Market Talk

If you think the emerging markets are overdone, you might want to consider the frontier, says adviser Chris Cordaro. And, Dow Jones’ Brendan Conway relays one way traders are playing the market’s volatility.

So much for those notions that GE maybe added jobs in 2010.

Its 10-K fresh out (nice timing, Friday late afternoon/early evening), showing that the company, run by the head of the White House’s special jobs creation panel, cut another 17,000 jobs last year.

The “good news” is that GE only cut 1,000 US jobs, while eliminating 16,000 positions overseas. Still, that was more than 83 people per month cut loose in America last year.

Since 2006, the company has shed 22,000 US jobs, while the overseas workforce is down just 10,000 since 2006.

Again, we are eager to hear Jeff Immelt’s and his panel’s ideas on actually creating jobs in the US.

US stocks calm their britches, holding onto yesterday’s rebound, but still posted sharp losses on the week as the violence and chaos on North Africa continues unabated.

DJIA gains 62 (0.5%) to 12130, still down about 2% on the week; S&P 500 gains 14 (1.1%) to 1320, and Nasdaq jumps 43 (1.6%) to 2781. Crude gains a little ground, and tellingly Treasurys rise, a sign that investors are still looking for safe havens.

Market seems less worried about oil-supply shocks. Still, the surge in crude this week will be filtering through to the pump over the next few weeks, and given the revisions today to 4Q GDP — and what that said about the relative strength of the consumer — the economic effects are yet to be seen.

Listen, the bottom line for us here in the U.S. is that gas prices are going to go up, and all that optimistic talk about the consumer coming back that you were hearing in December was a bit off the mark. Add in that we are going to see a drag to the economy from the state and federal government.

Wages aren’t going anywhere, and while we may see a decent number next Friday on the monthly jobs report, it’s just a seasonally adjusted rebound from what was a seasonally adjusted number in January, and, well, we trashed this particular data point pretty good earlier this week. The bottom line is hiring remains weak, and given the headwinds isn’t going anywhere.

And all that’s assuming the Jasmine Revolution doesn’t have a bigger effect on the global economy than it already is having, and that’s not exactly a safe bet.

No evidence that the run-up in commodities prices is soon to abate. Crude oil higher today, rice futures limit up, corn up, soy products rally and wheat up big, too.

Expect to hear more comments down the road like this one yesterday from Safeway’s (SWY) CEO Steve Burd during the company’s quarterly conference call. Responding to a question about passing on rising costs to consumers, Burd said, “we are not the only one passing along cost increases and it is not confined to the supermarket industry. And it’s called preservation.”

Catch that? It’s called preservation, he says. After at least a year of walking on eggshells over raising prices, scared that customers will just run for lower prices at the competition, businesses are collectively (“…not confined to the supermarket industry,” as Burd says) raising prices. Out of (self) preservation. Continue reading…

The longer the Mideast revolts last, and the subsequent jump in crude prices, the more people are going to start drawing lines between gas prices, the consumer, the state of the state and federal government and the economy.

Don’t mean to bum you out, but the more of those lines that get connected, the worse the picture gets.

If you’re not already paying $3.50 for gas at the pump, and some of you are, are you ready for it? Because it’s coming, and when it gets here, things are going to get sticky.

It’s almost a given, because the spike in crude-oil prices this week will be filtering through to the pump over the course of the next few weeks. I know the gas station in town I go to was charging $2.95 last Friday, and was charging $3.09 yesterday (I live in Jersey; high taxes, cheap gas.)

Don’t kid yourself: the “recovery,” already a weak, pale thing, could be totally unwound by a spike in gas prices. In 2008, $4 gas was the last straw that pitched the economy over. Given how much weaker the average American is today than then, it wouldn’t surprise me if $3.50 was the trigger this time.

Once prices starting going above $3.50, we’re in seriously perilous territory (as if perilous itself isn’t perilous enough.) Now, most people think the only way that happens is is we get a serious supply shock, like if Saudi Arabia goes under, and the market universally doesn’t think that can happen. Of course, how many times have you heard a line like that?

Gluskin Sheff’s David Rosenberg’s heard it quite a few:

I have to say that it is amazing how myths become so quickly promulgated in the financial industry. First, it is now taken as a given that the Saudi Arabian political regime will remain intact because surveys show how well loved the King is and how great it is to see the population now being bought off with $36 billion of fiscal assistance from the Royal Family. As if the population is going to be bribed into trading in economic freedom for fiscal transfers, especially if the large Shiite population sees democratic concessions take hold in neighbouring Bahrain (where most of the people are Shiites, many from Iran, and ruled by the Sunnis).

Now sure the odds as of this moment are low that the revolution will spread to Saudi Arabia. But the Saudis are worried about it, which is what that payoff was all about. If the House of Saud thinks it can happen (and you don’t spend $37 billion if you don’t) then why’s the market so unconcerned? Because whistling past the graveyard is a favored strategy on Wall Street.

Newswires’ David Bird lays out the domestic picture for you: (subscription required.)

NEW YORK — U.S. gasoline prices, already at record highs for February, don’t fully reflect the surge in crude-oil prices amid turmoil in the global oil patch. A $3.50-a-gallon national average–the highest since September 2008–is in sight well ahead of the peak driving season.

Gasoline prices, already up 20 cents a gallon in the futures market this week as global benchmark Brent crude climbed to as high as $120 a barrel, could hit $4 a gallon or higher, raising the spectre of economic turmoil and a double-dip recession in the world’s biggest energy user, analysts said.

Continue reading…

I hope that in the long run, the Jasmine Revolution sweeping North Africa will be a good thing for the world. Much depends upon who comes to power post-revolution, of course, (anybody remember Napoleon?), but any movement that is about getting rid of autocratic, dictatorial tin-pot despots ought to be a good thing in the long run.

Keep in mind that the people of North Africa and the Middle East don’t have a history with democracy. This isn’t to say that they can’t embrace democracy, but it takes time. Democracy blossomed in the United States, but it didn’t come full grown on July 4, 1776.

The movement toward self-government had been festering in Europe for more than a hundred years during the Enlightenment. That’s why we were all forced to read Locke and Hobbes in school (do they still even teach Locke and Hobbes?)

The modern Arabian states didn’t exist until the end of World War I and the fall of the Ottoman Empire (don’t worry, this isn’t a college thesis; I’ll be brief.) After that was a period of colonialism that lasted until the ’50s. Then you had popular revolts that threw off the colonials, and replaced them with the despots. There has not been a democratic movement to build upon. It’s possible, and hopeful, that we’re seeing it now. After all, ideas that took a hundred years to filter through a society back in the day move much faster in our electronic world.

It will be interesting to see how the developed world reacts. There is only one thing politicians respect: power (although respect for the ultimate source of their own power, the consent of the governed, seems to elude them.) You saw it in the Panic of 2008. The politicians stepped in not to save the system, but to save the powerful within that system.

Because there are still an awful lot of despots out there. Some of them we still shake hands with. Some of them run the world’s second largest economy, know what I’m saying?

Continue reading…

Premarket US stock futures signal a sturdy snapback in the making after the Dow Industrials’ log their worst three-day stretch since last August.

The geopolitical problems that set stocks back this week haven’t exactly eased, mind you, but for some reason their importance has diminished this morning. A slight retreat in oil prices gets citations for the improved tone, though it’s wishful thinking to bet that crude has marked its near-term highs.

Second look at 4Q GDP due at 8:30 a.m. ET, expectations look for slightly higher revision, to 3.3%. Reuters/Univ of Michigan final February consumer sentiment index out at 9:55 a.m.

S&P futures up 8.70, DJ futures up 69. Ten-year lower, yield at 3.46%. Crude futures up a hair at $97.37/barrel.