Market Talk

By now you’ve certainly noticed that we’ve stopped posting. A few of you have written to us, asking what the deal is. We’ve been remiss in explaining ourselves, but the deal is we have to put the blog on a permanent vacation.

The problem is simply time constraints. Between the Newswires version of Market Talk, and the Upshot column for the Journal, and the Markets Hub at WSJ.com, we just don’t have the time to dedicate to the blog. Something had to give, and unfortunately this blog was it.

We have enjoyed exposing the wishful thinking that passes for reasoned thought in the markets, and will of course continue to do so in our other endeavors. You can still catch us on the Markets Hub, and on the wire and in the paper.

But for now, as that famous sage of the markets Groucho Marx once said, Hello, I must be going.

Here’s a link to the latest quarterly musings of Jeremy Grantham, always informative, thought-provoking and entertaining. Titled “Time to Wake Up: Days of Abundant Resources and Falling Prices Are Over Forever,” here’s a nice little taste:

Now no one, in round numbers, wants to buy into the implication that we must rescale our collective growth ambitions. I was once invited to a monthly discussion held by a very diverse, very smart group, at which it slowly dawned on my jet-lagged brain that I was expected to contribute. So finally, in desperation, I gave my first-ever “running out of everything” harangue (off topic as usual). Not one solitary soul agreed. What they did agree on was that the human mind is – unlike resources – infinite and, consequently, the intellectual cavalry would always ride to the rescue. I was too tired to argue that the infinite brains present in Mayan civilization after Mayan civilization could not stop them from imploding as weather (mainly) moved against them. Many other civilizations, despite being armed with the same brains as we have, bit the dust or just faded away after the misuse of their resources. This faith in the human brain is just human exceptionalism and is not justified either by our past disasters, the accumulated damage we have done to the planet, or the frozen-in-the-headlights response we are showing right now in the face of the distant locomotive quite rapidly approaching and, thoughtfully enough, whistling loudly.

Anyone betting that manufacturing will continue to lead the US economic recovery might think twice after reading comments from survey respondents in Dallas Fed’s April Texas manufacturing outlook.

Similar to Philly Fed’s gauge last week, Dallas headline number tanked, to 8.1 from 24.1 in March. The Philly survey’s headline number fell to 18.5 from 43.4 in March, but unlike the Dallas survey, Philly doesn’t include respondent comments in its report.

Down in Texas there’s a fair measure of cautious optimism among survey respondents, and plenty of concern about high costs and soft demand. Here’s one from a plastics and rubber products manufacturer that sounds pretty good:

“We are very encouraged by the breadth of activity with our cross section of customers in the Dallas–Fort Worth area. It is not just a few companies with increased requirements for plastic parts, but pretty much all of our diverse customer base.”

Now here’s one from the other end of the spectrum, a furniture/related product manufacturer: “Our industry has hit another brick wall. Rapidly increasing costs and fuel costs have shocked the consumer away from any nonmandatory spending. They normally adjust, but it may take several months.” Continue reading…

From News Hub host and colleague Simon Constable:

Just in time for Earth Day, New York City Mayor Michael Bloomberg announced yesterday he wants phase out the very filthiest furnaces that are used to heat apartments. Under the plan, in two decades in New York City there would be no boilers that use the two dirtiest types of fuel – No.4 and No. 6 heating oil.

Last night I heard a commentator on the radio suggest that it wasn’t fair to introduce such a measure as the cost of switching out the boiler equipment would be disproportionately fall on the poor. The truth is the cost of changing heating equipment would fall on the richest residents of the city: Those living on the fashionable Upper West Side and Upper East Side of Manhattan.

Here’s a column I wrote last year:

NEW YORK (Dow Jones)–Manhattan’s expensive Upper West Side, often criticized as the bastion of northeastern liberal “elites,” is also the home to the highest concentration of the filthiest home-heating furnaces in New York City.

That’s according to a recently published report titled, “The Bottom of the Barrel,” that pinpoints the location of furnaces by fuel-type through the whole of the Big Apple. It was commissioned by the Environmental Defense Fund and the U.S. Green Building Council, both respected organizations in the green arena.

It isn’t just the UWS that is pumping smog from the basement. Not far behind on the dirty-list is the so-called “billionaires’ row” on the Upper East Side.

How so?

It is in those locations in New York, the Upper West Side and the Upper East Side, that you’ll find the highest count of furnaces fueled using a black sludge that kicks off high concentrations of sulfur-dioxide and nitrous-oxide.

Known as No. 6 heating oil, it emits a far higher level of those pollutants than other commonly used heating fuels such as natural gas, and No. 2 and No. 4 oils.

As a result of this sludge use, a mere 1% of structures citywide contribute 87% of soot pollution that is linked to heating oil, the report says.

It gets worse.

“Overall…heating systems release 50% more soot (PM) and 17 times more sulfur dioxides (SO2) than cars and trucks on New York City’s roads,” the report states.

When I mentioned this smog outrage to colleagues who live in the Upper West Side, they pointed to the age of the buildings–quite old–as the likely reason for the use of these pollution-pumping furnaces.

If only it were that simple. The truth is that furnaces need to be replaced every few decades so that a century-old apartment building will likely have seen a number of replacement furnace installations.

Money may be a more likely reason. Turns out that burning black sludge is economic if dirty. No. 6 oil costs $15.14 per million British thermal units, compared with $20.49 for the less polluting No. 2 oil, according to the report.

How about that.

Lot of ground to cover in today’s show: big stock rally, earnings, the falling dollar and the rising (very, very slowly) yuan. Today’s special guest is Mike Ryan, chief investment strategist at UBS Wealth Management.

US stocks on the launch pad as Asian and European markets engage in a spirited rally. Intel earnings credited for sparking gains, but earnings are almost a side note as US dollar index slumps to lowest levels in more than 16 months, and euro explodes higher.

EUR/USD surges above $1.45, and US stocks have a propensity to chase a bolting euro. No surprise either to see oil and gold soar. Seems sovereign debt problems — both in Europe and US — are too slow-moving, deferred and, at times, abstract for today’s capricious markets to get hung up on.

March existing home sales due at 10:00 a.m. ET. AT&T reports before the open; Apple, AmEx after the close.

S&P futures up 17.40, DJ futures up 137. Ten-year lower, yield at 3.41%.

Speaking of Intel, Kevin Kingbury posted the following:

Some mea culpas are going around on Wall Street as Intel (INTC) blew past 1Q expectations and gave a surprising strong 2Q revenue view in the face of what had been conventional wisdom about supposedly weak desktop and laptop demand. Auriga notes, “Consensus was clearly too pessimistic on PC sales (the primary source of upside).” While admitting that growth is under pressure from tablets and the economy, “data center will likely bolster both revenue and profitability.” RW Baird boosts its price target to $29 from $27 as it says INTC’s new Sandy Bridge product “is strong so far, debunking the myth about lack of demand for high-performance CPUs in PCs.” INTC up 6.2% premarket at $21.10.

Okay, so yesterday the world was about to spin off its axis, the end-times were nigh, disaster seemed afoot. Even Charlie Sheen was putting on a credible stage show.

Today, not so much.

US stocks recover after yesterday’s sell-off, with Johnson & Johnson leading the Dow higher after a well-received earnings report. Given how quickly stocks shook off that S&P warning, which yesterday seemed a globe-rattling event, you wonder if yesterday’s sell-off in the stock market had as much to do with S&P’s report as it did with an overbought market.

DJIA gains 65 (0.5%) to 12267, S&P 500 rises 7 (0.6%) to 1313, Nasdaq Comp adds 10 (0.4%) to 2745. NYSE volume’s low. J&J, Caterpillar comprise about half of the Dow’s gains. J&J, Goldman both see earnings slide from a year ago, although the Street rewards the former and punishes the latter.

Gold touches $1,500, closes a hair beneath there. Crude’s above $108/barrel again. Yen remains pegged above 82 to the dollar, but watch if it breaks below there (moves down in the yen represent strengthening.) We’d be getting back to the range that sparked the yen’s wild March 16 rise and subsequent G7 intervention.

Slate of post-market earnings includes IBM, Yahoo and Intel.

Despite the recovery today, the technical damage yesterday was material, as our colleague Tomi Kilgore points out:

The S&P 500′s bounce was encouraging for bulls, but it didn’t quite erase the negative overhang created by Monday’s tumble. The S&P 500 up 7 at 1313, but below resistance at the 50-day moving average (currently at 1315). While the index stays below the 50-day MA on a closing basis, the preferred stance will be sell on rallies, as Monday’s slide stirred up technical chatter about a possible longer-term “double-top” reversal pattern (February top of 1344, April top of 1339). That won’t be confirmed unless the index falls below the March low (1249), but the longer the index closes below the 50-day MA, the more likely it becomes.

Now, for sheer lunacy, absolutely nothing tops this story from the Orlando Sentinel about a central Florida unemployment bureau and its latest plan to, well, fight unemployment: they’re giving out “superhero” capes.

It sounds like a bad Saturday Night Live sketch, but we’re not kidding. Here’s the website of the Workforce Central Florida, which launched a marketing campaign to “help us fight Dr. Evil Unemployment.” It’d be hysterical if it wasn’t so sad. Nothing quite says “we’ve hit the wall” than this effort.

Big show today, markets trying to rebound after yesterday’s sell-off, earnings from Goldman and J&J as well as a look at this afternoon’s earnings, and author, economist and sometimes actor Ben Stein comes on to talk about the U.S. debt issues, the future of the economy and the importance of diversification.

Asian markets overnight felt the reverberations of S&P’s outlook cut on US government debt, with stocks marking substantial declines.

European markets currently engaged in a moderate bounce from sharp selling yesterday, and euro’s recovering. Stage set for modest rebound for US stocks after yesterday’s sell-off

Oil continues to slide, recently at $106.43/barrel, and gold’s up a little after another fresh Comex settlement high yesterday at $1492.30.

Goldman Sachs, J&J earnings headlines hitting the tape now. Both stocks rising in premarket trading. Intel, IBM after the close. March housing starts due at 8:30 a.m. ET.

S&P futures up 1.80, DJ futures up 27. Ten-year note lower, yield at 3.39%.

Meanwhile, last night Texas Instruments reported a weak first quarter and warned the Japanese disaster would cut into its second quarter. Kevin Kingsbury adds some perspective:

Citigroup calls the impact on Texas Instruments (TXN) in the wake of Japan’s disaster largely as expected. It lowers guidance amid TXN’s cut and moves price target to $40 from $42. But the investment bank does call TXN’s underlying business “good” and “order strength is contributing to an optimistic” 2H view. Susquehanna concurs, adding, “Outside of baseband/Japan, demand commentary sounds good.” FBR says, “We remain constructive on TXN as the firm has meaningful barriers, growing scale and a low 12x P/E multiple,” which should send shares higher. “That said, many TXN comparables are also inexpensive.” Auriga keeps its sell rating, contending it is “somewhat pessimistic” about a 2H rebound. TXN down 2.3% premarket at $34.

Or, at least, Google was weighing on the market. Stocks certainly have taken off since our report at 10:30 in the a.m. Guess the markets put those disappointing earnings reports behind them, and are buying the Fed’s argument that there isn’t any inflation, at least any that’s going to last.

Good luck with that one.

Big show today. We covered Bank of America’s earnings, the SEC’s likely settlement with the banks over the issue of mortgage-backed securities, and the potential Groupon IPO.