7 Gut checks pre-open

Need to Know MAY 30, 2013 7 gut checks before the stock market's opening bell By V. Phani Kumar   Shutterstock Good morning. The "taper" flower is in full blossom as we head into the market open, with everyone and her cousin apparently chipping in with their two cents. Wonder if the sum total of those cents could make up for the amount by which the Fed will eventually downsize its $85 billion-a-month QE. "Eek! Debt!" If you're looking for a schooling, Paul Krugman neatly explains how different asset classes would react to rising interest rates under different scenarios. And in his MarketWatch column on how the end of the QE will surprise everyone , Matthew Lynn makes a call that bond yields will stay steady when the Fed takes the scissors to asset purchases. That pits him directly against Merrill Lynch, which advised clients to sell Treasurys in a note released Thursday. And against Goldman Sachs, which reportedly said the bond sell off is "for real" this time . Cullen Roche of Orcam Financial Group, meanwhile, begs to differ with Krugman in a Pragmatic Capitalism post, contending that stocks don't tend to fall when the Fed tightens . Clearly, it's easy to get confused by all the different voices. But unless you share Bill Gross's view that Fed Chairman Bernanke has lost a little control , it'd perhaps help to take a step back and work out whether the Fed would really taper QE off as badly as the stylist in this picture. Key market gauges: If Tuesdays are great for Wall Street , Thursdays are fast becoming nightmares for stocks in Tokyo. After plunging 7.3% this day last week, the Nikkei dived 5.2% today for its fifth Thursday drop in a row, as investors remained jittery with the dollar again flirting with ¥100. But other Asian markets didn't react nearly as bad , and neither have European equities . The same should be true for U.S. shares, going by futures. At the time of writing, and with some key economic data on tap, S&P 500 futures were marginally lower, and DJIA futures were off 0.1%. The economy: Expect a déjà vu from the economic data coming up, but, as always, stay close to the fire escape, just in case. Economists surveyed by MarketWatch are anticipating an increase of 1,000 new jobless claims applications, not veering too far away from recent employment trends that have underpinned the taper talk. First-quarter GDP growth is forecast at 2.5%, unchanged from last month's preliminary print. The buzz: Watch out for Tesla after the buzz surrounding CEO Elon Musk's stage appearance last night at the D11 conference. Musk said the company will be tripling the coverage of superchargers around the country and set up in most metropolitan cities by the end of this year . Costco earnings came in slightly ahead of analyst expectations, and the company is planning nine new warehouses this fiscal year. Earnings: A string of other late quarterly reports are on tap, including from Guess and Krispy Kreme after Thursday's market close. The call of the day:Martin Hutchinson of Money Morning is advising investors to jump on shipping stocks as a cyclical play. He suggested the limited new supply of ships might keep freight rates supported, as  the shipbuilding cycle had peaked in 2012. "If you buy shipping companies that can take advantage of this uptrend intelligently, there's some good money to be made," he wrote. Among the four top shipping stocks he mentions, he's tempted by the 6.2% yield at Teekay LNG Partners and by DHT Holdings , which is trading in the dumps at 23% of book value. Mark Mobius, meanwhile, continues to see potential for investments in gold, saying that demand for commodities should continue to rise as emerging markets develop. "Companies that can produce at a low rate and can weather the volatility of the prices of commodities could be good potential long-term investments. We try our best to look for mining companies that can produce at low cost and are diversified, so that if the price of gold (or another commodity) falls, they would likely not be as adversely affected because they have other products to sell," he wrote in answer to a readers' question. Also interesting is the buy rating Citi maintained on Monsanto after the company's outlook. But it's difficult to imagine the stock would rise to the moon, after Japanese authorities canceled a tender offer to buy buy wheat from the U.S. , after unapproved genetically modified wheat was found in an Oregon field. MarketWatch's Al Lewis expands on the protests over GM food in this column . Get the latest news on our mobile site: http://www.marketwatch.com/m MarketWatch has sent you this newsletter because you signed up to receive it. 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