Market Talk

I’m not a pessimist. But I get pretty cranky when my car dies in the driveway, my son gets sick, when the person on the bus behind is gabbing on their cellphone, when the financial system drops an atom bomb on the economy that we’re still dealing with, when the central bank plays God with the markets, when companies wrap themselves in the flag and then ship jobs to China, when politicians from both parties wrap themselves up in the flag and then take millions of dollars from the companies shipping jobs overseas, and then rewrite the rules to favor the companies shipping jobs overseas, when…

Well, you get the picture. I consider myself an optimist. But I am also a realist, and I have to tell you, right now, realistically, everything stinks.

Okay, you got me; not every single thing in the world stinks, and like the New York Knicks, everything that stinks can get better. It may take a major upheaval, a revolution or exiling Justin Bieber to Inner Mongolia to make it better, but it will get better.

Now, if you’re a player, a real player, a Koch brother or Jamie Dimon, then everything’s great. But, for the rest of us, here’s just a partial list of everything that today stinks. Tell me if I left anything out.

The economy stinks. We are not creating anywhere near enough jobs, which means we’ve got millions of people stuck on unemployment, and millions more who are employed but are seeing their wages and benefits undercut by the lack of demand. We have a completely shot-through housing market. The list is endless. We will be lucky, and I mean David-Tyree-catching-the-ball-against-his-helmet lucky, to avoid another global banking crisis.

Stocks stink. I don’t want to hear about bull rallies. The market is largely controlled by computers programmed by pros who can suck all the value out  of a stock 200 times over before you even get near it. The average investor does not stand a chance, not a chance, of getting real value out of the stock market.

Bonds stink. The Federal Reserve has been driving down interest rates in the interest of driving investors further out along the risk curve, into, say, stocks (and commodities.) Where you’ll get crushed by the quants and bots. That’s not even factoring in default risk. I’d go so far as to say that today, there is not a single safe investment for the average person. Not one.

The Republicans stink. Poppy Bush had it right when he blasted “voodoo economics,” but nobody in the party listened, we had 30 years of “supply-side economics” that led directly to an all-time economic crisis. Republicans stink.

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- National savings rate in June inched up to 6.4% from 6.3% a month earlier and is approaching the 50-year average of 6.9%. “On the one hand, higher savings will put a crimp on consumer spending which of course makes up a majority of US GDP,” says Miller Tabak’s Peter Boockvar.. “But on the other, higher savings is the fuel for investment which helps to finance businesses everywhere that are getting crowded out in their borrowing by the enormous needs of the US government and some European ones.”

- The Wells Fargo/Gallup Small Business Index hit its lowest level since the index’s inception in 2003. Most of the poll’s decline came from the “Future Expectations” category of the survey, which follows business owners’ expectations for cash flows, new jobs, access to credit and capital spending. “In other words, as dour as the subjects are about the present sitch, they are even more so about the near future,” Josh Brown writes at The Reformed Broker.

- By next year, Apple (AAPL) will likely become the second-largest semiconductor buyer in the world, thanks to the iPhone, which prompts TechCrunch’s Steve Cheney to ponder: “Should Apple own its own wireless chip development?” Rumors are swirling Intel (INTC) may be close to acquiring Infineon’s (IFX.XE) wireless chip business, but “based on Apple’s deep relationship with Infineon, and its famed secrecy around M&A, it is a pretty safe bet that Steve Jobs is analyzing the implications of a deal.”

- Consumer spending and personal income were both flat last month, slightly below economists’ expectations. “That’s not terribly surprising these days, but it’s hardly encouraging. Perhaps the best we can say is that it’s more of the same,” James Picerno writes at The Capital Spectator.

- Android may not be a money-maker, yet, but it’s still a success. Google’s (GOOG) strategy differs from Apple (AAPL), which sells great products while tightly controlling its hardware and software distribution. Conversely, Google “sprays its software all over the place for free, betting on owning the future of the mobile Internet and search advertising businesses the way it owns them on the web,” Dan Frommer notes. “That’s why, despite Apple’s huge financial lead, Android is already a big early success for Google.”

- About the Fed potentially plowing cash from its maturing debt back into the Treasury market: “It’s not a huge move, but letting the MBS portfolio slowly burn off is inherently tightening,” Joe Weisenthal says at The Money Game. “Rolling over that portfolio, therefore, maintains the status quo.”

- “Lately the Fed seems more interested justifying why it doesn’t need to do anything more to boost the economy rather than grappling with actual data showing that the economy needs more help from the Fed,” University of Oregon economics professor Mark Thoma writes.

- Ever since stocks bottomed out in early July, gold hasn’t been able to generate a sustainable rally. And for much of 2010 gold and the US dollar, which are usually inversely correlated, have essentially moved in lockstep. “Over the last six months the two assets have been more positively correlated than at any other time in at least ten years,” Bespoke Investment Group says.

- Research in Motion (RIMM) Co-CEO Mike Lazardis calls BlackBerry Torch launch one of most important in the company’s history, which certainly isn’t an understatement. But the question remains: Is this device a “buzzworthy breakthrough or just another BlackBerry?” asks Digital Daily blogger John Paczkowski.

- Many corporations and their shareholders are enjoying surging profits and boosted dividends, but employees are still waiting on returns of the 401(k) matches.

- Don’t dismiss the notion that retail spending is being partly driven by homeowners strategically defaulting on mortgages, even though it’s hard to quantify exactly hoe many people are “spending the mortgage,” Paul Jackson writes at HousingWire.

- Small businesses, which have led job creation in previous recoveries, may be finally contributing to job growth now as the economy rebounds, Atlanta Fed’s macroblog says.

- “The Squid has been living for years off the simple fact that, like the fabled IBM of yore, no-one ever got fired (or sued) for picking Goldman Sachs,” the Epicurean Dealmaker notes. “That calculus has been changed,” and everyone knows it.

- Google’s (GOOG) recent acquisition of secretive early-stage start-up Agnilux ranks as the “most curious” deal in its history, Digital Daily blogger John Paczkowski says.

- Picking apart Apple’s (AAPL) blowout earnings, Silicon Alley Insider’s Dan Frommer says Apple’s iPhone business is growing much faster internationally than it is in the US.

- Lots of merger chatter swirling swirling around UAL Corp’s (UAUA) United Airlines. And while a deal might make sense for operational reasons, Footnoted’s Theo Francis notes the company has made it “substantially more attractive” for its top executives to seal a deal.

- Facebook’s launching an ambitious plan to essentially take over the Internet.

- Looks like Adobe (ADBE has finally given up on getting Flash on the iPhone. “We will still be shipping the ability to target the iPhone and iPad in Flash CS5,” Mike Chambers, Adobe’s principal product manager for the Flash platform, writes on his blog. “However, we are currently not planning any additional investments in that feature.”

- Investors take note: A stock-market indicator with a good long-term record has flashed a buy signal.

- The grudge match over your 401(k)

- All the recent chatter concerning the Fed’s exit strategy is puzzling, Tim Iacono says. Maybe it’s “simply a way for policymakers to generate confidence that might not otherwise be there.”

- Keep an eye on cumulative breadth, number of stocks moving up and down on a given day, for clues about future market performance, Bespoke Investment Group says.

- Despite the aughts being a lost decade for the stock market, 401(k) savers did ok, at least according to Fidelity Investments. “But unless market performance picks up in this decade even dedicated 401(k) savers could come up short in their retirement savings,” LA Times’ Walter Hamilton says.

- Google’s (GOOG) $2 million donation to Wikipedia “cements a kind of symbiotic relationship” between the two companies, Mathew Ingram writes at GigaOm. “For better or worse, it sounds like Wikipedia and Google will be joined at the hip for some time to come — not just because of the money, but because the relationship benefits both sides equally.”

- Obama administration’s tolerance of AIG is just astounding, Yves Smith says.

- Backlash against Google Buzz has reached a new level. A class action law suit has been filed in San Jose (CA) federal court alleging Google (GOOG) acted illegally when its new social networking tool shared personal data without consent, according to SF Chronicle blog.

- Greece should approach the IMF, former IMF chief economist Simon Johnson says. “Our baseline view is still that the IMF’s role will be only ‘technical,’ but behind the scenes the prospect of greater IMF engagement (and even a standby loan) is a powerful card that Greece should threaten to play.”

- Wall Street’s bailout hustle – Taibbi’s latest missive.

- Chris Dodd plans to introduce a new bill next week to overhaul financial regulation.

- The pilot that crashed a small plane in Austin posted an anti-government manifesto and may have targeted IRS offices after a tax dispute.