Market Talk

- “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.

- Is the Web really dead? The blogosphere debates.

- Looking to succeed at the dating game? Maybe its time to get off match.com and other dating sites and hit the athletic fields. WSJ explains.

Newswires telecom reporter Roger Cheng checks in with this report:

OMG! I dropped my phone!

Remember Sony Ericsson? With all the talk of Palm sinking into oblivion or getting scooped up, it’s easy to forget some of the other handset vendors that have been swept away by the great smartphone wave.
The mobile handset manufacturer—a joint venture between Sony and L.M. Ericsson Telephone—reported a slight profit in the first quarter, which represented a rare bright spot for a company that continues to lose market share and post declining sales. But the company is a long way away from a true comeback, and continues to stand on the precipice of irrelevancy.

Just a few years ago, Sony Ericsson was riding high on the strength of its colorful feature phones. The company had successfully used Sony’s various consumer brands, which included Walkman and Cybershot, to convey the strength and focus on a particular handset, whether it be as a music player or high-end camera phone. But like Motorola, and even larger companies such as LG Electronics, it had failed to anticipate the exploding popularity of smartphones, and that many of those “premium features” were reduced to standard features.

Continue reading…

- A total of 130 companies in S&P 500, or 26% of the index, hit 52-week highs yesterday, while no companies hit fresh lows, Bespoke says. “While net new highs had been struggling to expand in recent months, today’s reading marks a new bull market high.”

- Sirius XM (SIRI) gets a delisting notice from Nasdaq. “An ominous threat, but one not likely to be carried out,” Digital Daily blogger John Paczkowski says, noting Sirius is appealing the notice and seeking an extension from Nasdaq. “Frankly, with over 3.7 billion shares outstanding, there’s little reason to fear Sirius will be booted from Nasdaq.”

- Can’t sugarcoat it: The aughts were awful. Atlanta Fed’s macroblog looks at trough-to-trough periods based on real GDP growth, and determines 2002-09 period was one of the worst since 1930s. “No other previous period comes close.”

- What exactly does the VIX tell us? FT Alphaville weighs in on the debate.

- Weekly jobless claims and consumer prices data suggest “the heavy lifting of rebuilding the economy is upon us,” James Picerno says.

- “Congress did not need to deregulate Wall Street – they only had to defund the SEC – which is what effectively happened,” Barry Ritholtz writes. “Hence, the chief cop on the Wall Street beat was outgunned, overmatched, undermanned and out-lawyered by the industry they were supposed to be regulating. How can that possibly have been any good for investors?”

- HTC has flimsy defense against Apple, John Paczkowski says. Its main argument: it’s been making smartphones longer than Apple. “While it’s certainly possible that might be the case, it’s hard to accept that argument without a list of patents to back it up. Harder still, when HTC says nothing about its legal strategy for dealing with Apple’s assault.”

- More bailed out banks failed to pay a quarterly dividend to the government in February. The number hit 82 last month, up from 55 in November 2009.

- Apple’s (AAPL) already pre-sold hundreds of thousands of iPads in anticipation of April’s official release, WSJ reports.

- First upset of the NCAA Tournament’s already in. No. 11 Old Dominion defeats No. 6 Notre Dame in the opening round.

Apple (AAPL) goes on the offensive against HTC, a key Google (GOOG) partner, by suing the Taiwanese smart phone maker for several alleged patent violations.

It’s interesting that Apple would sue small potatoes like HTC and not go after Google. But the suit obviously has a not-so-hidden agenda between Apple and Google (even if Google isn’t mentioned in the suit), suggesting a brewing war between Apple’s iPhone and Google’s Nexus One is heating up. But first, here are some details of the suit, from WSJ:

Apple’s two complaints—filed Tuesday in federal court in Delaware and the U.S. International Trade Commission—allege HTC devices, including the Nexus One, infringe a total of 20 Apple patents. The complaints claim the patents cover an array of cellphone technologies, everything from power-management functions to a method of unlocking a handset with a finger swipe on a touch screen.

“We can sit by and watch competitors steal our patented inventions, or we can do something about it. We’ve decided to do something about it,” Apple Chief Executive Steve Jobs said in a prepared statement. “We think competition is healthy, but competitors should create their own original technology, not steal ours.”

Jobs offers a valid argument on paper, but Dan Frommer at Silicon Alley Insider says the suit is a sign Apple is terrified that Google’s Android mobile operating system is becoming a formidable rival in the smart phone industry.

Moreover, the lawsuit makes Apple “look wimpy,” Frommer says, which is not likely how Jobs wants his company to be perceived.

“[Apple's] going on the offense with patents, not just products, which reeks of fear,” Frommer adds.

But keep in mind that Apple likely didn’t just sue Google because the two companies still work closely together on a couple of integral apps: search and maps, Digital Daily blogger John Paczkowski points out.

“Going after Google outright might put those projects at risk at a time (pre-iPad launch) when they need to be preserved,” Paczkowski says. “Safer then for Apple to spank a company like HTC to make its point – unless, of course, Google feels compelled to come to HTC’s defense.”

Google shares recently up 0.8%; Apple up a fraction.

(Scott Morrison contributed to this post.)