- Mark Hulbert says some are drawing the wrong lessons from this week’s market anniversaries.
- The view from the bottom. Our MarketBeat bud Matt Phillips compiles some quotes from market watchers when stocks were bottoming out this time last year.
- “As we celebrate the one year birthday of the current bull market, a key characteristic that still looms one year in is the lack of conviction and confidence in the economic outlook for those on Main Street versus the more optimistic view of those who work on Wall Street,” Peter Boockvar writes.
- Wards of the state enjoy a nice day. Citi (C), AIG, Fannie Mae (FNM) and Freddie Mac (FRE) all rally.
- Small business owners now say conditions will be worse six months from now. “It’s not a pretty picture,” Economist’s Free Exchange blog says. “The problem is clearly not labor supply. Rather, the economy’s principal job creators are seeing too little demand to justify increases in hiring. That’s the drag on recovery.”
- Cisco (CSCO) says faster router “will forever change the Internet? Does the announcement live up to hype? Shares close flat at $26.13.
- Government has bailed out the banks, now it’s time to bail out our nation’s schools, former labor secretary Robert Reich says.
- An improved Web browser on Amazon’s (AMZN) Kindle is long overdue, MediaMemo blogger Peter Kafka notes. “At this point having a wireless device that only grudgingly accesses the Web makes no sense. And it certainly won’t fly once Apple’s (AAPL) iPad ships next month.”
- “The biggest banks in some European countries today are already too big to save,” former IMF chief economist Simon Johnson says. “Unless we take immediate and real action to reduce the power – and size – of our largest banks, we are heading in exactly the same direction.”
- Monetary policy and unemployment: Should the Fed have done more? Mark Thoma ponders.
Gluskin Sheff chief economist David Rosenberg highlights some of the major differences in the equity markets throughout the last year. (Registration required.)
• The VIX was 50, not 17.
• The yield on the 10-year Treasury note was 2.9%, not 3.7%.
• The budget deficit was $900 billion, not $1.5 trillion.
• Baa spreads were 540bps and tightening, not 260bps and widening.
• The market was 20% ‘cheap’ as per Shiller P/E ratio, not 25% overvalued.
• The DXY was at 90 and depreciating, not 80 and appreciating.
• Oil was at $47/bbl, not $82/bbl (we can see $80+ crude being good for the Saudi market; we’re not sure how it fits in bullishly to the S&P call).
• Equity PM cash ratios were at 5.5%, not 3.6%.
The only thing we’d like to add is some jobs data. Unemployment rate has soared from 8.1% in February 2009 to 9.7% last month. But 651,000 jobs were lost in February 2009, compared to only 36,000 last month.
US stocks finish slightly higher, but not by much, and jump through a lot of hoops before settling essentially unchanged. And given that this is the ’09 rally’s birthday, well, it’s oddly appropriate now, isn’t it?
DJIA adds 12 to 10564 after rising as much as 60 early. S&P 500 inches ahead 2 to 1140, Nasdaq Comp gains 8 to 2341. NYSE volume’s high. Dollar rises on warnings about European credit quality.
It’s a strange, jittery day. Dow crossed 10600, the S&P came within a percent of the January high of 1150, a line in the sand that many see as the demarcation between a new leg in the bull market, or a tumble back to something much darker. And it got weirder from there.
Citi, AIG, Fannie and Freddie all surged seemingly out of nowhere. The rumor mills were creaking, but the likely culprit seems to be a Fox Business report from Charlie Gasparino that the feds are mulling selling their Citi stake. But something spooked the shorts, and as much as we respect Charlie, we have to wonder.
Cisco ends absolutely flat at $26.13, not up or down even a penny, after making a big deal out of its new router.
To some, the latest JOLTS data from the Labor Department may look encouraging.
Job openings at the end of January increased to 2.7 million from 2.5 million in December. Translation: There were only about five-and-a-half job seekers for every opening in January, instead of more than six in December. Grand.
If it makes you feel better seeing only four other folks rather than five waiting to be interviewed for the same job you’re after, then maybe Jan JOLTS is uplifting. But the numbers don’t necessarily suggest imminent job creation.
January job openings are slightly above levels seen last March, when the economy lost 652,000 jobs, and about 100,000 fewer openings than in February when 651,000 jobs went out the window. Indeed, openings are up from their worst levels of 2.3 million in July, but far off what could be considered indicative of solid job creation.
As investors celebrate the bull market’s one-year anniversary, US stocks are up yet again today, although there’s some curious trading occurring in some beleaguered financial stocks.
Several government-owned financials, including Citigroup (C), experiencing big gains after Fox Business reported the government’s discussing plans to sell its 27% stake in the bank, perhaps as soon as the next three months. Citi was recently up 6.4% at $3.79. AIG, Fannie Mae (FNM) and Freddie Mac (FRE) also seeing big gains.
The curious trading today largely symbolizes much of the trading experienced since March 2009. The Dow Jones Industrial Average sank to a 12-year low on this day one year ago, as pessimism was running rampant through the market. With the Dow trading around 6500, there was little hope that good times were on the horizon.
Fast forward one year later and investor sentiment has definitely shifted for the better, prompting a 60% rally. While jitters about the recovery’s sustainability still exist, investors for the most part feel much better about the economy’s prospects than they did a year ago.
Today we’re talking about the NFIB’s small-business optimism survey (it wasn’t very optimistic,) the Greek delegation’s visit to DC, and Cisco’s new router, which the company claimed would “change the Internet.”
Posted by Steven Russolilloon March 09, 2010 Economy, Gold, Media /
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Don't be afraid to go against the herd.
Bubbles are a funny thing. People try to spot them as they’re developing, but the longer they linger before popping, the more complacent people get about them.
Look at the housing bubble, for instance. Folks knew the rapid growth in housing prices wasn’t sustainable. But as prices kept going up, people either became more complacent or truly believed they could get out at the right time.
The same sort of thing seems to be happening in gold, as an “almost universal agreement” seems to exist about the current gold bubble.
“Usually the markets have the courtesy of giving cover for bubbles,” says Rick Bookstaber, a senior policy adviser at the SEC. “But with gold, no one seems even to care about a justification.”
He notes a herd mentality is developing, with the likes of George Soros and John Paulson publicly pumping gold. Goldman Sachs also believes gold could go as high as $1,400 over the next year, Bookstaber adds. And Charles Morris of HSBC has said, “I absolutely believe it’s heading into a bubble, but that’s why you buy it. ”
Bookstaber goes on to describe how investors tend to follow the herd, even though time and again it’s been proven to be a “less than rational” business decision.
“Everyone seems to be happy in agreeing that this is a bubble, and we are all going to participate in this bubble in a rational, genteel way,” Bookstaber says. “Though we might want to ask who is leading this herd, because my bet is they will be stepping aside and cheering us over the cliff.”
Greek Prime Minister George Papandreou is the latest public figure to criticize short sellers play in the market. From Bloomberg:
Greek Prime Minister George Papandreou will press President Barack Obama to help Europe combat “unprincipled speculators,” who he said have roiled markets and threaten a new global financial crisis.
“Europe and America must say ‘enough is enough’ to those speculators who only place value on immediate returns, with utter disregard for the consequences on the larger economic system,” he said in a speech yesterday in Washington.
Papandreou, who is struggling to convince investors his government is serious about taming Europe’s biggest budget deficit, meets Obama and Treasury Secretary Timothy F. Geithner today in his first U.S. visit since being elected in October.
Blaming short sellers and speculators seems to be the easy way out for everyone these days. They were common fall guys during the height of the financial crisis and recently have re-appeared in the spotlight.
Citigroup (C) CEO Vikram Pandit told Congressional Oversight Panel last week that short sellers were to blame for the bank’s near collapse.
Now Greece is placing part of the blame on short sellers, a stance that’s not sitting well in the blogosphere.
“I can’t believe I even need to write this post,” the Kid Dynamite blogger says. “Look, folks: CDS did not kill Greece, short sellers did not kill Bear Stearns, and no one is metaphorically buying insurance on their neighbor’s house and burning it down. Greece burned down their own house with years of poor fiscal decisions.”
Michael Shedlock, an investment adviser for Sitka Pacific Capital, is even more blunt about where the blame should be placed regarding Greece’s debt woes.
“What hurt Greece was Greece,” he says. “Moreover, one should not just blame Greece, but the EU itself for not looking into the finances of Greece better…Now, as bear markets expose and magnify structural issues, Greece and the EU are blaming everyone else for problems they caused.”
Investors seem more tentative toward risky assets this morning as the US dollar picked up some steam overnight and is maintaining gains.
Dollar index recently at 80.77, highest level in about a week. Gold, oil and US stock futures all moderately lower premarket. Asian stocks were mixed to slightly higher overnight, and main European markets are all lower. No notable economic data on the calendar until tomorrow, when we see a reading on January wholesale trade. Treasury sells $40B in 3-year notes today.
S&P futures down 3.40; DJ futures down 19. Ten-year higher, yield at 3.68%.
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 […]
The bridge that collapsed on Interstate 5 bridge over the Skagit River in Washington was listed as “functionally obsolete” and “fracture critical,” which means the whole sha-bang could come tumbling down if one major part fails. Click here to read the details from USAToday. This sort of thing shouldn’t be happening in a modern, developed nation. Barry LePatn […]
