Market Talk

Feeling a little deja vu, with the premarket complexion nearly identical to yesterday’s at this time, except stocks were stronger in Asia overnight.

Positive tone for global markets is being attributed to a Chinese official’s comments in support of EU bailout measures. Was there some concern that China might denounce such actions? This stuff is boilerplate trade diplomacy, folks, so the emphasis it gets today speaks to the lack of other tangible drivers. Oh, so China’s cool with the EU’s attempts to keep its economic system intact? What a relief.

Despite the DJIA’s inability to make headway yesterday, the path of least resistance still seems to remain higher into year end, as participants focus on wrapping up business and enjoying the holidays.

Euro flatlining around $1.315, USD index shaded lower. S&P futures up 4.00; 10-yr note higher, yield at 3.31%.

Off to a slow start this week, but mulling over a couple things from this morning, including St. Louis Fed President James Bullard’s appearance on CNBC. Didn’t see the segment but read a write-up. Spoiler alert: there’s no Hoenig-like straight talk to be found here. Instead, we get this (from Dow Jones Newswires’ Mike Casey):

Asked whether the quantitative easing program, which has been dubbed “QE2,” was a factor behind the strong gains in commodity prices, he said the gains were most likely led by normal demand and supply factors and saw “no evidence” that Fed policy was behind it. However, he did say the relationship would need to be studied.

That “no evidence” part catch your eye, too? Thought it might. Reminded us of proclamations from certain Fed officials five or six years ago that there was no evidence of a housing bubble. Just like when the Fed says something’s “contained,” it probably isn’t; when they say “no evidence,” there’s probably conclusive evidence circulating. Why else would he admit the relationship between QE2 and commodity prices needs to be “studied”? Continue reading…

It’s getting harder and harder to find bears lately, with major stock averages forging two-year highs. And even one consistent, well-known bear — Gluskin Sheff’s David Rosenberg — is a shade less bearish.

Rosenberg in his daily morning “musings” today carries just a hint of submission, though he’s quick to say he’s not changing his views –  he remains a secular bond bull, sees GDP growth only around 2% next year and “core inflation will remain in a declining trend.”

But while he sees some European countries needing to undergo debt restructuring, which would raise risk premia in general, “this will likely take more time to play out than I had thought before,” Rosenberg writes. For now, “expect upward revisions to Q4 and by extension Q1 2011 GDP and hence earnings; therefore, over the near-term, it may not be a bad idea, tactically, to lighten up on the bearishness,” Rosenberg says.

It’s not a big change, just “think of it as a company lifting the bottom of its revenue forecasts,” he adds. Continue reading…

US stocks rally for a second straight day, as markets overcame disappointment over what the ECB didn’t do, focusing instead on what it did do.

DJIA jumps 107 (1%) to 11362, S&P 500 gains 15 (1.3%) to 1222 — the second time this year it’s been up more than 1% two consecutive sessions — Nasdaq Comp rises 30 (1.2%) to 2579.

This put stocks close to two-year highs. That’s something that was hit in the oil patch, as crude rises to a two-year high of $88/bbl.

Yeah, that’ll be great for the consumer.

The ECB disappointed the market with what it said, but it encouraged the market with what it did. We explain.

For the record, I’m pegging today’s rally as just another first-day affair, whereas new money comes into the market at the beginning of the month. I’d also say some of is a rebound after a couple of weak weeks.

But the bottom line is, nothing’s changed from yesterday to today.

Bulls once again are able to fend off a mortal gash by bears, erasing much of a sharp morning decline, but still limp away from this engagement.

Nasdaq, in particular, shows some damage as a few tech bellwethers — Google, eBay, Amazon — get hit with some earnest selling. Tech, health-care and financial stocks slide most; only telecom ekes out a small gain.

Euro-zone issues continue to be a drag, euro slides below $1.30, USD index rises 0.4%.

First negative month for the DJIA since August. DJIA down 46.47 to 11006.02, and Nasdaq Comp sheds 26.99 to 2498.23. S&P 500 ends 7.21 lower at 1180.55.

Stocks fall, but call it a moral victory for bulls who perform another one of those escapes that would make Houdini grin. Markets shake off ongoing concerns about euro-zone’s debt problems and erase much of their early substantial losses.

For the past several months, US markets have pulled moves similar to this with collaboration of a weaker dollar/stronger euro, but neither was present today. It almost looked like a reversal based on sheer will alone. Perhaps there was some of that, inspired by S&P 500 holding a critical level around 1174. Continue reading…

Investors aren’t convinced a $113 billion bailout of Ireland will stop contagion in Europe. The Dow Jones Industrial Average, which earlier plunged as much as 163 points, was recently only down 36 points. Part of the move is technical trading, but ultimately its tough to explain today’s move. Here’s a piece of a snippet John put on the wire around 3:00 pm ET:

No easy indentifiable catalyst for the turnaround, though that’s not unusual for these late afternoon sprints toward the finish. The euro has recovered a little lost ground, but isn’t setting the place on fire with its move.

Nevertheless, concerns that the Irish bailout might not be enough to contain the euro-zone debt crisis appears to be the main theme on investors’ minds. And that mindset isn’t going away anytime soon.

Dow Jones’ Donna Kardos Yesalavich, Michael Casey and Joe Bel Bruno report on this issue and more on today’s Markets Hub:

Remember all the rave reviews and talk about transparency during the summer when European bank stress-test results were released? As Gluskin Sheff’s David Rosenberg reminds us today, the Irish banks (yes, the ones at the center of the bailout), “passed” those tests.

The euro and US stocks enjoyed a nifty little rally back in late July, in part on hype about the stress-test “results,” even though there was wide skepticism and derision over the testing process.

At least part of that charade is over. Back in July, Dow Jones reporter Vladimir Guevarra wrote that the Bank of Ireland and Allied Irish Banks “passed a European Union-wide stress test on the strength of their balance sheets,” according to the Irish Central Bank and financial regulator. Continue reading…