US stocks rise modestly, on a hopeful inventories report, as well as an upgrade of blue-chip 3M, and despite more troubling sovereign debt news.
DJIA rises 51 (0.5%) to 10337, S&P 500 adds 4 to 1096, Nasdaq Comp gains 11 (0.5%) to 2184. IBM, 3M drive Dow’s gains. Volume, as it has been for a while, is light. Crude drops sharply, and gold continues its ride downtown. Dollar slips against the euro and yen.
For stocks, all in all it’s basically what’s called an “inside day,” with the S&P especially stay within support and resistance levels. Of course, the longer it gets wound up inside the ranges, the sharper the eventual breakout will be. The only problem with that is, nobody knows which direction the breakout will travel.
“The feel is that we are on the verge of a significant breakout in the markets,” UBS’ Art Cashin wrote this morning. “We need to determine the direction.”
Spain the latest sovereign to get a downgrade, but the effect on stocks is more muted than the reaction to the news over Greece yesterday, or the panic over Dubai over Thanksgiving.
Wholesale inventories rise for the first time in 14 months, a sign inventory destocking may be over. It’ll be interesting to see if business inventories confirm the trend.
And CNBC reports Citi plan to repay its $45B in TARP loans with proceeds from $20B raised through an equity offering.
- Treasury extends TARP to October. Republicans aren’t pleased.
-The Wall Street casino keeps getting even more confusing. “Over the long run, the markets reveal themselves. But on any given day, nobody can see exactly what’s happening, much less explain exactly why it’s happening.”
- Meredith Whitney says the government is “out of bullets” in its battle to boost the economy.
- Apple (AAPL) shares getting a nice bump today as tablet-related rumors have returned. Prior to the open shares had dropped 8% off their 52-week high, but one analyst stressed not to worry.
- Monetary policy and commodities – notice a link?
- It pains me to say this, but comments from McClatchy (MCI) and NY Times (NYT) prove newspaper publishers are looking at the future through rose-colored glasses.
That is some trick the Treasury Secretary pulled today, saying he’s got a plan to exit the TARP program – at the same time as he extends it for nearly another year, because now that the banks are back in the pink (and the black, and the green,) there are other, less hardy components of the economy that could benefit from government largesse.
Somebody needs to bag Paul Volcker before he does some real damage.
We noted yesterday the former Fed chairman threw a few salvos during a WSJ-sponsored forum. Today he told a gathering in Europe it’s no time to let bankers go back to business as usual, and not to get distracted by the global stock rally, and
After being little more than a hood ornament for 10 months, it seems like the administration has finally unleashed its most potent bulldog. Is it coincidence? It is planned? Is the administration worried about a populist backlash against its arguably Wall-Street friendly bailouts and lifelines, so it’s letting the actual smartest guy in the room loose to lash some hides? We don’t know, but for whatever reason, it’s good to hear some plain talk from a guy as sharp as Volcker.
Here’s the story, from the Journal’s David Wessel:
Former U.S. Federal Reserve Chairman Paul Volcker, speaking to the congress of Europe’s center-right political parties in Bonn, said “this is no time for a return to business as usual” in global finance.
“The rally in world stock markets from recession loans has brought renewed hopes on Wall Street in the City of London for a return to outlandish bonuses for financial operators and vigorous defense of established vested interests,” Mr. Volcker said, according to a prepared text of his remarks.
“Those hopes and positions must not distract us from what needs to be done,” he said to a congress of European People’s Parties.
Amid all the wailing about sovereign debt downgrades and such, you may have missed yesterday’s jobless numbers from the Bureau of Labor Statistics. No, you didn’t miss the monthly jobs report, or even the weekly initial claims. What you missed (if you did miss it,) was the Job Openings and Labor Turnover Survey. Or, the JOLTS report.
The BLS reported there were 2.5 million job openings in October, with the opening rate at 1.9%, a level that has held steady since March. That means hiring has not picked up at any pace since the stock-market rally – and the purported recovery – began, and the ratio of more than six unemployed for every job opening remains steady.
So even if you buy into Friday’s jobs report, the fact remains that hiring has not picked up, which is confirmed by the fact that long-term unemployment continues to rise.
And if you don’t buy into Friday’s report, well, you’re not alone. Like I wrote Friday, I’m skeptical. And certainly Fed Chairman Ben Bernanke didn’t think it was strong enough to get him to even hint that he might lift interest rates off the floor. And other folks are still deconstructing it.
Of all the ideas to come out of Washington to combat this, well, what do we call it these days? Recession? Rough patch? Malaise? Whatever you call it, of all the ideas to come out of Washington to, let’s just say, strengthen the economy, not one has been this:
Raise interest rates.
You certainly won’t hear that from the Federal Reserve. No, they are traveling in the absolute, polar opposite direction, keeping their key overnight rate, the fed funds rate, at basically zero (it travels in a band between zero and 0.25%,) as far down on the gas pedal as they can go. The idea is that through extremely low interest rates – rates lower than those that sparked the housing bubble and subsequent subprime meltdown and credit crisis – the central bank can spur activity, which can spark a rebound, which can get the economy rolling along again.
Well, it worked once, for a spell. But we’re not so sure it’s working this time. Look at John’s post about Kroger’s conference call. Deflation. Food stamps. Kroger’s CEO said he’s never seen conditions like the ones he sees today. Granted, Kroger’s isn’t a multinational bank that’s too integral to the financial system to be left to the ravages of the marketplace, but they serve people at a pretty basic level.
And, if you think about it, a 1% or even 2% fed funds rate would still represent extremely loose monetary policy. Of course, it would crimp the big banks’ profits a bit, as they’ve been making quite a tidy profit from the cost-free borrowing.
Since March, every selloff in US stocks has subsequently been greeted by investors as a buying opportunity. Yesterday’s retreat appears to be no exception, based on premarket futures.
US dollar index is getting dinged again, and while oil is bouncing smartly, gold hasn’t yet responded as well to the lower greenback.
Another quiet day for economic data, with October wholesale trade numbers the only notable item on the menu.
Dollar index down 0.4%. S&P futures up 5.70, DJ futures up 45. Ten-year slightly lower, yield at 3.40%.
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 […]
The bridge that collapsed on Interstate 5 bridge over the Skagit River in Washington was listed as “functionally obsolete” and “fracture critical,” which means the whole sha-bang could come tumbling down if one major part fails. Click here to read the details from USAToday. This sort of thing shouldn’t be happening in a modern, developed nation. Barry LePatn […]
