Wondering how batty this stock market has gotten, citizens? Behold.
Home builder Standard Pacific’s (SPF) shares rose almost 9% to $5.65 in heavy volume today, ostensibly due, we’re told, to a positive trade-publication profile (is there any other kind?) of CEO Ken Campbell.
Note that the publication date at “Big Builder” online says last Thursday, but supposedly a “blast email” about the story went out today. For whatever that’s worth.
Sure, SPF may be in better shape thanks to Mr. Campbell’s stewardship. We’ve read conference call transcripts and he seems like an affable straight shooter and a capable CEO. And, no doubt, investors were well aware of his abilities before Big Builder’s recent profile.
But today’s action makes one thing abundantly clear, and it goes beyond Campbell and SPF: This market is riding on a massive momentum buzz, with traders/investors scrambling from one ascending stock to the next, hoping to leap to another high-riser just as their current ride shows the first signs of fatigue. Doesn’t really matter why it’s going up, as long as it’s going up.
Simply put, when a trade-mag puff-piece (and a dated one at that) has enough influence to vault a stock up nearly 9% amid close to four-times the average daily volume, then we say things have reached the patently absurd level.
And the Fed says it’s hard to spot bubbles before they pop.
- VIX volatility index can be a great contrarian indicator — problem is, it’s a backward-looking gauge, Tom Petruno says.
- Crude oil’s getting sneaky high and no one seems to care. “One explanation is that oil prices haven’t climbed as fast as they did in early 2008, with the slope of the ascent being a primary source of worries,” Paul Kedrosky writes.
- “The key to long term economic health, though, will be a greater contribution from exports and less on borrowing and spending all over again,” Peter Boockvar notes.
- He’s chairman and CEO of the world’s largest health-care conglomerate, Johnson & Johnson (JNJ), but yesterday Bill Weldon took on a new role: blogger.
- Twitter users will not abandon the microblogging service just because it will start running search-based advertising, Forrester analyst Josh Bernoff says.
- Rumor du heure for Palm: Let Intel buy them, Jason Perlow writes.
- Google (GOOG) reportedly developing a new tablet device compatible with Android would be great for Adobe (ADBE), but not so good for Apple (AAPL).
- Tech blogger Om Malik gets his hands on Microsoft’s (MSFT) new Kin smartphones, but doesn’t exactly offer a stellar review.
- “If the US economy was about to reach “escape velocity” as Larry Summers says, small business optimism would not be in the gutter and sinking,” Mish says.
- “We live in an age of unprecedented bailouts,” Simon Johnson writes. “The Greek package of support from the eurozone this weekend marks a high tide for the principle that complete, unconditional, and fundamentally dangerous protection must be extended to creditors whenever something “big” gets into trouble.”
Another erratic day for stocks, which close higher after dropping sharply in the morning, after Alcoa disappoints investors and Greece manages to auction off some short-term debt.
DJIA gains 13 to 11019, S&P 500 adds 1 to 1197; the 1200 level still eludes the index. Nasdaq Comp rises 8 to 2466. Stocks tanked early, on rumors that Bernanke was planning to rejigger rate-hike expectations. But for now it remains only talk. The Fed chief testifies to Congress tomorrow.
Trade deficit widens bit more than expected, and NFIB survey of small businesses casts pall on all the recovery talk.
That small-business survey today should really get your attention, it certainly got ours. Elsewhere, Alcoa disappoints, and we wonder who else will. And Greece sold some short-term debt, but they still have long-term problems.
Any attention is good attention, and HTC Corp. is certainly getting its fair share. The Taiwanese company has been thrust into the center of the hottest debate raging throughout the wireless industry: who is going to scoop up Palm?
Palm has been continually rumored to be a takeover target, but chatter exploded yesterday after the company hired Goldman Sachs and Frank Quattrone’s Qatalyst Partners to advise it on a potential sale. While analysts and reports have speculated upon several suitors, HTC comes up as the most logical target. HTC could stand to use Palm’s talent, as well as its software. Most importantly, Palm’s patent portfolio provides a potent defense in HTC’s legal battle with Apple (AAPL).
Yesterday’s statement from the NBER Business Cycle Dating Committee seemed a bit odd.
The committee usually releases a statement when it has something substantial to say about the economy. But saying it was maintaining the status quo on its recession call and holding off on declaring the downturn over seemed strange.
But Jeff Frankel, Harvard economist and a committee member, sheds some light on the reasoning behind the statement.
“The press was bound to find out that there had been an in-person meeting (as it did), and so the confusion created by issuing the statement was probably less than the confusion that would have been created by remaining mysteriously silent,” Frankel writes on his blog.
So there you have it. The committee thought ahead about the repercussions of its meeting getting leaked and appeared to act in a transparent manner.
That hasn’t stopped Frankel, himself, as well as Robert Gordon of Northwestern University from stepping forward and claiming the recession is already over.
But what seems to be getting lost in translation is this debate doesn’t really impact investors. Sure, officially calling the recession’s end sounds good from a psychological standpoint, but it’s not likely to impact policy decisions.
“The NBER is attempting to identify peaks and troughs in the economic cycle for research purposes,” Jeffrey Miller, CEO of NewArc Investments, writes at A Dash of Insight. “The NBER has a research mission, not a policy mission.”
So the market’s hit a bit of a snag. After coming within one point of the 1200 mark on the S&P 500 yesterday, the market’s taking a step back today.
Some of it could be attributed to the dollar, which has worked off a lot of its earlier weakness, sapping the risk trade. Rumors started flying around mid-morning that Fed Chairman Bernanke would use his appearance before Congress’ joint economic panel to change the wording of the Fed’s rate outlook, effectively “resetting” market expectations about when rate hikes might be coming.
The rumors haven’t come from any definitive sources (at which point, of course, they would stop being rumors,) but still, in a top-heavy market, stuff like this can have an outsized effect. The Dow dropped as much as 58 points this morning before recovering somewhat. While still lower, it’s only off about 13 points. The S&P is down 5 at 1191.
Even if Bernanke says some “actionable” tomorrow, We’d be surprised if the Fed embarked on a rate-hike regime. And even if they did, starting at zero, it will take a long time, given the way the Fed operates, before rates are in even a neutral range, forget about something constricting. Indeed, at this rate, we may get another ice age before the Fed has interest rates at a level that would constrict activity.
Meanwhile, back in the world, this morning’s trade deficit report wasn’t very bullish; neither was the NFIB’s small-business survey. And Alcoa’s down after posting merely in-line earnings last night; not a good sign for a market that expects to be dazzled by earnings season.
Come on back in and shop, America. Hope's on sale, aisle five. Fantasies, aisle six.
Before you read one more Why So Glum? piece, one more America’s Back cover story, read today’s report on small-business sentiment from the National Federation of Independent Businesses.
This is why people are so glum:
The National Federation of Independent Business Index of Small Business Optimism lost 1.2 points in March, falling to 86.8. The persistence of index readings below 90 is unprecedented in survey history.
“The March reading is very low and headed in the wrong direction,” said Bill Dunkelberg, NFIB chief economist. “Something isn’t sitting well with small business owners. Poor sales and uncertainty continue to overwhelm any other good news about the economy.”
The index has been under 90 for 18 months, and nine of the index’s 10 components either fell or were flat in March. The lone riser was business conditions, which rose one percentage point to negative 20%.
Why so glum? Why so glum?
Look, everybody wants America to be back on top (at least everybody in America, right?) But just writing positive-sounding blather and adding an American flag graphic isn’t going to make things better. For that matter, just throwing a couple trillion into a broken, dysfunctional economic machine isn’t going to make things better either. Both just obscure the hard spade-work that has to be done to rebuild the economy. There is no way around this.
People get it. That’s why the Fed reports month after month that consumer credit keeps contracting. Businesses get it, too, at least businesses that aren’t banks. That’s why they’re sitting on a mountain of cash rather than blowing it all on the narcissistic advice of M&A bankers.
It appears only the government, Wall Street, and some elements of the press don’t get it.
As has been repeated a hundred times, small businesses create the majority of the new jobs in this nation (the exact percentage has been debated, but the majority part hasn’t) and small-business owners aren’t feeling giddy. They’re not seeing the great gosh America’s-Backness of this recovery.
Premarket US stock futures hint at a modestly lower start when regular trading gets underway. The tone is slightly negative on Alcoa following its generally in-line 1Q report, with shares off about 3% premarket. Asian stocks mostly lower overnight, European markets following that trend.
US dollar had gained some ground last night, but looks to be easing back again. USD index recently at 80.52. If the dollar can’t get its act together, emboldened bulls likely make another attempt to poke through S&P 500′s 1200 level after closing just below 1197 yesterday.
February trade deficit, March import prices both due at 8:30 a.m. Intel reports 1Q results after the close. S&P futures down 2.50, DJ futures down 20. Ten-year a hair higher, yield at 3.84%.
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 […]
