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Need to Know
APRIL 04, 2013
6 crucial gut checks before the
stock market's opening bell
Good
morning.
The market is getting to know Haruhiko Kuroda . The Bank of Japan's new
governor wasted no time making his mark, with the central bank on Thursday
launching an aggressive easing program aimed at whipping deflation now .
Markets applauded, with the yen plunging and the Nikkei jumping. That's
extra impressive given that markets had already been banking on some
shock-and-awe from the new governor.
It's a busy day for big central banks, but Kuroda may have stolen the
limelight. The Bank of England sat on its hands for another month, as
widely expected as its policy meeting concluded. European Central Bank
President Mario Draghi also stood pat Thursday, despite a string of data -- including Thursday's
weak services PMI readings -- that's undermined faith in the ECB's
expectations for the euro zone to begin emerging from recession later this
year. But investors will be hanging on his every word at the ECB presser
later.
For U.S. markets, it will be interesting to see how San Francisco
Federal Reserve Bank President John Williams's assertion that the Fed could
begin to taper its bond-buying
program by summer if there's a substantial improvement in the labor outlook
affects market psychology.
"Aside from an absolute shocker with the economic data, this would
appear to be the most likely catalyst for a big reversion in equity
markets, but traders will probably be left looking for more clarification
here before scrambling for the lifeboats," said Fawad Razaqzada,
market strategist at GFT Markets.
Key market gauges: Japan's Nikkei 225 index
jumped as the Bank of Japan pulled out the big guns, posting a 2.2% rise.
The yen plunged, with the dollar soaring 2.6% versus the
Japanese unit to 95.37 yen. U.S. stock index futures were posting modest
gains, while Europe's main indexes were hovering near
unchanged ahead of the central bank decisions.
The economy: Labor data came in with a thud on Thursday,
taking some wind out of stock futures. Weekly jobless claims jumped 28,000 to
385,000 in the worst reading since November. That may bode a bit darkly for
that prepare for that all-important March nonfarm payrolls report on
Friday.
Some economists have already cut their payrolls forecast after
weaker-than-expected ISM readings and a disappointing
private-sector payrolls report from Automatic Data Processing . The direction
claims take could help tilt market expectations for Friday's data.
Maybe some good news? Challenger Grey & Christmas said
planned layoffs fell in March.
The buzz: Facebook Inc. is trending on Google and StockTwits
after jumping more than 3% on Wednesday. The company is set to host an event Thursday that's
expected to revolve around a "Facebook phone." The company is
expected to clarify its vision for mobile .
Forbes says there's one thing to keep in mind: It's not really
about the phone.
Speaking of phones, our own Terese Poletti asks whether Apple is becoming a niche player again
(complete with a pic of one of its first computers, the
Macintosh Classic -- just to get you thinking, er
nervous). But hey, some are predicting that that new iPhone, persistently
rumored to be in the works, can't lose and will be the
best-selling phone of all times. Apple was initiated at buy by Lazard on
Thursday.
Netflix Inc. is also getting plenty of buzz. Shares fell almost 4%
Wednesday on chatter that activist investor Carl
Icahn dumped at least part of his 10% stake in the company, though CNBC
later reported that Icahn had denied doing any such thing.
Microsoft were slipping about 0.5% in premarket trading after Bank of America Merrill Lynch downgraded
the share to neutral from buy. They've had that rating since 2008 and said
Microsoft has disappointed with its smartphones and tablets foray.
Call of the day: North Korea is back in the headlines,
but it shouldn't dictate your trading strategy, Dennis
Gartman of The Gartman Letter told
CNBC .
News on Wednesday that North Korea would close a factory zone and restart a nuclear reactor appeared to
shake stock markets. But it shouldn't be a worry, Gartman says.
"They have no real nuclear capabilities whatsoever. Their missiles are
very, very old, very immature. They can't move more than 1,500
kilometers," he told CNBC.
"There are other reasons the market's going to go down, not because of
North Korea," he said. "Sell bounces."
Chart of the day: Mark Hanna at Market Montage takes a look at an
"amazing divergence" between the S&P 500 and the Russell 2000
. While the Russell has wiped out a month's worth of gains, the S&P 500
is roughly back to where it was last Wednesday.
The fall by the Russell 2000 and other developments, such as the flattening
of the Dow Transports index, have rattled some investors who are wary of a
near-term pullback.
Random Reads: There still seems to be some dispute over the math behind Tesla's
lease plan for its Model S electric car.
Meanwhile in bad-news-a-minute Spain, Princess Cristina de Borbon, the
youngest daughter of the King of Spain, has been named as a suspect in a criminal case
involving her husband.
Oh and it's not good when the person you put in charge of ferreting out tax
dodgers ends up accused of having a secret Swiss bank account.
The New Statesman says the scandal surrounding former French budget
minister Jerome Cahuzac has left President Francois Hollande a lame duck in record time.
And a cruise with Carnival. What more needs to be said?
--William L. Watts
Follow on Twitter @wlwatts
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