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MV Weather Report: It's Summertime, and Living Is Easy for Banks


Rain or shine, we review the day's biggest stock stories.

The story of the day was economic data: Initial Claims, Leading Indicators, and the Philadelphia Fed where released. The big shocker was the June manufacturing survey, which came in at -2.2 which is a significant improvement from -22.6. The report was the best since September 2008 when the index posted a positive reading of 1.9.

On Today's Buzz and Banter, Minyanville Professor Jack Lavery gave his thoughts on the Initial Jobless Claims numbers.

"Once again, initial jobless claims came in weaker than expected. This is excellent news. The four-week moving average for claims through the week of June 13th declined to 615,750, from 622,750. Even more importantly, initial claims are well below the apparent cyclical peak of 644,000 in the week ending April 4.

"The behavior of unemployment claims can relate closely to picking the trough of the recession. With initial claims still forthcoming from the auto plant shutdowns and dealership closings, I do not believe the economic trough has been reached. But, it is possible that the second half of 2009 could house the trough.

"Even if the trough in the economy proves to be close at hand, the shape and pace of the recovery is what really matters going forward. There are three scenarios for the shape of the recovery. They are V, L, or W. I do not believe the traditional V recovery is close at hand. If it looks that way initially, it is more likely to become a double-dip or the W shaped recovery. Economic growth looks underwhelming to me over the near term, implying more of the L shape scenario at the outset."

After an initial positive reaction, the S&P 500 waddled and waned for most of the day. The leaders of the day were the banks, which bounced back nicely after a few days of profit-taking. Bank of America (BAC), JPMorgan (JPM), and Wells Fargo (WFC) led the group higher after Tim Geither presented his financial regulation plan to Congress.

Technology was the weak link today, and I expect it to trade weaker tomorrow after Research in Motion's (RIMM) earnings report tonight. The company reported EPS of $0.98 per share, compared with estimates of $0.94. Revenues also came in weak, at $3.42 billion; analysts were at $3.43 billion. The company also reported inline EPS guidance for the second quarter, of $0.94 to 1.03. The stock is currently trading down almost 5% in after hours to $72 a share.

There's not much on the radar tomorrow other then options expiration.

Have a great night!
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No positions in stocks mentioned.

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