- “In this recovery there is less job creation, less household formation, and less demand for housing units than a normal recovery. This is sort of a circular trap for both GDP growth and employment,” Calculated Risk says. “This is one of the reasons I expect the unemployment rate to tick up over the next several months.
- FusionIQ CEO Barry Ritholtz makes the argument that US bonds are resembling tech stocks during the dot-com bubble. “What made the dot-com situation so pernicious was that anyone who was judged on relative performance (i.e., mutual fund managers), were all but forced into these names in order to keep up,” Ritholtz says at The Big Picture. “Very few people — Buffett and Grantham come to mind — managed to both avoid both chasing these names and losing their client base.”
- There’s no denying the strong quarterly profit reports coming from S&P 500 companies in 2Q. But the notion that strong profits actually represent good news is “murky at best,” Derek Thompson writes at the Atlantic. “High unemployment is, strangely, both dampening revenue and enhancing profits.”
- Mortgage Bankers Association reports refinance activity surged 17% amid historically low interest rates. But Miller Tabak’s Peter Boockvar notes purchasing fell 3.4% and remains just 3.5% off lowest level since 1997. “This economic response to low rates is indicative of our whole economy that has the Fed now pushing on a string,” Boockvar says. “In times of deleveraging, lower rates only encourage refi’s, not new economic activity whether the purchase of a home or the expansion of a business.”
- Boston Fed argues economists aren’t to blame for missing the housing bubble, which absolutely baffles naked capitalism blogger Yves Smith. “It is truly astonishing to watch how determined the economics orthodoxy is to defend its inexcusable, economy-wrecking performance in the runup to the financial crisis,” Smith says.
- UPS recently said in a 10-Q that the impact of the health-care reform legislation “was not material” to its financial results, which shocks Footnoted blogger Michelle Leder, especially since many companies have said they’ll take big charges related to legislation, including AT&T’s (T) $1B charge.
- Since Fed’s announcement last week to reinvest proceeds from expiring MBS, the dollar’s risen while crude oil and S&P 500 have tumbled. “A cynic, however, might look at the lackluster reaction and think that the US central bank is losing some of its market-firepower in terms of unconventional monetary policy,” FT’s Alphaville says. “And an even bigger cynic might think that the market is simply holding out — or pushing — for a bigger bout of unconventional policy. Either way though, something’s out of sync here — the market or the Fed.”
- Tech blog Download Squad says Google (GOOG) and hardware maker HTC (2498.TW) are teaming up to build a tablet device that runs GOOG’s Chrome operating system. The blog says the tablet will be offered in conjunction with Verizon (VZ) and launched on Nov. 26, or Black Friday, the busiest shopping day of the year in the US.
Stocks meander to some slight gains, adding to yesterday’s rally amid low volume and generally quiet news flow. No economic data to help steer stocks, so early action was mostly locked on movements of the euro.
That disconnected in early afternoon, and while stocks showed some sympathy to a lagging euro, they didn’t pay quite the same heed we’ve seen lately. This one looks more like a draw, slight edge to bulls as both sides had chances to apply pressure.
Energy, health care sectors decline; consumer discretionary leads the small advance. Dow Industrials rise 9.69 to 10415.54, while Nasdaq Comp adds 6.26 to 2215.70. S&P 500 ends 1.62 higher at 1094.16.
Not exactly a rousing display of conviction by bulls, on the heels of solid rally yesterday. Some caution may be warranted ahead of weekly jobless claims, and Philly Fed’s August business outlook tomorrow.
Remember, last week initial claims rose slightly to 484,000, four-week moving average up 14,250 to 473,500 and emergency unemployment claims shot up more than 1.1 million after Congress restored those benies a few weeks ago. Bulls will hope for some stabilization in Philly Fed’s outlook, after July tanked to 5.1 from 8.0, with new orders, delivery times and prices received all negative.
Posted by John Shipmanon August 18, 2010 Bonds, Markets /
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Ignominious day for the state of New Jersey, as it officially becomes the first in the union to be charged by the SEC for violations of federal securities laws. As any respectable defendant does in such cases, Jersey settled without admitting or denying. Ah, fugetaboutit.
Not to cast any aspersions, but it is interesting to note that the owner of Jersey’s tallest building, Goldman Sachs, also didn’t admit or deny and then settled SEC fraud charges not long ago. Coincidentally, former Goldman CEO Jon Corzine’s public service as a Jersey US senator and then NJ governor overlap the period (August 2001 to April 2007) when the SEC says NJ committed the violations. SEC says the problems were in the state treasurer’s office.
NJ sold more than $26 billion in muni bonds in 79 offerings, SEC said, in which it failed to disclose the underfunding of both a teachers’ and a public employees’ pension fund. Oops.
Posted by Steven Russolilloon August 18, 2010 Economy, Markets /
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The farm sector is in focus as Deere (DE) reports a 47% jump in earnings, although shares fall after issue a tepid outlook for Europe. BHP Billiton (BHP) also goes hostile with its $39 billion bid for Potash Corp (POT). But on the retail front, results from Target (TGT) show the consumer still has a ways to go.
Newswires’ Steve Wisnefski, Madeleine Lim and Michael Casey discuss on the Markets Hub.
We’re looking at a “what have you done for me lately” trader’s market, at least through the summer, says Ticonderoga strategist John Stoltzfus in a note today.
Sounds about right. As a strong second-quarter earnings season fades into a memory, Stoltzfus says day-to-day stock market action “is likely to become dominated even more than usual by a ‘what have you done for me lately?’ sentiment as the markets grow increasingly dependent on the economic data du jour for catalysts to move up or down on any given day.”
It’s a trader’s market “that will likely continue to frustrate traditional mid- and long-term investors who are looking for support for their plans and allocations,” Stoltzfus says.
We’re not trying to put you on HindenburgOmenoverload here at Market Talk, but just wanted to share one more link about the indicator. Last night I did a radio gig on The John Batchelor Show with John and CNBC host Larry Kudlow and we talked about the Omen’s implications. During the 10-minute discussion, Larry brought up an interesting point: why freak out about the Hindenburg Omen now when some other crazy-named indicator will generate headlines next week?
It’s a good point, to which I responded that all different forms of technical analysis and other indicators should be taken with a grain of salt. Sure, they are important to understand and consider when analyzing a portfolio strategy. And investors should file it in the back of their brains for future reference. But no one should overreact and go 100% cash just because a particular metric is signaling gloom and doom ahead.
For more of the discussion, hit this link to get to the podcast. (Skip ahead to about the middle of the podcast and you’ll find the Hindenburg segment.)
Also, WSJ News Hub host Simon Constable and his panel discussed the Omen at the end of yesterday’s Hub. Check it here:
Mixed session for Asian stocks overnight, European markets currently seeing some selling pressure and the US premarket picture looks flat as a pancake.
Euro’s roughly even with its value when US stocks closed yesterday, hovering a bit below $1.29. Not much sign of direction so far, and economic data calendar is empty. Lacking any other discernible influence, expect stocks to continue to follow the euro (andvice versa) like a lost puppy.
Not a bad time to note a frequent concern of ours, that the stock market has largely ignored geopolitical risks since embarking back in 2009 on its mostly steady march higher. Recent rumblings concerning Israel and Iran, and flood-related events playing out in Pakistan shouldn’t be easily dismissed.
Mortgage Bankers Association’s weekly index out, shows folks ramping up the refi activity again as those rates are too juicy-low to pass up. Meanwhile, the home purchase mortage activity remains weak.
S&P futures down a point; 10-yr higher, yield at 2.60%.
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 […]
