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Need to Know
JULY 15, 2013
7 gut checks before the stock
market's opening bell
By Shawn Langlois
Good
morning.
The onset of earnings season was supposed to deliver us a respite from the
taper talk -- a chance to return to some semblance of normalcy and focus on
the nuts and bolts of what really matters. Or should, anyway.
But now, markets are snorting up that stimulus dust with a renewed vigor,
and it's hard to imagine quarterly numbers from Citigroup, Google or any of
the other 77 S&P 500 companies reporting this week upstaging Ben's
upcoming testimony in front of Congress or, really, any batch of economic
data that's in the pipeline.
While stocks push deeper into new territory, the Dow still has some
resistance to bust through if it wants to reach real record highs
(more on that below).
History, statistically speaking, is on the side of bulls for the next few
months, though. The S&P rallied in the first half of the year for the
16th time in the past 24 years. In 12 of those cases, gains have followed
in the second half, according to BTN Research.
The tech-heavy Nasdaq 100 won't be revisiting its highs anytime soon,
but it IS looking at 14 straight days in the green. With Bernanke on board
and a low bar for tech earnings, there's nothing to suggest the QQQ orgy is
about to end.
Key market gauges: Data showed China's economy grew in line
with expectations, allaying fears of a sharper slowdown and
boosting the Shanghai Composite to start the week. Asia , in general,
enjoyed a broad advance, while Europe is following up with some gains
of its own. Futures on the Dow and the S&P are also up.
The economy: Ahead of Bernanke's appearance before Congress
midweek, investors caught a glimpse of consumer spending patterns
when retailer sales numbers showed an increase of 0.4% in June
. Economists were looking for a rise of 0.9%, which would have been
the second biggest gain of the year. Separately, the Empire State index
rose to 9.5 from 7.8, holding tight in positive territory for five of the last six months .
Bernanke
may have come across as dovish last week, but J.P. Morgan analysts say the
Fed chairman did little to "counter the notion that tapering will
occur relatively soon." So they're sticking by their forecast that the
process starts in September.
Earnings: Citigroup is the biggie today, and the stock
is up 2% after the company posted a big jump in second-quarter profit . J.P.
Morgan and Wells Fargo got earnings season started in the financial
sector on Friday and here's what their results say about housing .
Later this week, results from Goldman Sachs and Bank of America
will shed more light on the banks while Google , Microsoft and
Yahoo are just some of the big-name tech companies on deck. Read: Earnings to test record-high stock prices
.
The buzz: Suing McDonald's for too-hot coffee seems
reasonable compared with what Apple is facing. Some guy is suing the company for allowing porn to pop
up on its machines. In a less-facepalmy development, Apple has reportedly
begun an aggressive push to hire design talent
for its "iWatch" project. Sadly and scarily, Apple also finds
itself investigating a case in which the family of a 23-year-old woman says
that she was electrocuted to death by her iPhone .
With the Asiana crash still fresh in the minds of travelers, more troubles befell the Dreamliner and
sent Boeing shares down almost 5% on Friday. The stock is
rebounding a bit premarket and could "recover quickly if the fire is
related to a burned coffee pot or a mistake in the crew rest area," said Citi analyst Jason Gursky .
GlaxoSmithKline will be a hot ticker today on word that Chinese
officials have detained four of its execs . Other
top-trending tickers on StockTwits include Berkshire Hathaway , Vivus
and iShares Gold Trust .
The chart of the day: With all the pomp and circumstance
surrounding the new highs on the Dow, it's worth noting that the blue chips
are really just hovering around where they were 13 years ago. In fact, if
you adjust the Dow for inflation, it's actually lower than it was back
then. The Kimble Charting Solutions blog illustrates how the Dow appears to be having trouble
breaking through inflation-adjusted resistance.
The
call of the day: Barring a "melt up"
over the rest of the year, Ed Yardeni, president and chief investment
strategist at Yardeni Research, says that the market's reaction to
Bernanke's accommodative comments last week signals that the bull market could stick around for another four
years . "Valuation multiples remain rational, and record
highs in forward earnings suggest that the fundamentals continue to support
those valuations," he wrote in his Dr. Ed's Blog.
Random reads: Bigger wins? Invest in Silicon Valley.
More consistent, but smaller returns? It's Hollywood. Best advice: avoid both .
America reacts to Zimmerman verdict, a social media roundup .
Tumblr's David Karp takes a swipe at "boring" Palo Alto .
Cats can be wonderful companions. And, more importantly, they can also help
you avoid having your privates bitten while on the loo .
Radiohead's Thom Yorke wages a "small meaningless rebellion"
against Spotify.
"Porc de Triomphe!" San Francisco's Bacon Bacon restaurant
is set to reopen after being shut down
by those hippies on Haight Street who complained about the smell.
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