Market Talk

- Considering the “uncomfortably uncertain” mood heading into this morning’s jobs data, the report wasn’t that bad. “The overall picture is of a labor market that continues to chug along in the right direction, albeit far too slowly,” Ryan Avent notes. “The pace of employment recovery implies several long, hard years ahead for American workers. But given the mood on markets and around dinner tables lately, one has to appreciate the continuation of the upward trend.”

- Stocks popped Friday on the jobs data, but Capital Gains and Games blogger Andrew Samwick says the report merely represents “more of the same” for the labor market. “There is nothing in here that merits joy,” he writes. “Expect the spinmeisters to focus on the rise in private sector employment (up 763,000 since the low in December 2009) and the upward revisions (to smaller job losses) from the two prior months.”

- The positive vibe (at least for stocks) generated from nonfarm payrolls data can’t be sitting well with former labor secretary Robert Reich. “The Great Jobs Depression continues to worsen,” Reich writes on his blog. “The last time we saw anything on this scale was in the 1930s…The practical choice we face is this: Either major action to reverse the jobs emergency or years of intolerably high unemployment coupled with demagoguery and scapegoating.”

- August jobs report offers a “small sigh of relief,” but the big takeaway is the labor market remains essentially flat, Reuters blogger Felix Salmon says. “Flat, then, is the new up — which only goes to demonstrate just how worried the markets are about a double-dip recession,” he writes. “We’re not remotely in full-bore recovery mode yet.”

- August auto sales, released earlier this week, were portrayed as worst sales in 27 years. But that’s not best way to interpret the data, James Hamilton writes at Econbrowser. “The story for autos remains pretty much what it has been for some time — we’ve bounced off the bottom, but remain stuck at a point far below what would normally be expected. Double dip? Not here, not yet. Disappointingly sluggish growth? Very much so.”

- “The outlook for subpar growth and weak job creation — although superior to a new recession — is a real and present danger, and today’s employment report doesn’t offer much reason to dismiss the danger,” James Picerno writes at The Capital Spectator. “If the economy continues to struggle, eventually the risk of a recession will become more than a low-probability prediction.”

- Mark Thoma uses the central valley in California as a metaphor for economic recovery. “It’s narrow east to west, but very long north to south,” he notes at Economist’s View. “We went down into the valley as we went into the recession, and the question for me has always been whether we are heading east to west so that we will climb out of the valley relatively quickly, or north to south as we trudge along at the bottom of the valley for considerable time…The fact that we’ve had essentially no growth for a year now, and no hint of change any time soon, makes the north to south fear very real.”

- Barnes & Noble’s (BKS) battle with activist investor Ron Burkle is symbolic of a “big fish swallowing a small fish only to be itself swallowed by an even bigger one,” Josh Brown writes at The Reformed Broker. “Founder Len Riggio built the largest bookseller on earth by putting thousands of mom & pops under his sword across the country,” Brown notes. “Now he himself is facing his own possible destruction from the twin threats of shareholder activist Ron Burkle and the disintermediation of the digital age.”

- With Dell pulling out of the 3Par (PAR) bidding war, Robert Cyran wonders if Dell shareholders are on Xanax. Dell investors “displayed neither much concern about overpayment nor relief about the deal being dropped,” he says. “After a decade of scandals, missed opportunities and dismal performance, they may have stopped caring.”

- Just your typical brawl at the US Open.

Stocks aren’t seeing any follow-through today from yesterday’s rally, and while the session isn’t over, how the markets react after that rally will tell you everything you need to know about how “real” the rally itself was.

Meanwhile, there’s more M&A news, with H-P once again upping its bid for 3Par. Also, gold is back around its record closing price of $1,257 (currently at $1.253.90.)

That’s what we’re talking about on the Markets Hub.

- Bernanke essentially admitted the economy looks nothing like the growth he was expecting six months ago. “But he argued that 2011 will be better, because…well, it was hard to see exactly why,” Paul Krugman writes at Conscience of a Liberal. “He offered no major drivers of growth…So: I guess this speech marked a small step toward QE2 and all that. But mainly the message was that just around the corner, there’s a rainbow in the sky.”

- Big surprise from Bernanke’s speech? He said “deflation” on six separate occasions, Stephen Gandel notes at Time’s Curious Capitalist blog. “Clearly, Bernanke believes the chances of prices falling is a credible threat to the economy,” he says, although noting the Fed chairman didn’t propose any new strategies to fight deflation. “So again, Bernanke is making the case that deflation is not a problem he is worried about.”

- Intel (INTC) cutting its 3Q revenue outlook gets overshadowed by Bernanke’s speech, but don’t discount this major development, warns the Pragmatic Capitalism blogger. “We could be at a crucial turning point where the economy is slowing substantially and analysts estimates appear high,” blog says. “If Intel is any early indication…we are likely to see more warnings and a lot of analyst cuts in the coming months,” which will put pressure on markets.

- Turns out Wall Street analysts predicted Intel’s slashed outlook long before the company finally came clean. In recent weeks, Barron’s Tech Trader Daily blogger Eric Savitz notes JMP Securities, Roth Capital, Bernstein Research, BMO Capital, Barclays and Baird have all slashed estimates on Intel. Savitz ponders: “If they all could see this coming, what took Intel so long to admit there was a problem with its previous guidance?”

- Reuters blogger Felix Salmon calls sluggish 2Q GDP the “best kind of bad news,” as imports surged 32% last quarter, overshadowing 9.1% gain in exports. Relatively healthy exports and strong imports are signs that there’s still plenty of demand.

- GDP downward revision to 1.6% in 2Q, from 2.4%, is bad, but better than economists were expecting. “The revisions can be chalked up to the anticipated factors,” Ryan Avent writes at The Economist’s Free Exchange blog. “Private inventory investment and exports were lower than expected, while imports, which count as a negative to GDP, came in higher. The main bright spot in the report is a slight upward revision to personal consumption expenditures.”

- The bidding bonanza between Dell and Hewlett-Packard (HPQ) over 3Par (PAR) has many market observers wondering what’s the big deal with this previously obscure company. It’s bringing back memories of the “crazed acquisitive days of the dot-com boom,” FT’s Alphaville notes. “Who needs rationality when desperation and blind optimism conspire so well?”

- And as the bidding war between Dell and H-P stays red hot, “the rapid-fire pace could continue,” Brian Caulfield writes on a Forbes blog. “Both HP and Dell need 3Par. Dell needs to expand its presence in the corporate data centers, where it has a strong lineup of server offerings. H-P, meanwhile, already has a storage business, and is eager to grow it.”

- Corporate America couldn’t care less what Bernanke said today, Miller Tabak’s Peter Boockvar says. “They know that interest rates are already at historic lows and the average business person, whether for a big company or small knows that the cost of money at this point is not a factor in the decision of whether to expand/hire or not,” he says. “From the perspective of the consumer, they are only interested in paying down debt and saving and if anything, more ‘easing’ by the Fed just makes saving that much more difficult.”

- It’s US Open season, baby! WSJ profiles one of my favorites — New York’s own James Blake. He’s been so frustrating to watch throughout the years, but here’s to hoping the low-ranked wildcard can turn some heads at this year’s tournament.

The only thing I can say for sure about today is this: it’s no dog day of summer, kids.

Attention this morning riveted on Kansas City Fed’s economic symposium in Jackson Hole, Wyo., and Ben Bernanke’s upcoming remarks on the US outlook and policy response.

While the Fed meets annually there, it’s oddly appropriate this year that it’s in a locale with “hole” in the name. Tip for Ben: Try to open with a little joke or funny anecdote before getting to the real serious stuff. He’s set to speak at 10:00 a.m. ET.

Of course, before that we’ll get a second look at 2Q GDP growth at 8:30 a.m.; economists see a revision down around 1.3% from original 2.4%. Also, a final look at Reuters/Univ of Michigan August consumer sentiment at 9:55 a.m.

Elsewhere in the world, Boeing delays the first delivery of the Dreamliner — again — and Dell matches Hewlett-Packard’s $27/share offer for 3Par. This is a company, mind you, that was trading at $9.65 on Aug. 13, before Dell’s original offer. Good month for 3Par shareholders.

S&P futures up 3.60, DJ futures up 28. Ten-year roughly flat, yield at 2.50%.

I did a co-host stint on the News Hub this morning, and it struck me during the show that the subjects we talked about, jobless claims, deflationary hedges and hi-tech gimmicks to lure shoppers, all can be strung together, they all play one off the other.

Sure there was some improvement in jobless claims, but they are still way too high, and indicate there’s precious little hiring going on. That’s exacerbating the spending habits of consumers, who are also somewhere inside a huge deleveraging process, and that’s exacerbating the inflation/deflation situation. That thought occurred to me while we were doing the show, but I didn’t get a chance to mention it.

Call it, oh, I don’t know, and extended pause.

US stocks skid into the close, losing what little momentum they developed in the morning on a spate of M&A news. But the economic problems that have been growing since the spring just aren’t going anywhere soon.

DJIA loses 39 (0.4%) to 10174, after rising 91 in the morning. S&P 500 drops 4 (0.4%) to 1067, Nasdaq Comp falls 20 (0.9%) to 2160.Treasury’s don’t move much, 10-year yield is still right around 2.60%, but the euro slides to $1.2662, sensitive to the same headwinds as stocks. A Eurozone PMI report this morning showed decelerating growth, although European stocks still rose.

Tech shares tumble amid concern about PC demand. But 3Par share surge 43% as a bidding war between H-P and Dell breaks out. That’s part of the broad M&A trend, with a bidding war apparently heating up over Potash Corp. also. But the wave isn’t doing much to bolster sentiment in the markets, despite the efforts of the bulls to push every meme from cash on the sidelines to the bond bubble.

Elsewhere in American capitalism, Vice President Joe Biden says the government may retain a GM stake past this year. He adds, also, that the auto industry’s been “very successful” under the Obama administration, and he expects the IPO will be successful as well. So it seems the government can do something better than the private industry, right?

Once again, we see this situation where the market, the stock market, is just looking for something to seize upon, some bullish piece of news, they can use to spark a rally. Today it was H-P’s surprise bid for 3Par, sparking a bidding war with Dell, as well as the general increase in M&A. But the big picture remains shaded in tones of dark grey, and that’s putting a lid on any rally.

US stocks looking to open higher, as the bulls seem to have pulled themselves together for now (although futures are off earlier highs.) Stocks are rising in Europe, but are mainly lower in Asia.

There’s some M&A talk in the news, but most of it seems to be of the mulling (SABMiller for Foster’s), considering (Campbell for United Biscuits) and studying (Chinese consortium for Potash Corp.) kind. Albeit, Hewlett-Packard got bold this morning, making a rival bid for 3Par, which is already in a deal to be acquired by Dell. 3Par shares are getting another wild ride on the news. H-P’s offer of $24/share represents a 33% premium to Dell’s bid. Dell bid of $18 a share, which itself represented an 87% premium. It’s like the Yankees and Red Sox going after the same player, just to keep the other one from getting them.

While investors were trying to figure out which data-storage company would be next on the hit list, it appears PAR is still the main attraction, and with PAR shares quickly up 39% in premarket trading, it’s worth wondering if Dell will come back with an even higher offer. Dell, H-P shares up a hai.

No major data on the docket today, but the week holds a couple of housing related reports, a few regional Fed reports, and Friday’s nail biter, the first revision to 2Q GDP. S&P futures up 3.40, DJ up 26. Ten-year down a bit, yield at 2.62%.