Need to Know
APRIL 12, 2013
7 gut checks before the stock market's opening bell
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Good morning.
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Is it just us, or is the world of
finance and investing in danger of disappearing into its own navel? First,
there's the daily, tortured self-analysis over the sustainability of a record Wall
Street rally that nobody believes in. Then we had Bill Gross staring himself down in the mirro r,
wondering if he really is such a great investor.
Now we have J.P. Morgan Chase & Co. , which on the eve of its just-released earnings report, published an analyst note that seemed to offer a hint of self-doubt.
Citing regulatory risks and tougher rules on capital and funding, J.P. Morgan analysts called top-tier investment banks "uninvestable at this point with a risk of a spinoff from universal banks," according to Bloomberg . The analysts didn't mention their own bank in the report, but warn that the "viability of running a global Tier 1 investment bank business as part of a universal banking business is starting to be put in question."
Key market gauges: Europe's own psychodrama helped put a crimp in European markets and U.S. stock index futures after reports said Cyprus's president asked for additional assistance as euro-zone finance ministers prepared to meet in Dublin to finalize the country's $13 billion rescue. Downbeat U.S. retail sales added to pressure.
Cypriot officials subsequently said the president was only asking for additional technical assistance, but economists widely expect the country to require further help down the road.
South Korean stocks saw heavy losses , while Japanese shares pulled back from a string of multi-year highs. Goldman Sachs is a big believer in the Bank of Japan's efforts to whip deflation, boosting its targets for the Nikkei and Topix indexes.
The economy: Doubt may also be the watchword on the economic front after March U.S. retail sales fell by a steeper-than-expected 0.4% in March. That might be taken as a sign higher taxes and slower jobs growth is taking a bite, offering another clue the U.S. economy is set for a possible spring swoon.
March retail sales data will be scanned for any further signs of softening in the U.S. economy. Economists surveyed by MarketWatch expect sales to dip 0.1% after a 1.1% February surge that was fueled by a spike in gas prices. Excluding autos, sales are forecast to come in unchanged at 8:30 a.m. Eastern.
March producer prices fell by 0.6% , outstripping forecasts for a 0.3% decline. The University of Michigan's latest consumer sentiment reading is out after the opening bell.
Everyone will want to hear what Boston Fed President Eric Rosengren has to say about last month's weak jobs data when he speaks at 8:45 a.m. Eastern. Rosengren has been a big backer of the Fed's bond-buying program.
Earnings: Doubts notwithstanding, J.P. Morgan beat Wall Street forecasts with a profit of $1.59 a share, while managed revenue came in a pinch below expectations at $25.85 billion. Shares slipped in premarket action.
Wells Fargo & Co. said quarterly profit rose 22%, also topping forecasts. But shares, which have jumped 10% year-to-date and nearly 12% over the past 12 months, fell back nearly 2% in pre-open trading.
The buzz: Three-dimensional printing company 3D Systems Corporation is trending high over at StockTwits .
"This stock has been a popular trading vehicle no matter which side you are on. With nearly 30% short interest it can be subject to big swings," says Gregory W. Harmon in a post at Dragonfly Capital. While the company's fundamentals won't be more clear until its earnings report at the end of the month, he lays out a "doozy" of a technical picture.
Your favorite song in 140 notes? Twitter plans to launch a new, standalone music application as early as Friday, reports All Things D .
Infosys is getting slammed in premarket action after disappointing on revenue .
Who needs Facebook? The craziness continues atop Mt. Gox, but for now, those famous Winkelvoss twins are Bitcoin millionaires.
Business networking site LinkedIn Corp. is in the frame after it announced the purchase late Thursday of Pulse, a news reader and mobile-content company for $90 million from Alphonso Labs.
The chart of the day: You can stop asking where the new individual stock highs are. Notes Bespoke Investment Group :
As shown below, 31.6% of S&P 500 stocks made new 52-week highs [Thursday]. When an index like the S&P 500 is making new highs, technicians like to see a large number of individual stocks in the index also making new highs. When that is happening, it means there is broad participation in the rally, which is indicative of a healthy bull market. That's certainly happening now.
Now we have J.P. Morgan Chase & Co. , which on the eve of its just-released earnings report, published an analyst note that seemed to offer a hint of self-doubt.
Citing regulatory risks and tougher rules on capital and funding, J.P. Morgan analysts called top-tier investment banks "uninvestable at this point with a risk of a spinoff from universal banks," according to Bloomberg . The analysts didn't mention their own bank in the report, but warn that the "viability of running a global Tier 1 investment bank business as part of a universal banking business is starting to be put in question."
Key market gauges: Europe's own psychodrama helped put a crimp in European markets and U.S. stock index futures after reports said Cyprus's president asked for additional assistance as euro-zone finance ministers prepared to meet in Dublin to finalize the country's $13 billion rescue. Downbeat U.S. retail sales added to pressure.
Cypriot officials subsequently said the president was only asking for additional technical assistance, but economists widely expect the country to require further help down the road.
South Korean stocks saw heavy losses , while Japanese shares pulled back from a string of multi-year highs. Goldman Sachs is a big believer in the Bank of Japan's efforts to whip deflation, boosting its targets for the Nikkei and Topix indexes.
The economy: Doubt may also be the watchword on the economic front after March U.S. retail sales fell by a steeper-than-expected 0.4% in March. That might be taken as a sign higher taxes and slower jobs growth is taking a bite, offering another clue the U.S. economy is set for a possible spring swoon.
March retail sales data will be scanned for any further signs of softening in the U.S. economy. Economists surveyed by MarketWatch expect sales to dip 0.1% after a 1.1% February surge that was fueled by a spike in gas prices. Excluding autos, sales are forecast to come in unchanged at 8:30 a.m. Eastern.
March producer prices fell by 0.6% , outstripping forecasts for a 0.3% decline. The University of Michigan's latest consumer sentiment reading is out after the opening bell.
Everyone will want to hear what Boston Fed President Eric Rosengren has to say about last month's weak jobs data when he speaks at 8:45 a.m. Eastern. Rosengren has been a big backer of the Fed's bond-buying program.
Earnings: Doubts notwithstanding, J.P. Morgan beat Wall Street forecasts with a profit of $1.59 a share, while managed revenue came in a pinch below expectations at $25.85 billion. Shares slipped in premarket action.
Wells Fargo & Co. said quarterly profit rose 22%, also topping forecasts. But shares, which have jumped 10% year-to-date and nearly 12% over the past 12 months, fell back nearly 2% in pre-open trading.
The buzz: Three-dimensional printing company 3D Systems Corporation is trending high over at StockTwits .
"This stock has been a popular trading vehicle no matter which side you are on. With nearly 30% short interest it can be subject to big swings," says Gregory W. Harmon in a post at Dragonfly Capital. While the company's fundamentals won't be more clear until its earnings report at the end of the month, he lays out a "doozy" of a technical picture.
Your favorite song in 140 notes? Twitter plans to launch a new, standalone music application as early as Friday, reports All Things D .
Infosys is getting slammed in premarket action after disappointing on revenue .
Who needs Facebook? The craziness continues atop Mt. Gox, but for now, those famous Winkelvoss twins are Bitcoin millionaires.
Business networking site LinkedIn Corp. is in the frame after it announced the purchase late Thursday of Pulse, a news reader and mobile-content company for $90 million from Alphonso Labs.
The chart of the day: You can stop asking where the new individual stock highs are. Notes Bespoke Investment Group :
As shown below, 31.6% of S&P 500 stocks made new 52-week highs [Thursday]. When an index like the S&P 500 is making new highs, technicians like to see a large number of individual stocks in the index also making new highs. When that is happening, it means there is broad participation in the rally, which is indicative of a healthy bull market. That's certainly happening now.
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The FTSE's outperformance of the major European bourses this year reflects more than a simple FX adjustment. Of course weaker sterling buoys earnings generated overseas, but this does not explain market leadership. Our equally weighted portfolio of domestically-orientated stocks has beaten the international earners portfolio. This is a trend we think is likely to persist.
Random reads: "The crisis isn't over in the U.S. or Europe ," says economist Carmen Reinhart, the woman who wrote the book on financial crises.
Get ready for the party mafia. The man who brought you Gangnam Style doesn't intend to be a one-hit wonder.
--William L. Watts
Follow on Twitter @wlwatts
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