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Need to Know
JUNE 19, 2013
6 gut checks before the stock
market's opening bell
By Shawn Langlois
Good
morning.
Surely, Ben Bernanke is going to miss days like this when he steps down.
Or gets fired . The breathless
anticipation. The power. The fame. The being likened to the Wizard of Oz , Wile E. Coyote and a breast-feeding mother to Citigroup's Jamie Dimon
.
But he's not gone yet, and until one of these guys takes his place, the
markets will continue to hang on his every word. Especially when the latest
and most important Fed meeting of all time (since the previous
one) is upon us. As Dan Greenhaus put it in his note last night: "The
nerds remain in charge and tomorrow is their Bonnaroo ."
Markets are clearly anticipating a soothing, QE-friendly tone out of Ben's
Bonnaroo. But traders have reason to approach today's fray with trepidation ,
if the meeting from a year ago is any indication. At that time, the Dow had
surged 341 points heading into the meeting. The three days that followed
saw the blue chips give it almost all back.
Needless to say, get ready for some short-term mayhem.
Key market gauges:A sixth-straight triple-digit move on the
Dow industrials , and stocks aren't done yet. In the early going, futures
on the Dow are poised to extend yesterday's 138-point climb. The
Nikkei bucked weakness in other corners of Asia , with a 1.8%
surge, while Europe is pretty much flat across the board.
Small-caps are on fire lately, with the Russell 2000 bumping up
against record highs. George Leong of Profit Confidential says this is the place to be .
The Fed:Trading will be well underway before Bernanke takes
the mic around 2:30 p.m. Eastern, so whatever shape the markets take early
won't mean much compared with what we'll see when taper talks begin. No big
changes are expected, to either interest rates or the quantitative easing
program. It's all about reading the signals and overreacting feverishly to
them. Read: How to trade the Federal Reserve decision
.
The buzz: Adobe shares are up 5% premarket after the
software company reported a better-than-expected profit for its
second quarter. Moving in the other direction, La-Z-Boy is wilting in the
wake of its results.
Nokia is still trending on Market IQ after a report that it could be an acquisition target sent the
stock up 4.6% yesterday. The potential suitor, Huawei, later said, however,
it has no plans to buy the Finnish phone maker.
Other stocks on the clicks list include Gevo , General Electric and
Hormel , which took a hit after the company cut its 2013 outlook .
Keep an eye on Dell , too. The stock is edging higher on word of Carl Icahn
stepping up his bid to take control of the
company by nearly doubling his stake.
There hasn't been much in the way of negative headlines from Tesla
amid its scorching stock run lately, but founder and CEO Elon Musk
tweeted that the company is recalling about 800 of its Model S
vehicles . It doesn't look like a big deal -- no injuries or
complaints, they'll pick it up for you -- but it should still be more than
enough to stir up the electric-car maker's detractors.
On the earnings front, FedEx is drifting lower after its report,
with Micron on deck. Read: Stocks to watch .
The chart of the day: Here's a breakdown on how various asset
classes have fared since QE3 started and since the Fed first began dropping
hints of a taper.
The
call of the day: Stay clear of Citigroup
because the stock is entering David Trainer's "danger zone"
this week and he says the current price "is simply out of touch with
reality." Bulls are banking on the fact that a rising-interest-rate
environment would prove to be a further tailwind for the shares, but
Trainer says there are bigger issues here. "Investors and analysts are
missing red flags in the footnotes and making mistaken assumptions about
future profitability," he wrote on Seeking Alpha. "The end result
is that Citi's valuation is out of sync with its fundamentals."
Random reads: Pulling all-nighters might be the key to your success .
"Writers of his courage and talent are so rare, and he was taken way
too soon." BuzzFeed mourns the loss of Michael Hastings . But we
don't usually visit BuzzFeed to feel sad. We visit to check out cool toilets and stuff .
Home of Patriots' star searched after an "associate" of his was
found dead nearby. One distraught neighbor voiced her concern:
"We need the Patriots to win!"
There's still a couple months before we get back to "Breaking
Bad". In the meantime, this Reddit AMA with Bryan Cranston might
help ease the withdrawal.
The most dominant figure in sports isn't LeBron or Michael Phelps. It's
Serena Williams. Read about how she definitely DOES NOT blame the girl in
the Steubenville rape case. But really, "why was she that drunk?"
Need to Know starts early and is updated as needed until the opening
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