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Need to Know
JUNE 27, 2013
6 gut checks before the stock
market's opening bell
By Shawn Langlois
Good
morning.
U.S. stocks are back in rally mode for the time being -- nothing inspires
like a downward revision to the GDP, apparently. While there's a calm
settling over equity markets, hammers are still raining down in precious
metals and fixed income. As we've come to expect, gold bugs are out in
force being "constructive." Hey,
there's Frank Holmes on CNBC right now, touting
the stuff. It could be worse; at least it's not 1976. Yet. (More on that
below).
Not to be outdone, the bond guys are doing their best to ease fears.
Pimco's Bill Gross is slinging some nautical metaphors in our call of the
day: "Should you as a bond investor jump overboard and risk the cold
money market Atlantic Ocean at near zero degrees? We don't think so."
As for stocks, volume has picked up lately, particularly on the down days,
which tells us investors have more conviction in the market when it's moving
lower . Not the most bullish of indicators.
But with trading set to lighten up a bit as we head into a shortened week,
there's a statistical tidbit pointing to some steady sessions in the days
ahead. The S&P has historically fared leading up to the Fourth of July.
Not exactly fireworks, but over the past two decades, buying five days
before the break and then selling on the eve of the holiday has been a winning bet 65% of the time , with an
average profit of 1.04%. From 1994 through 2001, that trade never lost.
That's... something.
Key market gauges: Gold isn't any healthier this
morning after yesterday's brutal 3.6% drop took it down to its lowest
close since August 2010. Silver , which was also hit hard, is feeling a
similar tug lower. Today's economic reports could go a long way in shaping
where they go from here.
There seems to be at least some follow-through from Wednesday's rally
shaping up in the U.S. markets. Futures on both the Dow and the
S&P are notching slight gains in the early hours.
The Nikkei ended the day with a 3% surge, leading Asia higher.
The Shanghai Composite , however, still can't find its footing amid worries
over policy outlook. Europe is hovering, with none of the major
indexes in the region moving more than 1% in either direction.
The economy: Consumers likely picked up their pace of
spending in May after pulling back in April. We'll find out by how much
when the Commerce Department releases the data at 8:30 a.m. Eastern.
Economists are looking for a 0.3% rise. At the same time, weekly jobless
claims will hit, with expectations calling for a drop to 345,000 from
354,000. Later in the day, pending home sales for May are due and we'll
hear from a trio of Fed speakers. Read: Spotlight on economy .
The buzz:Microsoft , in a break from the norm, seems to be
drawing more praise than jeers for its Windows 8.1 upgrade . The stock rose
2% after its developers conference kicked off yesterday and is inching
higher premarket. Read: Microsoft quickens its pace, but can it catch
up?
With his bullish call on Treasurys spinning out of control, DoubleLine bond
boss Jeff Gundlach will likely do some spinning of his own during an impromptu conference call slated for
4:15 p.m. Eastern. Gundlach previously targeted a year-end yield on the
10-year of 1.7%. He also said he didn't see it going above 2.5% this year.
Well, it's above that level right now. So, in his own words, "what in
the world is going on?"
BlackBerry is the top trending ticker on StockTwits ahead of its
earnings report due out Friday. Also on the list are Pandora , Fortinet
and several gold- and silver-related stocks.
On today's earnings docket, Accenture , Nike and KB Homes are
expected to report their quarterly results. Read: Stocks to watch .
The chart of the day: This gold slide has been brutal, but
it's nothing compared to what happened in 1976, as this chart from the Short Side of Long blog clearly shows.
"I am not necessarily saying that gold will correct as bad as it did
in mid 1970s, but it very well could," wrote blogger and fund manager
Tiho Brkan. "And to make matters even worse for the perma-bulls out
there, why couldn't gold fall even more than in 1976?" He's still a
precious-metal bull, however, saying the current downtrend and discounted
prices offer a lifetime buying opportunity. "We are moving closer
towards a global currency crisis, which will affect confidence of all
investors and the only way to protect yourself is to own some precious metals,"
Brkan wrote.
The
call of the day:While Gundlach prepares to
explain his latest stance, Pimco's Bill Gross, another bond guy who's been
beaten up this year, waxed naval in his effort to soothe
investor fears about where the bond market is headed. "We may have
reached an inflection point of low Treasury, mortgage and corporate yields in
late April, but this is overdone," he wrote. We won't be seeing the
kind of annualized returns in stocks and bonds we've enjoyed in the past 20
or 30 years, but you can expect 3% to 5% for both in the coming years, he
said.
Random reads: "If wine is [BS], then isn't everything
else we eat and drink [BS] too?" So, maybe we can't tell the
difference between cheap and expensive wines, but what
about cheap and expensive meat and fish ?
Japan's public broadcaster is accused of using too many English words. One
sufferer of "mental distress" is suing NHK for 1.41 million yen .
A University of Edinburgh professor says he might have figured out how to
detect massive alien spaceships powered by stars.
Samsung rolls out its $13,000 curved TV .
Pakistan is loving Facebook .
BuzzFeed tells us what "risk parity" funds have in common
with Steve Carell. And how Glenn Greenwald became Glenn Greenwald . But Barack Obama
doesn't care, he's getting his Daft Punk on .
Lambos and Ferraris arrive in droves for the summer, wreaking havoc on
central London's streets. Not a single tear was shed when this glow-in-the-dark Aventador was seized
by the police.
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