MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Sunday, May 27, 2012
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9:05 AM Though academic research suggests that the stocks of companies that make political donations perform worse than ones that don't, this year's elections could see corporate political spending skyrocket with a Supreme Court ruling having opened the door for unlimited spending on campaigns. Shareholders at Boeing (BA), IBM, PepsiCo (PEP) and BofA (BAC) seem to get the picture - having put forward motions to curb political spending. But their resolutions failed, so execs may squander more resources on campaigns with no benefit to investors. 15 Comments
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Saturday, May 26, 2012
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12:15 PM Housing prices in just 2 of the 20 largest U.S. metro areas have returned to 2006 levels - Dallas and Houston. Oil? Luck? Perhaps, but a Texas law requiring any homeowner refinancing a mortgage or taking out a home equity loan to have at least 20% equity in their home may have helped shield the state from at least part of the housing bust. 30 Comments
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10:15 AM Rex Nutting's column asserting "Obama's spending binge never happened" has created a buzz in some high places, and it's true that the president's spending levels are little changed from FY2009, the last Bush budget. But that was a TARP-inflated one-off, and Obama must take the blame for choosing not to reverse that elevated level of spending... or for not spending enough. 59 Comments
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Friday, May 25, 2012
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7:35 PM Speaking on the issue of increased financial regulation, Goldman's Jim O'Neill asks rhetorically: “Is it really that entirely desirable to have financial stability at the expense of everything else? I sort of think you want your investment bank to be a little unstable.” - pure Goldman gold. 22 Comments
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6:15 PM Red flag for the U.S. economy? Lending during Q1 fell by more than $56B Q/Q, or 0.8%, a reversal from three consecutive quarters in which lending expanded. While lending to larger commercial and industrial customers continues to rise, nearly all other types of loans declined, including those to small businesses. Comment!
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6:10 PM Is the “cult of the equity” dead? Institutional investors have slashed their equity holdings over the past decade. Stocks have not been this far out of favor in over a half a century. “Ultimately what is going on is that fundamental tenets of capitalist society are being questioned,” says Allianz's Andreas Utermann. This is stunning in light of overwhelming evidence that, in the long run, equities outperform. From 1900 to 2010, they beat inflation by 6.3% a year in the U.S., compared with only 1.8% for bonds. 20 Comments
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12:49 PM Three lunchtime reads:
1) Is QE3 just around the corner?
2) Humbler horizons: America's potential GDP - and its limits
3) Why $1600/oz. is my price at which to return to the gold standard Comment! -
11:59 AM In "a moment of major promise and considerable danger," Royal Dutch Shell (RDS.A) will begin drilling test wells off the coast of northern Alaska in July, opening a new frontier in U.S. oil exploration. "We never expected a Democratic president... to open up the Arctic Ocean for drilling," Sierra Club's Michael Brune laments. 4 Comments
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11:57 AM Home values increased 0.7% in March and stand 1.8% lower Y/Y, reports Zillow. Rents rose sharply, up 1.6% on the month and 3.2% Y/Y. The report also shows a big decline in foreclosures, confounding ideas they were set to increase following the settlement between the banks and the states in February. Comment!
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10:11 AM The S&P 500 +0.2%, gets a little bounce following the better-than-expected consumer sentiment print. At 79.3, it's the highest read since October 2007. The improvement was led by a big rise in the current conditions index (to 87.3 from 82.9), but expectations declined to 71.7 from 72.3. 4 Comments
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8:26 AM There Will Be Blood. A knock at the door could mean jackpot for Kansas farmers in certain areas, where oil companies are offering up to $1,250/acre for mineral rights that were going for $25/acre a year ago. One beneficiary could be John Deere (DE) as formerly strapped farmers swap their old equipment for new. Comment!
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8:17 AM MIT's Billion Prices Project, which spent much of 2010 and 2011 showing inflation at a higher rate than official numbers - is now showing inflation falling faster than the CPI data. It's annualized pace has fallen below 2% while the government pegs it closer to 3%. Comment!
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1:40 AM With the focus so strongly on Europe, it has been easy to miss the data pointing to economic trouble in China, India, South Africa, Brazil and elsewhere. The specter of renewed crisis looms large if activity is slowing in sync around the globe and not just in isolated regions. 2 Comments
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Thursday, May 24, 2012
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1:26 PM Treasurys dip a little further in the middle of the curve after the seven-year note auction came at a record low yield. The 30-year yield +0.03 to 2.86%; 10-year +0.02 to 1.77%; five-year +0.03 to 0.775%. Comment!
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1:17 PM While the case can be made for additional accommodation, says FRBNY chief Dudley in a speech, the costs at this point are likely to exceed the benefits. He stands ready to change his mind towards more ease should things slow down, but would also consider tightening policy earlier than expected if growth gets stronger. (earlier on CNBC) Comment!
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1:04 PM The Treasury sells $29B in seven-year notes at a record-low 1.203%. Bid-to-cover ratio of 2.8, vs. a recent average of 2.58; indirect bidders take 42.7%, vs. a recent 38.7%. Direct bidders take 15.7%, vs. a recent 15.5%. 2 Comments
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12:30 PM Three lunchtime reads:
1) Nervous investors look beyond positive U.S. economic signs
2) China is a black box of misinformation
3) Time to enforce Sarbanes-Oxley in the JPMorgan scandal Comment! -
11:01 AM May Kansas City Fed Manufacturing Survey: Rise to 9 from 3 in Apr, 9 in Mar. New Orders 10 vs. -8 previous, Production 17 vs. 0 previous. Backlogs -3 vs. -5 previous. 1 Comment
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9:57 AM Zillow's new negative equity report shows nearly 16M U.S. homeowners, or 31.4% of all homeowners with a mortgage, were underwater in 2012 - a bit better than 2011's 32.4% but higher than estimates from CoreLogic and others. “It’s a $1.2T problem," Zillow's Stan Humphries says. “We think 2012 is going to be a great year for home sales, but a mixed picture for prices." 2 Comments
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