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CNBC ON DIGG

Shanghai Rocks and Retails Report

Published: Thursday, 3 Sep 2009 | 9:30 AM ET

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By: Bob Pisani
Reporter

China's Shanghai Index rose 4.8 percent, as Chinese officials now routinely verbally manipulate the markets, this time after a securities regulator said the markets were healthy and pledged to keep it stable.

Two weeks ago other Chinese officials were complaining the markets were overpriced and pledged to reign in spending in the steel and cement industries, and to curtail lending.

Elsewhere:

1) In general, August retail sales are below last year's same period, but most are beating the estimates, including Costco (down 2.7 percent vs. consensus of down 5.7 percent), Limited (down 4 percent vs. consensus of down 5.9 percent), Gap (down 3 percent vs. down 7 percent consensus-strong sales of their premium denim)

Target said September sales would be down in the low to mid single digits.

As expected, teen retailers like Hot Topic and Abercrombie were weak (though Aeropostale again beat numbers and raised guidance) as were most department stores: Macy's, Saks and JC Penney [JCP Loading... () ] all were below expectations.

Retail Reports

Two key points:

a) the late Labor Day means that much of the retail sales that would usually go into August will be in September; and

b) Wal-Mart [WMT Loading... () ] no longer reports monthly comp store sales, so there is a bit of a hole in our information.

2) Gold up almost 1 percent again today after rising 2.4 percent yesterday on dollar weakness and fears of a correction. Gold stocks are also up about 2 percent pre-open.

3) This week's weakness in housing stocks continues. After falling 17 percent so far this week, Hovnanian [HOV Loading... () ] is dropping another 8 percent pre-open after posting a bigger-than-expected loss.

4) Brazilian beef producer JBS is reportedly eyeing a $2.5 billion bid for U.S. chicken producer Pilgrim's Pride (PGPDQ), which is currently under bankruptcy protection. Both companies declined to confirm a deal was imminent, but the Wall Street Journal said the deal could be announced next week.

The combined company would generate about $20 billion in annual sales, posing as a formidable competitor to Tyson Foods, which has $27 billion in annual revenues.

5) Japanese pharmaceutical firm Dainippon Sumitomo Pharma announced it was acquiring U.S. drugmaker Sepracor [SEPR Loading... () ] in a $2.6 billion deal. The bid pays $23 per share to shareholders of Sepracor, the maker of popular insomnia drug Lunesta, and comes at a 28 percent premium to yesterday's close.

6) Del Monte Foods [DLM Loading... () ] soars 11 percent pre-open after beating Q1 estimates and seeing a 12 percent rise in sales. The food company noted higher prices and lower costs helped its Q1 results.