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.
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?
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%.
Newswires telecom reporter Roger Cheng reports:
With Nokia (NOK) cutting its financial targets for the second time in three months, it isn’t surprising that the mobile handset giant cited competition in the high-end smartphone market as a chief culprit for the disappointment.
Nokia has been stubbornly slow in taking large strides forward with its smartphones. Take its recently unveiled N8, a multimedia powerhouse that a few years ago would’ve been eagerly snapped up. It’s the first device to run on the new version of the Symbian operating system. Symbian 3, however, isn’t the quantum leap many industry observers say is needed to match the likes of Apple (AAPL) or Google (GOOG). Despite a few upgrades and a bit more polish, the platform is showing its age relative to iOS or Android.
The competition is taking its toll. Nokia on Wednesday warned that second-quarter revenue from its mobile devices and services business would fall at the lower end of its previous guidance of EUR6.7 billion to EUR7.2 billion, citing disappointingly lower average selling prices and device volumes.
Despite a wide lead in the handset business, Nokia continues to cede market share in the high-end segment. In the first quarter, Symbian’s share of the smartphone market slipped to 44.3% from 48.8% a year ago, according to research firm Gartner. Both the iPhone and Android operating systems saw their share jump at its expense. The trend is likely to continue into the second quarter.
Economy, Financials, Housing, Internet, Markets, Media, S&P 500, Technology, Unemployment, Washington / Comments Off
- Economists expect strong jobs number later this week, but don’t be fooled by great headline number as May is the peak for Census hiring, Bill McBride cautions at Calculated Risk.
- As Apple (AAPL) shares keep running higher, some believe the run-up is only setting investors up for a bigger fall. Reihan Salam, who actually describes himself as an “Apple devotee,” worries that the “Apple magic [will] evaporate” whenever CEO Steve Jobs leaves the company. “Surely he’ll one day tire of wielding his charismatic authority as CEO of Apple,” Salam writes. “And there is no woman or man alive who could fill that man’s turtleneck…Apple won’t be able to defy gravity forever.”
- S&P 500′s 1.7% decline yesterday marked the second-worst start to June in last 50 years, according to Bespoke Investment Group. Only the first trading day of June 2002 was worse, as index dropped 2.5% that day. Additionally, yesterday’s late-day swoon sent S&P 500 into “extreme oversold” levels, which Bespoke describes as two standard deviations below the 50-day moving average.
- The $35.5 billion global life-insurance deal that would have remade the industry landscape has collapsed, WSJ reports.
- Google (GOOG) has acquired ad tech startup Invite Media, Peter Kafka reports at All Things D, citing multiple sources. He believes GOOG paid in the $70M range for the startup. “People familiar with the transaction say Google’s plan is to leave Invite running as a stand-alone unit, which will work at arm’s length with exchange’s like Google’s AdX as well as competitors like OpenX, Yahoo’s (YHOO) Right Media and Microsoft’s (MSFT) AdECN,” Kafka says.
- BP’s massive oil spill is a major “wake-up call for Western society,” Harvard economist Kenneth Rogoff writes, and adds yet another front to the regulation debate. Is regulation destined to perpetually miss the mark?
- Even as the unemployment rate hovers near 10%, there doesn’t seem to be a sense of urgency in the Obama administration to get people back to work, which mystifies UC Berkely economics professor Brad DeLong.
- AT&T (T) eliminating unlimited data plans marks step in wrong direction for wireless industry, especially since the mobile web is about to “explode with new devices and new uses for us all to be ubiquitously and constantly connected,” BuzzMachine blogger Jeff Jarvis says. But “AT&T says it wants nothing to do with that explosion (because it would have to work harder and invest more to do better),” he notes.
- Friday’s jobs report won’t say much about America’s growing anxious class, Robert Reich says.
- Keep following WSJ’s All Things Digital tech conference as some of the biggest names in tech check in throughout the week.
Banks, Economy, europe, Financials, Markets, Media, Recession, Washington / 2 Comments
- Prosecutors investigating Morgan Stanley’s (MS) CDO practices are going to have a hard time getting to the bottom of things. “It is likely going to take continued investigation by prosecutors and lawsuits from private parties to unearth a good bit of what happened in this market,” Yves Smith writes at naked capitalism.
- Verizon Wireless working with Google (GOOG) on an iPad rival “sounds sexy,” Dan Frommer says at Silicon Alley Insider. “But let’s take this for what it really is. This is just Verizon trying to get leverage in its negotiations with Apple for the iPad and iPhone.”
- The haves and have-nots in last week’s flash crash.
- It appears Apple (AAPL) has lost another next-generation iPhone prototype. Digital Daily blogger John Paczkowski reports photos of the purported device were posted to the Vietnamese forum Taoviet yesterday. “They look to be genuine, though obviously there’s no way of knowing for sure.”
- Baltic Dry Index is on one wild ride.
- “Regardless of your directional bent, respect — but never defer to — the price action and define your risk as there are powerful players moving markets with deep-rooted agendas,” Todd Harrison says at Minyanville. “Financial stability is, in the words of global leaders, a matter of national security. As the war of words heats up and the monetary mortars fly overhead, we would be wise to keep some powder dry.”
- Did Dow actually drop 1250 in ‘flash crash?’
- “Certainly, the cause of the recession was not the usual run of the mill factors,” Barry Ritholtz says at The Big Picture. “Nor was depth or duration. “However, it appears — at least according to the charts I see — that this recovery is following a fairly normal script.”
- This isn’t a ripe environment for the retail investor, Reuters blogger Felix Salmon says. “Volatility is good for traders, not
investors: just check out the spectacular trading results at the money-center banks last quarter.”
- The parallels between Greece and US
- When should a company disclose a Wells Notice?
(Newswires’ telecom reporter Roger Cheng penned the following.)
The fourth-largest U.S. wireless carrier by subscriber base has apparently hit a wall with growth. The first quarter is usually a rough one for the national carriers, as customers in recent years have shifted away from pricier contracts and toward less expensive prepaid services. But T-Mobile saw its growth on both ends falter, suggesting it is having trouble keeping pace at all levels of the wireless business.
In the first quarter, T-Mobile USA lost 118,000 net contract customers, consistent with recent losses, but a reversal of the 160,000 additions seen a year ago. The real concern stems from the prepaid side. It only added 41,000 customers, down 92% from the fourth quarter and 83% from a year ago. The startling drop in prepaid customers — at a time when the other prepaid providers showed impressive growth — illustrates the brutal competitive environment. With T-Mobile USA at the short end of it.
Even Sprint Nextel Corp., which can’t reverse the loss of its most lucrative contract customers, can point to the prepaid side with success. The company purchased Virgin Mobile USA to double down on the low end, and the strategy appears to be working. Verizon Wireless saw its own contract customer business declined, but has expanded its wholesale business to offset the slowdown, while AT&T Inc. has used emerging devices as another source of growth.
Banks, Economy, europe, Financials, Markets, Recession, S&P 500, Washington / 1 Comment
- Eurobail package is keeping the wolves at bay, for now. “The package is clearly an effective short-term palliative,” Richard Alford writes at naked capitalism. “Its curative powers remain in question. In the absence of market signals and discipline, it is not at all clear that the political elites in Europe will have the will to discipline each other.”
- The duration of Apple (AAPL) and AT&T’s (T) iPhone exclusivity deal has long been a mystery, but Engadget uncovers some new details pertaining to the pact. Blog reports both companies agreed to five-year iPhone exclusivity in 2007, based on court documents filed by Apple. AT&T says it has a great relationship with Apple and doesn’t comment on specifics.
- George Mason economics professor Tyler Cowan offers his “simple thoughts” on Europe and the EU’s nearly $1T bailout package. “The fundamental cause of the financial crisis has been people and institutions thinking they are more wealthy than they are; this spread to Europe as well and now we are seeing the comeuppance.”
- Bespoke dissects yesterday’s rally and concludes that short covering was only part of the story.
- Eurobail euphoria eases. “I’m glad to see that the immediate crisis has been delayed, but I don’t see how all of this goes according to plan,” Ryan Avent writes at The Economist’s Free Exchange blog.
- Mark Thoma tackles the issue of bank lending. “I think the problem is on both sides. Supply has tightened up due to poor economic conditions — as noted above banks are unwilling to loan to firms who look shaky during the downturn, firms that might have looked very solid and worthy not all that long ago. But the demand for loans has fallen as well since firms have little reason to invest in such bad economic conditions.”
- Apple’s not too concerned about a recent report showing Android devices are outselling the iPhone.
- Intel (INTC) CEO Paul Otellini predicts sharp growth for its business in new markets over the next few years.
- Europe’s turmoil and high debt levels in America won’t derail this economic recovery, says Jim O’Sullivan, chief economist for MF Global.
- A-Rod’s run to become home-run king may not be such a sure thing like many expect.
Markets / Comments Off
Newswires telecom reporter Roger Cheng reports:
Those old standby metrics for wireless carriers just aren’t reliable as they used to be.
Take AT&T, which reported a record 1.9 million net customer additions for the first quarter, up from a 1.2 million net gain from a year ago. Impressive, right? It’s less so when you consider that much of the growth—1.1 million—was driven by connected devices, or any non-cellphone with a cellular connection, like an e-reader, which chip in far less revenue than your average phone bill.
The most common examples of connected devices are e-readers and netbooks, but the Apple iPad will be also be counted in the second quarter once the 3G version launches on April 30. While there has been a lot of noise about wireless dog collars (really, we’re talking about actual dog collars that use a wireless signal,) a significant amount of the applications are found in businesses such as inventory tracking systems or vehicle monitoring.
AT&T has been aggressive with the business, and it’s paid off with strong growth in the first quarter.