Market Talk

US stocks slide amid a raft of sovereign debt related news, including a downgrade in Dubai and a warning to the US and UK.

DJIA drops 104 (1%) to 10286, S&P 500 loses 11 (1%) to 1092, Nasdaq Comp falls 17 (0.8%) to 2173. It’s the Dow’s lowest close since Nov. 13. Dollar rises again, crude, gold, stocks all drop.

Markets jarred by continued debt problems in Greece and Dubai, and warnings to the US and UK. S&P puts Greece on credit watch and Fitch downgrades the nation. Moody’s downgrades several Dubai corporations, and also warns larger nations like the US and UK to get their financial houses in order.

But the key word in that paragraph is “continued.” Greece and Dubai’s problems aren’t exactly new (neither are the US or UK’s, for that matter,) but in a top-heavy market, it’s a perfect excuse to sell. Since the S&P 500 rose as high as 1119 during Friday’s session, stocks have been dropping, and in fact have been in something of a holding pattern since mid-November.

The dollar rose sharply today, with the dollar index up 0.6%, and the euro tumbling down below $1.47. Does anybody else find it ironic that the dollar is still, even despite all the slings and arrows being thrown at it, considered a safe haven?

So, yesterday, I said, what does it say about the economy that the Fed’s keeping interest rates at zero. Today, I’m saying, what does it say about the global economy that when push comes to shove, the dollar is still considered a safe haven.

Also, and this is a point UBS’ Art Cashin has been pounding for weeks, with every trade seemingly going in the same direction – against the dollar – any break in that flow potentially will be a big washout. And while within days just about everybody was saying Dubai’s problems were well contained, well, maybe they weren’t so well contained.

As a student of the Great Depression, concerns about rampant deflation may keep Ben Bernanke awake at night. If that’s the case, he might want to avoid hearing about Kroger’s (KR) 3Q results today.

The company reported a net loss of $875 million, mostly on write-downs related to an acquisition, but excluding that, profits would’ve still been down 26%.

Commenting on the quarter, CEO David Dillon said: “In the near-term, our financial results are being pressured by factors including persistent deflation, unusually intense competition and the cautious mindset of customers.”

Persistent deflation, Ben. Continue reading…

Hey, Ben Bernanke wasn’t just whistling Dixie yesterday. It’s still rough out there, for small businesses and small nations (and maybe even some big ones at some future point, should they not get their financial houses in order, hint, hint.)

US stocks remain in the red Tuesday as worries over the fallout from the credit crisis have intensified. Dubai and Greece each received downgrades from credit-rating agencies, prompting renewed concerns about the global economy.

The Dow was recently off 112 at 10277; S&P 500 down 11 at 1092. Both indexes are up more than 60% from the early-March lows, but stocks have certainly cooled off in recent weeks.

Prior to today’s session, the difference between the S&P 500′s closing high and low throughout the last 20 trading days has been just 2.2%, which is the smallest spread since February 2007, according to Bespoke Investment Group.

By comparison, the 20-day high/low spread peaked at 40% in October 2008, and sat at 10% at the beginning of 2009. “We’re definitely ending the year on a much different note that the way it started,” firm says.

Continue reading…

The truth will set you free.

There’s a reason the Obama administration keeps former Fed Chairman Paul Volcker chained to a radiator in a White House cooler – the guy speaks just a little too much truth.

Since being named to head up the President’s special economic recovery team, whether by design or by accident, he’s been barely heard from. It’s almost enough to make you wonder if his position was all just some PR stunt to draw some attention away from an inexperienced President.

But today, at a forum sponsored by the Wall Street Journal, he let it rip, and if we had a few more people roaming around Washington like him, there’d be a chance this whole fiasco could turn out alright.

Here’s the story, as relayed through MarketBeat:

Former Federal Reserve Chief Paul Volcker isn’t afraid to speak his mind. At The Wall Street Journal’s Future of Finance Initiative he tossed a few broadsides at a group of financial executives and policy makers.

The group had gathered to come up with suggested reforms that would help prevent a future financial calamity. Mr. Volcker’s verdict: “Your response I can only say, is inadequate. You have not come anywhere close.”

Mr. Volcker, who also chairs President Obama’s Economic Recovery Advisory Board, had a few other choice comments. Among them:

“I wish somebody would give me some shred of evidence linking financial innovation with a benefit to the economy.”

Mr. Volcker’s favorite financial innovation of the past 25 years? The ATM. “It really helps people, it’s useful.”

Continue reading…

Merry Christmas!

Ben Bernanke wasn’t kidding yesterday. We do still have “some way to go” before we know the recovery’s going to stick.

What we’re seeing today is the same thing we saw when Dubai World blew up the front pages over Thanksgiving; that the global economy is still feeling the after-effects of the credit crisis, and the ugly fallout can be seen across the globe, from small businesses in America to the Middle East to the very cradle of democracy.

Despite the meteoric rise this year in the major stock indexes like the DJIA and S&P 500, which comprise the biggest and bluest of the blue-chip companies, everybody knows small businesses are going to have to be a big part of any recovery in the United States.

So while it’s not having a big impact in the markets, this morning’s sentiment report from the National Federation of Independent Business is worth noting. The NFIB’s November survey shows its optimism index at 88.3, the lowest level since July and down from September’s 89.1.

“Owner optimism remains stuck at recession levels,” the group said. “The proximate cause is very weak consumer spending, better than a year ago, but that was pretty bad.”

Continue reading…

US stock futures are a little soft and a bit wobbly premarket, following some more rumblings related to Dubai and weakness in Asian markets overnight.

US dollar index a shade higher, oil and gold both lower; crude threatening to break below $73 a barrel. Markets mixed to weaker to Europe. No notable economic data on the calendar.

S&P futures down 8.60, DJ futures down 71. Ten-year higher, yield at 3.40%.