Market Talk

Equities investors start the 3Q off better than they ended the 2Q, bidding up US stocks after manufacturing and housing reports offered some signs of improvement and on a much ballyhooed PMI report out of China.

DJIA rises 57 (0.7%) to 8504, S&P 500 gains 4 (0.4%) to 923, Nasdaq Comp rises 11 (0.6%) to 1845. Late selling trims gains; volume’s weak.

ISM report still shows contraction in manufacturing, but signs of expanion in overall economy. ADP calls June jobs losses at 473,000, but they’ve been off before. Pending home sales rose in May a hair.

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It should come as no surprise to anyone that bankers are fighting Obama’s proposed consumer-protection agency.

Lawmakers are reviewing the proposed Consumer Financial Protection Agency, which is intended to protect consumers from the financial industry. But the American Bankers Association has already complained that the new agency would “stifle product innovation.”

Can’t blame lobbyists for lobbying, Andrew Jeffery writes at Minyanville, but it’s not likely complaints from Citi (C), Wells Fargo (WFC), Bank of America (BAC) and others will do much good.

“When an industry displays an abject inability to make good decisions to the extent that its blunders nearly bring down the entire world economy, it should take its regulatory medicine and move on,” Jeffery notes.

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Hooray! We surely have enough capital now!

US banks have managed to raise tens of billions in fresh capital recently, but it’s not enough to warrant a rapid upgrade from Moody’s.

“We do not expect these recent capital raises to result in a quick reversal of our US bank financial strength ratings to previous levels,” firm says, because of the still fragile state of the economy. “Should macroeconomic conditions worsen, Moody’s does not believe the recent capital raises represent an adequate buffer against the asset quality deterioration that would likely result.”

And, firm adds, further economic deterioration could result in the equities market quickly shutting down for the banks, limiting their ability to raise more capital. Continue reading…

We'll take a lost decade over this anyday.

Janet Yellen, president of the San Francisco Fed, yesterday tried to put the kibosh on this growing assumption that the Fed’s going to raise interest rates soon. This is based on two assumptions, one, that the economy is on the mend, and, two, that the Fed’s stoking inflation with all the money it’s poured into the economy.

Yellen says the focus on inflation is “misplaced,” because there is also a “misunderstanding” of the underlying situation.

“We have a very serious recession,” she said, adding it wouldn’t be “outside of the realm of possibility” for the Fed to keep interest rates around zero for years.

That rang a bell.

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The US stock market’s been on a wild roller coaster ride throughout the last six months, but doesn’t have much to show for it at 2009′s midway point.

Dow industrials posted their best quarter since 2003, gaining 11% for the last three months, but still remains down 3.8% for the year. The S&P 500 gained 15% in the second quarter, its best performance since 1998, but is only up 1.8% for the year.

Many parts of the credit markets showed improvement, banks and brokerage firms were able to raise cash and emerging markets and commodities were big winners in the second quarter, WSJ notes. However, investors still remain doubtful about a sustained recovery.

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A new day dawns, citizens.

Entering a fresh month, fresh quarter and back half of the year where expectations run high for clear proof that the US government’s herculean efforts to hoist us from our economic morass are gaining traction.

S&P futures up 4.70; DJ futures up 43. Ten-year lower, yield at 3.59%. Crude’s back over $71/barrel as well.

The first bit of today’s data is in: ADP projects private-sector job losses in June totaled 473,000; that’s wider than expectations the number would come in at 400,000.

May job losses, according to the Commerce Department, were 345,000.

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