Market Talk

So yesterday, I said we could see Dow 12000 before noon. As it turns out, we got it right around 10 a.m., after the release of the new-home sales report (the fact that the report, which capped off the worst year for new home sales on record, was the final spark to get the index over that mark shows you exactly how excited you should be about it.)

Sure, the Fed’s as excited as the guys in the pits about this rising stock market, we’ll see if they can actually hold it; right now, Dow’s under the mark, but we’ll get the Fed statement at 2:15, which always sends stocks off in zany directions.

With the Dow crossing 12000 and the S&P 500 poised at 1300, and commodities across the globe on a tear, we leave it to Gluskin Sheff’s David Rosenberg to put things in perspective. We pick this up from Rosenberg’s daily commentary, right after he noted that some retailers are sounding a bit panicky.

We’ll tell you someone who isn’t panicky at all. His name is Ben Bernanke. He runs the nation’s printing press, and he is one cool customer. His nickname is Helicopter Ben. We’ll call him HB for short.

We just saw in the King Report that HB gave an interview on CNBC last Thursday when he was queried about the success of QE2, especially since bond yields and mortgage rates have gone up substantially in recent months. Here was his response:

“Policies have contributed to a stronger stock market just as they did in March 2009, when we did the last iteration of this. The S&P 500 is up 20%-plus and the Russell 2000, which is about small cap stocks, is up 30%-plus.”

Well, there you have it. When you have a central bank chief talking about the virtues of small-cap stocks, you know you really have a pro looking after the country’s monetary affairs. One has to wonder whether Cramer will end up on the short list for HB’s replacement when the time comes. So what we have is a Fed that is now targeting the stock market and engaging in some form of manipulation to invite the same speculative risky behaviour that has ended so badly in the past. But make no mistake, HB is spiking the Kool-Aid in a significant way and it is working for now. So the Bernanke put is really an extension of the old Greenspan put, but with just a different strike price.

Jim Cramer for Fed chair. That’s the quote of the day, right there. Boo-yah!

I’ll tell you what, by the end of President Barack Obama’s State of the Union address, I was feeling a little bit, a little bit, what? Incited? Motivated? Inspired? It’s hard to know exactly what it was I felt, because it didn’t last long.

No doubt, the President did his best to seize his own personal Sputnik moment, trying to regain what he had in 2008, before the health-care debate, the bank-reform debate, before the rowdy tea-party movement, before the mid-term elections. It was a good speech, as these speeches go. Obama’s biggest gift is his oration, and this is the ideal setting to show off that skill.

The idea of building, or rebuilding, the nation to meet the challenges of the 21st Century, or however he phrased it, is nice enough, and there’s certainly nothing wrong about it. Dennis Gartman, who edits and publishes the Gartman Letter, said it was “a speech that the high school speech teachers around the country might grade decently, giving it a “B+” perhaps, but only because the student in question had always done good work in the past and deserved at least the benefit of the doubt.”

Obama’s focus on the “Sputnik moment” (or whatever speechwriter focused on it, actually; look, we’re writers here, we like to give writers credit,) actually strikes upon a point I’ve made in the past: that our eras of growth, real, solid growth, have always have some fundamental thing to spark them. Today we lack that thing, which is why the economy seems to be just drifting along.

But that wasn’t the President’s point. By choosing Sputnik as his metaphor, what he was saying is that a metaphorical Soviet Union — the Chinese, the Indians, the entire developing world, the Jersey Shore cast, whomever — is storming our gates. It’s a good metaphor, but it misses the point. It misses our real Sputnik moment.

Continue reading…

The stock market’s ready for its Sputnik moment already.

Strength so far in European stock markets today and President Obama’s inspired tone last night lift premarket mood in the US, with the Dow Industrials fixing to poke through the 12000 level and S&P 500 gunning for 1300.

Stocks should remain under the influence of an ongoing flood of quarterly earnings reports, while December new home sales and this afternoon’s FOMC statement could elicit some reaction. Euro climbs above $1.37, US dollar index recently at its lowest level since early November.

United Technologies 4Q generally in line, company backs 2011 EPS outlook. Boeing, General Dynamics results due before the open; Starbucks, Qualcomm and Netflix out after the close.

S&P futures up 4.80, Dow futures up 37. Ten-year note lower, yield at 3.36%.