Market Talk

You can tell from my skimpy market recap that I got called up to the sixth floor to be a guest on WSJ.com’s News Hub, and talk about the stock market. Here’s the video:

- “For the last 10 months, as stocks have rallied with only minor interruptions, even the bulls have warned that at some point a ‘correction’ would hit,” LA Times’ Tom Petruno says. “Is this finally it?”

- Not a lot to cheer in NBC Universal’s 4Q results. But don’t worry GE, it’ll all just be a memory soon enough.

- Obama’s bank plans don’t bode well for venture capital industry, Infectious Greed blogger Paul Kedrosky says.

- Gluskin Sheff chief economist David Rosenberg succinctly lists what’s plaguing the economy. “Greece. Portugal. Ireland. China tightening. Bank bashing. Foreclosures. The housing and mortgage market. Jobs. The Fed’s exit strategy (if it happens),” he says. What does it all mean? “There is no quick fix,” the Pragmatic Capitalist says.

- Bernanke’s confirmation vote suddenly looks like it’s in jeopardy. Not a good sign, especially since it would have some “unpredictable macroeconomic consequences all on its own,” Matt Yglesias writes.

- Betting on Bernanke not such a sure thing anymore. As more senators come out against reconfirming Ben Bernanke as Fed chairman, the betting markets are starting to sour on him, Catherine Rampell writes at NYT’s Economix blog. Odds of Bernanke being reconfirmed have fallen from 93% to 80%, according to Intrade

- The Economics of Contempt blog wonders if Obama’s plan is merely a “transparent political stunt”?

- People love to criticize. But Reuters blogger Felix Salmon says he’s “cautiously optimistic” about the future impact of Obama’s bank plan. “No, it won’t singlehandedly prevent another financial crisis – but I’m getting a bit tired, at this point, of people criticizing necessary moves on the grounds that they’re not sufficient,” he says.

- “Fear and greed are the odd couple whose constant squabbling dictates the direction of financial markets,” Liam Denning writes in a WSJ Heard on the Street column. Keep an eye on the VIX.

- The Last of Lost – ABC’s hit series set for its final season. How awesome is this show? Obama actually rescheduled his “State of the Union” address a few weeks ago so it wouldn’t conflict with the season premiere.

US stocks sell off for the fourth time in the past five sessions and it seems the long-anticipated correction may finally be here. (Of course, we’ve been here twice before, but like they say, the third time’s the charm, right?)

DJIA slides 216.90 (2.1%) to 10172.98, S&P 500 drops 24.73 (2.2%) to 1091.75, Nasdaq Comp loses 60.41 (2.7%) to 2205.29.

The market’s had to deal with a lot of “unexpecteds” this week: the Massachusetts special election, a bank-bashing president, a Fed chairman with shaky job security and jitters over China’s growth trajectory. There have been two other minor corrections in this long run. Investors adjusted and moved on.

The question, of course, is will they again.

So GE, like any number of other financial and financial-related outfits, thinks the credit market’s woes have peaked. Of course, any number of financial and financial-related outfits didn’t think the subprime market could have a big effect on the market, but that’s another story.

We’re also looking at Barney Frank’s idea to scrap to Fannie and Freddie, which seemed to come out of left field. And speaking of left field, how many things are coming out of there these days?

My last job? Fed chairman.

Want to know what’s got the market in a tizzy? Gluskin Sheff’s David Rosenberg lays it out:

Greece. Portugal. Ireland. China tightening. Bank bashing. Foreclosures. The housing and mortgage market. Jobs. The Fed’s exit strategy (if it happens).

And now we’re adding the job security of Fed chieftain Ben Bernanke to that stew. “We just have to realize that deleveraging cycles are long and painful,” the Pragmatic Capitalist writes. ” There is no quick fix. In other words, get used to it until our leaders find some resolve and actually begin dealing with the structural problems that got us here in the first place. Removing those who helped cause the problems is a good start.”

It seems hard to believe that Congress would not approve the President’s choice for the Federal Reserve, but the uncertainty of it is hanging in the air, after the confirmation vote was delayed to next week. Some time next week. The Fed chairman’s term expires next Sunday.

Let’s just say it wouldn’t exactly send the right message to the rest of the world, and the bond market especially, should Congress vote Bernanke out. You have to expect a good amount of this is just posturing, something Congress does better than any other group on the planet. But, you know, wars tend to start with a single, errant shot.

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If Paul Volcker is a winner for his role in influencing President Obama’s proposed bank plans, is Tim Geithner the biggest loser?

It’s certainly hard to ignore Geithner’s role (or lack thereof) in Obama’s press conference yesterday. The President began his speech by thanking Volcker and Bill Donaldson for their advice and influence regarding his new bank regulations, even calling the new policy “The Volcker Rule.”

“That in itself is shocking,” Henry Blodget writes at Clusterstock, as Volcker, a former Fed chairman, is now just an advisor to Obama whereas Geithner is Treasury Secretary.

Even the lineup on stage at yesterday’s press conference was astounding. Volcker stood right by Obama’s side, followed by Barney Frank and then a distant Geithner, who may as well have been caddy-cornered on the side of the stage.

“At the very least, yesterday’s press conference seemed designed to tell America that Tim Geithner has been marginalized, that Obama is now (finally) committed to change,” Blodget says.

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Think he's ready?

I’ll have more on this later (busy getting some material ready for our earnings column that starts next week in the WSJ, look for it starting Monday,) but I wanted to get this thought into your heads now: the fourth-quarter’s GDP is going to look good, very good, but it may be a complete head fake.

This comes from Capital Economics:

Our calculations suggest that fourth-quarter GDP increased at an impressive annualised rate of 5.6%. With the consensus forecast as low as 4.5%, we expect the equity markets to react favourably to the release of the initial estimate this Friday. Unfortunately, our calculations also imply that most of the growth was due to a big shift in the inventory cycle. In all likelihood, the growth rate of final sales to domestic purchasers actually slowed in the fourth quarter. We still believe that once the boosts from the inventory cycle and the fiscal stimulus fade, GDP growth will slow sharply in the second half of this year.

GDP should expand by as much as 3% this year, but we fear growth will slow to only 1.5% next year.

We’ve long been in the camp that the whole inventory thesis is overblown. We’ve also been in the camp that says any signs of recovery in the economy have come wholly from the various government props. The big question is going to be if this baby can swim on his own, without the floaties.

Looking at not only unemployment, but the rate of, for lack of a better term, reemployment, and I have serious doubts about how strong the economy really is, and how durable the recovery will prove to be also.

(Photo: wikipedia commons)

Aaaayh!

I’ll be up front. I’m a big fan of Barry Ritholtz over at The Big Picture; we cite him regularly in both our wire column and here on this blog. When I was first trying to get more blog-sourced opinion on the wire, The Big Picture was a blog I leaned upon heavily, and his sharp, lucid opinions really helped cement for my editors the notion that there was intelligent material being produced in the blogosphere.

I’ve got nothing but love for you, Barry, and I hope this doesn’t affect our having a drink together some day. But you’re wrong about the Journal.

“It used to be that articles on the market or specific companies or various finance stories were objective and reliable and free from bias,” he writes in a post that absolutely takes the Journal out behind the woodshed and beats it with a 2×4. “That is no longer the case. The lunatics now run the asylum, and henceforth, I am moving the WSJ into the column of “Stuff to read, but not take very seriously.”

What cemented for Barry his notion that “ham-fisted politburo apparatchiks” are running the paper was the page one lead story, “New Bank Rules Sink Stocks.” Now, I will grant Barry one thing: the headline makes it seem like it’s a market story, when it’s actually a political story. Of course, the bank stocks certainly fell on the bank proposal, so you can even defend the headline.

“It doesn’t take much looking to see other, more plausible, less politically motivated explanations than the floated Volcker/Obama proposal,” Barry wrote. “The market’s biggest losers were not finance-related issues, but rather were commodity-related stocks.”

Barry, you’re absolutely right about that. There were other causes. And they were covered yesterday here, here and here (and how about here and here the day before,) in the Money & Investing section, where the market recaps are always found. All those stories mention China.

The front page is for the big story, and the big story yesterday, without a doubt, was the President’s proposal.

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Fourth-quarter earnings season so far seems to be delivering the solid results the Street and investors expected, as evidenced most recently by Google and Goldman Sachs yesterday.

Trouble is, those expectations are apparently well priced in, as a growing list of high-profile names have sold off after posting upside earnings results. GOOG, for example, down 3.7% premarket after once again beating Street views, although it wasn’t quite the kind of blowout performance investors have come to expect.

Perhaps GE will break that string this morning, with shares up 1.8% premarket at $16.25 after better-than-expected 4Q EPS. McDonald’s also out with numbers that topped Street views, and its shares are higher as well.

The problem is, despite those two bellwethers, and a 200-point slide yesterday, there is not the slightest hint of any kind of rebound for equities, with S&P 500 futures down 2.10 and DJ futures down 30.

No economic data on the calendar. US dollar index a little weaker, though gold and oil are both lower, too.