Stocks are showing a bit of strength, but not much. Meanwhile, crude’s showing a bit of weakness — but not much (and lately is creeping back toward $105/barrel.) But bigger than both of those may be the prices in the cocoa market, what with Easter coming up and all.
Libya
Crude prices are back over $105 a barrel, something that until the Japanese calamity was a major story, given the wide implications. There is not a single aspect of the global economy that isn’t touched by oil prices, and some participants, think small truckers, say, or your average consumer, are touched more.
But even large companies have to deal with higher oil prices, and for some industries it’s an undeniable millstone. I’m thinking airlines, which weeks ago already said they to see their profits cut in half this year just on oil prices alone.
How many body blows can the global economy absorb, and the American economy in particular? I’d guess it isn’t many more, and given the confusion that seems to cover this entire Libyan intervention, it’s a good bet oil prices will climb higher, putting more pressure on small truckers, consumers, airlines and everybody else.
Dennis Gartman, who edits and publishes The Gartman Letter, sums it up well in his morning missive:
Energy prices are quite a good deal higher as the markets try to make sense of the situation in Libya…a senseless situation if there ever was one. We have a madman on one hand, and a Constitutional “crisis” on the other, and no one truly understands what the end-game shall be. In most instances, confusion breeds contempt and lower prices, but in the energy world confusion breeds stronger, higher prices.
The only people who benefit from the confusion, it seems, are oil traders.
US stocks are poised to take a breather, at least initially, after a three-day rebound that has seen equities erase early last week’s swoon, with index futures essentially flat.
“The coalition forces continue to patrol the skies over Libya and the markets continue to recover,” says Alastair McCaig of WorldSpreads.
Asian stocks were modestly higher except in Japan, where trading was closed Monday for a holiday and responded with a 4.4% jump overnight in the Nikkei.
Quiet on the US economic data front, though quarterly reports from the likes of Walgreen (WAG), Jefferies (JEF), Carnival (CCL) and Discover (DFS) come this morning.
Meanwhile, the dollar continues to lose ground after the ICE Dollar Index hit a 15-month low Monday, with the pound reaching 14-month highs this morning against the greenback.
S&P futures down 0.20, Dow futures up 12. Crude futures and 10-year US Treasurys edge lower. Oil at $102.94.
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%.
I wonder how many more times in my life I’m going to have to say, “that’s the worst thing I’ve ever seen.”
“The time to look for the emergency aisles and where the exits are located is before takeoff, not after the wings fall off the plane,” Barry Ritholtz writes this morning at The Big Picture. He points to a Doug Kass list of calamities over just the past ten years, like the Sept. 11 attacks, Katrina, Haiti’s earthquake, and notes that these so-called “black swan” events occur much more often than we think, and it’s only common sense to be prepared for them.
But have we ever had so many all at once? The Japanese are suffering through three distinct disasters at the same time, the earthquake, tsunami and nuclear crisis. It is going to take them God only knows how long to get back to where they were Thursday, and anybody who blithely suggests the rebuilding will be a good thing because it will spur economic activity isn’t really watching what’s going on, and has a poor grasp of economics.
I don’t know about you, but to me, it feels like the world’s on fire these days.
Man, this is one of those days. Stocks were rising as we taped this morning’s Markets Hub, but I think before the video was even published, the market had turned around and stocks have been lower ever since. Well, that’s the business we’re in here. You never know, by the closing bell they could be positive again.
Still, there’s good stuff in here. We have Tatyana Shumsky talking about the gold market, with gold at a fresh record high — unadjusted for inflation, of course, but certainly not unaffected by inflation.
There are a lot of conflicting reports surrounding Libya today, a lot a lot. That’s having the effect of whipsawing markets. There are a number of reports about the fighting across the nation, and there are more rumors about the fate of Gadhafi. We’re not passing them along, but be aware that some of these sudden moves today are being driven by that.
- Why, yes, riding a bike is a great idea.
This just in: gas costs $3.50 a gallon. If it doesn’t where you live, just wait. It soon will.
The AAA’s daily fuel gauge shows the national average for regular is $3.50. I believe it was $3.47 on Friday. There’s nothing magical about the $3.50 level, except for its psychological effects.
The big problem is that with $3.50 here, the $4 level comes within hailing distance, and it was when gas prices hit $4 in the summer of 2008 that the feta really hit the fan.
Listen, the real fear here isn’t an end-of-the-world kind of thing. Whatever happens in the Middle East, at some point the world will return to something approaching normal, like it always does (which is not exactly the same as normal; when you think about it, we live in a pretty dysfunctional world.) The real fear, for us here in the U.S. at least, Europe, too, for that matter, is that the uprising drives oil prices high enough to derail the recovery.
Crude prices are up more than $2 this morning, pushing Nymex crude futures to near $107/barrel. Brent, the European benchmark that is more directly affected by the events in Libya, is pushing $118/barrel (and lots of people note that a big chunk of U.S. gas prices, being imported, are more sensitive to Brent prices than Nymex.) Given that it takes a few weeks for crude prices to filter through to y0ur local service station, you can expect that prices will keep rising.
US stocks rallying sharply as the market just isn’t interested in worry today, and there are more signs the labor market is improving.
DJIA surges 191 (1.6%) to 12258, its best one-day gain (points and percentage) since Dec. 1; S&P 500 rises 23 (1.7%) to 1331, Nasdaq Comp jumps 51 (1.8%) to 2799. NYSE composite volume is a bit above average. Concurrently, Treasurys drop, with the 10-year yield jumping back up over 3.50%.
Weekly jobless claims fall again, to 368,000, raising hopes that the labor market is finally, actually improving. This is contributing to a lot of enthusiasm about tomorrow’s jobs report. But remember a lot of it is based on the fact that the January report was so weak — ostensibly because of the massive snowstorms — that a big snapback is expected for February. Which means you’ll have to take the two months together and average them out if you want to have an idea of the underlying strength of the jobs market.
There’s also a general easing of tensions about the whole Middle East thing, although you wouldn’t really know it from crude futures. There’s some optimism (and let’s hope it’s not misplaced) that the revolt in Libya may come to a relatively quick conclusion, and seeing as there hasn’t been a major blow-up, literally or figuratively, in any other nation, people are taking that as a positive.
However, while Nymex crude was down for the today’s session, it’s still pushing $102/barrel, and Brent is still just under $115. These are still very high, elevated levels, and those elevations are going to be elevating your gas prices over the next few weeks, and we’re not even into the summer driving season yet, when prices always go up.
