Market Talk

Investors manage to arrest equities’ selloff, but the major indexes still close mixed as there’s just nothing for investors to get excited about right now.

DJIA slips 7 to 8498 after bouncing around in a fairly tight range all day. S&P 500 dips 1 to 911, but Nasdaq Comp rises 12 (0.7%) to 1808. Volume’s a bit better today. Crude, the dollar, Treasurys all show the same choppy, range-bound movements.

CPI data come in tame (and we can explain how despite the biggest yearly drop in almost 60 years, it wasn’t deflation,) the Obama administration detailsits proposed banking regulations and FedEx’s outlook pours cold water on the 2H rebound. S&P downgrades 18 banks, including seven that “passed” the government stress tests.

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This thing turns around, we'll never be able to buy the house.

The blogosphere has a lot to say about Jim Cramer’s latest housing-bottom call.

The host of CNBC’s “Mad Money” show saidyesterday that rising housing starts and permits prove the glut of excess inventory is finally waning. He says ramping sales and falling prices during last three months are reasons to believe housing has bottomed out.

But Calculated Risk reminds that nearly every housing bust has two distinct bottoms: the first for activity and second for prices.

“Maybe this time is different, but I think Cramer is confusing activity for price,” blog says.

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We left "normal" about 20 miles back, in a ditch.

Here’s a term we’ve seen the Street throw around lately with what seems like increasing frequency, particularly in reference to bank earnings: “normalized.”

The latest example comes from Deutsche Bank, which upgraded US Bancorp (USB) to buy, saying “normalized EPS ” is likely higher than what the market expects, and may approach $3.00, assuming an economic recovery takes hold in 2010. Street currently forecasts ’10 EPS at $1.49.

What exactly will be normal earnings for banks in the years ahead? Continue reading…

Brother, can you spare $24 billion?

We keep hearing Steely Dan in our heads, singing “California, tumbles into the sea…”

We saw the news last night that the White House ruled out a bailout of California. This leaves the Golden State with a little over a month to plug a $24B budget gap, or risk a complete meltdown. “This budgetary problem unfortunately is one that they’re going to have to solve,” White House spokesman Robert Gibbs said.

We’re kind of surprised the news isn’t a bigger deal. The numbers that have attended this economic crisis have become so large, that unless you are directly affected by them, like schoolteachers in California, they just seem to be more noise.

(And, for God’s sake, California is just such a weird place that the Lakers victory parade is getting more coverage than the budget crisis.)

But California’s budget crisis is very real, and the news that the White House won’t offer any more aid than it’s already extended the states to us is a big deal. It means, perhaps, that the Obama administration has realized there are limits to its ability to save entities from the ravages of the recession.

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Yesterday’s figures on industrial production and capacity utilization in the US were another shot at the green-shoots crowd, Stephen Schork of the Schork Report says.

“Capacity utilization in Manufacturing bottoms at the end of the recession, without outliers,” he writes, via FT’s Alphaville.

“Even though manufacturing’s share of the U.S. economy has been trending lower over the last sixty years, we have never come out of a recession without a commensurate bounce in manufacturing.”

Newswires’ Maxwell Murphy reports:

Recession 101: You know you’re in a recession when ad companies put cryptic pep talks on their unsold billboards for free.

That’s actually not one of the slogans being used by the Outdoor Advertising Association of America in a marketing campaign launched earlier this year. The messages are designed to assuage fears about financial Armageddon.

Member companies are encouraged to hang these ads, which appear to be typed on loose-leaf paper, on their unused space, and it’s likely if you drive you’ve seen more and more of them.

Among our favorites: “Don’t switch to cheaper scotch, drink slower,” and “This will end long before those who caused it are paroled.”

For a slide show of other slogans that soon may block views near you, check out the OAAA’s Web site.

Stocks have suffered their worst two-day stretch this quarter, making some wonder if the bulls have run out of steam.

The S&P 500′s declined more than 1% two days in a row, marking the 26th time this has happened since the index peaked in October 2007, Bespoke Investment Group says. The average return on the third day has been a gain of 0.7%, with positive returns occurring only about half the time.

More recently, this marks the third time the index has dropped more than 1% on consecutive days since the March lows. But following the two previous occurrences the index gained more than 1% the next day.

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Two straight sessions of declines in US stocks trims about 3.6% off the S&P 500, 3.3% off DJIA, and bulls so far aren’t showing much inclination to buck up and arrest the retreat.

An early attempt to rally yesterday never got any traction, and markets essentially ended at session lows. Emerging reticence to buy on the dips at these levels isn’t an encouraging sign.

S&P futures down 3; DJ futures down 28, after the morning’s data, and pointing to a slightly weaker opening. Still, the market’s going to have to wait and see who grabs the reins here.

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