Monday, March 18, 2013

5 Gut checks before stocks open today


Need to Know

MARCH 18, 2013

5 gut checks before the stock market's opening bell


By Shawn Langlois

 

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Good morning.

This isn't supposed to happen to small depositors. When us little guys put our savings in the bank, we expect it to stay there, safe and sound.

Cyprus, the Mediterranean island nation that blessed the world with Halloumi , has thrown that trust into question, even if a big chunk of the deposits are from Russia . Hugo Dixon labeled it "legalised bank robbery."

And the "uncomfortable precedent" is being felt in every corner of the globe as investors trip over themselves to purge some of their riskier assets. With one analyst calling it "a nuclear war on savings and wealth," and another saying it could be a fatal blow to the euro , safe haven investments are back in the cross-hairs.

Of course, traders have been looking for an elusive excuse to take some cash off the table after the steady market climb of the past few weeks, and, clearly, they got one. The devoted bull will tell you it's shaping up to be a healthy day of profit taking.

Gary Evans of the Global Macro Monitor blog was one of the few to downplay the Cypriot impact on the U.S. markets: "Will it end fracking and cheap energy?  Derail the housing market?  Cause the Fed to remove quantitative easing prematurely and raise interest rates? Get frickin' real, comrades."

For now, the selling is here, but just how long will it last and how should you deal with it? Zero Hedge walks us through "the diversity of response."

Key market gauges: Europe  is getting hammered. Spain's IBEX  is down almost 3% to lead decliners among the major indexes. The Nikkei  took the biggest hit during Asia's  broad losses. And, as expected, the U.S. markets will have trouble getting back on track with futures on the Dow  and S&P  both lower. Read Indications  and check out "What will Cyprus do to Wall Street's rally."

On the currency front, the euro  took a hit against the dollar during Asian trading hours. The dollar index , which tracks the greenback's performance against six of its rivals, rose. Read more on how currencies are reacting  and check out "Cyprus deposit-levy shakes up markets."

Gross: Cyprus deposit haircut moves risk-on trade to backseat. Sell Euro as well.

— PIMCO (@PIMCO) March 17, 2013

The buzz: Cypress is sucking up most of the headlines today, but that's not the only thing grabbing investor attention. STMicroelectronic  and the shuttering of its venture with Ericsson  is the top business story on Google this morning. Some 1,600 jobs will be lost as the two companies divide the assets of their unprofitable 50/50 partnership, which has racked up $2.7 billion in losses since 2009.

Gold  is trending on StockTwits, which comes as no surprise given the news flow. Joining the precious metal on the radar are Apple  and Bank of America , both of which are trading lower premarket.

Over on Market IQ, DirecTV , J.P. Morgan Chase  and Progenics Pharma , which saw its stock soar 29% following its report on Friday , are the top three trending tickers.

The chart of the day:Doing his best to look beyond Cyprus, J.C. Parets said Europe had better start rallying soon if the U.S. wants to keep moving higher. "Typically, Europe tops out first, and then the U.S. gets the memo and rolls over. Well, we're going on six weeks now without the U.S. joining the correction," he wrote on his All-Star Charts blog . Here's an illustration of the disconnect with early market action today signaling a widening chasm.

All-Star Charts

The call of the day: Simplified Asset Management's Bret Jensen is not one of those pundits that's looking for this minuscule Cyprus blip to blow over painlessly soon. And it's just a part of "the litany of woes facing Europe." But it's more than that.

He also points to a potential slowdown in both jobs growth and consumer spending, all combining to slam the S&P by 5% before we even reach the halfway point this year. What should investors do to navigate the downturn? Jensen advises to insure your portfolio through options, lighten up on the consumer discretionary sector and, finally, make a shopping list of stocks to buy in the wake of the pullback.

Random reads: Josh Brown puts his Reformed Broker spin on Cyprus , Here's a taster: "a person who goes by the name 'Anistasiades' -- so I'm concluding it's a stripper -- had cut a deal with the German Fourth Reich." Charles Hugh Smith plays it a bit straighter in his post on "The deeper meanings of Cyprus."

Market machinations driving you to drink? Here's a list of London's "oldest, greatest pubs. " I've hit four of these. Not a bad collection, but no list of London pubs is complete without The Grenadier . Still not ready for a pint, you might be after you read about One Hyde Park's $214-million apartments .

Twitter founder Jack Dorsey for mayor. Not on Foursquare. Of New York .

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