- “In this recovery there is less job creation, less household formation, and less demand for housing units than a normal recovery. This is sort of a circular trap for both GDP growth and employment,” Calculated Risk says. “This is one of the reasons I expect the unemployment rate to tick up over the next several months.
- FusionIQ CEO Barry Ritholtz makes the argument that US bonds are resembling tech stocks during the dot-com bubble. “What made the dot-com situation so pernicious was that anyone who was judged on relative performance (i.e., mutual fund managers), were all but forced into these names in order to keep up,” Ritholtz says at The Big Picture. “Very few people — Buffett and Grantham come to mind — managed to both avoid both chasing these names and losing their client base.”
- There’s no denying the strong quarterly profit reports coming from S&P 500 companies in 2Q. But the notion that strong profits actually represent good news is “murky at best,” Derek Thompson writes at the Atlantic. “High unemployment is, strangely, both dampening revenue and enhancing profits.”
- Mortgage Bankers Association reports refinance activity surged 17% amid historically low interest rates. But Miller Tabak’s Peter Boockvar notes purchasing fell 3.4% and remains just 3.5% off lowest level since 1997. “This economic response to low rates is indicative of our whole economy that has the Fed now pushing on a string,” Boockvar says. “In times of deleveraging, lower rates only encourage refi’s, not new economic activity whether the purchase of a home or the expansion of a business.”
- Boston Fed argues economists aren’t to blame for missing the housing bubble, which absolutely baffles naked capitalism blogger Yves Smith. “It is truly astonishing to watch how determined the economics orthodoxy is to defend its inexcusable, economy-wrecking performance in the runup to the financial crisis,” Smith says.
- UPS recently said in a 10-Q that the impact of the health-care reform legislation “was not material” to its financial results, which shocks Footnoted blogger Michelle Leder, especially since many companies have said they’ll take big charges related to legislation, including AT&T’s (T) $1B charge.
- Since Fed’s announcement last week to reinvest proceeds from expiring MBS, the dollar’s risen while crude oil and S&P 500 have tumbled. “A cynic, however, might look at the lackluster reaction and think that the US central bank is losing some of its market-firepower in terms of unconventional monetary policy,” FT’s Alphaville says. “And an even bigger cynic might think that the market is simply holding out — or pushing — for a bigger bout of unconventional policy. Either way though, something’s out of sync here — the market or the Fed.”
- Tech blog Download Squad says Google (GOOG) and hardware maker HTC (2498.TW) are teaming up to build a tablet device that runs GOOG’s Chrome operating system. The blog says the tablet will be offered in conjunction with Verizon (VZ) and launched on Nov. 26, or Black Friday, the busiest shopping day of the year in the US.
See-saw session for US stocks ends with bulls erasing yesterday’s decline.
Major averages spiked higher following improvement in ISM July services index, but stocks’ closest friend lately, the euro, decided to head in the opposite direction, almost straight down. Took a few minutes, but stocks eventually realized their dance partner had left the floor, and they immediately dropped sharply as well. As the euro stabilized so did US stocks; as euro rebounded, stocks did too.
Consumer discretionary sector leads; health care, materials also among best sector gainers. DJIA rises 44.05 to 10680.43, hits its highest closing level since May 13. Nasdaq Comp rises 20.05 to 2303.57 and has gained in three of the last four trading sessions. S&P 500 ends 6.78 higher at 1127.2, facing resistance between 1125 and 1130.
- Spiking interest rates shouldn’t be dismissed as an “irrelevant development,” especially if they continue rising at their recent pace, James Hamilton says.
- Short sellers deserve some vindication, especially for uncovering dishonest management, Barry Ritholtz says.
- Health-care reform sends out accounting ripples, FT Alphaville notes, as AT&T (T) as well as 3M (MMM), Deere (DE), Catepillar (CAT) and AK Steel (AKS) are all anticipating charges.
- Obama’s health-care victory has “breathed new life into his administration” and energized Democrats. His next “big thing” should be focusing on jobs, former labor secretary Robert Reich says.
- “Relative to every previous recession since 1948, the current hole in lost jobs is unusually deep,” James Picerno says. “In addition, the trend in job destruction this time suggests that repairing the damage will take longer compared with the past 60 years of economic recovery.”
- Trading in the weeks before and after Easter may not be as quiet as many think, Bespoke notes.
- “Against all the odds, a glimmer of hope for real financial reform begins to shine through,” former IMF chief economist Simon Johnson says.
-High income disparity leads to low savings rates, Yves Smith writes.
- “The problem is regulating shadow banking — non-depository banking,” Paul Krugman says. “So right from the beginning we have the problem of deciding what is a bank, and what liabilities need deposit-type guarantees.”
- “The Fed will take comfort in the inflation statistics even though the energy component in particular will reverse higher in March,” Miller Tabak’s Peter Boockvar says. “But income growth running higher by 2% y/o/y with spending up 3.4% y/o/y can only last for so long with access to credit not what it used to be.”
- Don’t blame the Fed for the jump in mortgage rates, Paul writes in today’s Ahead of the Tape column.
- Treasury’s Geithner and rest of Obama administration seem intent on praising financial bailouts for preventing the banking system from collapsing. But the government interventions weren’t ideal and involved some costly tradeoffs that need addressing, Economist’s Free Exchange blog says. “Geithner has put out the fire, but that’s not the end of the job.”
- Now that health-care reform has passed, it’s time for the reform ball to keep rolling and the White House to put an emphasis on reforming Wall Street and the banking sector, Barry Ritholtz notes.
- Stocks sidestep health care reform, showing the stock market may be ambivalent toward health-care reform, after all. “If Obamacare is such a disaster for the economy, where’s the market reaction,” Paul Krugman says.
- China officials foreseeing “a record trade deficit” for March would undercut the US’s argument that the renminbi is undervalued, Yves Smith writes at naked capitalism. “If true, this may bear out the contention that domestic inflation is running at a high level. The effect, of repricing goods upwards in renminbi terms, would have the effect of making prices less competitive globally.”
- “Remember the scene in Goodfellas when Joe Pesci says, ‘One dog goes one way, the other dog goes the other way, and this guy’s sayin’, ‘Whadda want from me?’” Todd Harrison writes at Minyanville. “That’s what’s emerging in Europe; Germany is pointing to an IMF-package to aid Greece and France prefers a broader European solution.”
- There are about five times as many people looking for jobs as there are openings, but that problem won’t last forever, at least according to a new study from Northestern University. Study argues there will be more jobs than people to fill them by 2018, WSJ’s Real Time Economics blog notes.
- Maybe Citi (C) CEO Vikram Pandit deserves some credit. That’s the message Chairman Richard Parsons has for all the cynics out there.
- “Mr. Bernanke needs to face some unpleasant realities,” former IMF chief economist Simon Johnson says. “The cherished independence of the Fed is now called into question – and losing this could end up being a huge consequence of the irresponsible behavior and effective blackmail exercised by megabanks – who still say, implicitly, ‘bail us all out, personally and generously, or the world economy will suffer.’”
- What’s in store now that the House’s historic health care legislation has finally passed? “Today’s vote confirms our hope that we can have both strength and competence in Washington. It is an audacious hope, but we have no choice,” Robert Reich says.
- Cinderellas, buzzer beaters and busted brackets – what a weekend at the Big Dance.
- Investors would be better off ignoring today’s jobs report, FusionIQ CEO Barry Ritholtz advises, as the overall labor market trend matters much more than one month of data. A monthly number is subject to multiple revisions. And in a labor market that consists of 135M people, monthly changes are practically rounding errors, he says.
- Still, jobs data sparks best one-day gain for stocks since Feb 16. But the positive reaction to the nonfarm payrolls report and rallying stock market shouldn’t come as a surprise. “Bulls have a free pass as a bad report would be attributed to weather and a better one would show improvement in the labor market,” Peter Boockvar notes.
- “Shrinking government jobs and benefits at the state and local level is a much needed adjustment,” Mike Shedlock says. “Those cutbacks will weigh on employment and consumer spending for quite some time. Expect to see structurally high unemployment for years to come.”
- The “better than expected but still miserable” jobs report further complicates President Obama’s final push for health-care reform, former labor secretary Robert Reich writes.
- Labor market’s still suffering due to lack of job creation, but the scary thing is “it’s not obvious that this risk is factored into the crowd’s sentiment,” James Picerno says.
- Apple says iPad will go on sale April 3, a week later than expected. Were there production issues? Possibly, but the Street doesn’t care. Shares hit fresh all-time high, close up 3.9% at $218.95.
- Estimating YouTube’s financial performance is anyone’s guess. But Citi analyst Mark Mahaney predicts the web video giant will generate more than $1.1 billion in revenue by 2011.
- “The Obama team – both political and economic wings – seems to feel that their base has nowhere else to go, and all they need to do is drift towards the right in a moderately confused fashion to assure re-election for the president,” Simon Johnson says.
- “What determines confidence? The actual level of debt has some influence — but it’s not as if there’s a red line, where you cross 90 or 100 percent of GDP and kablooie,” Paul Krugman writes. “Instead, it has a lot to do with the perceived responsibility of the political elite.”
- A 10-way Oscar race has boiled down to a David-and-Goliath battle between ‘Avatar’ and ‘The Hurt Locker.’
Newswires’ Madeleine Lim and Kathleen Madigan discuss disappointing durable goods and jobless claims data as well as the latest on health-care overhaul plans, all on Tomorrow’s News Today.
- Fed’s latest move to boost discount rate prompts thoughts that central bank’s ready to tighten. “Let’s hope that this is wrong,” Paul Krugman says, noting Fed waited almost three years to tighten after 2001 recession. “Assuming that the recession technically ended in June 2009, comparable behavior now would say no rate rise – and no tightening through other measures, such as shrinking the Fed’s balance sheet – for at least another two years.”
- Consumer staples and discretionary are only two overbought sectors in S&P 500, while telecom remains the lone oversold sector, according to Bespoke Investment Group. “These levels are in stark contrast to where we were at the start of last week,” when seven out of ten sectors were trading in oversold territory, firm says.
- Insider selling hit a fresh 2010 high last week, while buying also rose but remains near historically low levels, according to Pragmatic Capitalist. “Insider buying has been unusually low throughout the rally
as economic fundamentals remain questionable. Recent signs of recovery have done little to encourage insiders to invest their personal dollars in their own companies.”
- Volcker Rule endorsements keep increasing. “The writing is on the wall for all to see – the major ‘systemic’ banks will ultimately lose their vast prop trading operations,” Josh Brown notes. “The new question becomes, where will all of those exciting and typically profitable trading operations wind up?”
- Regulators and the media focusing on the crisis seem to think regulating derivatives is the best way to prevent a future crisis. But derivatives are only part of the problem, Roger Ehrenberg says. “The issue isn’t derivatives; it’s all financial transactions whose objective is to deceive or to weaken financial transparency.”
- There’s much more than commercial real estate to worry about. “Perhaps the economic miracle fairy casts her wand and cures all these system risks,” Michael Shedlock says. “But I would not bet on it.”
- Hype surrounding Apple’s (AAPL) iPad and the notion it will somehow become traditional media’s savior is getting tiresome, Kara Swisher writes. “Like Goldilocks, that’s just a fairy tale until the iPad is actually out in the wild and subject to consumer use when it begins to be rolled out in late March,” she says.
- Apple’s removed more than 3% of the apps in its App Store since last week, when it began enforcing a stricter policy about risque offerings. The purge continues to anger developers, who take issue with AAPL’s view of what is overtly sexual content.
- Obama proposes nearly $1 trillion, 10-year health-care plan that would allow US to deny or roll back insurance-premium increases and delay a tax on high-end plans until 2018.
- The government’s bank-friendly posture is tough to change. “The issue is not a lack of leverage, it’s a lack of nerve and a deliberate decision to side with the banks against the public until now,” Yves Smith says. “Having ceded so much ground on so many key issues, it is well nigh impossible for the administration to change course.”
- Banks get mixed messages on risk-taking in lending. Kid Dynamite offers a baseball metaphor to help depict the government’s tough talk to revive bank lending.
- Need a job? Look at health care, medical research.
- Former Fed Chairman Paul Volcker won’t relent on the innovation “myth.” The Obama administration must love hearing this guy speak. (Hint…sarcasm…hint hint.)
- Hard to believe little ZIRP’s one year old. How much longer will it last?
- Former Dallas Fed president Bob McTeer attempts to quell the rising uproar of Fed bashers.
- President Obama wasn’t exactly thrilled that three prominent Wall Street CEOs didn’t attend a recent meeting. Balance of power between Wall Street and Washington shifting back to Wall Street?
- Rising wholesale prices brings some inflation chatter back to the market, but University of Oregon economics professor Mark Thoma says it’s still too early to fret over inflation.
J.P. Morgan reported some strong earnings today. But what this bloggers eye were some of the sub-numbers in the earnings report. The bank booked $1.8 billion in investment banking fees. But don’t be fooled – that wasn’t from big M&A advising. But $429 million was in advisory fees. Instead, that $1.3 billion + remaining fees […]
I am not going to apply online to be lululemon’s next CEO because I don’t want my application getting lost in the pile. The slightly troubled yoga clothing retailer is taking applications from anyone on its website. Click here if you would like to apply. And click here to read more details from The Associated […]
