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Need to Know
JUNE 20, 2013
6 gut checks before the stock
market's opening bell
By Shawn Langlois
Good
morning.
"I'm like King Midas in reverse," Fed chief Ben Bernanke admitted
in Wednesday's press conference.
Actually, no, that quote came from the late great James Gandolfini in his
role as beloved thug Tony Soprano. But it might as well have come from
Bernanke after yesterday's complete market meltdown. Or as Mike Shedlock
describes it: a "hissy fit over fluff."
Well, investors are still hissy-fitting this morning, and it's not just
U.S. equities that are mired in full retreat mode. Gold is a mess. So are
the global markets. Perhaps a slew of economic data and a key report from
the tech sector today can help turn the tide?
Don't count on that happening in this environment, according to Shedlock,
who says "the current markets are all about liquidity and speculation
and nothing about fundamentals (in case you did not realize that
already)."
Triple-digit-swing day number eight, here we come.
Key market gauges: Gold prices are cratering, off
about 6% and touching on levels not seen in more than two years. "As a
trader said to me a few minutes ago, it's a bloodbath at the moment , with most
technical support levels being broken, we could still see $1,280, then
$1,265 being hit today," said Austin Kiddle, director at Sharps
Pixley. It's not a whole lot better for stocks either, as futures on the
Dow and the S&P aren't giving investors much hope for a
rebound in the wake of yesterday's carnage. Read: Indications .
Sellers aren't being picky. Asia was hit hard, bogged down by near-3%
drops in most major indexes. Europe is reeling midday, as well, with
Germany's DAX leading declines in the region.
The economy: The number of people applying for
unemployment benefits last week jumped by 18,000 to 354,000 , putting
initial claims back near the recent average and indicating little change in
a modestly improving labor market. Economists were looking for only
340,000. Later, we'll get Markit Flash PMI data and the Philly Fed Survey.
The full calendar also includes leading economic indicators and existing
home sales, both at 10 a.m. Eastern. Read: Spotlight on economy .
For its part, China's central bank stayed away from any open-market operations
, opting not to inject liquidity into a cash-starved banking system, even
with rates on short-term repurchase agreements skyrocketing.
The buzz: Oracle's offseason earnings report will
hit after the market close, with one analyst looking for how Larry Ellison and co. have fared
during "treacherous pockets of weakness" in the corporate
software market. Retail food chain Kroger is also on the light
earnings docket. Read: Stocks to watch .
Men's Wearhouse is still one of the top stories on Google's business
page this morning after the public ousting of founder, chairman,
and celebrated marijuana advocate , George
Zimmer a day earlier.
Understandably, gold related tickers, including GLD , DUST and NUGT
are dominating the trending list on StockTwits.
UBS lowering its #gold forecast today one month call to
$1250 from $1425 and 2013 forecast to $1440 from $1600 - brace for the
downgrades!
— Alix Steel (@adsteel) June 20, 2013
The chart of the day: When the market derails like it did yesterday,
cash starts looking pretty good. But this chart from BlackRock shows how
being scared out of equities and seeking the safety of the mattress could absolutely crush you in your golden years
. After all, BlackRock points out that cash has averaged a negative real, after-tax return
dating back to 1926 while stocks come in at 4.5% annually. "Put
simply, the more cash retirees hold, the greater the risk they will outlive
their assets." Of course, you'd be forgiven for your hesitation to
leap headlong into equities right now, but this is through a long-term
lens, especially if you plan to live to 100 .
The
call of the day: The U.K. is the next
U.S., according to UBS analyst Nick Nelson. For that reason, he upgraded
the region to overweight, citing a decoupling from Europe, easing credit
and rising home prices. "There is a political angle as well, as the
government attempts to kick-start the economy ahead of the 2015
election" Nelson said. Pockets of strength include domestic banks,
homebuilders and real estate, he said.
Random reads: On this day, I forgive you for "The Last
Castle" and the fake salute. RIP Gandolfini . Check out some of his finest moments , from Gawker.
At least James can afford a proper funeral, unlike this guy .
Lawyer: "Have you ever used the 'N' word?" Paula Deen: "Yes, of course."
Bad: A brain hemorrhage that has you fearing for your life. Worse: The idea
of being caught dead with porn still playing on your TV. Read and watch
more about "Busty Cops 3" and Bret Michaels's brush
with death .
Need to Know starts early and is updated as needed until the opening
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