US stocks close out November with modest gains on a late swing after a flurry of headlines out of Dubai about its troubled debt situation.
DJIA gains 35 (0.3%) to 10345, up about 6.5% on the month. S&P 500 gains 4 (0.4%) to 1096, up about 5.7% on the month. For the two, it’s their best November since 2001. Nasdaq Comp adds 6 (0.3%) to 2145. Treasurys rise; dollar, gold pare losses.
Late surge carries most sectors into the green, led by financials, which got a lift from the latest Dubai World news. Consumer stocks, though, lose ground, as holidays get off to sluggish start.
Chicago PMI, Dallas Fed reports show some growth in manufacturing sector.
Today on Tomorrow’s News Today, we talk about the evolving Dubai World story (perhaps I should say “revolving,”) disappointing retail sales and good signs from manufacturing reports.
- Wall Street’s ‘reckless myopia’ makes a quick return, according to John Hussman. He says the market’s increasing speculative nature is a result from policy leaders lacking fiscal and monetary discipline. “Policy makers who seek quick fixes and could care less about long-term consequences undoubtedly encourage investors to embrace the same value system.”
- WSJ’s Abread of the Market column ponders what happens to banks when the Fed finally raises interest rates.
- NYT’s Paul J. Lim says earnings need to recover sooner rather than later for the stock market to keep running higher. Barry Ritholtz isn’t so sure.
- Breadth shows investors have been turning more defensive in recent weeks, Bespoke says.
- Former labor secretary Robert Reich pens another ranting post about the growing disconnect between Wall Street and Main Street.
- Dubai World isn’t intrinsically important, but if its troubles open policy makers’ eyes to the likely start of the final leg of the trip from household default to bank default to sovereign default, “it may do some systemic good,” Willem Buiter writes at Maverecon.
Despite the dominance of video games these days, model railroad maker Lionel shows it can still keep up with the times, with a new addition to its classic line traditional railcars. It’s the Federal Reserve Bailout Mint Car, priced at $69.99.
“A unique new addition to the Lionel series of Federal Reserve cars, this special mint car is loaded with all the Treasury money necessary to bail out Wall Street!” the Lionel catalog says.
Investors have had a few days to digest the Dubai debt situation and it seems they think the crisis won’t be as bad as initially feared.
Still, it offers a perfect reminder for how lucky the global economy’s been at avoiding shocks that could’ve derailed this recovery. Major stock market indexes are up more than 60% off the early March lows largely because the economy’s shown early stages of recovery and hasn’t experienced any cataclysmic events since Lehman’s fall.
But the Dubai crisis has brought back troubling memories of the credit crisis and other problems that have plagued the economy throughout this downturn.
“Financial markets remain fragile, and any number of shoes might have dropped, preventing the economy from achieving even the current, meager recovery,” Economist’s Free Exchange blog says. “That is something else for which to be thankful, but the good fortune may not last, and policymakers should take that into consideration while deciding when and how to withdraw economic supports.”
Bloggers and pundits have wasted little time ripping Fed Chairman Ben Bernanke’s latest column that cautions against risks associated with revamping the Fed and hindering its independence.
In a Washington Post op-ed published this weekend, Bernanke warned that current legislative proposals would “seriously impair” the central bank. He didn’t hold back, noting many of the Fed’s actions last year during the height of the financial crisis were “distasteful and unfair,” but still were necessary to prevent the financial system from collapsing.
“Now more than ever, America needs a strong, nonpolitical and independent central bank with the tools to promote financial stability and to help steer our economy to recovery without inflation,” Bernanke wrote.
In continued defense of the Fed’s independence, he also said “independent does not mean unaccountable,” a point that he needs to keep driving home if he wants to maintain the central bank’s freedom.
Posted by Steven Russolilloon November 30, 2009 Economy, Retail Sales /
Comments Off
Hope you guys aren't expecting any big-ticket items.
Black Friday spending surveys are dropping left and right, but keep in mind it’s still way too early to determine whether Black Friday retail sales results can actually be deemed a success or not.
According to WSJ’s summary of Black Friday, big bargains drew people to the malls, but they remained reluctant to return to their free-spending days. From the Journal:
Retailers succeeded in enticing deal-hungry shoppers into their stores on Friday, but at the checkout lines many people were sticking to the most deeply discounted items.
That may prove to be a disappointment to executives at the nation’s major chain stores, which have been battered by the recession. Many have been hoping that, once in the stores, consumers would spend a little more freely than they did a year ago.
The Journal also quotes Best Buy’s (BBY) CEO Brian Dunn saying consumers were flocking to lower-priced items. “This is not a year where wallets are expanding,” Dunn tells WSJ. “There will be winners and losers this season in retail, and the differences will be pronounced.”
Retailers not only offered big discounts for Black Friday, but ended up extending promotions through the weekend, potentially suggesting they’re trying to counter a post-Black Friday lull or didn’t sell as much as they hoped.
“We did see some retailers execute promotions that were more reactionary in nature,” KeyBanc says.
We are likely to see more signs of economic growth this week, as I wrote in today’s Ahead of the Tape column for the Journal. But are the signs strong enough?
The Chicago Purchasing Managers Index, the first of several readings on the manufacturing sector this week, came in at a stronger than expected 56.1, up from 54.2 in October. It was the index’s second month above the 50 mark, which signals expansion rather than contraction, and stronger than the consensus expectations that it would slip to 53.5.
And the Dallas Fed’s index of general business activity came in at 0.3 from -3.3 in October.
Those are good signs, no doubt. And the bigger reports, the ISM’s manufacturing and services indexes, come later this week, tomorrow and Thursday.
But the question isn’t necessarily, are we seeing any signs of improvement. The question is, are we seeing the kinds of signs that indicate the economy’s growing enough to break down that unemployment rate? That overhyped V-shaped recovery may sound like so much Wall Street jargon, but what the economy actually needs is just that, a sharp rebound off a sharp fall. So far, though, we’re not getting it.
You’ve probably noticed the depressing frequency with which small businesses in your town have disappeared. Every so often, another storefront is suddenly empty, the windows papered over and dirt shadows on the walls where the old signs used to be.
Yes, my barber’s still packed on Saturday mornings, and an Italian deli in town just moved to a bigger store a block away, and even the local sporting-goods store is hanging in. But for each of those stories, there’s another business that’s already come and gone. And it’s clear that small businesses across the nation, a key to the economy, job growth and revival, remain pressured.
And, of course, that Italian deli moved into an abandoned storefront.
Incentives to spur small-business growth will be one of the “discussion forums” at this month’s “jobs summit,” the dog and pony show the White House is hosting to prove it’s committed to getting the nation’s unemployment rate down to a somewhat more incumbent-friendly level. (Here’s one “outside the box” idea, or maybe I should say, outside the beltway idea, for the summiteers: raise interest rates. That’s right, raise them.)
The big issue revolves around credit. On the one hand, banks don’t want to lend, certainly not with the drunken abandon they had before. But there also is less demand; businesses and consumers alike are cutting down debt, not taking on more of it. That is the heart of the problem.
J.P. Morgan reported some strong earnings today. But what this bloggers eye were some of the sub-numbers in the earnings report. The bank booked $1.8 billion in investment banking fees. But don’t be fooled – that wasn’t from big M&A advising. But $429 million was in advisory fees. Instead, that $1.3 billion + remaining fees […]
David Oreck, founder of a well-known maker of vacuums and air purifiers, says he’s upset his namesake company is in bankruptcy. He says Nashville, Tenn.-based Oreck Corp. was a perfectly profitable company when he sold his stake in it to a private equity firm in 2004. He blames the firm, New York-based American Securities Capital […]
