Market Talk

Newswires editors Paul Vigna and Madeleine Lim discuss the huge rally that’s occurred not only in the stock market, but also in many other risky assets. Reflecting on the anniversary, has the rally gone too far? It’s Tomorrow’s News Today:

- Two big anniversaries on the Street this week – tomorrow is one-year mark since Dow bottomed and Wednesday marks 10-year anniversary of Nasdaq Comp’s all-time closing high.

- Three vacancies currently exist at the Fed: two governors and a vice chairman. To find the proper candidates, FusionIQ CEO Barry Ritholtz offers his own “litmus test” for potential nominees.

- “This never was just a financial crisis,” Interfluidity blogger Steve Randy Waldman writes. “It was, and is, an economic and political crisis, and we are only a very short way down the path towards resolving it.”

- Some financial institutions are dangerously becoming “too big to save,” former IMF chief economist Simon Johnson says.

- “It may take longer to observe the full effect of continued mortgage delinquencies and foreclosures, but we are at about the point where the data would depart from the market’s ‘all clear’ expectations if credit pressures are likely to resume with force,” John Hussman says.

- James Hamilton considers a new financial conditions index that attempts to combine the information of 44 separate series for predicting real GDP growth.

- Government can and should create jobs, Mark Thoma says.

- Tim Geithner’s financial plan is working – and making him very unpopular. “We saved the economy, but we kind of lost the public,” Geithner tells The New Yorker. But MarketBeat wonders if Geithner’s stock is set to rise.

- Nasdaq Comp trading above pre-Lehman levels.

- Google’s testing a new TV programming search service with Dish Network, which runs on Android-powered TV set-top boxes and allows users to search content from Dish and the Web, WSJ reports.

- So much for all the drama surrounding ABC’s blackout on Cablevision. Academy Awards captures biggest audience for ABC in five years.

On the first anniversary of the start of this massive rally, stocks don’t seem in a particularly celebratory mood.

US stocks barely budge in a quiet session bereft of any big news. DJIA slips 14 to 10553, S&P 500 slips less than one to 1139, snapping its six-session winning streak; Nasdaq Comp adds 6 to 2332. Crude edges close to $82/barrel. And while the trading had the feel of a holiday session, NYSE volume, while weak at 3.7B shares traded, wasn’t exactly holiday material. Somebody was manning the desks today.

Obama raps insurance companies as part of his healthcare push. AIG, MetLife reach deal on $15.5B Alico sale. Greek PM comes to DC tomorrow.

Chuga chuga, chuga chuga

Encouraging signs in the latest gauge on railroad volume, as Association of American Railroads said Friday that US carload freight volume reached its highest level in more than a year in the week ended February 27.

AAR said US railroads originated 290,261 carloads during the last week of February, up 2.6% vs the same week last year and the highest level since the week ended December 6, 2008. While the increase is promising, the volume is still down 13.5% vs the comparable week in 2008. Total volume was estimated at 31.6 billion ton-miles, up 3.9% vs a year ago, but down 10.5% vs same week in 2008.

AAR said 15 of 19 carload commodity groups showed gains vs year ago, with 10 registering double-digit gains, led by metals (up almost 46%), farm products other than grain (up almost 40%) and primary forest products (up 22%).

For the first eight weeks of the year, carloads are still down 1.1% from last year, and 16.7% vs 2008.

Nice to see railroad freight volume is picking up compared with last year’s sharply depressed levels, but clearly still a long road to travel to get closer to 2008 levels.  Should be interesting to hear if the industry is pulling any railcars or locomotives out of storage. Amid slack demand, AAR recently said 28% of total North American freight cars were still in storage as of February 1. That’s down from almost 32% last June and July.

There’s been a lot of hopefulness surrounding the February jobs report. “Only” 36,000 jobs lost when about 75,000 losses were expected. And the optimists say the economy probably would’ve added jobs if it weren’t for the violent snowstorms.

On the flip side, 36,000 jobs lost marks yet another month of job losses. That’s 25 of the last 26 months that the economy’s shed jobs, totaling about 8.4 million jobs that have been wiped away since the recession began in December 2007. And for all the chatter about the snow’s impact, the Labor Department blatantly said it’s impossible to quantify the weather’s effect on the data.

All of this is a long-winded way of pointing to another troubling aspect of the labor markets that helps set this recession apart from previous downturns – the long-term jobless rate.

Calculated Risk posts a chart detailing long-term unemployment throughout the last 40 years. More than 30 years ago, folks out of work 27 weeks or more accounted for a little more than 20% of unemployment. Now, 40% of jobless folks are long-term unemployed, and getting them back to work is no easy task.

“That means putting back to work a lot of relatively low-skilled workers who were previously employed in construction, in manufacturing, and in retail and service industries,” Economist’s Free Exchange blog says. “In an economic climate in which construction and personal consumption are likely to contribute very little to output growth for the next few years.

“That’s a tall order. Not since the Depression has the American economy had to pull off anything like it.”

Analysts are bullish, investors are turning complacent and stocks are dragging along the break-even line minus any significant catalysts fueling today’s trading.

While today’s session crawls, BofA Merrill says S&P 500 is eventually poised for a retest, and a successful one at that, of the January highs. Firm believes the index is poised to break out to fresh recovery highs.

“A test of the 1130 to 1150 resistance is underway, but new highs for the NYSE and S&P 500 advance decline lines point to strong market breadth and support the case for new recovery highs for S&P 500,” firm says, while pegging resistance at 1180-1200.

Stocks registered some impressive gains last week, with the Dow jumping 2.3% and returning to the black for the year. S&P 500 had a weekly gain of 3.1% and Nasdaq Comp and Russell 2000 both hit year highs.

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The latest spat between Disney (DIS) and Cablevision (CVC) prompts some to wonder whether the cable industry will ever embrace an a la carte pricing structure.

The long-running feud between TV broadcasters and cable operators has intensified in recent months. Disney and Cablevision struck a deal last night to restore ABC’s feed to Cablevision subscribers just as the Academy Awards were kicking off. Same sort of dispute occurred a few months ago as talks between Time Warner Cable (TWC) and News Corp (NWS NWSA) went down to the wire, with News Corp threatening to pull access to the Fox network. But the two sides agreed to a last-minute deal on New Year’s Day. (News Corp owns Dow Jones Newswires, publisher of this blog.)

Other disputes haven’t ended without major disputes. The Food Network and HGTV – owned by Scripps Networks (SNI) – were blacked out on Cablevision for three weeks in January before the sides could reach a deal.

The longer these battles between broadcasters and cable operators last, the more likely consumer outrage will increase and FCC “will have the cause it seems to have wanted to require a la carte pricing for cable,” says CUNY journalism professor Jeff Jarvis.

A la carte pricing essentially allows consumers to pick and choose which stations they will pay for instead of paying higher rates for access to hundreds (if not thousands) of stations that most people don’t even watch.

“Then both broadcasters and cable operators and their parent companies will get their just desserts,” he writes. “I will not pay for 90% of the channels I am forced to pay for now. That will reduce revenue to cable. It will mean that many channels will no longer be subsidized. It will kill marginal channels.”

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Thin week ahead for both US economic data and corporate earnings results, with not much meaningful due until Wednesday’s January wholesale trade report or Thursday’s weekly jobless claims.

Friday’s a little busier, with February retail sales, Reuters/Univ of Michigan early March consumer sentiment and January business inventories. In the absence of notable data or earnings, expect some focus to gravitate more toward the Greece situation, and ongoing domestic debates in the US over health-care and financial industry reform.

Stocks strong in Asia overnight, slightly higher currently in Europe. S&P futures up about a point, DJ futures up 6. Ten-year lower, yield at 3.70%.