Market Talk

By now you’ve certainly noticed that we’ve stopped posting. A few of you have written to us, asking what the deal is. We’ve been remiss in explaining ourselves, but the deal is we have to put the blog on a permanent vacation.

The problem is simply time constraints. Between the Newswires version of Market Talk, and the Upshot column for the Journal, and the Markets Hub at WSJ.com, we just don’t have the time to dedicate to the blog. Something had to give, and unfortunately this blog was it.

We have enjoyed exposing the wishful thinking that passes for reasoned thought in the markets, and will of course continue to do so in our other endeavors. You can still catch us on the Markets Hub, and on the wire and in the paper.

But for now, as that famous sage of the markets Groucho Marx once said, Hello, I must be going.

Here’s a link to the latest quarterly musings of Jeremy Grantham, always informative, thought-provoking and entertaining. Titled “Time to Wake Up: Days of Abundant Resources and Falling Prices Are Over Forever,” here’s a nice little taste:

Now no one, in round numbers, wants to buy into the implication that we must rescale our collective growth ambitions. I was once invited to a monthly discussion held by a very diverse, very smart group, at which it slowly dawned on my jet-lagged brain that I was expected to contribute. So finally, in desperation, I gave my first-ever “running out of everything” harangue (off topic as usual). Not one solitary soul agreed. What they did agree on was that the human mind is – unlike resources – infinite and, consequently, the intellectual cavalry would always ride to the rescue. I was too tired to argue that the infinite brains present in Mayan civilization after Mayan civilization could not stop them from imploding as weather (mainly) moved against them. Many other civilizations, despite being armed with the same brains as we have, bit the dust or just faded away after the misuse of their resources. This faith in the human brain is just human exceptionalism and is not justified either by our past disasters, the accumulated damage we have done to the planet, or the frozen-in-the-headlights response we are showing right now in the face of the distant locomotive quite rapidly approaching and, thoughtfully enough, whistling loudly.

Lot of ground to cover in today’s show: big stock rally, earnings, the falling dollar and the rising (very, very slowly) yuan. Today’s special guest is Mike Ryan, chief investment strategist at UBS Wealth Management.

US stocks on the launch pad as Asian and European markets engage in a spirited rally. Intel earnings credited for sparking gains, but earnings are almost a side note as US dollar index slumps to lowest levels in more than 16 months, and euro explodes higher.

EUR/USD surges above $1.45, and US stocks have a propensity to chase a bolting euro. No surprise either to see oil and gold soar. Seems sovereign debt problems — both in Europe and US — are too slow-moving, deferred and, at times, abstract for today’s capricious markets to get hung up on.

March existing home sales due at 10:00 a.m. ET. AT&T reports before the open; Apple, AmEx after the close.

S&P futures up 17.40, DJ futures up 137. Ten-year lower, yield at 3.41%.

Speaking of Intel, Kevin Kingbury posted the following:

Some mea culpas are going around on Wall Street as Intel (INTC) blew past 1Q expectations and gave a surprising strong 2Q revenue view in the face of what had been conventional wisdom about supposedly weak desktop and laptop demand. Auriga notes, “Consensus was clearly too pessimistic on PC sales (the primary source of upside).” While admitting that growth is under pressure from tablets and the economy, “data center will likely bolster both revenue and profitability.” RW Baird boosts its price target to $29 from $27 as it says INTC’s new Sandy Bridge product “is strong so far, debunking the myth about lack of demand for high-performance CPUs in PCs.” INTC up 6.2% premarket at $21.10.

Okay, so yesterday the world was about to spin off its axis, the end-times were nigh, disaster seemed afoot. Even Charlie Sheen was putting on a credible stage show.

Today, not so much.

US stocks recover after yesterday’s sell-off, with Johnson & Johnson leading the Dow higher after a well-received earnings report. Given how quickly stocks shook off that S&P warning, which yesterday seemed a globe-rattling event, you wonder if yesterday’s sell-off in the stock market had as much to do with S&P’s report as it did with an overbought market.

DJIA gains 65 (0.5%) to 12267, S&P 500 rises 7 (0.6%) to 1313, Nasdaq Comp adds 10 (0.4%) to 2745. NYSE volume’s low. J&J, Caterpillar comprise about half of the Dow’s gains. J&J, Goldman both see earnings slide from a year ago, although the Street rewards the former and punishes the latter.

Gold touches $1,500, closes a hair beneath there. Crude’s above $108/barrel again. Yen remains pegged above 82 to the dollar, but watch if it breaks below there (moves down in the yen represent strengthening.) We’d be getting back to the range that sparked the yen’s wild March 16 rise and subsequent G7 intervention.

Slate of post-market earnings includes IBM, Yahoo and Intel.

Despite the recovery today, the technical damage yesterday was material, as our colleague Tomi Kilgore points out:

The S&P 500′s bounce was encouraging for bulls, but it didn’t quite erase the negative overhang created by Monday’s tumble. The S&P 500 up 7 at 1313, but below resistance at the 50-day moving average (currently at 1315). While the index stays below the 50-day MA on a closing basis, the preferred stance will be sell on rallies, as Monday’s slide stirred up technical chatter about a possible longer-term “double-top” reversal pattern (February top of 1344, April top of 1339). That won’t be confirmed unless the index falls below the March low (1249), but the longer the index closes below the 50-day MA, the more likely it becomes.

Now, for sheer lunacy, absolutely nothing tops this story from the Orlando Sentinel about a central Florida unemployment bureau and its latest plan to, well, fight unemployment: they’re giving out “superhero” capes.

It sounds like a bad Saturday Night Live sketch, but we’re not kidding. Here’s the website of the Workforce Central Florida, which launched a marketing campaign to “help us fight Dr. Evil Unemployment.” It’d be hysterical if it wasn’t so sad. Nothing quite says “we’ve hit the wall” than this effort.

Big show today, markets trying to rebound after yesterday’s sell-off, earnings from Goldman and J&J as well as a look at this afternoon’s earnings, and author, economist and sometimes actor Ben Stein comes on to talk about the U.S. debt issues, the future of the economy and the importance of diversification.

Asian markets overnight felt the reverberations of S&P’s outlook cut on US government debt, with stocks marking substantial declines.

European markets currently engaged in a moderate bounce from sharp selling yesterday, and euro’s recovering. Stage set for modest rebound for US stocks after yesterday’s sell-off

Oil continues to slide, recently at $106.43/barrel, and gold’s up a little after another fresh Comex settlement high yesterday at $1492.30.

Goldman Sachs, J&J earnings headlines hitting the tape now. Both stocks rising in premarket trading. Intel, IBM after the close. March housing starts due at 8:30 a.m. ET.

S&P futures up 1.80, DJ futures up 27. Ten-year note lower, yield at 3.39%.

Meanwhile, last night Texas Instruments reported a weak first quarter and warned the Japanese disaster would cut into its second quarter. Kevin Kingsbury adds some perspective:

Citigroup calls the impact on Texas Instruments (TXN) in the wake of Japan’s disaster largely as expected. It lowers guidance amid TXN’s cut and moves price target to $40 from $42. But the investment bank does call TXN’s underlying business “good” and “order strength is contributing to an optimistic” 2H view. Susquehanna concurs, adding, “Outside of baseband/Japan, demand commentary sounds good.” FBR says, “We remain constructive on TXN as the firm has meaningful barriers, growing scale and a low 12x P/E multiple,” which should send shares higher. “That said, many TXN comparables are also inexpensive.” Auriga keeps its sell rating, contending it is “somewhat pessimistic” about a 2H rebound. TXN down 2.3% premarket at $34.

Or, at least, Google was weighing on the market. Stocks certainly have taken off since our report at 10:30 in the a.m. Guess the markets put those disappointing earnings reports behind them, and are buying the Fed’s argument that there isn’t any inflation, at least any that’s going to last.

Good luck with that one.

Big show today. We covered Bank of America’s earnings, the SEC’s likely settlement with the banks over the issue of mortgage-backed securities, and the potential Groupon IPO.

Lackluster earnings results from Google last night and BofA this morning don’t bother investors much, as US stocks look to open generally flat to a shade lower, based on indications from equity futures.

Markets currently modestly higher in Europe, while stocks were mostly lower in Asia overnight. We’ll get some sense of how much higher producer prices are feeding through to consumers with release of March CPI at 8:30 a.m. ET.

New York Fed’s April Empire State manufacturing survey also set for 8:30 a.m.; March industrial production & capacity utilization due at 9:15 a.m.; and Thomson Reuters/Univ of Michigan prelim April consumer sentiment at 9:55 a.m.

S&P futures down 3.60, DJ futures down 34. Ten-year note higher, yield at 3.47%. Crude floating around the $108/barrel mark.

Meanwhile, our colleague Dave Benoit sums up all the news surrounding Bank of America this morning:

Bank of America (BAC) announces a whole lot of news all at once this morning. A quick summation: $2 billion in earnings, at 17c a share misses expectations of 27c a share. But revenue beats. Deposit-group and investment-bank earnings are both down from year ago, the latter sharply from strong 2010. And CFO Chuck Noski is out, moving to a vice chairman role in a company with a separate chairman and CEO already. He’ll be replaced by chief risk officer Bruce Thompson. Chief counsel is also changed. The 2010 year of rebuilding appears to be continuing into 2011. BAC is paring bigger premarket losses minutes earlier, with shares now up 0.8% at $13.23.

Corn’s at an all-time high, supposedly on surging demand.

But just remember that whatever such increases there are, it’s primarily not going into people’s bellies, but their gas tanks just as crude oil is reliving its 2008 superspike.

Haven’t we seen this movie before?

We’ve been bellowing (and we’re not totally alone on this, as the Bank of Japan’s recent report shows) about how QE has been cascading untold liquidity into the financial markets, allowing for stocks to nearly double the past two years and commodities to surge toward, or past, their 2008 peaks. Much of the thanks for that can go to the nation’s central planners bankers, and the free-money bonanza of the last decade.

We’ve long plowed the road here of how the Federal Reserve helped goose the credit markets that allowed for dodgy borrowers to get dodgy mortgages. Then even-dodgier securities were created for “sophisticated” investors looking for the next best thing.

But the half-wits in Congress — dithering over how to cut a few billion here, a few billion there as shut down of the US government looms — have commodity-spike blame as well. Beyond refusing to enact trade deals that would boost US exports and potentially help develop new supplies of commodities in those markets, we get things like farm subsidies that incentivize not raising crops or animals and laws requiring ethanol — largely developed from corn — to be added to gasoline while its benefits are in question.

So until we get enough grown-ups on Capitol Hill and in the halls of the Federal Reserve able to bring about responsible policy, the likes of Dallas Fed President Richard Fisher will seemingly just be playing the role of graveyard whistlers or token dissidents while crony capitalism lives on and fans the flames of inflation.

Hopefully it’s not like the 1970s. Not like I would remember, being a tyke back in those days. But there’s no need for me to get first-hand experience, thank you.