5 gut checks before the stock market opens
By Barbara Kollmeyer
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Reuters
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Good morning.
This time five years ago the world was waking up to the Lehman collapse and a kickoff to financial chaos. Fast forward and it's a "risk-on" Monday thanks to Larry Summers, who has taken himself out of the race to become Fed chairman, and Syria. Stock futures are soaring and the dollar is in the dumps.
In the words of Hedgeye's Keith McCullough , investors should always "embrace the improbable." Though some betting sites saw him as a shoe-in, Summers apparently realized his confirmation process would be no picnic . His exit may pave the way for less-hawkish Fed Vice Chairwoman Janet Yellen, who isn't expected to go tapering quite aggressively as her former rival, one reason markets are flying so high this morning.
Pimco's Mohamed El-Erian says Yellen back in the running ups chances of "broad policy continuity" at the Fed, which is bullish for U.S. interest rate curve trades and risk assets. The yield on the 10-year is off a fair bit on the news. Sober Look , meanwhile, warns against thinking Yellen is a done deal and ticks off plenty of investor pitfalls. In other words, don't go risk-crazy just yet.
One good reason? This is the week that tapering may begin, with a two-day FOMC meeting due to wrap up on Wednesday. Economics polled in a recent WSJ survey say the Fed will likely pare back its $85 billion-a-month bond buys by around $15 billion a month. That may not shake up stocks too much, say analysts, but we could get surprised one way or the other. Read about what to expect besides the taper.
Stock futures are also getting a lift from that other piece of weekend news -- Russia and the U.S. struck a deal over Syria's chemical stockpile.
Key market gauges: The bow-out by Summers lit a fire under Asia stocks and Europe followed suit. Futures on the Dow d, the S&P and the Nasdaq are pointing due north.
The dollar is dropping like a stone on Summers news, which has helped gold out a bit. Oil is getting hit by Syria deal news .
The economy: A smattering of data is due out later, including the Empire State index at 8:30 a.m., and industrial production and capacity utilization at 9:15 a.m.
The buzz: Shares of Boise are up 28% in premarket after Packaging Corp. of America says it will buy all outstanding Boise shares for $12.55 in cash, plus debt, making for a premium over Friday's close of $9.96. PKG is also up nicely ahead of the open.
Is a so-called 'golden cross' setting Apple up for a rebound? A golden cross can suggest a bull market is ahead for the stock and occurs when a short-term indicator such as the 50-day moving average breaks above the longer-term 200-day moving average. Read more . Also, Apple vs. Facebook, which is the better buy?
The call of the day:If you had been up a few hours earlier, you would have seen gold soaring far higher. The benefit of a weaker dollar has been a lift to the downtrodden shiny stuff. But SpreadEx's Max Cohen says keep the gains in perspective and notes that without Summers at the Fed, demand for gold as a hedge against inflation has weakened. Plus, Goldman Sachs said Friday that gold could held below $1,000 for the first time since October 2009.
"Considering that gold fell some 4.57% last week, this could simple be ambitious traders seeking a bargain. Alternatively, with some quarters questioning Obama's leadership in regards to Syria, there could perhaps be fears that stability in the region may not be as rosy as first thought," says Cohen.
If investors have priced in a Fed stimulus withdrawal starting this week, the gold rally could be sustained, but Cohen doesn't think these gains aren't going to last.
Recent flows on gold also looked pretty weak, according to Commerzbank. Speculative net long positions fell by 10.6 thousand contracts in the week to Sept. 10, and at 7.5 tons, gold ETFs saw their most pronounced daily outflows since the beginning of August on Friday.
Random reads: Newly crowned Miss America Nina Davuluri, and first winner of Indian descent, probably helped nail it with this dance routine. Of course, where there is beauty, there are also a few Twitter trolls .
Marking the Lehman collapse anniversary, former Barclays head Bob Diamond says leverage was too high in the boom years. Oh, get away, Bob!
Playing soon at a gym near you, the Princess of Pop's new single .
oh so everyone is just going to pretend that new Britney Spears song is good? ok then
— Elijah Daniel (@aguywithnolife) September 16, 2013
Cheer up Larry Summers, at least you didn't marry a Kardashian .
The one thing you should never say to a customer, especially if you are CEO.
Need to Know starts early and is updated as needed until the opening bell, but sign up here to get it delivered once to your e-mail box. Be sure to check the Need to Know item. The e-mailed version will be sent out at approximately 8:45 a.m. Eastern. Follow @bkollmeyer on Twitter.
This time five years ago the world was waking up to the Lehman collapse and a kickoff to financial chaos. Fast forward and it's a "risk-on" Monday thanks to Larry Summers, who has taken himself out of the race to become Fed chairman, and Syria. Stock futures are soaring and the dollar is in the dumps.
In the words of Hedgeye's Keith McCullough , investors should always "embrace the improbable." Though some betting sites saw him as a shoe-in, Summers apparently realized his confirmation process would be no picnic . His exit may pave the way for less-hawkish Fed Vice Chairwoman Janet Yellen, who isn't expected to go tapering quite aggressively as her former rival, one reason markets are flying so high this morning.
Pimco's Mohamed El-Erian says Yellen back in the running ups chances of "broad policy continuity" at the Fed, which is bullish for U.S. interest rate curve trades and risk assets. The yield on the 10-year is off a fair bit on the news. Sober Look , meanwhile, warns against thinking Yellen is a done deal and ticks off plenty of investor pitfalls. In other words, don't go risk-crazy just yet.
One good reason? This is the week that tapering may begin, with a two-day FOMC meeting due to wrap up on Wednesday. Economics polled in a recent WSJ survey say the Fed will likely pare back its $85 billion-a-month bond buys by around $15 billion a month. That may not shake up stocks too much, say analysts, but we could get surprised one way or the other. Read about what to expect besides the taper.
Stock futures are also getting a lift from that other piece of weekend news -- Russia and the U.S. struck a deal over Syria's chemical stockpile.
Key market gauges: The bow-out by Summers lit a fire under Asia stocks and Europe followed suit. Futures on the Dow d, the S&P and the Nasdaq are pointing due north.
The dollar is dropping like a stone on Summers news, which has helped gold out a bit. Oil is getting hit by Syria deal news .
The economy: A smattering of data is due out later, including the Empire State index at 8:30 a.m., and industrial production and capacity utilization at 9:15 a.m.
The buzz: Shares of Boise are up 28% in premarket after Packaging Corp. of America says it will buy all outstanding Boise shares for $12.55 in cash, plus debt, making for a premium over Friday's close of $9.96. PKG is also up nicely ahead of the open.
Is a so-called 'golden cross' setting Apple up for a rebound? A golden cross can suggest a bull market is ahead for the stock and occurs when a short-term indicator such as the 50-day moving average breaks above the longer-term 200-day moving average. Read more . Also, Apple vs. Facebook, which is the better buy?
The call of the day:If you had been up a few hours earlier, you would have seen gold soaring far higher. The benefit of a weaker dollar has been a lift to the downtrodden shiny stuff. But SpreadEx's Max Cohen says keep the gains in perspective and notes that without Summers at the Fed, demand for gold as a hedge against inflation has weakened. Plus, Goldman Sachs said Friday that gold could held below $1,000 for the first time since October 2009.
"Considering that gold fell some 4.57% last week, this could simple be ambitious traders seeking a bargain. Alternatively, with some quarters questioning Obama's leadership in regards to Syria, there could perhaps be fears that stability in the region may not be as rosy as first thought," says Cohen.
If investors have priced in a Fed stimulus withdrawal starting this week, the gold rally could be sustained, but Cohen doesn't think these gains aren't going to last.
Recent flows on gold also looked pretty weak, according to Commerzbank. Speculative net long positions fell by 10.6 thousand contracts in the week to Sept. 10, and at 7.5 tons, gold ETFs saw their most pronounced daily outflows since the beginning of August on Friday.
Random reads: Newly crowned Miss America Nina Davuluri, and first winner of Indian descent, probably helped nail it with this dance routine. Of course, where there is beauty, there are also a few Twitter trolls .
Marking the Lehman collapse anniversary, former Barclays head Bob Diamond says leverage was too high in the boom years. Oh, get away, Bob!
Playing soon at a gym near you, the Princess of Pop's new single .
oh so everyone is just going to pretend that new Britney Spears song is good? ok then
— Elijah Daniel (@aguywithnolife) September 16, 2013
Cheer up Larry Summers, at least you didn't marry a Kardashian .
The one thing you should never say to a customer, especially if you are CEO.
Need to Know starts early and is updated as needed until the opening bell, but sign up here to get it delivered once to your e-mail box. Be sure to check the Need to Know item. The e-mailed version will be sent out at approximately 8:45 a.m. Eastern. Follow @bkollmeyer on Twitter.
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