Well, that wasn’t such a bad Friday the 13th after all, was it?
US stocks rise as the dollar plunges, after the trade deficit widened further than expected and consumer sentiment sank, but better than expected earnings reports bolstered investors’ appetite.
DJIA rises 73 (0.7%) to 10270, up about 2.5% for the week, and 5.7% over the past two weeks. S&P 500 gained 6 (0.6%) to 1093, Nasdaq Comp adds 19 (0.9%) to 2168. Dollar slipped 0.5% against the euro this week, crude rose 1.4% and gold 1.9%.
Trade gap hits $36.5B. Consumer discretionary leads gainers, even though a report on consumer confidence falls for a second month, and retailers’ holiday outlooks are still murky. Eurozone sees GDP rise sequentially. Obama tells Asian economies not to count on the US consumer anymore.
It looked dicey after the University of Michigan’s consumer sentiment report was released just before 10 a.m. Sentiment slid for the second month in a row, and stocks immediately dropped, quickly dipping their toes into negative territory. But they just as quickly recovered (can you say Plunge Protection Team? Nah, couldn’t be them.)
We’ve been saying for some time now that the budget problems in the states is at some point going to be a big problem, like a tornado-just-blew-my-house-away big. With the wife and kids in it. And the dog.
The 50 states currently face collectively a roughly $140 billion budget shortfall, and while California’s problems have been the most prominent, the Golden State is far from alone.
“The same pressures that drove (California) toward fiscal disaster are wreaking havoc in a number of states, with potentially damaging consequences for the entire country,” the Pew Center said in a fresh report. The report looks at the 10 states in the worst shape: California, Nevada, Arizona, Oregon, Michigan, Wisconsin, Illinois, Florida, Rhode Island and <snif!> my beloved (and often concurrently reviled) New Jersey.
It’s a gathering storm, to be sure, being held back at present only by federal stimulus largesse, as the Journal reported yesterday:
Once stimulus funds have been accounted for, states still face a combined deficit of $142 billion for fiscal 2011, up from $113 billion for the current fiscal year, according to the Center on Budget and Policy Priorities.
Not to pick on JC Penney (JCP), but it just seems to be a good measure of how this consumer discretionary run-up — particularly with today’s uglier consumer sentiment reading — looks a bit too giddy.
Reuters/University of Michigan early look at November consumer sentiment came in at 66, well below the expected 71 reading and down from Oct’s 70.6. Common sense suggests that’s not good for discretionary names, but the sector is by far the best performer among the 10 S&P industry groups. Go figure. Continue reading…
President Obama travels to Asia, where he’s got a big message for the locals: don’t count on the US consumer anymore. And even though the trade deficit showed a sharp rise in imports, this morning’s consumer confidence report offered a very telling take on the mood of the consumer. Lastly, there are signs of life in the Eurozone, but they’re the same stimulus-driven signs seen over here, with the same fears that it won’t last.
The more we hear, the more we think this whole inventory rebuilding thing that everybody’s been pushing since forever is going to turn out to be one big fiction. We have yet to see any real evidence of an inventory rebuilding cycle that will kick start job (and wage) growth in response to some surge in demand that’s been manufactured by government stimulus.
Yesterday, Daimler’s CEO Dieter Zetsche visited Dow Jones’ midtown offices, and I got to sit in on the meeting. There was talk about Chrysler, of course, and Zetsche let on that they’re thinking about introducing a small car in the US. I got in only one question.
How are your inventories?
“We’ve never been as cleared out as we are now,” he said, in his somewhat familiar German accent. That comports with most of the data we’ve seen, right? Inventories across a range of businesses have been, as he said, cleared out. So, I asked, what are your plans now? (Okay, I got in two questions.)
Premarket tone seems a bit subdued, with US stock futures leaning a hair higher as the US dollar index gives back some of yesterday’s solid gains. Oil and gold aren’t doing much, despite a weaker dollar.
Markets look mostly flat in Europe, and action overnight in Asia was mixed. September trade deficit and October import prices due at 8:30 a.m. ET; Reuters/Univ of Michigan’s early read on November consumer sentiment releases at 9:55 a.m.
Busy data calendar next week, featuring October retail sales, regional manufacturing reports, PPI and CPI, industrial production readings and housing starts.
Dollar index down 0.3%. S&P futures up 1.80; DJ futures up 12. Ten-year roughly flat, yield at 3.44%.
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 […]
President Reagan’s former budget director David Stockman says Edward Snowden performed a heroic act, the Patriot Act should be repealed, and this whole spying-on-U.S.-citizens thing is a symptom of an out-of-control military-industrial complex. Click here to watch him go on YahooFinance. The author of “The Great Deformation: The Corruption of Capitalism in A […]