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Need to Know
JULY 01, 2013
5 gut checks before the stock
market's opening bell
By Shawn Langlois
Good
morning.
It may be the start of a new quarter, but it looks to be the same old
markets story. For investors, the first week, in a familiar dance, will be
spent wringing hands over what impact Friday's jobs report will have on the
Fed's roadmap to weaning.
If Goldman's Jan Hatzius is on point, the numbers will disappoint . Of course, in
this wack environment, that could be viewed as a "good"
thing. The alternative would mean another step toward the 7% unemployment
level that Bernanke put out there as a tapering threshold.
Moving away from QE-palooza, the whole "bad is good" thing
probably won't hold up when earnings season kicks off next week. Hard to
imagine investors looking past bad numbers, no matter how committed the Fed
seems to be to drowning economic weakness in a flood of cash. Just look at
BlackBerry's dismal showing last week.
The thing is, most of that weakness may already be baked in as some 87
companies in the S&P have warned, while only 21 have issued positive
guidance. At 81%, that's a record for companies getting
gloomy ahead of earnings, according to FactSet. In other words, lower the
bar, then beat it. Boom, there's your rally.
One area that could desperately use some good news -- actual good news --
is emerging markets, where the carnage has been well documented. Or,
as Josh Brown puts it : "EM stocks
couldn't find a bottom in a Sir Mix-a-Lot video."
Northern Trust says these stocks are trading at a 32% discount to the
S&P 500. Over the past eight years, they've typically traded at a 20%
discount. Time for a bounce? Not in the next quarter or two, but Northern
Trust's Jim McDonald told Reuters that, over the next 12 to 18
months, "this group will work."
Key market gauges:European stocks are shrugging off
early declines, catching a lift from mostly upbeat PMI numbers . In fact, the
euro zone hasn't seen these levels in 16 months. Germany was the only
nation to weaken and the DAX was the hardest hit of the region's
major indexes.
Manufacturing PMIs pic.twitter.com/rqA9CMANpa
— cigolo (@cigolo) July 1, 2013
Data wasn't nearly as rosy in China but the Shanghai Composite
actually managed to log a gain to start the quarter on a high note
following June's massive 14% drop. In Japan, the Nikkei pushed to its
highest level since May 29, shrugging off earlier losses. Read: Asia markets .
Stocks are on the move higher in the U.S., with futures on the Dow
and the S&P gaining. Gold is also perking up
after June's meltdown but it has a long way to go to recoup its 23% plunge in the second quarter .
The buzz: Jousting price targets and the fact that Apple
has filed for an "iWatch" trademark
will keep the ticker in the spotlight today, while wound-licking over
BlackBerry's horrendous performance last week won't be going away
anytime soon. BlackBerry is down another 5% premarket after more
downgrades.
Many people on Wall Street were recommeding $BBRY -i don't know anyone who said sell.
It is amazing how hard people are on you here. For free
— Jim Cramer (@jimcramer) July 1, 2013
3M is down a bit after being hit with a downgrade of its own . Morgan Stanley
cut the stock to equal weight, saying positives are mostly priced in.
Molycorp is trending on StockTwits after Friday's gains. The stock
boasts a lopsided sentiment score of 96% bullish. Onyx tops the trending
list after the company rejected Amgen's buyout bid. The stock is up more
than 50% premarket. Pandora and Barrick Gold are also on the
radar.
The chart of the day: The housing recovery is merely
"another case of cheap (free?) money distorting the market," says
Decision Point's Carl Swenlin. He pointed out that lenders aren't waiting
for the Fed, judging from the jump in mortgage rates. He also said that
this home construction index chart, from a technical perspective, has
entered a correction phase . "Pending Fed tightening
and rising mortgage rates confirm the top we see on the chart,"
Swenlin wrote.
The call of the day: If given the chance to change the title
of his new book "$10,000 Gold: Why Gold's Inevitable Rise Is the
Investor's Safe Haven" in light of the nasty showing in precious
metals lately, Bullion Management CEO Nick Barisheff says, "absolutely
not!" In an interview from a few weeks back that was released this
weekend, he stuck to this outlandish target . And
while it's gotten much uglier since he confirmed his target, the reasons
behind it haven't changed.
One of the primary drivers is the perfect record of failure of paper-based
currencies. "If you give a printing press, in simplified terms, to a
politician, a king, an emperor, a president, a prime minister, you name it,
they will overuse it every single time. That is just human nature. And that
is what happens," he said. If the Fed were to pull back on easing,
Barisheff said we would have a "massive depression." So print
more. And then some more. "But the problem is, what happens down the
road?"
Investors in David Einhorn's offshore gold fund wouldn't mind seeing some
headway toward that $10,000 target. They've lost about 20% this year .
Random reads: Dreaming of self-employment? Here's some good news .
The first death during a live performance in Cirque
du Soleil's 29-year history.
"Partners do not spy on each other," said EU Justice Commissioner
Viviane Reding at a public forum in Luxembourg. I guess the EU doesn't like getting snooped on either
.
Here's Twitter Chief Executive Dick Costello in Aspen, dancing around Katie Couric's NSA- and IPO-related questions
.
Student loan indenture and why we must hate our children .
Mayhem marks the start of the Tour de France . But it
could have been much worse .
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