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Need to Know
AUGUST 02, 2013
Gut checks before the stock
market's opening bell
By V. Phani Kumar
Good morning.
One can almost chew on the anticipation in the air this morning as we
barrel down towards nonfarm payrolls data, after what has been an
exhaustive week of earnings and economic data and events. The hope, once
again, is that the number will provide some magic insight into when the Fed
will taper.
But behind
the scenes, some are closely watching what they think is an even more
important number than the nonfarm payrolls figure: Treasury yields. The 30-year bond yield Thursday hit a two-year high
, rising 12 basis points to 3.758%, and the 10-year yield rose 13 bps to
$2.712%.
Amid some
expectations that the 10-year yield could rise much further ,
Michael Snyder describes it as the "vitally important number"
that could potentially collapse the entire financial system if it goes too
high. "There are more than 440 trillion dollars worth of interest rate
derivatives sitting out there, and rapidly rising interest rates could
cause that gigantic time bomb to go off and implode our entire financial
system," he writes .
The economy:
Economists surveyed by MarketWatch see the jobs print for July, due at 8:30
a.m. Eastern, at 180,000. Not really a reason for exuberance, given that
the economy created more jobs on average in the first half of
2013 , but the upside surprises in other employment indicators
this week have lifted the bar of expectations. Consumer spending for June
is also anticipated to have risen at a faster clip.
"With U.S. data posting solid upside surprises this week, market
expectation of a strong NFP report has now become conventional
wisdom," says Boris Schlossberg at BK Asset Management, adding that
only a very large print of 225,000-250,000 jobs could rock prices in North
American trade today. Deutsche Bank is among those calling for a such a print.
Key gauges:
U.S. equity futures were treading tentatively ahead of the jobs data.
Nasdaq 100 futures were up 0.2%, while S&P 500 futures held steady just
a tad above the 1,700-point level. Asian markets strode higher earlier in the
day, with Japan's Nikkei Stock Average soaring 3.3% as the yen dipped back
toward Y100.
But gold prices betrayed the street's
nervousness as they fell more than $20 to slide well under $1,300 an ounce.
The sharp losses perhaps serve as a reminder of the extreme volatility the
metal has witnessed around the last several jobs reports, as detailed in this Bloomberg News report .
The buzz:
LinkedIn is up more than 9% in premarket trades after posting better-than-expected second-quarter results
late Thursday.
And AIG shares are up more than 5% following its earnings beat, and news
the insurer will pay a dividend for the first time since 2008.
Earnings:
Chevron and Viacom v are among the big earnings today, and they are
expected to be markedly different. Where the energy major is seen posting a
sharp drop in both earnings and sales from the year-earlier quarter, in the
same vein as Exxon Mobil , Viacom is estimated to post earnings of $1.30
for the fiscal third quarter, up from 97 cents a year ago.
Berkshire is also due to report results at the end of the market close.
The chart of the day:
Spending on
religious construction, already on a declining trend when the global
financial crisis struck, has taken a much harder blow ever since, as the
above chart shows. Business Insider's thought-provoking headline for the
chart, "The secular bear market in god," says it all.
Religious construction spending dropped as much as 12.2% in June from the
year-ago period, ranking as "one of the notable drags" on overall
construction activity, which slipped 0.6% during the month, according to this report .
Random reads:
As the mercury shoots higher, so does violence. Warmer climate strongly
affects human conflict, according to this study .
Here's a slideshow on how the Chinese are
coping with a heat wave on the other side of the world.
Some of the scariest water slides to chill.
Texas, the state with the highest execution rate in the U.S., is running out of a drug used for lethal injections
.
Glee will "deal directly" with the issue of drug abuse following Cory
Monteith's death due to an accidental overdose, says a top
official at Fox.
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