Sunday, May 10, 2009
Market Insider: Wall Street's Bull Is Tired but Not Out
Posted By:Patti Domm
The stock market's two-month-old bull run is getting tired, but it still may not be ready to pause.In the coming week, investors will have plenty of data to mull over, but none as pivotal as Friday's better-than-expected April jobs report. Retail sales data Wednesday should provide a good look at how the economy is faring, as will weekly jobless claims and inventory data. Fed Chairman Ben Bernanke speaks at a conference Monday night, and there are just a few earnings, including Wal-Mart [WMT 50.14 0.25 (+0.5%) ] and several other major retailers.
Traders are closely watching the behavior of the financial sector, which has been a market leader, doubling since stocks started moving higher in early March. In the past week, the group made double digit gains as the government released results of its stress tests for 19 major institutions. Traders say the reports, which contained few surprises, drew buyers into the group but also forced shorts to cover, driving prices higher. The government's announcement, and subsequent comments from banks on their capital raising plans, also lifted a cloud from the group and made their stocks more "investable."But still, there is a powerful debate in the market between those who believe its recent gains are topping out and those who think stocks can still go higher. "I wouldn't make a decision about this market until next Friday just because of options expirations. I think we're going to be very choppy and then it will stabilize after that," said Patrick Kernen, who trades S&P 500 options for Cardinal Capital. The expiration next Friday is for options on indexes, equities and ETFs.
Traders also have been watching the technicals closely as the naysayers have been proven wrong about the rally week after week. The S&P 500, which finished at 929.23 Friday, is expected to face resistance at the 945 to 955 level. For the week, the Dow Jones Industrial Average rose 4.41 percent, the S&P climbed 5.89 percent, and the Nasdaq added 1.15 percent.The pull back though should not break the March lows and should be temporary, with stocks finishing the year higher. Ezrati said the market's progress is dependent on the current signs of economic stabilization developing into a real turnaround, not just a lessening decline. He also said he is watching the health of the European banking sector as a potential problem area for markets should losses from Eastern Europe worsen.
The Long View
The mutual fund industry typically takes a longer term view of the market. David Antonelli, chief investment officer for global and non U.S. investments for the MFS family of funds, said stocks right now are enticing for long-term investors with a three- to five-year horizon.Antonelli said the key is to find stocks that are weathering the recession better than their peers. "The discussion we're trying to make sure we're having is we're trying to look company by company at what we think is more mid-cycle earnings...Let's try to get out of the confusion, as the economy looks for an inflection point and think about what a company would earn and should earn in a more normalized environment and what you should pay for it," he said.
Econorama
In the coming week, retail sales are perhaps the most anticipated among the economic reports, but there are plenty of other data points to consider."We're going to be focusing on the retail sales data. It will certainly be that April on-the-ground data, away from autos, has improved. April's been a great month, and we're going to continue to see upward surprises in a number of April data points," said Steven Wieting, U.S. economist for Citigroup.Wieting said he expects negative 1 percent GDP for the second quarter. He said one factor hurting the second quarter is the shutdown of auto production by Chrysler and General Motors [GM 1.61 0.01 (+0.63%) ], which would have contributed positive 2 percent to GDP but now contributes zero. GM is shutting production for nine weeks and Chrysler is shutting down during its bankruptcy.
For Investors:
"May and June data points are going to be weaker than March and April. You're going to see (unemployment) claims filings (starting this week) in connection with those auto shutdowns. I don't think we're going to relapse and have an outright deceleration again, but it's going to hold back the pace of improvement," he said.
The April jobs report Friday showed non farm employment fell 539,000, less than the expected 600,000. The unemployment rate rose to 8.9 percent. Wieting said the next two months could see job losses near 500,000. "We're going to be headed for something in the neighborhood of a 300,000 decline ideally before too long," he said.Wieting said he expects GDP to be slightly positive by fourth quarter. "We've moved away from the financial precursors or preconditions of a depression and we've moved the economy and the financial markets back on the path of a more cyclical event, and some of the data is more consistent with normal recession data," he said.Other data in the coming week includes the NFIB small business survey and international trade for March, both released Tuesday. Wednesday's reports include retail sales, business inventories and import prices. Weekly jobless claims are reported Thursday. Inflation data comes in the form of producer prices Thursday and consumer prices Friday. Also on Friday, the Empire State survey, industrial production and consumer sentiment are reported. The closely watched Treasury international capital flows are also reported Friday.
The Atlanta Fed holds its annual financial markets conference in Jekyll Island, Ga. Fed Chairman Ben Bernanke is the speaker Monday evening and will take questions from the audience
Treasurys
In the Treasury market, the yield curve steepening ramped up sharply this past week. By late Friday, the 10-year was yielding 3.29 percent, and the 30-year was yielding 4.27 percent, both off their high yields. In the past week, more than $70 billion was auctioned by the Treasury including a 30-year issuance that was particularly sloppy.
Klingman said Treasurys recovered some ground Friday and he expects buying could continue into next week.
Earnings Central
Retail earnings include Macy's and Whole Foods Wednesday; Wal-Mart; Kohl's and Nordstrom's Thursday, and JCPenney and Abercrombie and Fitch Friday. Other earnings of note include Dish Network and Fluor on Monday; Applied Materials and Nissan on Tuesday; Dr. Pepper Snapple Wednesday, and Agilent Thursday.
The stock market's two-month-old bull run is getting tired, but it still may not be ready to pause.In the coming week, investors will have plenty of data to mull over, but none as pivotal as Friday's better-than-expected April jobs report. Retail sales data Wednesday should provide a good look at how the economy is faring, as will weekly jobless claims and inventory data. Fed Chairman Ben Bernanke speaks at a conference Monday night, and there are just a few earnings, including Wal-Mart [WMT 50.14 0.25 (+0.5%) ] and several other major retailers.
Traders are closely watching the behavior of the financial sector, which has been a market leader, doubling since stocks started moving higher in early March. In the past week, the group made double digit gains as the government released results of its stress tests for 19 major institutions. Traders say the reports, which contained few surprises, drew buyers into the group but also forced shorts to cover, driving prices higher. The government's announcement, and subsequent comments from banks on their capital raising plans, also lifted a cloud from the group and made their stocks more "investable."But still, there is a powerful debate in the market between those who believe its recent gains are topping out and those who think stocks can still go higher. "I wouldn't make a decision about this market until next Friday just because of options expirations. I think we're going to be very choppy and then it will stabilize after that," said Patrick Kernen, who trades S&P 500 options for Cardinal Capital. The expiration next Friday is for options on indexes, equities and ETFs.
Traders also have been watching the technicals closely as the naysayers have been proven wrong about the rally week after week. The S&P 500, which finished at 929.23 Friday, is expected to face resistance at the 945 to 955 level. For the week, the Dow Jones Industrial Average rose 4.41 percent, the S&P climbed 5.89 percent, and the Nasdaq added 1.15 percent.The pull back though should not break the March lows and should be temporary, with stocks finishing the year higher. Ezrati said the market's progress is dependent on the current signs of economic stabilization developing into a real turnaround, not just a lessening decline. He also said he is watching the health of the European banking sector as a potential problem area for markets should losses from Eastern Europe worsen.
The Long View
The mutual fund industry typically takes a longer term view of the market. David Antonelli, chief investment officer for global and non U.S. investments for the MFS family of funds, said stocks right now are enticing for long-term investors with a three- to five-year horizon.Antonelli said the key is to find stocks that are weathering the recession better than their peers. "The discussion we're trying to make sure we're having is we're trying to look company by company at what we think is more mid-cycle earnings...Let's try to get out of the confusion, as the economy looks for an inflection point and think about what a company would earn and should earn in a more normalized environment and what you should pay for it," he said.
Econorama
In the coming week, retail sales are perhaps the most anticipated among the economic reports, but there are plenty of other data points to consider."We're going to be focusing on the retail sales data. It will certainly be that April on-the-ground data, away from autos, has improved. April's been a great month, and we're going to continue to see upward surprises in a number of April data points," said Steven Wieting, U.S. economist for Citigroup.Wieting said he expects negative 1 percent GDP for the second quarter. He said one factor hurting the second quarter is the shutdown of auto production by Chrysler and General Motors [GM 1.61 0.01 (+0.63%) ], which would have contributed positive 2 percent to GDP but now contributes zero. GM is shutting production for nine weeks and Chrysler is shutting down during its bankruptcy.
For Investors:
"May and June data points are going to be weaker than March and April. You're going to see (unemployment) claims filings (starting this week) in connection with those auto shutdowns. I don't think we're going to relapse and have an outright deceleration again, but it's going to hold back the pace of improvement," he said.
The April jobs report Friday showed non farm employment fell 539,000, less than the expected 600,000. The unemployment rate rose to 8.9 percent. Wieting said the next two months could see job losses near 500,000. "We're going to be headed for something in the neighborhood of a 300,000 decline ideally before too long," he said.Wieting said he expects GDP to be slightly positive by fourth quarter. "We've moved away from the financial precursors or preconditions of a depression and we've moved the economy and the financial markets back on the path of a more cyclical event, and some of the data is more consistent with normal recession data," he said.Other data in the coming week includes the NFIB small business survey and international trade for March, both released Tuesday. Wednesday's reports include retail sales, business inventories and import prices. Weekly jobless claims are reported Thursday. Inflation data comes in the form of producer prices Thursday and consumer prices Friday. Also on Friday, the Empire State survey, industrial production and consumer sentiment are reported. The closely watched Treasury international capital flows are also reported Friday.
The Atlanta Fed holds its annual financial markets conference in Jekyll Island, Ga. Fed Chairman Ben Bernanke is the speaker Monday evening and will take questions from the audience
Treasurys
In the Treasury market, the yield curve steepening ramped up sharply this past week. By late Friday, the 10-year was yielding 3.29 percent, and the 30-year was yielding 4.27 percent, both off their high yields. In the past week, more than $70 billion was auctioned by the Treasury including a 30-year issuance that was particularly sloppy.
Klingman said Treasurys recovered some ground Friday and he expects buying could continue into next week.
Earnings Central
Retail earnings include Macy's and Whole Foods Wednesday; Wal-Mart; Kohl's and Nordstrom's Thursday, and JCPenney and Abercrombie and Fitch Friday. Other earnings of note include Dish Network and Fluor on Monday; Applied Materials and Nissan on Tuesday; Dr. Pepper Snapple Wednesday, and Agilent Thursday.
Kalender Ekonomi & Event Global (11- Mei 2009)
Date WIB +11 Jam Currency Forecast Previous
Sun
May 10 9:30pm
AUD NAB Business Confidence -13
Mon
May 11 Tentative JPY Prelim Machine Tool Orders y/y -85.2%
2:45am EUR French Industrial Production m/m -0.4% -0.5%
4:00am EUR Italian Industrial Production m/m -1.7% -3.5%
8:30am CAD NHPI m/m -0.5% -0.7%
6:45pm NZD FPI m/m 0.5%
7:01pm GBP BRC Retail Sales Monitor y/y -1.2%
7:01pm GBP RICS House Price Balance -70.2% -73.1%
7:30pm USD Fed Chairman Bernanke Speaks
9:30pm AUD Home Loans m/m 4.5% 0.4%
Tue
May 12 1:00am JPY Leading Indicators 77.1% 75.0%
2:00am EUR German Final CPI m/m 0.0% 0.0%
2:00am EUR German WPI m/m 0.0% -0.9%
2:45am EUR French Gov Budget Balance -29.9B
4:30am GBP Manufacturing Production m/m -0.8% -0.9%
4:30am GBP Trade Balance -7.2B -7.3B
4:30am GBP DCLG HPI y/y -12.5% -12.3%
4:30am GBP Industrial Production m/m -0.7% -1.0%
5:30am AUD Annual Budget Release
8:20am USD FOMC Member Lockhart Speaks
8:30am CAD Trade Balance 0.5B 0.1B
8:30am USD Trade Balance -29.2B -26.0B
10:00am USD IBD/TIPP Economic Optimism 49.7 49.1
2:00pm USD Federal Budget Balance -60.5B -192.3B
5:00pm NZD RBNZ Financial Stability Report
7:01pm GBP NIESR GDP Estimate -1.5%
7:50pm JPY Bank Lending y/y 3.4%
7:50pm JPY Current Account 0.51T 0.67T
7:50pm JPY M2 Money Stock y/y 2.3% 2.2%
8:30pm AUD Westpac Consumer Sentiment 8.3%
Wed
May 13 1:00am JPY Economy Watchers Sentiment 30.1 28.4
2:45am EUR French CPI m/m 0.2% 0.2%
4:30am GBP Claimant Count Change 81.5K 73.7K
4:30am GBP Average Earnings Index 3m/y -1.0% 0.1%
4:30am GBP Unemployment Rate 6.9% 6.7%
5:00am EUR Industrial Production m/m -0.9% -2.3%
5:30am GBP BOE Gov King Speaks
5:30am GBP BOE Inflation Report
Tentative JPY BOJ Gov Shirakawa Speaks
8:30am CAD New Motor Vehicle Sales m/m 6.1% -2.2%
8:30am USD Core Retail Sales m/m 0.0% -1.0%
8:30am USD Retail Sales m/m 0.0% -1.2%
8:30am USD Import Prices m/m 0.4% 0.5%
10:00am USD Business Inventories m/m -1.1% -1.3%
10:30am USD Crude Oil Inventories 0.6M
10:30am USD FOMC Member Duke Speaks
12:00pm USD FOMC Member Lockhart Speaks
6:30pm NZD Business NZ Manufacturing Index 40.7
9:00pm AUD MI Inflation Expectations 2.4%
Thu
May 14 3:00am CHF Gov Board Member Jordan Speaks
3:15am CHF PPI m/m 1.0% -0.5%
4:00am EUR ECB Monthly Bulletin
5:00am GBP CB Leading Index m/m -0.6%
8:30am USD PPI m/m 0.1% -1.2%
8:30am USD Unemployment Claims 610K 601K
8:30am USD Core PPI m/m 0.1% 0.0%
10:30am USD Natural Gas Storage 95B
6:45pm NZD Retail Sales m/m 0.2%
6:45pm NZD Core Retail Sales m/m -0.1%
Tentative GBP BOE Financial Stability Report
7:50pm JPY Core Machinery Orders m/m -4.7% 1.4%
7:50pm JPY CGPI y/y -3.0% -2.2%
Fri
May 15 2:00am EUR German Prelim GDP q/q -3.0% -2.1%
2:45am EUR French Prelim Non-Farm Payrolls q/q -0.8% -0.7%
2:45am EUR French Prelim GDP q/q -1.3% -1.1%
3:15am CHF Retail Sales y/y 0.4% -3.8%
4:00am EUR Italian Prelim GDP q/q -1.6% -1.9%
5:00am EUR CPI y/y 0.6% 0.6%
5:00am EUR Core CPI y/y 1.6% 1.5%
5:00am EUR Flash GDP q/q -2.1% -1.6%
8:30am CAD Manufacturing Sales m/m 1.3% 2.2%
8:30am USD Core CPI m/m 0.1% 0.2%
8:30am USD CPI m/m 0.0% -0.1%
8:30am USD Empire State Manufacturing Index -13.9 -14.7
9:00am USD TIC Long-Term Purchases 27.3B 22.0B
9:15am USD Capacity Utilization Rate 68.9% 69.3%
9:15am USD Industrial Production m/m -0.5% -1.5%
9:55am USD Prelim UoM Consumer Sentiment 65.8 65.1
9:55am USD Prelim UoM Inflation Expectations 2.8%
Sun
May 10 9:30pm
AUD NAB Business Confidence -13
Mon
May 11 Tentative JPY Prelim Machine Tool Orders y/y -85.2%
2:45am EUR French Industrial Production m/m -0.4% -0.5%
4:00am EUR Italian Industrial Production m/m -1.7% -3.5%
8:30am CAD NHPI m/m -0.5% -0.7%
6:45pm NZD FPI m/m 0.5%
7:01pm GBP BRC Retail Sales Monitor y/y -1.2%
7:01pm GBP RICS House Price Balance -70.2% -73.1%
7:30pm USD Fed Chairman Bernanke Speaks
9:30pm AUD Home Loans m/m 4.5% 0.4%
Tue
May 12 1:00am JPY Leading Indicators 77.1% 75.0%
2:00am EUR German Final CPI m/m 0.0% 0.0%
2:00am EUR German WPI m/m 0.0% -0.9%
2:45am EUR French Gov Budget Balance -29.9B
4:30am GBP Manufacturing Production m/m -0.8% -0.9%
4:30am GBP Trade Balance -7.2B -7.3B
4:30am GBP DCLG HPI y/y -12.5% -12.3%
4:30am GBP Industrial Production m/m -0.7% -1.0%
5:30am AUD Annual Budget Release
8:20am USD FOMC Member Lockhart Speaks
8:30am CAD Trade Balance 0.5B 0.1B
8:30am USD Trade Balance -29.2B -26.0B
10:00am USD IBD/TIPP Economic Optimism 49.7 49.1
2:00pm USD Federal Budget Balance -60.5B -192.3B
5:00pm NZD RBNZ Financial Stability Report
7:01pm GBP NIESR GDP Estimate -1.5%
7:50pm JPY Bank Lending y/y 3.4%
7:50pm JPY Current Account 0.51T 0.67T
7:50pm JPY M2 Money Stock y/y 2.3% 2.2%
8:30pm AUD Westpac Consumer Sentiment 8.3%
Wed
May 13 1:00am JPY Economy Watchers Sentiment 30.1 28.4
2:45am EUR French CPI m/m 0.2% 0.2%
4:30am GBP Claimant Count Change 81.5K 73.7K
4:30am GBP Average Earnings Index 3m/y -1.0% 0.1%
4:30am GBP Unemployment Rate 6.9% 6.7%
5:00am EUR Industrial Production m/m -0.9% -2.3%
5:30am GBP BOE Gov King Speaks
5:30am GBP BOE Inflation Report
Tentative JPY BOJ Gov Shirakawa Speaks
8:30am CAD New Motor Vehicle Sales m/m 6.1% -2.2%
8:30am USD Core Retail Sales m/m 0.0% -1.0%
8:30am USD Retail Sales m/m 0.0% -1.2%
8:30am USD Import Prices m/m 0.4% 0.5%
10:00am USD Business Inventories m/m -1.1% -1.3%
10:30am USD Crude Oil Inventories 0.6M
10:30am USD FOMC Member Duke Speaks
12:00pm USD FOMC Member Lockhart Speaks
6:30pm NZD Business NZ Manufacturing Index 40.7
9:00pm AUD MI Inflation Expectations 2.4%
Thu
May 14 3:00am CHF Gov Board Member Jordan Speaks
3:15am CHF PPI m/m 1.0% -0.5%
4:00am EUR ECB Monthly Bulletin
5:00am GBP CB Leading Index m/m -0.6%
8:30am USD PPI m/m 0.1% -1.2%
8:30am USD Unemployment Claims 610K 601K
8:30am USD Core PPI m/m 0.1% 0.0%
10:30am USD Natural Gas Storage 95B
6:45pm NZD Retail Sales m/m 0.2%
6:45pm NZD Core Retail Sales m/m -0.1%
Tentative GBP BOE Financial Stability Report
7:50pm JPY Core Machinery Orders m/m -4.7% 1.4%
7:50pm JPY CGPI y/y -3.0% -2.2%
Fri
May 15 2:00am EUR German Prelim GDP q/q -3.0% -2.1%
2:45am EUR French Prelim Non-Farm Payrolls q/q -0.8% -0.7%
2:45am EUR French Prelim GDP q/q -1.3% -1.1%
3:15am CHF Retail Sales y/y 0.4% -3.8%
4:00am EUR Italian Prelim GDP q/q -1.6% -1.9%
5:00am EUR CPI y/y 0.6% 0.6%
5:00am EUR Core CPI y/y 1.6% 1.5%
5:00am EUR Flash GDP q/q -2.1% -1.6%
8:30am CAD Manufacturing Sales m/m 1.3% 2.2%
8:30am USD Core CPI m/m 0.1% 0.2%
8:30am USD CPI m/m 0.0% -0.1%
8:30am USD Empire State Manufacturing Index -13.9 -14.7
9:00am USD TIC Long-Term Purchases 27.3B 22.0B
9:15am USD Capacity Utilization Rate 68.9% 69.3%
9:15am USD Industrial Production m/m -0.5% -1.5%
9:55am USD Prelim UoM Consumer Sentiment 65.8 65.1
9:55am USD Prelim UoM Inflation Expectations 2.8%
Oil Set for Biggest Weekly Gain Since March on Demand Optimism
(Bloomberg) -- Crude oil rose for a third day in New York, poised for the biggest weekly gain since March, on signs the global economy may be starting to recover. Oil has advanced this week as equity markets rose on speculation the outlook for growth is improving. A U.S. government report yesterday showed the worst of the nation’s job cuts may be over. “We are getting a bit of a consistent run of slightly better-than-expected economic data out of the U.S.,” said Mark Pervan, a senior commodity strategist at Australia and New Zealand Banking Group Ltd. in Melbourne. “Oil is maybe moving to a higher trading range, pushing through what looked like a key resistance level of $55 a barrel.”Crude oil for June delivery rose as much as 59 cents, or 1 percent, to $57.30 a barrel in electronic trading on the New York Mercantile Exchange, and was at $57.26 at 9:48 a.m. Singapore time.
Oil is set to reach $62.65 a barrel “in the near future” and rally to $78 within six months as prices retrace the surge that started in 1998, according to technical analysis by PVM Oil Associates Ltd.Yesterday, oil closed at $56.71, the highest settlement since Nov. 14. Prices have gained 7.7 percent this week, poised for the largest gain since the week ended March 20, and are up 28 percent this year.Crude retreated from an intraday high of $58.57 yesterday as U.S. equities gave up some of their gains. Stocks slid from a four-month high as declines in financial, telephone and technology shares snuffed out an early rally. The S&P 500, which has risen 34 percent from a 12-year-low in March, slid 1.3 percent to 907.39. The Dow Jones Industrial Average decreased 1.2 percent to 8,409.85.
‘Exuberance’ Over Economy
The number of Americans filing for unemployment insurance fell last week to the lowest level in three months. Initial jobless claims dropped by 34,000 to 601,000 in the week ended May 2, the fewest since late January, the Labor Department said in Washington yesterday.
U.S. crude oil inventories rose 605,000 barrels to 375.3 million during the week ended May 1, the highest since 1990, according to a May 6 report from the Energy Department. Analysts forecast a gain of 2.5 million barrels. Gasoline supplies fell 167,000 barrels to 212.4 million, leaving stockpiles 2.8 percent above the five-year average for the period.
OPEC Ministers
Ministers from the Organization of Petroleum Exporting Countries are scheduled to discuss production levels at a May 28 gathering in Vienna. The group agreed at three meetings last year to reduce output by 4.2 million barrels a day to bolster prices.
The 12-member group will trim oil shipments to about 22.15 million barrels a day in the month ending May 23 from 22.28 million a day in the period to April 25, Oil Movements, the Halifax, England-based tanker-tracker, said yesterday. Shipments are at their lowest level since June 2003, its data show.
Oil is set to reach $62.65 a barrel “in the near future” and rally to $78 within six months as prices retrace the surge that started in 1998, according to technical analysis by PVM Oil Associates Ltd.Yesterday, oil closed at $56.71, the highest settlement since Nov. 14. Prices have gained 7.7 percent this week, poised for the largest gain since the week ended March 20, and are up 28 percent this year.Crude retreated from an intraday high of $58.57 yesterday as U.S. equities gave up some of their gains. Stocks slid from a four-month high as declines in financial, telephone and technology shares snuffed out an early rally. The S&P 500, which has risen 34 percent from a 12-year-low in March, slid 1.3 percent to 907.39. The Dow Jones Industrial Average decreased 1.2 percent to 8,409.85.
‘Exuberance’ Over Economy
The number of Americans filing for unemployment insurance fell last week to the lowest level in three months. Initial jobless claims dropped by 34,000 to 601,000 in the week ended May 2, the fewest since late January, the Labor Department said in Washington yesterday.
U.S. crude oil inventories rose 605,000 barrels to 375.3 million during the week ended May 1, the highest since 1990, according to a May 6 report from the Energy Department. Analysts forecast a gain of 2.5 million barrels. Gasoline supplies fell 167,000 barrels to 212.4 million, leaving stockpiles 2.8 percent above the five-year average for the period.
OPEC Ministers
Ministers from the Organization of Petroleum Exporting Countries are scheduled to discuss production levels at a May 28 gathering in Vienna. The group agreed at three meetings last year to reduce output by 4.2 million barrels a day to bolster prices.
The 12-member group will trim oil shipments to about 22.15 million barrels a day in the month ending May 23 from 22.28 million a day in the period to April 25, Oil Movements, the Halifax, England-based tanker-tracker, said yesterday. Shipments are at their lowest level since June 2003, its data show.
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