Market Talk

- Economists expect strong jobs number later this week, but don’t be fooled by great headline number as May is the peak for Census hiring, Bill McBride cautions at Calculated Risk.

- As Apple (AAPL) shares keep running higher, some believe the run-up is only setting investors up for a bigger fall. Reihan Salam, who actually describes himself as an “Apple devotee,” worries that the “Apple magic [will] evaporate” whenever CEO Steve Jobs leaves the company. “Surely he’ll one day tire of wielding his charismatic authority as CEO of Apple,” Salam writes. “And there is no woman or man alive who could fill that man’s turtleneck…Apple won’t be able to defy gravity forever.”

- S&P 500′s 1.7% decline yesterday marked the second-worst start to June in last 50 years, according to Bespoke Investment Group. Only the first trading day of June 2002 was worse, as index dropped 2.5% that day. Additionally, yesterday’s late-day swoon sent S&P 500 into “extreme oversold” levels, which Bespoke describes as two standard deviations below the 50-day moving average.

- The $35.5 billion global life-insurance deal that would have remade the industry landscape has collapsed, WSJ reports.

- Google (GOOG) has acquired ad tech startup Invite Media, Peter Kafka reports at All Things D, citing multiple sources. He believes GOOG paid in the $70M range for the startup. “People familiar with the transaction say Google’s plan is to leave Invite running as a stand-alone unit, which will work at arm’s length with exchange’s like Google’s AdX as well as competitors like OpenX, Yahoo’s (YHOO) Right Media and Microsoft’s (MSFT) AdECN,” Kafka says.

- BP’s massive oil spill is a major “wake-up call for Western society,” Harvard economist Kenneth Rogoff writes, and adds yet another front to the regulation debate. Is regulation destined to perpetually miss the mark?

- Even as the unemployment rate hovers near 10%, there doesn’t seem to be a sense of urgency in the Obama administration to get people back to work, which mystifies UC Berkely economics professor Brad DeLong.

- AT&T (T) eliminating unlimited data plans marks step in wrong direction for wireless industry, especially since the mobile web is about to “explode with new devices and new uses for us all to be ubiquitously and constantly connected,” BuzzMachine blogger Jeff Jarvis says. But “AT&T says it wants nothing to do with that explosion (because it would have to work harder and invest more to do better),” he notes.

- Friday’s jobs report won’t say much about America’s growing anxious class, Robert Reich says.

- Keep following WSJ’s All Things Digital tech conference as some of the biggest names in tech check in throughout the week.

- “Either market volatility is about to increase substantially from current levels or options traders have overestimated future volatility,” Bill Luby writes. “If we have one or two more days in which stocks show average to slightly higher than usual volatility, expect the VIX to begin to move back down to a level that is a better reflection of those daily moves.” Indeed, VIX drops 9.7% to 34.61 as stocks close slightly lower, paring steep intraday losses.

- Threat of deflation isn’t as concerning as some folks like to believe, says David Beckworth. Even though the recovery has been sluggish and weak, don’t expect another collapse in spending. “Both current and expected spending are growing. It may be not be growing as fast as we want, but it is growing and there is no sign of an imminent collapse.”

- “The most important thing to know about the 1,500-page financial reform bill passed by the Senate last week — now on the way to being reconciled with the House bill — is that it’s regulatory,” says former labor secretary Robert Reich. “It does nothing to change the structure of Wall Street.”

- “Amazon (AMZN) for some time has talked up the success of its Kindle, including the claim that the device is the biggest-selling item on its site. But it is hard to avoid the conclusion that Chief Executive Jeff Bezos was trying to lower expectations at the company’s annual meeting Tuesday,” Martin Peers writes at WSJ’s Heard On The Street column.

- CNet reports Google (GOOG) offered Viacom (VIA) $592 million if the media giant agreed to license TV shows and films to YouTube. Details of the offer, made shortly after Google bought YouTube in 2006, were revealed in documents released by a Manhattan court where Viacom filed its $1 billion copyright lawsuit against Google and YouTube.

- “For a brief moment last fall, it looked as though the American housing sector might not be the persistent economic drag economists had feared,” the Economist’s Free Exchange blog says. “But the good times haven’t lasted.”

- Apple (AAPL) CEO Steve Jobs plans to deliver the keynote address at its Worldwide Developers Conference on June 7, but NYT Bits blogger Nick Bilton wonders how Jobs will wow the crowd, especially since many of his secrets have been revealed. “Product images and specs have leaked out of Apple before previous keynote presentations, but this time the amount of information was a relative gusher.”

- “With margin calls back on the radar screen for the first time since the financial crisis, it’s worth noting that margin debt has hit levels not seen since early in the crisis,” Brendan Conway writes at MarketBeat.

- Calculated Risk blogger Bill McBride delves deeper into yesterday’s existing home sales report and remains worried about increasing inventory and months-of-supply levels.

- Mounting tensions in the global financial system are evident in the increasing Libor rate. “The world’s big banks continue to grow leerier about lending to one another,” writes LA Times’ Tom Petruno. Three-month dollar Libor rate earlier highest level since July, though Petruno notes it remains well off levels seen during the financial-crisis in late 2008 when credit markets froze.

- Keep an eye on the huge shift from bullishness to bearishness throughout the last few weeks.

- The Apple/Adobe war over Flash jumps to a new level: Apple (AAPL) CEO Steve Jobs uncharacteristically pens a post weighing in on his decision not to support Flash.

- Adobe’s (ADBE) CEO responds.

- Hewlett-Packard (HPQ) acquiring Palm prompts Digital Daily blogger John Paczkowski to ask: “Why spend $1.2 billion on a company whose downward spiral has been the talk of Silicon Valley for the past year?” The answer is relatively simple — H-P wants its own operating system, which is exactly what Palm has to offer.

- What does the Fed’s “extended period” really mean? NYT’s Economix and Calculated Risk weigh in.

- Hewlett-Packard (HPQ) is taking a page out of Apple’s playbook: It wants an operating system it completely controls without relying on Microsoft’s (MSFT) Windows. Unfortunately, Dan Frommer at Silicon Alley Insider isn’t optimistic about the plan.

- Greece fizzles…But the Dow sizzles.

- “The uptrend remains in place, and until it is broken we maintain an upside bias,” Barry Ritholtz says. “We are not at the sorts of extremes yet that make the contrarian in us scream ‘sell.’”

- Why do markets pay any attention to ratings agencies?

- Initial jobless claims dropped 11,000 to 448,000 last week. “If you’ve been following the soap opera with this data series you know that we’ll need to see something more dramatic before the central bank changes its monetary tune of standing pat,” James Picerno writes at The Capital Spectator.

- Paul Kedrosky looks at stocks vs flows relating to consumer solvency.

- “I cannot figure out the thought process behind putting a consumer protection agency into the hands of the Fed,” FusionIQ CEO Barry Ritholtz notes. “This is the same regulatory body that gave a total pass to the non-bank lenders at the heart of the subprime, APR and exotic loan issues.”

- Big banks are bad for the economy just like they were 100 years ago when their powerful influence shaped the financial playing field in their favor, NYT’s Economix blog says. “Just as it did 100 years ago, the consensus on big banks has to change. In this instance, either we break them up, or they will soon break us all.”

- “The longer the economy expands without boosting payrolls, the less likely that expansion is to be sustained,” Economist’s Free Exchange blog says.

- Investors are brushing aside the market’s late January/early February declines and seem focused on brighter times ahead. At least that’s what the latest American Association of Individual Investors survey says, as bearish sentiment fell to 26.2%, the lowest reading since early January and third lowest mark since early 2009, Bespoke points out.

- When Apple (AAPL) CEO Steve Jobs announced lawsuit against HTC for patent infringement, he said in no uncertain terms that competitors should stop stealing their technology. “That’s not the language of a licensing dispute or the beginning of a polite negotiation. That’s the language of a man aggrieved,” Daring Fireball blogger John Gruber writes.

- Facebook CEO Mark Zuckerberg remains in no rush to take his social networking behemoth public. Judging from the stock performance this year of the four big digital giants, Facebook’s not missing out on much upside, Kara Swisher says.

- Huffington Post had a staggering 40M unique visitors last month. “Eyeballs are eyeballs,” Peter Kafka writes. “Next up: Turning them into dollars.”

- Despite Google’s threats to pull out of China, China Unicom (CHU) says it still plans on selling handsets that run GOOG’s Android operating system.

- House approves $15 billion jobs plan.

- Sony’s looking to seriously get back in the game. It’s developing a new collection of portable gadgets that connect to its coming online media service and are designed to compete against Apple’s iPhone and iPad.

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.)

How do you like them apples?

Apple (AAPL) once again insists there are no plans for a dividend, instead preferring to sit on its enormous pile of cash for future opportunities.

Maybe it’s a prudent move, hard to be too cautious these days. Maybe it’s also a pride issue – some might say offering a dividend would no longer classify Apple as a growth company, a status it certainly wants to maintain.

Whatever the case, Apple still has nearly $25 billion in cash and short-term securities on its balance sheet and hasn’t indicated that its ready to go hunting for an acquisition anytime soon.

For the record, CEO Steve Jobs told shareholders at yesterday’s annual meeting that he preferred to “leave the powder dry” for possibly acquisitions and cash “will come in handy.”

Continue reading…

How do you like them apples?

I’m tired.

Physically I’m fine. But I’m mentally drained keeping up with the ridiculous amount of Apple (AAPL) coverage that has been floating through the blogosphere this week. Considering all the attention the iPad’s unveiling received, one would’ve thought the cure for the common cold was discovered.

Hey, we’re just as guilty as the next news guy, as Apple stories have been splashed all over The Wall Street Journal (and this blog) all week long. A vast majority of my posts this week have been, in one form or another, about Apple.

And guess what? It makes me sick. Because I’m just another cog in the Apple machine.

This is exactly what Apple wants – and it’s absolutely genius. The company leaks some details about a hip new product a few months before its release and then lets the blogosphere do the legwork. Tech bloggers drum up buzz, piecing together as many details as they can about what Apple has up its sleeve. By the time the product is actually released, everyone knows what’s coming. Keep in mind, too, that all this marketing and PR doesn’t cost Apple a dime.

It’s amazing – I dare you to name one other company that can drum up half as much interest about their products, without publicly saying a word, like Apple does.

Continue reading…

- From Geithner’s hearing to the FOMC statement and Obama’s State of the Union address tonight, politics seem to be overshadowing fundamentals in the markets these days. “If there ever was a day that encapsulates the new economic world we live in, it is today,” says Miller Tabak’s Peter Boocvkar.

- Recent data from Investor’s Intelligence show a 23% one-week drop in bullish sentiment. “Declining sentiment from high levels tends to be bearish for the market, not bullish,” Jason Goepfert writes at Sentiment’s Edge blog.

- Tablet day – what else can we say. Here’s the Journal’s recap. But one thing Steve Jobs didn’t show off today: much in the way of new media, MediaMemo blogger Peter Kafka says.

- Matt Taibbi weighs in on populism. The man needs no introduction, just go read it.

- Turbo Tim defends AIG bailout.

- Hoenig: the lone dissenter.

- “The dollar seems be benefiting from the ever so slightest of hints that the Fed might be prepared to take tiny, baby steps towards tightening,” Grainne McCarthy writes at MarketBeat.

- Toyota dealers say they are trying to operate normally a day after automaker decided to halt sales and production of eight models because of safety concerns.

- At Davos, global business leaders warned Western governments that a populist crackdown on the financial industry could crimp this fragile recovery.

- NYT’s Room For Debate blog has an excellent discussion about Ben Bernanke and whether he should be confirmed for a second term as Fed chairman. Yves Smith says he doesn’t deserve another term after being a “major architect” of the worst crisis since the Great Depression. But Tyler Cowan says it would be a mistake if populist outrage prevented Bernanke from getting confirmed.

Believe it or not, there are other things going on in the world besides everyone watching some dude in a black turtleneck and jeans play with a brand new touch-screen device.

As expected, the Fed leaves short-term interest rates near zero, but gives a slightly more upbeat reading of the economy’s outlook.

Here’s a snip from Dow Jones reporter Michael Derby in the wire’s version of Market Talk:

The FOMC statement looks pretty free of surprises. On rates, it says “the Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” It has also reaffirmed its plan to end mortgage purchases at the conclusion of March, along with again flagging the impending end of most of the emergency lending programs.

Also of note is Kansas City Fed President Thomas Hoenig voting against keeping rates so low. He remains concerned that all the stimulus funneled into the economy to fight the crisis may ignite inflation in the future.

Continue reading…

The tablet is here.

Alright, then, Apple went ahead and introduced the product that absolutely everybody knew they were going to introduce: a big iPhone they’re calling the Newton. No, no, we kid, it’s called the iPad. Jobs is on stage in California right now, typically in his black turtleneck and jeans, vaunting with pride over his new toy, and the fawning audience, we’re sure, is buying every ounce of it.

We’re not sure which website is better for following this. One the one hand, WSJ.com’s Digits blog is being written by professional, seasoned journalists determined to report the news and get the facts. On the other hand, Fake Steve is much funnier (and also is written by a seasoned professional actually.)

No word on pricing yet, but it’ll cost more than a netbook, we guarantee that. But, dang, you want one already, don’t you? You know you do.