Market Talk

Strong wire-to-wire gains for stocks, led by the energy sector as oil prices climb again, and by a beefy performance from industrial stocks.

The perception of an improving situation in Japan offered bulls some running room, even as conflict in Libya remains nasty and helps drive up oil.

Steep drop in existing home sales, and word that Portugal will likely seek a bailout both get shrugged off as well. Financial stocks gain, but are notable laggards, along with health-care sector.

Today’s big move comes as stocks recover from oversold conditions. Sustaining these gains will be the test this week. DJIA rises 178 to 12036, while Nasdaq Comp adds 48 to 2692. S&P 500 ends 19 higher at 1298.

Note that the S&P 500 closed in the lower part of a resistance band that some technicians note between 1297 and 1308. S&P Equity Research’s Mark Abeter said after running into all this overhead resistance, “we think the S&P 500 will drop back and at least retest the lows” of last week.

Mary Ann Bartels at BofA Merrill echoed that sentiment, noting that an uptrend since last summer’s lows was broken, and along with a break last week of 1270 “on big volume,” it suggests “at least a test of the recent low of 1249 with possibly the need to test second support at 1220-1170.”

(Tomi Kilgore contributed to this post.)

Treasury Department will begin unloading its $142 billion stash of mortgage-backed securities in an “orderly wind down” beginning this month, which raises an interesting question: Will these sales shed any light on the valuations of MBS that commercial banks are still sitting on?

Banks have not been eager sellers of their inventory of troubled MBS and other non-performing real-estate loans, as bids for the stuff have generally been well below what the banks are willing to accept. And as long as FASB isn’t forcing banks to mark these securities to market, then there’s no strong incentive to sell.

But the Treasury has incentive to sell, noting in its Q&A on the wind-down that its “mission does not typically include managing a large mortgage portfolio.” At least Treasury’s willing to admit it now. The Fed hasn’t yet reached that conclusion.

As of now, Treasury plans to sell $10 billion in MBS per month until it’s all gone, but could suspend sales “if market conditions become less favorable.” Any suspensions or slow pace of sales should offer some gauge on whether bidders continue to low ball, or if Treasury — like banks — is still asking too high a price for the debt.

Treasury says it’ll post its portfolio holdings at the end of each month,  including any sales that were completed, broken down by coupon and agency here.

I said it almost exactly one year ago: a better tag for Alan Greenspan would be the “Sorcerer’s Apprentice.” When your policies lead to as much havoc as his did, nobody but nobody should be calling you a maestro.

But the former Fed chairman soldiers on, putting out a paper that lays the blame on the “weak recovery” at the feet of an overreaching government, which sends Paul Krugman into orbit:

Greenspan writes in characteristic form: other people may have their models, but he’s the wise oracle who knows the deep mysteries of human behavior, who can discern patterns based on his ineffable knowledge of economic psychology and history.

Sorry, but he doesn’t get to do that any more. 2011 is not 2006. Greenspan is an ex-Maestro; his reputation is pushing up the daisies, it’s gone to meet its maker, it’s joined the choir invisible.

He’s no longer the Man Who Knows; he’s the man who presided over an economy careening to the worst economic crisis since the Great Depression.

You’ve got to appreciate Krugman consciously parroting (pun intended) an old Monty Python bit, the famous dead-parrot sketch.

“This is an ex-parrot.”

(h/t Big Picture)

Stocks are rally. So is oil.

Look, we get it. Markets like to rally. Markets like to rally on Mondays, especially on Mondays when there’s a big, juicy M&A deal on the table that gets everybody all jazzed up. Then add in some dry oversold tinder on a Monday after a couple of weeks of persistent sell-offs and this is what can happen.

The Dow is up roughly 200 points, back around the psychologically and technically key 12000 level. The S&P poked its head above 1300. The Nasdaq Comp is up 2%. It’s a risk-on day without a doubt, and investors are piling on.

Let’s keep a little perspective here. Maybe we’re missing something, but the day seems a little thin on “good” news, while stocks base their gains mainly on big M&A and oil marching higher again.

- For starters, the situation at Fukushima Daiichi remains dangerous. The level of damage still isn’t clear, how much melting down there actually was, and what the ultimate solution will be.

- Portugal, one of the nations that supposedly wasn’t Greece, is looking more and more like Greece. Reports are the nation may seeks a bailout by June at the latest, if not earlier. That’d make three European nations on the bailout register.

- The fight in Libya is looking murkier by the day, with what now seems like a hastily arranged no-fly zone putting the western powers into the conflict, without a clear goal or exit strategy. Crude oil prices are reflecting the uncertainly not only in Libya but across the Maghreb and Middle East, rising back over $103/barrel.

That enough risk for you? How about we drill down a bit further?

Continue reading…

US stocks are spring-loaded for an early burst higher, goaded by big M&A news (AT&T’s $39B deal for T-Mobile), reports that Japan is gaining control over its nuclear plant crisis and rallying markets in Europe.

Chatty week for the Fed, with a host of speeches scheduled for the central bankers, while the data calendar is relatively thin. February existing home sales set for 10:00 a.m. ET, and new home sales due Wednesday. Other data include February durable goods on Thursday and a third look at 4Q GDP Friday.

Oil running higher, nearing $103/barrel. S&P futures up 14.80, Dow futures up 111. Ten-year note slides, yield at 3.33%.