Need to Know
JUNE 11, 2013
6 gut checks before the stock market's opening bell
By Shawn Langlois
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Reuters
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Good morning.
With U.S. Treasurys down for a third straight day, the bond crash theme is ringing out again this morning. A global downturn in stocks isn't doing much to help the mood, either.
In the past 30 years, an interest rate rise of more than 50% from lows has happened five times. Three of those instances were followed by an wrenching equity correction of between 15% and 45%. Well, if SocGen strategists are on point, the yield on the 10-year U.S. Treasury will reach 2.75% by the end of the year, surpassing that 50% qualifier.
Of course, there's still a long way to go to reach that number. Yields are up around 2.27% this morning, touching levels not seen in more than a year, after Friday's jobs report fanned speculation of Fed tapering sooner rather than later.
So much for Gundlach's call last week for a 2.15% yield peak.
For those expecting a rotation away from credit and into equities, don't hold your breath, says Barclays analyst Bradley Rogoff. "Using nearly 100 years of data, we find no evidence of a sustained selloff in Treasurys accompanied by a rally in equities and widening in credit spreads, and we believe it is unlikely to happen now," he wrote.
At least S&P is feeling better about the U.S ., which has to be a huge boost for stocks, eh? I mean, to get a sense of the forward-looking, market-shaping power of the ratings agency, look back at how investors have fared since S&P first cut its U.S. credit rating in the summer of 2011. Stocks are only up about 40% over that time.
Key market gauges: With mainland China still on holiday, the rest of Asia was led lower by drop on the Nikkei after the Bank of Japan didn't budge on its asset-buying plan. Of note, the plunge of the Aussie dollar continued. Europe is only doing marginally better but is still suffering declines across all major indexes.
There's no escaping it, sellers clearly have the upper hand everywhere. Futures on the Dow and the S&P are tracking lower , as well. So is gold and crude oil . Read: Futures movers .
The economy: There's a fair amount of data on the way, but nothing to get too concerned with, markets-wise. The NFIB's small-business optimism index hit first , while the Labor Department's job openings data and the Commerce Department's wholesale inventories numbers follow later. Read: Spotlight on the economy .
The buzz: Lululemon shares are facing a nasty start to the session after the yoga clothes retailer handed in its first-quarter results late yesterday and also announced the sudden departure of its chief executive. Looks like the plea from the Lululemon Addict's blog has finally been answered.
CEOs leaving before successor is named w/o a reason .... is not usually what investors want to see $LULU
— Herb Greenberg (@herbgreenberg) June 10, 2013
Apple unveiled its latest mobile operating system on Monday to mixed reviews. On the bright side, Goldman Sachs analysts said it "could be the most significant development for the long-term story." Then there's The Fly's less-effusive take over on the iBankCoin blog: "Today's news that AAPL will delve into online radio and pictures is five years too late. Jobs would've never done such nonsense. Or if he did, he wouldn't make a big deal out of it." Read more about the revamp .
Oh, did you grab some of those Apple bonds a few weeks back? Sorry about that .
A breakout in Visa shares? There's some rumbling on that front over on StockTwits , where the stock joins Tibco , Infinity and the National Bank of Greece among the top-trending tickers in the early going.
As for the big movers, keep an eye on Dole after CEO David Murdock offered to take the company private. The stock is up more than 20% premarket. Sprint Nextel is gaining 3% on word of a higher offer from Softbank. Read: Movers & Shakers .
The chart of the day: The second-quarter earnings season is shaping up to be a painful one, if the negative-to-positive guidance ratio is any indication. Of the 116 preannouncements so far, a massive 93 have been negative. Only 14 positive. That's a 6.6 ratio, the worst we've seen since 2001, according to the Alpha Now blog .
With U.S. Treasurys down for a third straight day, the bond crash theme is ringing out again this morning. A global downturn in stocks isn't doing much to help the mood, either.
In the past 30 years, an interest rate rise of more than 50% from lows has happened five times. Three of those instances were followed by an wrenching equity correction of between 15% and 45%. Well, if SocGen strategists are on point, the yield on the 10-year U.S. Treasury will reach 2.75% by the end of the year, surpassing that 50% qualifier.
Of course, there's still a long way to go to reach that number. Yields are up around 2.27% this morning, touching levels not seen in more than a year, after Friday's jobs report fanned speculation of Fed tapering sooner rather than later.
So much for Gundlach's call last week for a 2.15% yield peak.
For those expecting a rotation away from credit and into equities, don't hold your breath, says Barclays analyst Bradley Rogoff. "Using nearly 100 years of data, we find no evidence of a sustained selloff in Treasurys accompanied by a rally in equities and widening in credit spreads, and we believe it is unlikely to happen now," he wrote.
At least S&P is feeling better about the U.S ., which has to be a huge boost for stocks, eh? I mean, to get a sense of the forward-looking, market-shaping power of the ratings agency, look back at how investors have fared since S&P first cut its U.S. credit rating in the summer of 2011. Stocks are only up about 40% over that time.
Key market gauges: With mainland China still on holiday, the rest of Asia was led lower by drop on the Nikkei after the Bank of Japan didn't budge on its asset-buying plan. Of note, the plunge of the Aussie dollar continued. Europe is only doing marginally better but is still suffering declines across all major indexes.
There's no escaping it, sellers clearly have the upper hand everywhere. Futures on the Dow and the S&P are tracking lower , as well. So is gold and crude oil . Read: Futures movers .
The economy: There's a fair amount of data on the way, but nothing to get too concerned with, markets-wise. The NFIB's small-business optimism index hit first , while the Labor Department's job openings data and the Commerce Department's wholesale inventories numbers follow later. Read: Spotlight on the economy .
The buzz: Lululemon shares are facing a nasty start to the session after the yoga clothes retailer handed in its first-quarter results late yesterday and also announced the sudden departure of its chief executive. Looks like the plea from the Lululemon Addict's blog has finally been answered.
CEOs leaving before successor is named w/o a reason .... is not usually what investors want to see $LULU
— Herb Greenberg (@herbgreenberg) June 10, 2013
Apple unveiled its latest mobile operating system on Monday to mixed reviews. On the bright side, Goldman Sachs analysts said it "could be the most significant development for the long-term story." Then there's The Fly's less-effusive take over on the iBankCoin blog: "Today's news that AAPL will delve into online radio and pictures is five years too late. Jobs would've never done such nonsense. Or if he did, he wouldn't make a big deal out of it." Read more about the revamp .
Oh, did you grab some of those Apple bonds a few weeks back? Sorry about that .
A breakout in Visa shares? There's some rumbling on that front over on StockTwits , where the stock joins Tibco , Infinity and the National Bank of Greece among the top-trending tickers in the early going.
As for the big movers, keep an eye on Dole after CEO David Murdock offered to take the company private. The stock is up more than 20% premarket. Sprint Nextel is gaining 3% on word of a higher offer from Softbank. Read: Movers & Shakers .
The chart of the day: The second-quarter earnings season is shaping up to be a painful one, if the negative-to-positive guidance ratio is any indication. Of the 116 preannouncements so far, a massive 93 have been negative. Only 14 positive. That's a 6.6 ratio, the worst we've seen since 2001, according to the Alpha Now blog .
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Thomson Reuters
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The call of the
day: Helix Investment Research is thumbing its nose at Barron's
and its "expansive" critique of Tesla
Motors , telling investors they'd be well-advised to avoid shorting and, in fact, they should buy
on the dips. Why? The Amazon and Salesforce.com factors. Like
those two growth juggernauts, Tesla has a strong institutional base that is
unlikely to want to shed the stock, but would also have a tough time doing so,
Helix wrote. Also, all three are led by formidable CEOs with their net worths
tied to the companies they founded.
Random reads: There are smart and not-so-smart (like, when completely sloshed) ways to tweet for financial advisers. Then there are just really, really mean ways, as read by the NBA players who were targeted.
Not news: Ref sentenced for fixing soccer matches. News: In return for sexual favors .
India, birthplace of Mahatma Gandhi, is developing robotic warriors , with enough "intelligence to enable them to differentiate between a threat and a friend." Oh, good.
Meet the girl Edward Snowden left behind , including shots of her pole-dancing and, of course, reading while scantily clad. Now, she's "lost at sea without a compass."
Need to Know starts early and is updated as needed until the opening bell, but sign up here to get it delivered once to your e-mail box. Be sure to check the Need to Know item. The e-mailed version will be sent out at approximately 8:45 a.m. Eastern. Follow @slangwise on Twitter.
Random reads: There are smart and not-so-smart (like, when completely sloshed) ways to tweet for financial advisers. Then there are just really, really mean ways, as read by the NBA players who were targeted.
Not news: Ref sentenced for fixing soccer matches. News: In return for sexual favors .
India, birthplace of Mahatma Gandhi, is developing robotic warriors , with enough "intelligence to enable them to differentiate between a threat and a friend." Oh, good.
Meet the girl Edward Snowden left behind , including shots of her pole-dancing and, of course, reading while scantily clad. Now, she's "lost at sea without a compass."
Need to Know starts early and is updated as needed until the opening bell, but sign up here to get it delivered once to your e-mail box. Be sure to check the Need to Know item. The e-mailed version will be sent out at approximately 8:45 a.m. Eastern. Follow @slangwise on Twitter.
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