US stocks rise slightly in a very lightly subscribed session, maintaining the rising tide they’ve been riding since last week. Some weakness in the afternoon gets wiped off the board with a small jump near the end; but the spread between the Dow’s high and low is only 45, a very tight range.
Consumers stocks don’t get much of a boost from word that holiday sales rose this year. Chicago Fed manufacturing index rose, but Dallas Fed’s slips. Fannie, Freddie surge on news Uncle Sam’s going to pick up their tab – however big it is. Airlines, understandably, lose ground amid aftermath of Northwest Flight 253.
DJIA gains 27 to 10547, S&P 500 adds 1 to 1128, Nasdaq Comp up 5 to 2291. NYSE volume’s very low. Crude rises close to $79/barrel, dollar’s essentially flat.
This isn’t the kind of thing you can write in a straight-up market commentary that would run either on the wires or in the paper, but I can say it here: if you weren’t around today, you didn’t miss much. I woudn’t say “nothing,” because obviously there was some news. But there wasn’t much (but keep an eye on that geopolitical stuff!)
I'll have three sticks of gum, two gobsmackers and five shares of Citi.
My goal in life is not to be one of these perma-bears. Being perma-anything, bull, bear, liberal, conservative, blinds you to flaws, mistakes, the other side of the coin, and so on. Blind faith in the ability of markets, for example, has proven to have, well, let’s just call it a blind spot.
But it does seem like there’s still a fair amount of pessimism out there about the recovery, despite all the hoopla over the it. For instance, here’s two stories from Investment News that put a damper on the V-shaper crowd. The first is from an interview with Pimco CEO Mohamed El-Erian:
The investor says the recovery may be gaining steam but is no different than a kid who eats too much candy at one of the birthday parties his 6-year-old daughter attends.
“We’re on a sugar high,” El-Erian says. “It feels good for a while but is unsustainable.”
His point: This burst of economic activity fed by government spending and near-zero interest rates will soon peter out.
El-Erian sees a 10% correction in the stock market, unemployment still above 8% a year from now and below trend GDP growth for years, which will drag out and exacerbate all the economy’s problems.
Between soundings on retail sales and reports on the manufacturing sector, seems like more of the data we’re seeing supports the “fits and starts” thesis to the recovery, rather than the V-shaped thesis. We shall see, of course, but for now, here’s tomorrow’s news today.
I never made it the Boy Scouts, I washed out after Webelos, but I never forgot the Boy Scout motto: be prepared.
I mentioned this morning that the market is not focused at all on what’s commonly called “geopolitical” issues; basically, anything that isn’t directly market related. When the market itself is on the edge of the abyss, as most seem to think it was late last year and early this year, it’s hard to worry about things happening in foreign places like the Middle East, or Asia, or Hollywood.
But if the economy’s recovering as beautifully as most people think it is, will geopolitical become a focus again? Or will geopolitical issues force their way into the market regardless?
There were two big stories over the weekend that certainly could have caught investors eyes, the mass protests in Iran and the attempt to blow up a plane over Detroit on Christmas. Just try for a moment to imagine if Umar Farouk Abdulmutallab had managed to blow up Northwest Flight 253 (and, yes, it is only an alleged crime at this point (and, of course, thank God he didn’t.)) Would anybody care about retail sales anymore?
A look at the week ahead with Dow Jones’ Meena Thiruvengadam. Conference Board expected to report that confidence is at its highest level since last September – but still less than half its peak in 2007.
So MasterCard got the jump on everybody, reporting already, via its SpendingPulse unit, that holiday sales were up 3.6% this year over last year.
By getting out there early, MasterCard makes sure they get their name in the papers. And while the report is a reliable indicator, it’s not a definitive source.
In the next few weeks, there will be other reports on the season, with the biggies coming from the National Retail Federation and the government “official” sales report . Of course, there’s also the financial statements from retailers themselves.
While a 3.6% increase sounds good, it isn’t doing much for Wall Street this morning. Consumer discretionary stocks are up a hair, and consumer staples stocks are down a hair. Retail information provider NPD Group characterizes holiday shopping as “adequate.”
“All in all, ” the firm’s chief industry analyst Marshal Cohen says, “Holiday 2009 was good enough, but has a long way to go with catching up to what the consumer really wants.”
Anecdotal reports coming in confirm the general sense that this year’s holiday sales were better than last year’s dismal season, but they weren’t exactly gangbusters, despite the doorbusters.
Enough traders watch this to turn it into a self-fulfilling prophecy: Failure at this key juncture foments doubt, but surmounting it will mean the stock market has recovered half of its bear-market losses, which might validate the recovery and beget more buying.
But Wall Street may have a hard time capitalizing on this move, right now at least. Because while it’s been pretty spectacular, it’s been attended by very weak trading volumes, which have only gotten weaker as the year’s worn on. Dow Jones’ Tomi Kilgore notes that stocks have been rising as bonds have been falling, but that dynamic may take a break (subscription required.)
US stocks looking slightly stronger ahead of trading on the last week of the last year of the first decade of the 21st century. Stocks are up a bit, as the first reports coming in on holiday sales indicate the season was better than last year’s weak one. Mastercard’s SpendingPulse says retail sales were up 3.6% from last year, WSJ reports.
This week’s pretty lean on the news front; manufacturing reports from Dallas and Chicago Fed today. Goldman Sachs and Redbook retail reports tomorrow, as well as Case-Shiller report for October. S&P futures up 1.50, DJ futures up 9. Ten-year down, yield up to 3.8%. Dollar weaker.
Treasury Department taking some heat for its after-hours, Christmas Eve announcement that it would cover an unlimited amount of Fannie and Freddie’s losses. That kind of timing is a classic stunt second-rate companies pull when they’re trying to bury something. The Treasury Department of the United States should be better than that.
Forget for a second that the government tried to slip this one under the radar. That’s not the real issue here. This is the real issue: what does it say that $200 billion, the original amount of credit extended to Fannie and Freddie, isn’t enough to cover the losses on their mortgage portfolios? Is that a good sign, or a bad one? And the government isn’t adding another $50 billion to the pile; it’s pledging to cover an unlimited amount of losses.
“Unlimited access to bailout funds through 2012 was ‘necessary for preserving the continued strength and stability of the mortgage market,’ the Treasury said,” according to the Journal. If you ask me, the fact that they made this move illustrates quite clearly that there is no strength in the mortgage market, and very little stability.
And, you know, we’ve still got this situation where people aren’t paying much attention to the so-called geopolitical risks. But what if that terrorist on the Northwest flight had actually managed to blow up the plane? Thank God he didn’t, but the mood across the country would be very different if he had.
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 […]
