Morning Report 8/27/12

Vital Statistics

Last Change Percent
S&P Futures 1413.8 4.0 0.28%
Eurostoxx Index 2442.3 8.0 0.33%
Oil (WTI) 97.07 0.9 0.96%
LIBOR 0.425 -0.002 -0.47%
US Dollar Index (DXY) 81.55 -0.044 -0.05%
10 Year Govt Bond Yield 1.67% -0.02%
RPX Composite Real Estate Index 192.1 0.0

Markets are higher this morning on no real news as we head into one of the slowest weeks of the year. The Fed Heads will meet in Jackson Hole this week, although analysts aren’t expecting much in the way of new policy announcements. That said, the article does suggest the Street is leaning heavily towards additional stimulus, so the risk is to the downside in MBS and Treasuries. There doesn’t appear to be any market-moving economic data this week. Oil is moving higher in response to Issac. Bonds and MBS are up slightly.

One of the longest merger kabuki dances ended today, as Hertz finally gets an agreed deal with Dollar. I believe Hertz’s initial bear hug letter was released in 2007 or 2008.

The first read on Back-To-School looks negative. Teen Apparel Retailers may end up missing their comp expectations next Thursday. Some of the names in this space have been flying lately – AEO, GPS, URBN, HOTT, so they may be vulnerable to a disappointment. For those that are more risk averse, you can always short Abercrumble as the stock cannot get out of its own way.

The Republican National Convention is this week and I don’t expect it to matter to the markets one bit. They had to shorten it a day due to Issac.  Greg Valierre of Potomac Research said that 98% of his Wall Street clients are voting for Romney.

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