Market Talk

If Faisal Shahzad had blown up his Pathfinder on Saturday night in Times Square, do you think it would have affected the stock market on Monday morning? I ask that not because I’m some heartless markets guy who sees the world only as it affects equities; I walk right past where Shahzad dumped his SUV twice a day, every day. Our office is two blocks away.

I ask because pondering it is like one of those Zen koans the monks meditate on, in this case a koan that illuminates where the market’s head is these days.

Let’s assume Shahzad did his job well. He killed, say, a dozen people coming out of the theater and wounded two dozen more, on a Saturday night in Times Square, one of the most famous, recognizable places in America. In the initial panic, he gets away. Sunday morning, blood-splattered images fill TVs across the country, across the world. How did this happen? Who did it? Will they do it again? Remember, a terrorist’s main goal is to instill terror. In our scenario, Shahzad did his job well.

How does the market react? Monday morning, the papers are starting to wonder, are we losing the war on terrorism? Homegrown or foreign, does it matter? Does the Obama administration have the gumption to really take on the terrorists, wherever and whoever they are? What are we really doing in Iraq and Afghanistan? Think the market is shocked by all this? Think that V-shaped confidence cracks a bit?

Continue reading…

- Greece’s historic bailout proves what many have believed for some time: Greece’s problems quickly turned into a “death spiral,” Paul Krugman says. “The EU has now, in effect, given up on trying to restore market confidence; instead, it’s going to break the death spiral by main force, providing Greece with all or almost all the financing it needs directly, at an interest rate much lower than the market was demanding.”

- The Greek bailout isn’t a bond cure-all as some investors expect government bond yields to keep increasing for many debt-laden countries, WSJ reports.

- Most asset classes saw minimal gains in April. But REITs were the lone exception, posting a 7.1% monthly return and have now gained 18% in 2010. At The Capital Spectator, James Picerno discusses whether they are they ripe for some profit-taking.

- Both consumption and spending rose in March, but spending growth outpaced income growth, forcing the savings rate down again to its lowest level in a year and a half. But “this isn’t the worst thing in the world,” Ryan Avent writes at The Economist’s Free Exchange blog. Not at least in the short-term.

- Newspaper ad sales are still falling, but the declines have significantly abated throughout first three months of 2010, Newsosaur blogger Alan Mutter reports.

- As the tiff between Apple (AAPL) and Adobe (ADBE) heats up, Microsoft (MSFT) weighs in, detailing its side of the debate.

- IPad 3G’s launch weekend was a success, though not as successful as original Wi-Fi-only release last month. Overall, Apple says iPad sales have already topped 1 million.

- US auto sales increased 20% in April compared to depressed levels a year ago as Chrysler, Ford and Toyota all reported sales up at least 25%.

- MarketWatch’s Mark Hulbert offers advice on how to gain exposure to financials without betting on Goldman Sachs (GS).

-Details of the Times Square bomb plot continue to unfold.

You know that scene in “Close Encounters” when Richard Dreyfuss makes a giant Devil’s Tower sculpture in his living room? Well, I swear I’ve got the Grand Tetons on my front lawn. I have a mountain of snow six feet high running the length of my front yard, parallel to the driveway. It’s absolutely unreal. Anyhow, a lot of things go through your mind when you’re endlessly shoveling snow (I think I’ve been out there six times in the past two and a half days,) so in no particular order, here are some of the things I’ve been thinking about:

- I am going to be shoveling snow for the rest of my life.

- The U.S. should promise tariff-parity with any nation with which we trade. There’s no more refinancings to be done. We’re going to have to dig out of this mess the old-fashioned way, by making stuff and selling it. That’s the only way we’re going to generate the tens of millions of jobs needed to get the country back on its feet. And we’re going to have to find markets for it all.

Now you always hear that U.S. workers make too much. But wages haven’t grown at all in a decade, and I bet adjusted for inflation they’ve barely grown in a generation (I know there’s a good table for this somewhere, just couldn’t find it quickly.) How overpaid could Joe Six-Pack possibly be anymore? It’s time to revive manufacturing.

- What idiots made the center of commerce, finance and politics the New York-Washington region? Why isn’t “New York” in Florida, or somewhere warm, where I could still have a job as a business reporter and not have to freeze and shovel snow? Who founded New York? The Dutch. God, I hate the Dutch.

Continue reading…