US stocks finish mainly flat, with the Dow down a bit and the S&P up a bit, as the day’s generally cheery economic data wasn’t enough to overcome a volley from the White House on healthcare reform. But they did slide into the close, losing whatever modest strength they’d been carrying with them for most of the session.
DJIA slips 9 to 10397, scuttling a three-day winning streak after rising as much as 63 during the day. The index is still slightly lower on the year. S&P 500 adds less than one to 1119, Nasdaq Comp loses less than one to 2281. Healthcare slides after White House renews press for reform.
Meanwhile, the dollar was down, Treasurys were down and crude crossed back over $80/barrel. That dollar/stocks trade that’s been so tightly wound lately — when one rises, the other falls and vice versa — seems to be weakening, for whatever reason.
Financials finish a bit higher, but ceded much of their gains, after the White House released a summary of its proposals under the Volcker Rule, with one big surprise being that it might target even companies that don’t have banking operations.
ADP pegs February jobs losses at 20,000, and ISM posts best reading on services sector in years. But the numbers certainly don’t point to any strong economic growth, and Fed’s beige book is once again cautiously optimistic.
Of course, we’re also getting that much closer to Friday’s big jobs report from the BLS, so it appears few people want to get in front of that bus.
Leaving no stone unturned in a search for signs of real consumer-driven demand in the US economy, our gaze turns to the latest Beige Book. Sorry, not much there, folks.
With consumers “variously” described in the report as “cautious, price sensitive, and focused on necessities,” it looks like the over-hyped “resilience” of the US consumer has indeed yielded. All’s not lost though as the report adds that consumers are “sometimes willing to spend on discretionary purchases.” Sometimes.
Another cogent indicator for demand, both consumer and business, is in the credit picture. “Loan demand continued to decline or remained weak in most Districts,” Fed said. Both Cleveland and Chicago districts reported low utilization of commercial credit lines; Cleveland also noted declining demand for business loans. “Philadelphia reported continuing declines for all categories of credit,” report said, while New York district said demand fell for all types of loans except residential mortgages.
- Auto sales are “crawling forward,” but still remain weak, James Hamilton says. “On a seasonally adjusted basis, we’re not making any progress from December…Whatever the explanation, auto sales so far this year remain 40% below the average seen for January and February over 2005 to 2008.”
- Small, mid-cap stocks leading the rally. As confidence about the global economy wavers a bit, some investors and traders are actually turning their attention to companies heavily dependent on the US economy, Tom Petruno writes.
- S&P 500 and US Dollar index are about as negatively correlated as they’ve ever been, Michael Panzner notes. But the equity-dollar relationship typically isn’t sustainable when it hits historical extremes, meaning investors may need to look beyond the currency markets for hints about the stock market’s next move.
- “Amazon’s MP3 store hasn’t done much to weaken Apple’s grip on the digital music business,” MediaMemo blogger Peter Kafka reports. “But that doesn’t mean Apple isn’t paying attention.”
- Since there are no assurances that new regulations will prevent a future financial crisis from occurring, regulators should take the next best step and break up the nation’s biggest banks, James Kwak says. “Politically, breaking up TBTF banks is something that should on paper be able to attract a bipartisan majority.”
- A consumer finance protection agency is a great idea, but it’s a shame that a simple mandate in the original plan — compare all mortgages to plain vanilla 30-year fixed contracts — was rejected, FusionIQ CEO Barry Ritholtz says.
- Millions of homeowners haven’t benefited from lowest mortgage rates in nearly a half-century because they can’t or won’t refinance, WSJ reports.
- Auto veteran Bob Lutz plans to retire from GM after four decades in the business and a career that included executive positions with each of the big three Detroit automakers.
- “It seems like governments are doing a lot of poking, probing and investigating of large investors in the markets recently. Especially when it comes to bets being made that have major implications for governments, i.e., positions taken on currencies and government debt,” WSJ’s MarketBeat says.
- NY Gov. David Paterson finds himself in the middle of yet another scandal.
Newswire editors Paul Vigna and Madaleine Lim discuss the improving services sector, the economy not showing job growth and Greece’s austerity measures. It’s Tomorrow’s News Today:
Apple (AAPL) goes on the offensive against HTC, a key Google (GOOG) partner, by suing the Taiwanese smart phone maker for several alleged patent violations.
It’s interesting that Apple would sue small potatoes like HTC and not go after Google. But the suit obviously has a not-so-hidden agenda between Apple and Google (even if Google isn’t mentioned in the suit), suggesting a brewing war between Apple’s iPhone and Google’s Nexus One is heating up. But first, here are some details of the suit, from WSJ:
Apple’s two complaints—filed Tuesday in federal court in Delaware and the U.S. International Trade Commission—allege HTC devices, including the Nexus One, infringe a total of 20 Apple patents. The complaints claim the patents cover an array of cellphone technologies, everything from power-management functions to a method of unlocking a handset with a finger swipe on a touch screen.
“We can sit by and watch competitors steal our patented inventions, or we can do something about it. We’ve decided to do something about it,” Apple Chief Executive Steve Jobs said in a prepared statement. “We think competition is healthy, but competitors should create their own original technology, not steal ours.”
Jobs offers a valid argument on paper, but Dan Frommer at Silicon Alley Insider says the suit is a sign Apple is terrified that Google’s Android mobile operating system is becoming a formidable rival in the smart phone industry.
Moreover, the lawsuit makes Apple “look wimpy,” Frommer says, which is not likely how Jobs wants his company to be perceived.
“[Apple's] going on the offense with patents, not just products, which reeks of fear,” Frommer adds.
But keep in mind that Apple likely didn’t just sue Google because the two companies still work closely together on a couple of integral apps: search and maps, Digital Daily blogger John Paczkowski points out.
“Going after Google outright might put those projects at risk at a time (pre-iPad launch) when they need to be preserved,” Paczkowski says. “Safer then for Apple to spank a company like HTC to make its point – unless, of course, Google feels compelled to come to HTC’s defense.”
Google shares recently up 0.8%; Apple up a fraction.
Posted by Paul Vignaon March 03, 2010 Markets /
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The place where all these large-scale, macro, geopolitical debt crises ground out is at the individual level, in cities and towns and communities across the nation, and across the world. The problems being fought over, and problems cursed over, in the marbled halls in Washington, Athens, London and capital across the world end up falling most heavily upon regular people. But of course, dear readers, you’re regular people. I don’t have to tell you this, right?
While I was writing my Greek post du jour, one of my cousins sent me this link to a website from the town where I grew up, Montclair, N.J., where the local school board is trying to figure out how to cut $5.1M from its budget — and 60 jobs. One of the school board members at a recent budget session called the packed meeting “pandemonium,” with people sitting on the floor and 150 teachers there to defend themselves.
This really is not very different from what’s happening in Greece, where the government is forcing, well, is trying to force, painful spending cuts on the public sector. The only difference is, right now certainly, their protesters go on strike.
Three private reports on the labor market released earlier today point to more jobs lost last month. Optimists note the rate of loss continues to diminish, but another round of red ink on the jobs front is disconcerting, to say the least.
As Paul wrote earlier, ADP, Challenger Gray & Christmas and TrimTabs all expect February job losses to be less than economists were previously expecting. Fears that the east coast snowstorms would hurt the jobs data may have been overblown, although we won’t know the full extent of the damage until Friday’s jobs report.
Nevertheless, another month of job losses doesn’t bode well for this purported recovery.
“With each passing month of loss, the stakes are higher for the necessity of minting jobs,” James Picerno writes at The Capital Spectator, noting a negative number in February would mark job losses in 25 out of the last 26 months. “The real challenge isn’t one of simply seeing a net gain on the payrolls ledger. That’s coming, and perhaps soon.”
But a lengthy and sustainable stretch of hundreds of thousands of jobs added on a monthly basis is what the economy really needs. “Unfortunately, almost no one expects that’s imminent.” he adds.
Greece has finally put the Castor oil on the table. The question remains can the Neo-Spartans drink it and digest it. And who else is going to have to drink it before this whole drama reaches its denouement? Because what the Greeks are having force-fed to them is the same stuff taxpayers in the United States are going to have to swallow at some point, voluntarily or not.
The Greeks unveiled a harsh austerity plan that includes a variety of tax hikes and pay cuts, designed to save them about $6.5 billion. “The decisions were necessary to be taken. Necessary for the survival of our country, of our economy. For Greece to emerge from the vortex, from the speculators, from the negative publicity,” Prime Minister George Papandreo said.
The measures have already been met with fierce resistance. “Black crows ready to devour country’s wealth and leave half the population jobless,” one newspaper headline said. As we said yesterday, it’s worth considering whether or not Greece can even make this plan work. But they’re pushing it because they have to in order to get the kind of “support” they need from their eurozone partners, and the Germans aren’t going to pony up any money unless they see the Greek’s flagellating themselves for their past profligacy.
Make no mistake, that belt-tightening is the cost of “support,” from the eurozone and whomever else buys all that Greek debt they have to issue this year to fund their budget (and do so without paying such a high yield that the interest rates alone overwhelms their revenues.) And that’s a cost that might be ringing up cash registers across the globe before this whole great deleveraging wave passes.
Jim Bunning may have been tilting at windmills with his little quest to make Congress actually pay for its spending bills, but Don Kentucky is onto something, make no mistake (perhaps you’d prefer to compare him to King Lear; either way.) Now, the Greeks are trying to cut about four percentage points off their debt-to-GDP ratio. If the United States were to embark upon a similar plan, we’d be looking at cutting something like $500 billion in spending (very roughly.) Those spending cuts would come very dearly. Or perhaps I should say, will come very dearly. Because at some point, we will hit the wall, and that point is coming faster than some reckon.
Dow industrials keep creeping higher, on pace for their fourth consecutive gain, as all eyes are focused on Friday’s jobs report. But the stock market skeptics point to a complacent VIX as cause for concern surrounding the market’s recent run-up.
A plethora of reports showing a smaller-than-expected drop in private-sector jobs are contributing to the positive tone in today’s action. The Dow has also crossed into the black for 2010, reversing losses from the pullback earlier this year.
But the stock market’s volatility index has fallen in 14 of the last 15 sessions, marking its longest downward streak since the market bounced off its early-March 2009 trough. The Chicago Board Options Exchange’s Market Volatility Index (VIX) has fallen further today, recently down 2.7% at 18.55.
Pragmatic Capitalist picks up on the trend, noting the few comparable streaks over the last year have been followed by sideways to down markets in the following four to eight weeks.
“This trend is beginning to look like a mighty bad bet to me,” PC says. “I’m not one to call tops, but as a manager of risk this indicator has me feeling a bit uneasy.”
Dow industrials were recently up 33; S&P 500 up 5.
ISM, the Institute for Supply Management, said business conditions in the services sector improved in February more than expected, which is a sign that the recovery may be expanding past the manufacturing sector, where it’s thus far been contained. It’s not as definitive a reading on the economy as, say, GDP (and there are problems with that, too,) but it’s a good signpost.
Importantly, though, new jobs still remain scarce.
The ISM said its service sector purchasing managers index hit 53 in February, above the 50.5 it hit in January. It’s the third monthly rise, the highest level since October 2007, and the first time it’s been what we might call “safely” over the 50 level that marks expansion as opposed to contraction. It’s important because the service sector comprises everything that isn’t manufacturing. But keep in mind these are “diffusion” indexes; meaning they collate the subindexes and point in a direction, rather than measure a literal level.
Business activity looked good, as did new orders. But prices slide, and employment while improved is still contracting. That’s critical because the services sector provides roughly 85% of the nation’s jobs.
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 […]
