Market Talk

The tone remains bullish for stocks this morning as the ongoing stream of liquidity provided by the Fed’s QE, and more recently by Bank of Japan, courses through global markets. Stocks were strong in Asia overnight, currently higher in Europe and US stock futures point to a higher open.

As of yesterday’s close, major US indexes have erased declines following the Japan quake/tsunami/nuclear crisis. Risk aversion remains just a dalliance, a mere gesture now and again, even as the litany of stresses and perils around the world hardly ever seemed higher.

A third look at 4Q GDP due at 8:30am ET, and final look at Reuters/Univ of Michigan March consumer sentiment at 9:55am. S&P futures off their earlier highs, up 3.60; 10-yr note up a little, yield at 3.39%.

Didn’t have much time to lift my head up to take a look around at what’s happening in the world today, but here’s a few things that caught my eye.

- NY Fed President Bill Dudley in comments today said enough bad stuff about the economy in order to justify continuing the Fed’s $600 billion bond-buying escapade, and enough good stuff about the economy to encourage bulls and performance chasers to keep buying stocks. Here’s a couple of examples of headlines showing the Fed trying to have its cake and eat it too:

Fed’s Dudley: Current Economic Situation ‘Unsatisfactory’
Fed’s Dudley: US Economic Situation Is ‘Considerably Brighter’

To Dudley’s credit, he did say the drop in January’s unemployment rate was “not an unmitigated positive,” as fewer people were actually out looking for jobs.

- Story on the top of WSJ today — “Mideast Unrest Spreads” — didn’t exactly spook stock markets. Perhaps it should. There’s a certain complacency about the events in Egypt that seems a bit mystifying, as if everyone’s convinced this transition from 30-year dictatorship to well-heeled democracy will be smooth as silk. The DJIA is up about 2.4% since the protests began on Jan 25, while the S&P 500 is up 3.2%. Hardly missed a beat. Meanwhile, protests flared in Iran, Algeria, Bahrain, Yemen and Jordan and it’s hard to imagine there’s a lot of pro-US sentiment swirling amid the Middle East upheaval.

Like Europe’s sovereign debt problems, this thing is only on simmer now, but could easily heat to a rapid boil at any time. Continue reading…

Don't...forget there's a world past Wall Street.

I never made it the Boy Scouts, I washed out after Webelos, but I never forgot the Boy Scout motto: be prepared.

I mentioned this morning that the market is not focused at all on what’s commonly called “geopolitical” issues; basically, anything that isn’t directly market related. When the market itself is on the edge of the abyss, as most seem to think it was late last year and early this year, it’s hard to worry about things happening in foreign places like the Middle East, or Asia, or Hollywood.

But if the economy’s recovering as beautifully as most people think it is, will geopolitical become a focus again? Or will geopolitical issues force their way into the market regardless?

There were two big stories over the weekend that certainly could have caught investors eyes, the mass protests in Iran and the attempt to blow up a plane over Detroit on Christmas. Just try for a moment to imagine if Umar Farouk Abdulmutallab had managed to blow up Northwest Flight 253 (and, yes, it is only an alleged crime at this point (and, of course, thank God he didn’t.)) Would anybody care about retail sales anymore?

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Bulls survived yesterday’s test of their mettle, but they’re not quite off the hook yet.

They tiptoed through Tuesday morning, and then felt comfortable enough to break into a leisurely jog higher by afternoon to win back some ground. But renewed weakness overnight in Asia and now in Europe sets a softer tone for US stocks this morning.

During the rally since March, overseas stock action didn’t seem to exert a great deal of influence here. Maybe the sudden fixation on China says something about the rally’s wherewithal at this stage.

And have you noticed the headlines coming out of Afghanistan and Iraq? Can you say geopolitical jitters?

Economic data calendar is empty. S&P futures down 11.90; Dow futures off 92. Ten-year higher, yield at 3.44%.

An average workday in New York City, circa 1918.

Seems like not so long ago, the markets moved every day on “geopolitical concerns.” Overseas news topped the daily headlines, and as crude made its brief but spectacular ascent to $145, every headline seemed to bump it a little higher.

Then the bottom fell out of the housing market, and the financial market, and autos, and retail, and you get the picture. We stopped caring about what was happening overseas; most of us, anyway. There was Lehman’s collapse, and AIG’s, and Bernie Madoff.

Now, with reports that GM’s preparing yet another restructuring plan, and with everybody still stress testing the stress tests, maybe Mr. Market won’t take time out of his busy day to consider non-equities related stories. But something tells us you might start hearing more about “geopolitical concerns” soon. Like today (especially if you live in New York.)

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