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Need to Know
AUGUST 22, 2013
7 gut checks before the stock
market's opening bell
By Shawn Langlois
Good
morning.
The Fed minutes, abridged: The taper is coming. At some undetermined time.
After now, but before much later. Probably. Thank you, bold stewards of the
U.S. economy.
While the minutes obviously didn't offer a whole lot more than a retread
from the last time we heard from the central bank, the stock market still
went full schizo. Nobody could have seen those wild swings coming, not even
the resident soothsayers at CNBC.
As Zero Hedge suggests, "grab the popcorn" and enjoy "the
almost-perfect top-tick timing" of this segment . Fortunately, MarketWatch,
the paragon of rational markets coverage (right, Paul? ), has never suffered such
indignities.
At any rate, there's nothing on tap today as sexy as the, uh, Fed
minutes, though China and Europe data is triggering some cheers from the
aisles. Meanwhile, we'll tuck into a few prevailing themes that will likely
stick with us through the summer wind-down, including the newfound love for
European stocks and the cataclysmic potential of spiking interest rates
(more on both below).
Key market gauges: The Indian rupee just keeps
breaking down to new lows. Deutsche Bank predicts that it could drop all the way to 70 rupees to
the dollar. Asia stocks came off their lows after a surprise improvement in
China's factory data, but India's Sensex and the rest of Asia all
closed lower, with Philippine's main index losing 6%.
Europe is rallying after a combination of upbeat home and Chinese
data, while futures on the Dow and the S&P are also paving the way for
a move up when the regular U.S. trading session opens.
The economy: The number of people filing new
applications for unemployment benefits is expected to bounce to 330,000
from 320,000 a week earlier. The level of claims two weeks ago was the lowest
since fall 2007. The Labor Department will release the report at 8:30 a.m.
Eastern. Then, a pair of reports are expected to show U.S. manufacturing
expanded in August and home prices rose in June. Finally, we'll get a look
at the leading economic index. See: Spotlight on economy .
Away from the U.S. is where the excitement has been so far. HSBC said Chinese manufacturing rebounded
to a four-month high of 50.1 in August, closer to the official data than it
has been before.
And Europe, the darling of the moment, also pushed out some decent numbers.
Business activity in the euro zone expanded at the fastest pace in more
than two years, while Germany's composite PMI rose to a seven-month high.
Earnings: From the perceived uber-chic to the meh, it's not
been great news. Starting with Abercrombie & Fitch , this tweet sums it
up pretty good.
Ummmmmmmmmmmmmmm where are the REST OF ABERCROMBIE'S EARNINGS?? $LOL $ANF
— Brian Sozzi (@BrianSozzi) August 22, 2013
The company, which has offended those who aren't svelte, posted some
cover-your-eyes bad results, with shares down 19% in premarket. Sozzi also
points out that ANF execs have been selling, selling, selling this past
quarter.
Sears Holdings is dropping over 5% in premarket as its losses
widened.
The buzz: Hewlett-Packard is pulling back
premarket after the company reported quarterly results yesterday that
just missed expectations. Still, the stock was up 80% for the year before
today's retreat. Hain Celestial is heading in the other direction
following its results .
With Marissa Mayer shaking things up, Yahoo beats out Google in
U.S. traffic, regaining the top spot for the first time
since 2011.
Yahoo: A Place to Go Two or Three Times a Year When Google Isn't Loading
— Eric Ledgin (@iamledgin) August 16, 2013
Agency pushes back on Tesla's
safety-ratings claim.
Wells Fargo , the biggest U.S. home lender, will slash 2,300 jobs in mortgage
production. This is to more closely align itself with the reality of
slumping demand for refinancing, which will likely persist as interest
rates rise.
The chart of the day: Michael Gayed, one of our top
Trading Deck contributors who goes by @pensionpartners
on Twitter, tweeted this chart to illustrate the dangers of yield spikes.
Here's a look at which major calamities took place each time corporate bond
rates jumped to the degree we're seeing now. Cause for concern?
The
call of the day: The rotation into European
stocks isn't just a flight of fancy, according to David Herro, who manages
the $21 billion Oakmark International Fund and was previously tagged by
Morningstar as the decade's best global stock picker. He told CNBC that the
best way to play the recovery overseas is to invest in the
region's banks, including names like Credit Suisse , BNP Paribas , Lloyds
and Allianz .
Random reads: Feeling blue? A recent study confirms what
my college roommates already knew 23 years ago -- marijuana can fix that .
Terrible. The German tourist who had her arm bit off a week ago died last night .
Thanks to the wonder of Twitter, we now know New Yorkers are generally happier in parks than they
are on the subway. The kicker: They're also happier on weekends.
For only $35,390 -- or a whole lot of dirhams -- the biggest hotel suite in the United Arab
Emirates can be yours for one night.
You know when you just about bruise the palm of your hand trying to get
that ketchup to pour? Relax, it's probably just rodent fur .
Need to Know starts early and is updated as needed until the opening
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