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Need to Know
JUNE 06, 2013
6 gut checks before the stock
market's opening bell
By Shawn Langlois
Good
morning.
So that's what a hard-hit stock market feels like. Not so bad, eh? Sure,
mounting question marks finally caught up with the bulls, and, like a kick to the shin , delivered the
biggest drop of the year. But let's get real, for those who have been
riding the wave lately, this hardly made a dent.
And, undaunted, U.S. markets appear ready to bounce right back to business
as usual. If they don't, we could see our first three-day losing streak
since last year. Maybe even a 5% drop from the highs, another twist we have
yet to see in 2013.
Then again, you don't endure a 217-point loss on the Dow without a flinch
or two. BTIG's Dan Greenhaus, for one, sees a potential shift under way. He
says equities have been coasting on "givens", specifically the
Fed. Not so, anymore.
"The investment equation appears to be changing and with it, investors
are reallocating, pulling back on what's worked and rethinking," he
wrote. "Friday's payroll figure is unlikely to change this
indecisiveness and investors will probably have to wait until the June 19 Fed
statement and press conference for anything 'new'."
While one bubble maker (the Fed) continues to get beaten up by its
detractors, another is getting showered with love. For good reason. (More
on that below).
Key market gauges: No recovery on tap from the damage brought
on by yesterday's disappointing economic roadmap
from Japan's Shinzo Abe. Overall, Asian stocks fell as the Nikkei
plumbed levels it hasn't seen since early April. Europe, on the other
hand, is sneaking higher early after the ECB kept the main lending rate
unchanged at 0.5%.
Futures on the Dow and the S&P are showing signs that a
rebound could be on offer when trading gets underway.
The economy: In the final warm-up for Friday's jobs
report, the Labor Department reported that the number of people who applied
for new unemployment benefits fell by 11,000 to 346,000 last week but
initial claims remained in a range indicating modest improvement in
job-market trends. Economists were looking for 345,000. At the same time,
ECB President Mario Draghi is holding his monthly presser . At noon, the Fed
unveils its flow-of-funds report, which should show continued growth in
household wealth. Finally, Philly Fed President Charles Plosser heads to
Boston College to talk about too-big-to-fail banks. Read: Spotlight on the economy .
The buzz: SodaStream doesn't typically need big news to
be one of the top trending tickers, so it goes without saying that word of a $2-billion buyout from PepsiCo
is enough to throw investors into a cyber frenzy. Just wait until
Coke enters the picture, as the Calcalist newspaper reported as a
possibility. SodaStream shares are currently up about 6% premarket but they
were up a whole lot more earlier before reports of Pepsi's denial.
BREAKING NEWS: Pepsi's Indra Nooyi just emailed me on SodaStream
acquisition rumor: "Totally and completely untrue."
— Becky Quick (@beckyquickcnbc) June 6, 2013
Today's the day GM drives back into the S&P 500, where it reigned
as the biggest company in the index for some 30 years. It was banished in
2009 after its bankruptcy. At the same time, the U.S. Treasury plans to unload 30 million GM shares . The
combo of the two should keep the stock in play in regular trading.
Also keep an eye on VeriFone Systems and Vera Bradley . Both stocks
are poised to slide on disappointing results. Read: Stocks to watch .
The chart of the day: Duru Ahanotu of the One Twenty-Two blog
just closed his long-standing short position in Facebook amid a stubbornly bullish commitment investors
seem to have to the stock. He says that, despite the current price drop,
short sellers aren't really biting, as short interest is at a lowly 1.6% of
float. "A price decline that garners little bearish interest is a
decline that will maintain a lot of fuel from buyers turning into capitulating
sellers," he writes.
Ahanotu is still looking for the stock to hit $20 at some point this year
but said that there's no telling how high this bullish bent could take it
in the short-term. Here's his illustration of what he calls "a classic
example of stock under distribution." What could possibly follow up
the sinister Hindenburg Omen descriptor? How about the "abandoned baby
bottom" that popped up last week when two analysts upgraded the shares ? See if
you can spot it in the chart. I know I can't.
The call of the day: Andrew Coleman of Raymond James,
in an interview this week with The
Energy Report, diverges from the pack with his call for an oil glut in
2014. An oil glut. He points to rising shale oil production and
waning demand from China as two primary drivers. He also says we'll
see a "continued evolution" toward natural gas, which will
"ultimately kick-start the next big wave of economic expansion."
Maybe right in time for tapering? At any rate, his favorite stock right now
is Anadarko Petroleum and he said it could see $130 a share. Why? The
resolution of the Tronox bankruptcy is just one of the "numerous"
catalysts on the horizon.
Random reads: "Little n----r, for every goal you
score, you're gonna get a banana." AC Milan stars Kevin Prince-Boateng
and Mario Balotelli are featured in this ripping tale from ESPN about "when the beautiful game turns ugly."
Bilderbergers, a vanishing media contact and "the Great Wall of Watford."
Beginner's luck for this Roman coin finder .
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