The chase by Frances Horodelski:
Today is the day traders have been waiting for – OPEC, Jobs and Greece.
Well, Greece has already been punted down the street with today’s payment deferred and Angela Merkel saying that there is a lot of work to be done. OPEC members, on their way into the closed session, have already tipped their individual hands noting that no change is warranted. We’ll find out officially at 10 am ET.
And jobs, that happens at 8:30 am. The U.S. consensus is 226,000; Canadian economists see 10,000 jobs created in May in this country and an unchanged unemployment rate at 6.8%. Equity markets are quivering, bond yields are rising, oil and gold are weak and the day begins.
I like the simplicity of this comment from BMO Capital Markets on the banks: “The ‘4+4’ formula of 4% earnings growth and 4% dividend yield for a total return of 8% per annum at a 30% discount to the market keeps us positive on the banks.” BMO’s favourites are BNS, CIBC, TD.
I like what I hear from options traders.
Yesterday, we heard from J.J. Kinahan at TD Ameritrade. He noted that one of the biggest trades in the VIX has been put on – long June $18 calls (which expire in two weeks). On his calculation, for the VIX to get to that level would require a 600 point drop in the Dow in two weeks! I’m also seeing that options bulls are putting their bets on WalMart buying July $75s (stock closed yesterday at $74.88) paying $1.40 which will require the stock to be north of $76.40 by the third Friday in July to be profitable. The stock has been a bit of a disaster (down from almost $90 high and down 13.7% year to date). The company’s annual meeting is today. The stock trades at its median P/E multiple, at a discount to the market and carries a 2.64% yield.
I like lists.
Yesterday, Credit Suisse put out its top picks list (included one Canadian name Agrium). Goldman also has a list of the top 12 takeover candidates (Vertex, Med Johnson, Cabot Oil, Agilent, Alkermes, Centene, FireEye, WhiteWave Food, Cablevision, BE Aerospace, Akorn, Targa.)
I like new guests.
Today we have a “quant” who uses a “military style computer that uses parallel processing, genetic algorithms, neutral networks and scalable computing power to analyze” events and probabilities. Join us for what his computers are telling him now (one of his last calls was Rosetta Resources which popped 25% on a takeover offer).
I like big companies that have lagged and look like value including Procter & Gamble (-14% year to date), WalMart (-14%), Johnson & Johnson (-5%) and TransCanada (-9%) – all well off their highs and close to 52-week lows.
I love how companies and advisors push the envelope when they are pricing IPOs.
Last night DavidsTeas priced 5.1 million shares (with an extra 765,000 shares greenshoe) at $19 versus the original $14-$16 range. And one of the old “red flags” for IPOs is flying here (just a little). Insiders are sellers. Of the 5.865M shares, proceeds from only 2.99M are going to the company, the rest are being sold by insiders. This doesn’t mean it won’t go up and be hotter than a pistol when it starts trading on the Nasdaq under the symbol DTEA – but just one of those things I like to monitor. Over the year, we have seen $1 trillion in IPOs and secondary offerings – and if this year’s pace continues, we’re on track to beat last year’s $900 billion record.
I like markets and statistics.
So, today, Australian stocks finished their worst week in three years led lower by banks (if you wanted to re-write the copy story for another time, replacing Australia with Canada would sound equally plausible). Meanwhile the Shenzhen Composite (1700 stocks of which, according to Bill Gross, only five were profitable in the past year) closed at another all-time high last night and is up a cool 3-fold in the past year.
There will be news as the day unfolds – join BNN to keep current. And – enjoy the weekend.
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