Market Talk

Apologies for the light posting, I’ve been really consumed in getting the live Markets Hub off the ground. Hopefully soon we’ll settle into a  steady pattern, and I can get back to some writing.

Paul and I talk about the March jobs report, outlook for jobs and NY Fed’s Bill Dudley with Mesirow Financial economist Diane Swonk. Dave Kansas then offers some perspective on Nasdaq/ICE bid for NYSE Euronext.

Two multibillion-dollar deals were announced in the hot mining and data-storage sectors, while better-than-expected retail sales are boosting stocks. Watch Donna Kardos Yesalavich, George Stahl and I break it down on the Markets Hub:

So much for Friday’s rally. Stocks are sinking here Monday, despite some flashy M&A-type activity, and despite the latest jawboning from the latest group of central bankers; today it’s the Bank of Japan’s turn at the rostrum. We break it down for you today on the Markets Hub.

US stocks skid into the close, losing what little momentum they developed in the morning on a spate of M&A news. But the economic problems that have been growing since the spring just aren’t going anywhere soon.

DJIA loses 39 (0.4%) to 10174, after rising 91 in the morning. S&P 500 drops 4 (0.4%) to 1067, Nasdaq Comp falls 20 (0.9%) to 2160.Treasury’s don’t move much, 10-year yield is still right around 2.60%, but the euro slides to $1.2662, sensitive to the same headwinds as stocks. A Eurozone PMI report this morning showed decelerating growth, although European stocks still rose.

Tech shares tumble amid concern about PC demand. But 3Par share surge 43% as a bidding war between H-P and Dell breaks out. That’s part of the broad M&A trend, with a bidding war apparently heating up over Potash Corp. also. But the wave isn’t doing much to bolster sentiment in the markets, despite the efforts of the bulls to push every meme from cash on the sidelines to the bond bubble.

Elsewhere in American capitalism, Vice President Joe Biden says the government may retain a GM stake past this year. He adds, also, that the auto industry’s been “very successful” under the Obama administration, and he expects the IPO will be successful as well. So it seems the government can do something better than the private industry, right?

Once again, we see this situation where the market, the stock market, is just looking for something to seize upon, some bullish piece of news, they can use to spark a rally. Today it was H-P’s surprise bid for 3Par, sparking a bidding war with Dell, as well as the general increase in M&A. But the big picture remains shaded in tones of dark grey, and that’s putting a lid on any rally.

Bulls kick off the week flexing their muscles.

US stocks wipe away much of Friday’s losses as everything seems to fall the bulls’ way.

Rising consumer spending and increasing auto sales as well as manufacturing activity hitting its highest level since July 2004 boosts sentiment. The market, which loves M&A, got a big, headline making deal with United and Continental. And what finally seems like a resolution to Greece’s debt woes contributed to the run-up.

Consumer discretionaries among the market’s biggest gainers as the consumer is slowly returning to pre-recession habits. Consumers increased their spending and cut their savings in March, not a good sign for the long-term economy but a positive development for these stocks in the short-term.

DJIA closes up 143, or 1.3%, to 11152, marking its biggest gain since Feb. 16 and fourth largest gain of the year. The index recaptured roughly 90% of Friday’s 159-point drop. Still, this marked the fourth triple-digit move out of the last six sessions, and that kind of volatility doesn’t exactly speak to overriding confidence.

Dow components Caterpillar and Boeing each rise 2.7% and contribute to about 20% of the index’s overall gain. The floats of those two stocks are among the smallest of the 30 in the average, so when the momentum gets cooking, as it did today, it’s easier to see a more pronounced increase (or decrease) in the dollar-value change in those stock prices.

S&P rises 16 to 1202, crossing back above the key 1200 level. Nasdaq Comp jumps 38 to 2499.

(John Shipman and Paul Vigna contributed to this post.)

- Don’t dismiss the notion that retail spending is being partly driven by homeowners strategically defaulting on mortgages, even though it’s hard to quantify exactly hoe many people are “spending the mortgage,” Paul Jackson writes at HousingWire.

- Small businesses, which have led job creation in previous recoveries, may be finally contributing to job growth now as the economy rebounds, Atlanta Fed’s macroblog says.

- “The Squid has been living for years off the simple fact that, like the fabled IBM of yore, no-one ever got fired (or sued) for picking Goldman Sachs,” the Epicurean Dealmaker notes. “That calculus has been changed,” and everyone knows it.

- Google’s (GOOG) recent acquisition of secretive early-stage start-up Agnilux ranks as the “most curious” deal in its history, Digital Daily blogger John Paczkowski says.

- Picking apart Apple’s (AAPL) blowout earnings, Silicon Alley Insider’s Dan Frommer says Apple’s iPhone business is growing much faster internationally than it is in the US.

- Lots of merger chatter swirling swirling around UAL Corp’s (UAUA) United Airlines. And while a deal might make sense for operational reasons, Footnoted’s Theo Francis notes the company has made it “substantially more attractive” for its top executives to seal a deal.

- Facebook’s launching an ambitious plan to essentially take over the Internet.

- Looks like Adobe (ADBE has finally given up on getting Flash on the iPhone. “We will still be shipping the ability to target the iPhone and iPad in Flash CS5,” Mike Chambers, Adobe’s principal product manager for the Flash platform, writes on his blog. “However, we are currently not planning any additional investments in that feature.”

- Investors take note: A stock-market indicator with a good long-term record has flashed a buy signal.

- The grudge match over your 401(k)

- VIX volatility index can be a great contrarian indicator — problem is, it’s a backward-looking gauge, Tom Petruno says.

- Crude oil’s getting sneaky high and no one seems to care. “One explanation is that oil prices haven’t climbed as fast as they did in early 2008, with the slope of the ascent being a primary source of worries,” Paul Kedrosky writes.

- “The key to long term economic health, though, will be a greater contribution from exports and less on borrowing and spending all over again,” Peter Boockvar notes.

- He’s chairman and CEO of the world’s largest health-care conglomerate, Johnson & Johnson (JNJ), but yesterday Bill Weldon took on a new role: blogger.

- Twitter users will not abandon the microblogging service just because it will start running search-based advertising, Forrester analyst Josh Bernoff says.

- Rumor du heure for Palm: Let Intel buy them, Jason Perlow writes.

- Google (GOOG) reportedly developing a new tablet device compatible with Android would be great for Adobe (ADBE), but not so good for Apple (AAPL).

- Tech blogger Om Malik gets his hands on Microsoft’s (MSFT) new Kin smartphones, but doesn’t exactly offer a stellar review.

- “If the US economy was about to reach “escape velocity” as Larry Summers says, small business optimism would not be in the gutter and sinking,” Mish says.

- “We live in an age of unprecedented bailouts,” Simon Johnson writes. “The Greek package of support from the eurozone this weekend marks a high tide for the principle that complete, unconditional, and fundamentally dangerous protection must be extended to creditors whenever something “big” gets into trouble.”

- Deflationary winds kicking up? Core CPI slips into negative territory for first time since 1982. “It’s hard to overlook the fat that negative monthly readings for this data series are extraordinary rare,” James Picerno says. “For the sake of economic stability, let’s hope it stays that way.”

- With Goldman Sachs’ (GS) image under attack, spokesman Lucas van Praag’s tough talk has only served to “alienate potential allies and enablers in the press and project a supercilious institutional arrogance which only serves to confirm the unflattering portrayals offered up by the firm’s detractors,” the Epicurean Dealmaker blog says.

- “High volatility in sentiment is a clear sign of utter confusion on the part of market participants and creates a landscape that is ripe for dramatic moves in either direction,” the Pragmatic Capitalist writes.

- Fed’s discount rate hike has more to do with technical reasons than a policy shift, former Dallas Fed president Bob McTeer says.

- Barclays scooped up a lot of talent throughout the financial crisis, according to LinkedIn data.

- Matt Taibbi’s latest account of the financial crisis misses one key point that no one wants to talk about: we could be in a depression without government intervention, Andrew Leonard writes. Still, reflecting on current bank profits, banks’ resistance to regulation and inability of government to do anything about it, “I’m beginning to come around to the view that maybe it would have been more effective to just blow everything up and start all over.”

- Deal activity has gotten off to a sluggish start in 2010, but investment bankers remain busy keeping up with secondary offerings, DealBook reports.

- Bottom line to this economy recovery is job growth. “The good news is Washington is working on it,” S&P’s Howard Silverblatt says. “The bad news is Washington is working on it.”

- Record bank profits may be tough to come by as the Fed starts raising rates.

- Tiger made the world stop from 11:00 to 11:15 this morning. How’d he do? Bill Simmons says the press conference was “a borderline train wreck.”