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Need to Know
JUNE 26, 2013
6 gut checks before the stock
market's opening bell
By Shawn Langlois
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Flickr/Marc van der Chijs
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Good
morning.
While mom and pop were busy selling their way out of the nasty market in
recent weeks, besuited sharks in Manhattan skyscrapers were happy to take
the other side of the trade, according to a recent index .
State Street's Paul O'Connell, who helped develop the gauge, said that
"while the prospect of an end to quantitative easing in the U.S. has
caused a spike in bond yields and a selloff in equities, institutional
investors have viewed this as an opportunity to add equity risk at the
expense of bond holdings."
Nothing screams risk like gold miners these days. But before you trot out
the "falling knife" warning, you might be surprised (I was) to
learn that buying clobbered assets over the years has actually, on average,
delivered some massive returns, if Mebane Faber's latest plunge into the data
is any indication. He took a look at some obliterated assets, like tech in
2002 and homebuilders in 2009, and found that when something is slammed by,
say, 80%, its usually a "great time to be wading in."
Tempted yet?
Key market gauges: A fluctuating session for the Nikkei
ended with a 1% dip, while the Shanghai Composite declined for the 15th time in 17 sessions . The rest of
Asia managed to post gains, led by the Hang Seng's 2.4%
rally. Europe is up for the second straight day, led by a 1.3% rally
in Spain's IBEX 35 .
Gold and silver are getting hit hard after yesterday's strong
economic data supported the stance that the Fed will back off the pace of
its easing this year. Futures on the Dow and the S&P are
shaking off tapering concerns early, with both building on Tuesday's bull
run.
The economy: Yesterday's flood of economic data turns into
more of a trickle today. Of note, the Commerce Department reported that the U.S. economy grew a lot slower in the
first quarter than previously believed, mainly because of less consumer
spending on services and weaker business investment. GDP rose by 1.8%, down
from a prior estimate of 2.4%. Economists had expected growth to remain
unchanged at 2.4%. Separately, Minneapolis Fed President Narayana
Kocherlakota told CNBC this morning that the bond-market reaction to
last week's Federal Reserve decision was "outsized", adding that
the Fed needs to defend its 2% inflation target both from above and below.
The buzz: Gold-related ETFs are trending in light of the
metal's tough morning, with Direxions Daily Gold Miners Bull 3x
Shares , SPDR Gold Trust and Market Vectors Gold Miners
leading the way on StockTwits.
Watch out
for headlines out of Microsoft's Build 2013 developers conference,
which is expected to show off some upcoming changes to the software maker's
Windows 8 operating system. The event, seen as a high-stakes move for Microsoft , is
scheduled to start at noon Eastern in San Francisco.
The deal forged between fierce rivals Oracle and Salesforce.com
is still a hotly-debated topic . ZDNet said
"if you listen closely you can almost hear Ellison holding Benioff's
head over the toilet and threatening to flush as the two were negotiating a
nine-figure software deal." Read more about "the peace offensive" and
why it's "make or break" time for
Oracle.
Two other movers to keep an eye on once trading gets underway include Apollo
, falling after its report, and AeroVironment , heading in the other
direction on its upbeat numbers. Read: Apollo shares fall after-hours on results
.
The chart of the day: The "global breadth
rule" just triggered a contrarian buy signal , says
BofA/Merrill Lynch analyst Michael Hartnett, and it has a strong track
record of foretelling short-term pops. He said the most oversold markets are in China,
Brazil and Turkey, while Japan and the U.S. are the least. The signal is
generated "when a net 88% of markets in the MSCI All Country World
Index are trading below both their 200-day moving average and 50-day moving
average."
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Bank of America/Merrill Lynch
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The
call of the day:Credit Suisse is bearish on
China growth in the medium term and recommends checking out some short
opportunities in miners, steelmakers, and mining equipment companies.
Specifically, analyst Andrew Garthwaite said Sandvik , which has lost more
than 20% in the past six months, is too expensive at these levels. He also
pointed out that the Aussie dollar "is still 40% overvalued and
has a lot further to fall." Read the full note .
Random read: Maybe Edward Snowden should consider fleeing
"to a nation with widespread public hostility to the U.S., such
as the U.S."
A look back at the double life of Marc Rich , who passed
away today in Switzerland.
The 100 smartest cities in America .
The billionaire's sex tape that nobody asked for .
Dan Quayle's "I'm so happy to be in the great state of Chicago"
and 19 other geographical and travel-related gaffes
.
Glastonbury is upon us, but is it still worth it ?
Wendy Davis's occupation? Apparently she's "the LeBron James of
filibustering." More on "how the Internet won and abortion rights lost in Texas," from
The Daily Dot.
What confuses Texas Republicans: 1) Women 2) Science 3) Clocks #StandWithWendy
— Greg Greene (@ggreeneva) June 26, 2013
Wendy Davis is Khaleesi @WendyDavisTexas #standwithwendy pic.twitter.com/Kf9P0gedI4
— Rosh (@coconutstripes) June 26, 2013
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