- Europe’s announced support for Greece was “badly bungled,” former IMF chief economist Simon Johnson says. And if the euro continues to depreciate, he believes the G7 will need to weigh in on the situation.
- Palm not exactly lighting it up in Verizon stores, but should benefit long-term. “Palm will be well-served with Verizon as a partner, but its challenge – as always – is one of awareness,” John Paczkowski says. “Once it overcomes that, increasing carrier momentum should follow.”
- Apple’s (AAPL) iPad is more than just a fancy gadget. “When I look at the iPad, I see a clean slate to reinvent pretty much how we think of media, information and in fact the whole user experience,” Om Malik says.
- Google wastes no time announcing privacy improvements for Buzz. “It’s still early, and we have a long list of improvements on the way,” Google’s Tom Jackson writes in a blog post.
- Unfortunately, Toyota has a thing or two in common with the banks. The good news, Barry Ritholtz notes, is the auto maker doesn’t need a bailout, and “they didn’t cripple the world’s economy.”
- All the jostling surrounding the financial-reform bill in the Senate is getting a bit confusing, Reuters blogger Felix Salmon says. “I’ve been pessimistic throughout this process,” he writes. “After decades of getting exactly what they want, I just can’t believe that the banking lobby is now going to end up getting exactly what they don’t want.”
- Let Greece go to the IMF, Harvard economist Jeff Frankel suggests.
- Do e-readers cause eye strain? “It turns out the answer isn’t as black-and-white as we might assume,” NYT’s Bits blog says.
- FT Alphaville wonders where all the bonus rage has gone.
- Olympic luger dies after training crash, just hours before the opening ceremony.
Blue chips slide on the day, but gain on the week, breaking a four-week losing streak for the DJIA ahead of a long weekend.
DJIA loses 47 (0.5%) to 10097, still up about 0.9% on the week, breaking that losing streak. S&P 500 eases 3 to 1075, Nasdaq Comp gains 6 to 2184 on tech strength.
Stocks fall sharply in the morning, buffeted by news from one end of the silk road to the other. Buyers pour in to fill the void, but the concerns over the goings on in Greece, China and Europe are likely to be on investors’ minds next week as well.
We’re off Monday for Presidents Day, but as appropriately obssessive news junkies, we’ll be watching everything over the weekend, so stay tuned (or follow us on Twitter (did I really just plug Twitter? Yes, I really did just plug Twitter. Wow.))
Here’s a few observations from the Philly Fed’s Survey of Professional Forecasters outlook on the economy:
- The US economy will grow at an annual rate of 2.7% during the next five quarters. They predict real GDP will grow at annual 3.0% year-over-year in 2010. The forecasters did a decent job with that number at this time last year, predicting real GDP would decline 2.0%; it fell 2.4%.
- They now see the unemployment rate at an average 9.8% in 2010, a shade better than the Obama administration’s estimate for 10% in yesterday’s Economic Report of the President. The pros and the administration both see the rate falling to 9.2% in 2011; 8.3% vs White House’s 8.2% in 2012; and both at 7.3% in 2013.
- In 1Q10, forecasters estimate monthly job growth at, get this, 600 (not a typo) per month; things pick up in 2Q with 117,600 per month, but tail off again in 2H, with only an average 96,000 jobs added each month. The administration forecasts average monthly job growth of 95,000.
- Forecasters also aren’t worried about a double-dip recession. They peg the chances of contraction in real GDP in 1Q at just under 10%; odds in 2Q put at 11.6%; 3Q 13.2%; and 14% in 4Q.
Celebrating this guy isn't such a fiesta for the stock market.
US stocks slumping, reversing much of yesterday’s gains, as weak GDP growth in the euro zone combined with China’s central bank boosting reserve requirements for banks weighed on stocks.
Selloff comes just one day after the market rallied on optimistic comments that the EU would support debt-laden Greece.
“Just as one fire has been put out for now (Greece), the one that originally caused jitters in the markets in mid-January, China, now flares up again,” says Miller Tabak equity strategist Peter Boockvar. “This proactive step is a good thing longer term but rarely is a smooth process in the short term.”
Dow industrials, which fell as much as 160 in earlier trading, were recently off 50 at 10094. S&P 500 off 4 at 1075.
Keep in mind the S&P 500 has closed down 15 of the last 18 Fridays before Presidents Day weekend, Ticonderoga Securities technicians write, as investors tend to prefer holding cash over risky assets through the long weekend, “especially in the current climate.”
Somewhere in the state of New Jersey, there’s already some little man, in a little green lampshade-colored plastic visor, who’s calculating just how much my property taxes are going to rise. I can feel him.
There hasn’t actually been much reaction among my fellow New Jerseyans, at least the one’s I know, to the “state of emergency” invoked by our new governor, Chris Christie. Just about everything, it seems, costs just a little bit more in New Jersey, for some odd reason that nobody can ever seem to figure out (ahem.) There’s a fiscal bomb going off? What else is new?
(Editor’s note: everything costs more in New Jersey, except gas, Russolillo points out.)
So this latest disaster scenario has invoked the usual response: There go our property taxes. It’s all just part of the delicate dance we entertain every day here in the Garden State.
But west of the Delaware (and east of the Hudson for that matter,) New Jersey suddenly is known for more than just mobster shows and trashy kids down the shore. Hey, we’re like California! Or New York. Or Illinois. Or Michigan. Or Ohio. Actually, when you think about it, there are a lot of states that are up against the wall, aren’t there? We’re just one in a long line. The state of the state, to state it just so, is pretty bad, and getting worse. California’s crisis last year grabbed all the headlines, but the Golden State is far from alone in sitting on top of a ticking debt bomb.
There’s a scene in the movie “Thirteen Days,” which chronicles the Cuban Missile Crisis, where President Kennedy’s defense secretary, Robert McNamara, gets into a screaming match with a Navy admiral during the blockade. (Stick with me, this is going somewhere, I promise.)
The admiral orders his ships to fire over a Russian freighter headed toward Cuba, basically standard operating procedure for a blockade. In the tension-filled war room, McNamara flips out, because the President ordered no firing. The admiral is furious that his authority’s being undermined. Tempers are flaring.
“This isn’t a blockade,” McNamara says, “this, is language, a new vocabulary the likes of which the world has never seen. This is President Kennedy communicating with Secretary Khruschev.” (By the way, this is a very good movie, except for one weird part: the “star” is Kevin Costner, but he plays the President’s special assistant Ken O’Donnell, a supporting role in the actual crisis. I’m not Joe Morgenstern, I thought it threw the movie off.)
I was reminded of that scene when I read this on the Broadtape a little while ago:
If Greece should need financial aid from the European Union, Athens would prefer a long-term loan rather than bond guarantees, two people with familiar with the Greek government’s thinking said Friday.
“A loan is a clear way of saying to the markets that the EU has confidence in the Greek government’s measures to tackle the budget deficit,” one of the people told Dow Jones Newswires. “But there is still no indication from Brussels on what may be decided.”
Greece hasn’t asked for help in tackling its debt crisis, but if that should become necessary, the second person said, “Around EUR20 billion would satisfy the government.”
The Greek Finance Ministry didn’t respond to attempts to seek comment.
Is this an example of the Greeks communicating with Brussels, and the marketplace, and maybe even the German people who’d have to pony up a big chunk of that 20 billion euro to satisfy the Greeks? If so, then there’s still a lot of negotiating to be done over the Greeks’ non-request for aid and Brussels’ non-offer of any.
It seems like people here in the U.S. became so used to the news being so bad, that absolutely anything that didn’t smack of Great Depression II was greeted as some harbinger of the days of wine and roses. That’s how most of 2009 went off.
Today’s retail sales report from January has some elements of this. Sales came in 0.5% higher than December, according to the Commerce Department, topping the Street’s 0.3% expectation. Sales were up 4.7% from last January (remember, last January was the depths of the recession.) But just because the numbers are positive, doesn’t mean they’re necessarily a positive.
“January’s retail sales figures show that spending is at least rising at a steady pace,” Capital Economics’ Paul Ashworth writes, “but there is nothing here to suggest the U.S. consumer is interested in becoming the engine of global growth again.”
Core sales have been rising since last summer, but are still well below the pace from the 2003-2006 boom years. And that isn’t going to change any time soon.
“We expect that lingering high unemployment, weak income growth, low confidence, tight credit conditions and the continuing need to deleverage will constrain consumption growth for at least this year and possibly well beyond,” Ashworth says. He add that without consumption growth, the recovery will likely falter in the second half, as the benefits of stimulus and inventory adjustments fade.
We'll take this fort, have everything wrapped up by Labor Day.
The Greeks got very little for all their trouble yesterday, just a little pat on the back from their EU partners and a “go get ‘em, boy” statement. That limpid kick-the-can response to what is a potentially destabilizing situation down by the Aegean won’t mollify people for very long.
As history has shown us time, and time, and time again, events that were initially thought to have been well contained can quickly unravel, and turn into some kind of horror show absolutely nobody initially thought possible.
I remember reading in a book on the Civil War that men signed up eagerly at first, assuming the war would last only a few months. But it dragged on for four painful years.
Back to today, meanwhile, there are other problems in the Old Country besides the specter of sovereign defaults. GDP in the Eurozone rose 0.1% in the fourth quarter, and was down 2.1% on the year, Dow Jones reports (via this WSJ link; trying to keep outside the paywall.) That was worse than expected, and more disconcerting was that almost all of the major nations contracted.
Germany fell back, but France grew. Italy and Spain both contracted. Greece got worse; its GDP contracted 0.8% in the fourth quarter, worse than the third quarter’s 0.5% contraction. That’s going to make Greece’s already dire dilemma even harder to solve. Ironic that the land that gave the world the Spartans is resisting such, um, spartan measures, isn’t it?
Fingers pointed at China this morning as US stock futures hover in moderately negative terrain premarket, and it seems like every day is international day these days.
PBC is raising reserve requirement again for banks, which is being read as a move to slow credit growth. Maybe so, or maybe China happened to notice banks in the US have had to add billions to loan-loss reserves as the housing market crashed, and they’re figuring it might be a good idea to make sure their banks have enough cash set aside, in case of a rainy day.
US dollar index up 0.7% at 80.66; gold and oil both down. January retail sales due at 8:30am; Reuters/Univ of Michigan Feb consumer sentiment at 9:55 a.m.; Dec business inventories at 10:00 a.m. S&P futures down 7.00, DJ futures down 55. Ten-year higher, yield at 3.70%.
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 […]
