors that have been waiting for a 10% pullback have been sitting on their hands for a long time and missing out on the stock market rally. My advice is to highlight the stocks/ETFs you want to buy and when there is a day or two of weakness – begin to build a position. A mix of go-for-it and patience.

Morning Market Outlook

The markets are near the flat line in early trading as investors digest mixed earnings reports from two big-name companies and Japan’s GDP that was released overnight.

The nation’s largest retailer, Wal-Mart (WMT), missed earnings expectations this morning and the stock is trading lower by over 2%. A former high-flyer, Cisco Systems (CSCO), beat their numbers last night and is surging in pre-market trading with a gain of 10%.
{ETFs to Watch: QQQ, RTH, XRT}

Japan reported growth of 3.5% during the first three quarters of the year, a possible signal that the stimulus package has been working for the country. The better than expected number did not lead to a rise in Japanese stocks because inside the number it showed that consumers are spending, but corporations are still hesitant. Also take into consideration that the Nikkei is already up 45% in 2013. Maybe time for a breather??
{ETFs to Watch: EWJ, DXJ, FXY}

Gold and Silver continue their downtrend with another loss in excess of 1% this morning. The trend is clearly not in the favor of the precious metal sector and I would continue to avoid it at all costs.
{ETFs to Watch: GLD, IAU, SLV}

I would not be shocked if the market experiences some profit-taking today after hitting yet another all-time high yesterday. My strategy will be to continue using weakness as a buying opportunity for higher stock prices later this year.

Morning Outlook: Malaysai, Oil, Top Stocks

Malaysia Leads Southeast Asia

The Malaysian stock market rose to its highest level ever this morning after trading higher by as much as 8% following yesterday’s election results. The ruling coalition Barisan Nasional extended their 56-year rule over the country and the “free money” approach they take helped stocks soar. The Ringgit (Malaysian currency) also had a strong day with an increase of 1.4%. Its neighboring countries are also enjoying some love as Vietnam is up 3% and Indonesia is rising by 1.4%.

ETFs to Watch: iShares Malaysia ($EWM), iShares Indonesia ($EIDO), Market Vectors Indonesia Small-Cap ($IDXJ), Global X FTSE ASEAN ($ASEA)

Oil Rises on Syria Fears

One of factors that moves the price of oil is geopolitical tension and over the weekend the tension has risen between Syria and Israel. Syria has vowed to retaliate after Israel bombed the area outside the capital of Damascus. Due to the potential for the conflict to escalate and the possibility of Iran getting involved, brent oil futures rose to their highest level in a month.

ETFs to Watch: iShares Israel ($EIS), US Brent Oil ETF ($BNO)
 
Market Flat

The futures are indicating a flat open for the major indices, with the NASDAQ up slightly – led by tech names Apple ($AAPL) and Intel ($INTC). After going through hundreds of charts this weekend I came up with a list of about 40 or so stocks/ETFs that were added to the PFG WatchList. There are mega-cap names, small unknown stocks, and high dividend-paying players on the list.

Here are 2 that I found intriguing:

·  Avis Budget Group (CAR) – Rental car company that trades with an ultra-low PEG Ratio of 0.39

·  Alaska Air Group (ALK) – Mid-sized airline company that is breaking out of a consolidation pattern and trades with a PEG Ratio of 0.74

Breaking Down the Jobs Number

April Non-Farm Payrolls increased by 165,000

Revisions to the February Number showed jobs increasing by 332,000 versus 268,000 – this is now the best month for job creation since November 2005 (not including months where census workers were added)

Revisions to the March Number showed jobs increasing by 138,000 versus 88,000
April Unemployment Rate fell to 7.5%, the lowest reading since it was 7.3% in December 2008 and below the 7.6% in March

Average Workweek down 0.2 hours to 34.4

Average Hourly Earnings +0.2% versus flat in March – but with an increase of only 1.9% in the last year it barely keeps up with inflation

Labor Force Participation Rate remained at 63.3% and still down from a reading of 63.6% last year – remains at a 34-year low.

The Unemployment Rate for people who want a full-time job and cannot find them (The U-6 Number) increased to 13.9% from 13.8% in March – This is the true barometer.

4.4 million: the number of people out of work for at least 6 months  – historically high for what many are calling a recovery.

150,000: the number of jobs that need to be created each month to keep up with population growth – April’s 165,000 will not get people back to work.

ETFs Up on a Big Down Day

Today the major US indices lost 0.9% and Gold fell by 1.2% as fears over Friday's jobs report and a slew of disappointing economic numbers caused the bulls to take a breather after pushing the S&P 500 to yet another all-time high yesterday.

There were a few bright spots in the world of ETFs today.

• PowerShares Build America Bonds (BAB) - Up 0.6% to a new historic high.
• First Trust High Yield Long/Short ETF (HYLS) - Up 0.2% today to a new high; the ETF has a yield of 6.5%.
• PowerShares Emerging Markets Sovereign Debt ETF (PCY) - Up 0.3% today to a new multi-month high; current yield of 4.8%.

Matt Talks Visa vs. Mastercard on BNN

Watch Matt discuss the better investment, Visa ($V) or MasterCard ($MA) today on Canada's BNN.

Morning Outlook: Jobs Report, Poor Econ Numbers, Stocks at Highs

Jobs Number Preview

The ADP April jobs number came in below expectations and showed the lowest monthly job growth in 7 months. The payroll processor said the private sector added only 119k jobs in April. And the March number was revised down to 131k from the original 158k reported last month.

The group of (oft-wrong) economics that come up with expectations believe the government number released on Friday will show an increase of 160k jobs. Last month the government number was disappointing and came in well below estimates and the ADP number.

All signs are pointing to yet another disappointing number on Friday morning when the government number is released. I am cautious in the very short-term heading into the report on Friday morning.

More Disappointing Economic News

The US April PMI Number fell to 52.1 from 54.6 in March and in-line with analysts expectations. The trend over the last two months as been the same for nearly all economic numbers - they are trending lower.

Breakout Stocks

A list of a few stocks breaking out that are on our PFG WatchList:

• CubeSmart (CUBE) 
• Oceaneering International (OII)
• Enbridge (ENB)
• Alliance Data (ADS)
• Ecolab (ECL)