Market Talk

Interesting to hear GE CEO Jeff Immelt will chair a new White House jobs panel tasked with finding ways to grow private-sector jobs. He runs a big company, but Immelt has shown more skill at cutting jobs, frankly, than creating.

GE finished 2009 with 18,000 fewer US workers than it had at the end of 2008, and US headcount is down 31,000 since Immelt’s first full year in 2002. During his tenure, GE workers based in the US as a percentage of total employees has fallen to 44% from 52%.

Maybe the company’s 2010 10-K due in February will show GE actually added jobs last year. But then again, maybe that’s just our imagination at work.

Addendum:

Here’s a dead-on take (as usual) from market strategist Joan McCullough at East Shore Partners, on this Immelt appointment:

Why do we give a flyin’ fig about this announcement from the White House? Because it hits home once again that nothing has changed. That the crony capitalism is as alive and well at the hands of a community organizer as it was with the rest before him. That the best interests of the US taxpayer are the last consideration of our rainmakers.

Photo courtesy of GE

Verbal jousting over currencies has heated up in the wake of the Fed’s QE2 launch last week, with German finance minister Wolfgang Schaeuble firing off a fusillade in a Der Spiegel interview over the weekend, countered by a rather limp but pointed retort from President Obama today.

“It doesn’t add up when the Americans accuse the Chinese of currency manipulation and then, with the help of their central bank’s printing presses, artificially lower the value of the dollar,” Schaeuble said.

Got to admit, the gentleman has a point.

Meanwhile, President Obama responded by saying his and the Fed’s mandate “is to grow our economy, and that’s not just good for the U.S. That’s good for the world as a whole.”

Careful, Mr. President. Be very careful. As we are all too well (and perhaps painfully) aware, what’s bad for the US — like an asset bubble disguised as economic growth (see, um, housing) — is also bad, in fact, for the world as a whole. Continue reading…

- Good ol’ Thomas Brown is at it again. Yes, the same Thomas Brown who called the bottom in bank stocks in July 2008. Now he’s saying Nouriel Roubini and Meredith Whitney are too bearish on the banking sector.

- GDP’s 1Q revised down to 3.0% represents only a “minor disappointment” amid current economic recovery, Ryan Avent writes at The Economist’s Free Exchange blog. “America’s recovery remains young and fragile. Still, many developed nations would be happy to have a nine-month performance like the one the American economy has managed since returning to growth.”

- BofA and Citi incorrectly hid from investors billions of dollars of their debt, similar to what Lehman did to obscure its level of risk, WSJ reports, citing company documents.

-WSJ’s Matt Phillips wonders if Libor fears are overdone.

- FT’s Alphaville relays a century-long look at the US equity market, via Deutsche Bank. Blog wonders whether we’re currently mired in a cyclical bull market within a longer, structural bear market?”

- “I believe the government response to the recession has created budgetary stress sufficient to bring about the crisis much sooner. Our generation — not our grandchildren’s — will have to deal with the consequences,” David Einhorn says in his NYT op-ed.

- Banks aren’t short of cash to spend on lobbying Washington to make sure serious financial reform never gets passed. But considering what’s at stake, the best hope for stronger reform is to make the upcoming House-Senate conference in June more transparent, writes Simon Johnson, former IMF chief economist.

- Palm’s mobile design guru, Matias Duarte — who led webOS development — is leaving the company and is headed to Google (GOOG), Digital Daily blogger John Paczkowski reports, noting Duarte’s departure is a “significant loss” for Palm and H-P.

- Blogosphere has been abuzz about rumors that Microsoft (MSFT) CEO Steve Ballmer would appear on stage at Apple’s Worldwide Developer Conference. But Microsoft quickly squashes those rumors. “Steve Ballmer not speaking at Apple Dev Conf. Nor appearing on Dancing with the Stars. Not riding in the Belmont. Just FYI,” Microsoft says via Twitter.

- Obama says he’s “angry and frustrated” over the spill in the gulf.

US stocks recover from steep early losses and finish higher, with consumer discretionary leading the way.

No clear catalyst for the mid-afternoon turnaround. Better-than-expected home-sales and a speech from Obama that wasn’t as harsh as some expected may have contributed to the reversal.

DJIA, which has finished higher for four straight sessions and 10 of the last 11, gains 9 to 11134. S&P 500 rises 3 to 1209 and Nasdaq Comp jumps 14 to 2519.

Moody’s downgrade of Greece weighed on stocks early, with the Dow falling as much as 109. But equities embarked on a slow and steady recovery before turning positive late in the session.

Plethora of earnings after hours. American Express’s (AXP) 1Q profit doubles on tumbling loan-loss provisions and a 16% jump in card-member spending. Shares rose 2% in after-hours trading to $47.70. The stock has nearly quadrupled from a 14-year low early last year.

Amazon (AMZN), however, isn’t enjoying the same success. Analysts are finding reasons to be disappointed with Amazon’s (AMZN) 1Q report. Results topped consensus estimates, but “it was not a monster beat,” says BGC Partners analyst Colin Gillis. JMP Securities’ Sameet Sinha also notes domestic year-over-year revenue growth was slower than 4Q, while the mid-point of Amazon’s 2Q operating income guidance is below the consensus.

AMZN shares were recently down 4.7% at $143 in after-hours trading.

(Scott Morrison contributed to this post.)

- 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.’

- Believe it or not, orders for durable goods are on the rise. “Yes, the overall durable goods trend is encouraging,” James Picerno says. “But even if we take this at face value, we can’t ignore that it’s a jobless recovery so far. As long as that qualification remains, the bullish aura surrounding leading indicators is suspect.”

- Financial Armageddon blogger Michael Panzner sifts through latest durable goods data and finds a growing trend throughout last few years: increasing impact of public spending on the overall total.

- Credit-default swaps didn’t destroy Lehman, Bear Stearns and almost topple AIG, Barry Ritholtz argues. Instead it was the “inordinate amount of highly leverage risk” that nearly crippled AIG, he says. Yet some people still don’t understand this concept. “The CDS argument is a variation of the ‘Shorts are killing our company’ nonsense that so many money-losing firms hide behind.”

- CBO insists stimulus has helped the economy, even if it isn’t obvious to the millions of unemployed Americans. “‘It could have been worse’ may not be the world’s catchiest slogan, but it’s the best selling point that stimulus supporters have,” NYT’s Economix blog says.

- Housing’s still the economy’s best leading indicator, Calculated Risk says.

- Paul Kedrosky isn’t pleased with all the media attention surrounding Intel (INTC) and 24 VC firms pledging to invest $3.5B in US companies throughout next two years. “Saying that you’ll heroically and patriotically do what you were likely going to do anyway shouldn’t get press.”

- Barbara Kiviat lists four smart things President Obama said about job creation.

- “Uncertainty remains the name of the game and uncertainty is rarely good for a market,” Pragmatic Capitalist says. “For now, the macro trends of global rate increases, weak jobs, sovereign debt, regulation and the death of the reflation trade (thanks to the Euro) will dominate any short-term moves.”

- Apple (AAPL) boasts about selling its 10 billionth song from iTunes only seven years after online store’s launch. It has also bragged that more than 3B apps have been downloaded. “But you won’t hear Apple boast about how much money it’s making from iTunes,” Peter Kafka says. “Because it’s not.”

- Denise E. O’Donnell, the official who supervises New York State Police, has resigned amid reports of intervention into a domestic-assault case against a senior aide to Governor Paterson, NYT reports.

Huh, whatdya know; this stuff's green, too.

Tim Geithner’s role throughout the financial crisis and ensuing recovery gets some heavy play today in a front-page WSJ piece.

The crux of the story: he helped rescue some of the biggest banks and averted economic collapse. But the no-strings attached bailouts he engineered have resulted in banks returning to pre-crisis mode, while the rest of America struggles to recover amid one of the worst downturns since the Great Depression.

And the fact that meaningful regulatory reform hasn’t been passed since he because Treasury Secretary more than a year ago hurts his credibility and only adds to his reputation that he “coddles” Wall Street.

The kicker WSJ quote: “Interviews with dozens of government officials show that Mr. Geithner has acted as a brake on administration officials seeking punitive action against big financial firms.”

Story details several of Geithner’s policy decisions, including resisting efforts to oust Citigroup (C) CEO Vikram Pandit as a condition for more government aid.

“The litany is not pretty,” FusionIQ CEO Barry Ritholtz says. But failure to pass any regulatory reform so far may be his biggest blunder. “Expect it to cost the Democrats dearly come November.”

Continue reading…

The White House is attempting to contain the damage surrounding President Obama’s curious remarks about bank bonuses. Whether it’s working is up for debate.

In case you missed it, Obama said he doesn’t “begrudge” the multi-million dollar bonuses JPMorgan (JPM) CEO Jamie Dimon and Goldman Sachs (GS) CEO Lloyd Blankfein received, noting it’s all part of the free-market system. He also compared these “savvy businessmen’s” exorbitant salaries to sports, saying some baseball players make more dough than both of those folks.

Now the White House is trying to mop up Obama’s mess. Huffington Post has the details:

The White House is moving swiftly to stem the fallout from a potentially damaging interview President Obama gave on Tuesday, in which, it was reported, he did not “begrudge” the multibillion-dollar bonuses of Wall Street executives.

Administration aides insisted, in email exchanges with the Huffington Post, that the quote was largely overplayed. The story, they say, made it appear as if the president didn’t mind massive compensation packages when he was simply stating that he didn’t fault anyone for his or her personal or professional success. Moreover, they added, the president has made similar remarks many times before without getting the critical reception he received on Wednesday morning.

“The president has said countless times, as he did in the interview, that he doesn’t ‘begrudge’ the success of Americans, but he also expressed ‘shock’ at the size of bonuses and made clear that there are a number of steps that need to be taken to change the culture of Wall Street,” spokesperson Jen Psaki told the Huffington Post. “[That is] a sentiment he has consistently expressed since long before he took office.”

The White House is clearly on damage control, trying to clean up a messy situation. But Princeton economist Paul Krugman, who heavily criticized Obama yesterday, still can’t get over the presiden’t “clueless” comments.

Continue reading…

President Obama strikes a curious chord, to say the least, in his latest comments concerning bonuses given to Goldman Sachs chief Lloyd Blankfein and JPMorgan CEO Jamie Dimon.

Obama says he doesn’t “begrudge” the multi-million dollar bonuses they received, noting some athletes make more dough than these two folks. From Bloomberg:

The president, speaking in an interview, said in response to a question that while $17 million is “an extraordinary amount of money” for Main Street, “there are some baseball players who are making more than that and don’t get to the World Series either, so I’m shocked by that as well.”

“I know both those guys; they are very savvy businessmen,” Obama said in the interview yesterday in the Oval Office with Bloomberg BusinessWeek, which will appear on newsstands Friday. “I, like most of the American people, don’t begrudge people success or wealth. That is part of the free-market system.”

Umm, we’re not even sure where to begin on this one.  Free-market system? That went out the window when the government engaged in its bailout binge with the nation’s largest banks. As former IMF chief economist Simon Johnson points out: “Not only were their banks saved by government action in 2008-09 but the overly generous nature of this bailout means that the playing field is now massively tilted in favor of these banks.”

And wasn’t it only a few weeks ago that Obama was ripping “fat cat” bankers on Wall Street for their “obscene” bonuses? From fat cats to savvy businessmen, that’s quite the reversal.

Continue reading…

- Apple’s (AAPL) iPhone shipped 8.7 million iPhones in 4Q, almost double the year-earlier figure and 18% higher than previous quarter’s gains. Impressive, except for the fact that the device’s market share actually slipped a bit from previous quarter. But don’t read too much into the decline, as claiming 16.6% of a market  it had no presence in three years ago is “astonishing,” Digital Daily blogger John Paczkowski says.

- As controversy swirls around Tim Geithner and his tenure as Treasury secretary, former IMF chief economist Simon Johnson offers a plausible successor: Tom Hoenig. He’s been a “beacon of clarity” throughout the past year and would appeal to both “sensible” Democrats and Republicans, Johnson says.

- AOL expected to report 4Q results tomorrow morning, marking first quarterly report since becoming newly independent company in mid-December. Shares are essentially unchanged since going public, reflecting investors’ “widespread wait-and-see attitude,” BoomTown blogger Kara Swisher says.

- There’s no way around the sense that President Obama’s budget proposal is “a tremendous comedown from the hopes of a year ago,” Paul Krugman writes at Conscience of a Liberal. “What we’re witnessing is an awesome national failure.”

- Here’s a deep concern plaguing Gannett (GCI): steep EBITDA decline throughout last few years suggests publisher is “running out of ways to trim expenses as ad sales decline,” Newsosaur blogger Alan Mutter says.

- Google’s (GOOG) expanding its research agenda, devoting $5.7 million to a dozen research projects. Money’s earmarked for four areas: machine learning, the use of mobile phones as data collection devices, energy efficiency in computing and privacy.

- TechCrunch says Google already has Apple’s iPad in its sights. Blog points to a series of photo mock-ups showing what Google’s Chrome operating system might look like on a tablet form factor.

- YouTube’s first attempt at charging customers to watch Web video wasn’t exactly a roaring success, netting about $10,700. But YouTube’s payoff isn’t just in cash. “The good news: some people paid up,” MediaMemo blogger Peter Kafka says. “And from YouTube’s perspective, that’s all that matters.”

- Amazon (AMZN) shares continue dropping in aftermath of a dispute with major book publisher about e-book prices as well as the prospect of increasing competition from Apple’s iPad. “What I will say is that every schoolboy learns that you sell the Christmas plans before Christmas, not in January,” Josh Brown writes at The Reformed Broker. “Amazon’s a classic example of why.”

- And the battle between Amazon and Macmillion is still raging, NYT’s Bits blog reports, as some, but not all, titles have been creeping back onto Amazon’s site.

- Paul Volcker continues pushing for bank limits. He said large commercial banks engaging in proprietary trading or private-investment activity are creating “strong conflicts of interest” and should be restricted.