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Need to Know
JUNE 12, 2013
5 gut checks before the stock market's
opening bell
By Shawn Langlois
Good
morning.
When Pimco explains to its clients that "artificially
priced financial markets provide all the excitement, danger and
unpredictability of surfing the Wedge when it is really pumping," hey,
I can relate, having been dumped unceremoniously on that shoreline several
times in my life.
Pimco strategist Saumil Parikh warns that volatility is running high,
everything is too pricey, and another global recession will likely hit us
within five years. He's not the only one with a red flag on the lifeguard
tower. With indexes enduring some wild swings lately and interest rates on
the move higher, concerns are flaring up everywhere.
But in the face of this worrisome groundswell, investors, at least in the
early going, seem to be taking the
Jeff Spicoli approach : "Danger is my business ... It's a
way of looking at that wave and saying, 'Hey bud, let's party!'"
Or maybe a big chunk of them are, understandably, more focused on this derecho .
The fact that stocks are in rebound mode early makes sense from a technical
perspective, according to Mark Hanna of the Market Montage blog, who points
out that the S&P has managed to bounce off its support level of
1,622-1,623 on seven different days since May 8. The broad gauge closed at
1,626 on Tuesday.
Still, it's hard to know where we'll end up. With all this volatility,
"the market is flopping around like a fish out of water the past few
weeks," Hanna wrote. Blue chips have now fluctuated by triple digits
in seven of the past 11 trading days .
Key market gauges: The Nikkei mounted a comeback
from some deep declines but still closed down for the session. The Dragon
Boat Festival kept markets in China closed for a third straight
day. Read why the Surly Trader blog says "Japan has become our Petri dish for central bank
efficacy."
In Europe , stocks clawing back some of
yesterday's sharp decline, with Spain's IBEX leading the tepid
charge, up 1.8%.
Greece, with its local stock index down 83% since 2007, is back in the
front-page news after MSCI dropped its classification from
developed to emerging. The ASE Index has also retreated 10% this week
alone.
U.S. markets could be in for a strong showing after Tuesday's triple-digit decline . With
volatility on the rise, futures on the Dow and the S&P are both
up nicely in the hours before the opening bell. Read: Indications .
The buzz: Facebook CEO Mark Zuckerberg told investors
yesterday that his company pushes back to protect its data from the
prying eyes of the government and that he's disappointed with the stock. So what?
The stock sold off 1.2% in the prior session but is showing signs of
opening higher today, though, in the aftermath of Tuesday's shareholder
meeting. Read: Facebook CEO faces ire over slumping stock
.
Lululemon and Dole are trending on Market IQ after the stocks
went in opposite directions yesterday. Others on the radar include Vanda
Pharma , EnCana and Sony .
"Buy a Kindle and read 'Life of Pi' now!" Amazon's inroads into the Chinese market , along
with word of its expanding grocery business , is
keeping the e-tailing giant in the spotlight this week. Joining Amazon on
the StockTwits trending list are BlackBerry , Gap and McDonald's .
The chart of the day: Qwest fund manager Cam Hui says
his "inner investor" is horrified by rising income inequality and
how it will "create social pressures, which will ultimately damage the
social fabric of the nation and be very bearish for the U.S. in the long
run." But he offered up this Tiffany /Wal-Mart ratio as a macro
play on the troubling trend, at least metaphorically.
The
call of the day: Fresh off two weeks of
"wonderful walking in the English Lake District," former Goldman
Sachs Asset Management Chairman Jim O'Neill told Bloomberg that we should get used to U.S. Treasury yields up near 4%
. That's no small leap from the 2.2% they're at now. "It's all
part of this big normalization that's going to happen," he said.
"In the process, there could be quite ugly days." Treasurys
haven't yielded 4% since April 2010. The global economy is maybe at
"the end of a 30-year growing love affair" with bonds, he said. See the full video .
Random reads: There's at least one winner coming out of this
NSA scandal, albeit a posthumous one. Sales of George Orwell's
"1984" have soared 5,771% as of Tuesday morning.
On that note, here are 27 Edward Snowden quotes that "should send a
chill up your spine," from The Economic Collapse blog .
The U.S. Open is almost here, but you're probably stuck behind seven
foursomes at your local par three. Here's what the USGA, with some help
from Caddyshack, is doing to change the increasingly brutal pace of play
.
The "deep, dark secret of SEO" is to write stuff people want to read . Who
knows, one day you, too, could build the next Huffington Post.
Drugged-up, spitting naked gymnast guy goes nuts at the 16th Street BART station
and all I can think about is La Taqueria down the street from there.
British Mexican food, with its baked beans, is everything I imagined it to
be.
Need to Know starts early and is updated as needed until the opening
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