Market Talk

- Soaring currency trading volume won’t have a happy ending. “It is a Fool’s Goldrush and will end horribly for most,” Josh Brown writes at The Reformed Broker. “The good news is, you can take the cautionary tales of the stock game, the mortgage game and the real estate game and figure out how you want to be positioned when the inevitable boom-bust-hatred cycle shifts into high gear.”

- Former Lehman CEO Dick Fuld was given a “surprisingly sympathetic ear” from the FCIC at yesterday’s hearing. “This is a deeply disturbing development,” Barry Ritholtz says at The Big Picture. “It leads to the unfortunate suspicion that the FCIC does not have the slightest clue as to the causes of the housing collapse, recession and market crash…I now fear the FCIC report is going to be an ideological farce.”

- It’s becoming obvious there is “no magic bullet” to immediately speed up the recovery, Harvard economist Kenneth Rogoff writes. “It took more than a decade to dig today’s hole, and climbing out of it will take a while, too,” he says. “Americans will have to be patient for many years as the financial sector regains its health and the economy climbs slowly out of its hole.”

- Investor demand for US Treasuries has waned over the last few sessions after some better-than-expected economic reports. But the “big test” comes tomorrow morning with the August nonfarm payroll report. “A smaller loss of jobs could stoke more optimism about the economy and raise more questions about how much lower interest rates can or should go in the near term,” LA Times’ Tom Petruno says. “But a bigger loss could re-energize bond bulls.”

- Yesterday was a 90% upside day, “the 13th such so-called panic-buying day since the April 26 high,” Jeff Cooper notes at Minyanville. Meanwhile, there’s been 14 panic-selling days during the same period, he says. “This kind of volatility is a market in disarray. It’s not a sign of a healthy market,” he says. “Risk runs high when frenzy runs deep.”

- Slate’s James Ledbetter wonders why people consistently underestimate Netflix (NFLX). “There is one company that has been more consistently underestimated than any other, whose innovations, growth, and, indeed, survival have been dismissed and denied for nearly all its corporate life. That’s Netflix,” he says. But “while its critics were flailing away, the company has continued to grow steadily and spread its influence well beyond the red envelope.”

- AOL renewing and expanding its search agreement with Google (GOOG) was a “surprisingly quick and even stealthy move,” Kara Swisher reports at All Things D.

- “Summertime, and the living is easy…for many, too easy. This July was the worst on record for youth employment: Less than half of all 16- to 24-year-olds had a job,” WSJ’s Heard on the Street says. “Meanwhile, at the other end of the spectrum, more than 40% of over-55s have work or are looking for it, the highest share since JFK was in office.”

- Housing prices still need to drop by 10% in order for the market to correct itself, Barry Ritholtz tells Tech Ticker.

- For all the runners out there, WSJ’s Nick Wingfield reviews three running apps.

US stocks rise for a second session, albeit not as sharply as during yesterday’s rally, as another batch of economic data gives some hope to the bulls.

DJIA rises 51 (0.5%) to 10320, S&P 500 gains 10 (0.9%) to 1090, Nasdaq Comp up 23 (1.1%) to 2200. NYSE volume’s low.

Today, it was a better-than-expected report on pending home sales that the bulls seized on. Jobless claims remain disturbingly high as 472,000, but no matter there’s a rally on. Dell bows out of 3Par sweepstakes after H-P raises its bid to $33/share.

Of course, what really matters is tomorrow morning’s monthly jobless report.

With emerging-market stocks trading at their highest valuations in more than two years, relative to developed market stocks, “a number of analysts and strategists are starting up a chorus that sings the phrase ‘this time it’s different,’” Ticonderoga’s John Stoltzfus writes, “and it makes us not just a little nervous.”

After nearly three decades “walking the beat on ‘investment street,’ we’ve never heard or known the phrase ‘this time it’s different’ to ring true for too long before some kind of proverbial ‘Terminator’ or ‘Black Swan’ arrives on the landscape,” he says.

And don’t buy the whole “decoupling” spiel that’s being thrown around again, either.  It’s too early for that, Stoltzfus says.

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Investors have kicked September off on a strong note. But significant technical resistance, as well as fundamental negativity, continues to plague S&P 500 at current levels.

From a technical perspective, it’s tough to make a bullish case for the broader market right now, even after yesterday’s run-up, according to Bespoke Investment Group. Firm notes the S&P 500 is currently sitting just above its 50-day moving average. But it’s still lingering too close for comfort as it hasn’t been able to significantly shoot higher all morning.

“The 50-day acted as a point of resistance (yesterday) that just couldn’t quite be broken,” Bespoke says. “For those hoping that the upside momentum will continue, it will be important to see a close above the 50-day in the next couple of days.”

S&P 500 was recently up 5 at 1086, with the 50-day at about 1080.

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Stocks aren’t seeing any follow-through today from yesterday’s rally, and while the session isn’t over, how the markets react after that rally will tell you everything you need to know about how “real” the rally itself was.

Meanwhile, there’s more M&A news, with H-P once again upping its bid for 3Par. Also, gold is back around its record closing price of $1,257 (currently at $1.253.90.)

That’s what we’re talking about on the Markets Hub.

99ers, back in the day.

Are people finding jobs, or falling off a cliff?

Today’s weekly jobless claims report from the Labor Department includes information on the number of people claiming emergency insurance, the folks who have exhausted the “normal” 26-week unemployment bennies, and are applying for the second, third and fourth tier of benefits, the ones that take unemployment insurance up to 99 weeks.

Labor reported today that 281,676 fewer people applied for the emergency unemployment compensation benefits in the week ended Aug. 14 (these number are reported at a two-week lag to the initial claims numbers.) That lowered the total to 4.5M, still higher than the 3.1M on the rolls a year ago this time. But it’s an improvement. It’s good news. Right?

Well, it depends. If people are surrendering these claims because they’ve found jobs, then it’s an unquestionable good. But there’s no evidence that’s the case. While I’d find it hard to believe that out of nearly 300,000 people, none of them found work, I don’t know that I’d bet the majority of them have. More likely, a disturbingly large number of those people have become 99ers.

“As always, we have no idea what percentage of people, if any, have simply run out of benefits or what percentage has found jobs,” Miller Tabak’s Dan Greenhaus wrote, “but if the latter is the reason for the drop, that is unquestionably a positive.  Additional data on this front can be found in tomorrow’s payroll report when we see the breakdown of unemployment durations.”

Almost half of the nation’s unemployment see their bout last more than six months. From there, it’s estimated that something like 1.4 million go all the way through the 99 weeks. Here’s good breakdown of the situation from the Columbia Journalism Review (albeit, a bit outdated as it’s from July.) Think about that number. It’s almost the size of the nation’s armed forces (active forces, that is.)

That’s an veritable army of unemployed people out there, who have been so for two years. That’s some development, I’d say.

US stock futures essentially flat on the heels of yesterday’s spike higher. European markets roughly flat, after the continent’s own scorching rally yesterday, while Asian stocks posted strong gains overnight.

As noted premarket yesterday, Wednesday’s action isn’t uncommon in a new month’s early days, and as we’ve seen lately, both rallies and sell-offs can come and go in the blink of an eye.

Weekly jobless claims, revised 2Q productivity and labor cost gauges both due at 8:30 a.m. ET; July pending home sales, and factory orders both out at 10:00 a.m. August chain-store sales reports also roll throughout the morning.

S&P futures up 0.20, DJ futures up 1. Ten-year note lower, yield at 2.59%.