Before The Bell: Consumer Watch; M&A Slump; Futures Point Lower
Investors are watching signs in consumer spending. The big banks are expecting a big M&A slump. Futures are lower.
WSJ reports with consumer spending accounting for two thirds of the U.S. economy, investors are carefully watching for any signs of a significant drop-off. The latest data surprised analysts with a 1.2% gain in retail sales, which marked the strongest growth in more than 30 years, yet the increase was led by a 6.8% rise in sales at gasoline stations due in part to $90 crude oil. This year, the consumer-discretionary sector has been the second worst-performing in the S&P 500, falling 13.6%. For more on consumer spending, read Professor Mike Shedlock's Implications Of Commercial Real Estate Collapse.
From the Bull Pen: Professor Guy Adami recently wrote, "Mastercard (MA) has to be on your shopping list" for 2008. Those bullish may place short-term sell-stops below $205.
From the Bear Cave: Professor Bennet Sedacca said consumers would likely stop using their American Express (AXP) card should they be strapped for cash. Those bearish may press the downside; buy-stops above recent lows ($54).
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Bloomberg reports executives at the major investment banks are predicting a decline in M&A next year due in part to a slowing economy and rising borrowing costs. Executives at JPMorgan (JPM), Lehman Brothers (LEH), and Bank of America (BAC) believe the value of M&A activity may fall as much as 20% from a record $3.9 trln this year. Financing costs have more than doubled since June and analysts believe a global slowdown in M&A will be particularly severe in the U.S. due to the weakened housing sector. For context, read Todd's Freaky Friday Potpourri: Numbers Adding Up To Stagflation.
From the Bull Pen: Todd recently mentioned Jamie Dimon and JP Morgan (JPM) as best in breed. Financial bulls may play JPM to the upside; sell-stops below $44.00.
From the Bear Cave: We mentioned last week a play in ETF ProShares Ultrashort Financials (SKF) which tracks twice (200%) the inverse of the D.J. Financials Index. Near-term sell-stops may be rolled up to $96.00
Click on Minyanville's Stocks To Watch for more company-specific ideas.
Quick Check Around the World
Asian trading closed with the Hang Seng -3.51%, Nikkei -1.71%, Sensex -3.85%, Taiwan -3.54% and Shanghai -2.53%.
A quick glance across the pond finds the CAC -1.62%, DAX -1.49%, FTSE -1.78%, ATX -1.63%, Swiss Mkt. -1.43% and Stockholm -2.37%.
A Look At Commodities
Crude oil is lower this morning -0.45 to 90.78. Gold is lower -3.0 to 795.00. Silver is down -0.08 to 13.90, and copper is down -5.8 to 289.85.
As of 8:45 AM ET, S&P futures are down by -5.3 points, and Nasdaq futures are lower by -7.25 points.
On the Radar
NY Empire State Index: 10.3 vs. 21.0 cons
Current Account: -178.5 bln vs. -183.0 bln cons.
9:00 Net Foreign Purchases: -$26.4 bn
Click here for the full trading radar.
Happy Monday, Minyans! Welcome back and good luck!
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