David's Feed
Feb 26, 2014
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MORNING BID-All the metal in China

Without a lot of fanfare, the U.S. equity market has worked its way back to a few points of all-time highs, as concerns over emerging markets (largely related to Ukraine) have magnified, as have worries over China’s struggling growth.

That’s once again produced the “best house in a bad neighborhood” effect for the U.S. stock market; bond yields remain range-bound in the 2.70 to 2.75 percent area, the 10-year still reflects a value that doesn’t suggest economic acceleration or worries over massive slowing either.

Feb 14, 2014

Snow blind: winter’s wrath obscures views on U.S. economy

NEW YORK (Reuters) – Interpreting U.S. economic figures in the last couple of months has taken on a familiar pattern: wonder about possible weakness in demand, and then shrug and dismiss it all as a product of bad weather.

Reports from official government agencies, private surveys and U.S. corporations have blamed colder-than-normal weather and heavy snowfall across large swaths of the country for everything from slack retail sales and weak employment data to poor industrial output.

Feb 13, 2014

Analysis – Snow blind: winter’s wrath obscures views on U.S. economy

NEW YORK (Reuters) – Interpreting U.S. economic figures in the last couple of months has taken on a familiar pattern: wonder about possible weakness in demand, and then shrug and dismiss it all as a product of bad weather.

Reports from official government agencies, private surveys and U.S. corporations have blamed colder-than-normal weather and heavy snowfall across large swaths of the country for everything from slack retail sales and weak employment data to poor industrial output.

Feb 7, 2014
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MORNING BID – But I never could find…(sha na na na, sha na na na na)

An odd jobs report sets the tone for what’s likely to be another choppy day in the markets – stock futures plunged, briefly, after the Labor Department said nonfarm payrolls grew by just 113,000, but the household survey saw a drop (again) in the unemployment rate to 6.6 percent on a big gain in jobs in that survey. An odd decline of 29,000 in government payrolls offset the overall about-at-trend-but-let’s-not-kid-ourselves-about-this-being-awesome 140,000 or so gains in the private jobs market, so there’s a little bit to like, some to shake one’s head at, and still more to wonder about how many people didn’t get to work because their feet froze to the ground when they tried to get into their cars.

(More seriously on that point – the establishment survey doesn’t get some kind of massive job loss just because of a storm on a particular day of surveying, so it’s not as if a snowstorm destroys job growth, so let’s not overstate the weather issue here. It’s a factor, but don’t look for a revision to +300,000 or something.)

Feb 6, 2014
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MORNING BID – A (Green) mountain of short interest

There’s a lot of stuff going on in the world right now, but sometimes it’s more fun to look at more provincial issues, like what promises to be the mother of all short squeezes Thursday in Green Mountain Coffee Roasters, the maker of Keurig machines which announced a big investment and partnership with Coca-Cola (y’know, the biggest beverage company in the world, which buys all the vanilla, uh, everywhere).

The most recent data from Nasdaq puts short interest in this name at 25 percent of the outstanding shares (and about 30 percent of the float) – about 37 million shares, which doesn’t come close to the record of about 51 million shares back in November 2012, but still is a lot – average volume over the past 50 days is 3.11 million shares, so at that rate it would take about a dozen days to cover all of those short bets if they threw in the towel all at once.

Feb 5, 2014

U.S. service sector growth, hiring improves in January

By David Gaffen

(Reuters) – Growth picked up in the dominant U.S. service sector in January, with steady strength in private-sector hiring, suggesting the U.S. economy was digging through the winter weather that socked the country over the last several weeks.

After two months of slower growth, the Institute for Supply Management said on Wednesday its services index rose to 54 last month from 53 in December, and firms added workers at the fastest clip in more than three years.

Feb 4, 2014
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MORNING BID – Making it up on volume

Monday was the worst day in the stock market since June. And while you can go through all the machinations and point out that the market is still down just 5 to 6 percent from its record high – and you’d be right – that doesn’t really translate to a strong environment at this time.

Not when the selloff continues through to overseas markets, with the Nikkei down 4 percent, Hong Kong losing more than 2 percent and ending at the day’s lows, and Europe down as well. So far the US market is experiencing something of a dead-cat bounce, but we’ll see how long that can last.

Jan 31, 2014
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MORNING BID – Contagion abounds, and the Super Bowl

On Thursday, this column suggested that a bunch of stock markets selling off in tandem did not satisfy the definition of contagion. Central banks dumping U.S. assets, weak auctions of government debt in seemingly less related countries, and big sell offs in less affected currencies? That’s getting closer to the mark.

Foreign central banks cut their holdings of U.S. debt stored at the Federal Reserve by the most in seven months in the past week, in a bid to defend weak currencies. “It makes sense,” said Scott Carmack, fixed income portfolio manager at Leader Capital, which has $1 billion under management. “It will probably continue as emerging markets try to prop up their currencies.”

Jan 30, 2014
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MORNING BID – The prime directive

So, it’s been a few days. Which means the markets have hit that point in the Star Trek episodes when the Klingons were temporarily short of torpedoes, which gave the Enterprise crew time to suss out what was going on.

Some of the missiles were fired. Big rate hikes from Turkey and South Africa, that followed a rate hike from India, and a few conclusions are inescapable:

Jan 29, 2014
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MORNING BID – Turkey, the Fed, and we all float down here

The messy sell-off in emerging markets was stemmed overnight after Turkey surprised everyone by raising rates to 12 percent – but it didn’t last. Major averages in Britain and Germany opened at their highs of the day but have since faded, and even though the big rate increases in Turkey, South Africa and India are meant to stem capital flight, so far the market’s shooting first and asking questions later. S&P futures were up about 20 points after the Turkey rate hike – an odd move for such a localized event – and we’re seeing the reaction now, which, to quote Tom the cat about the ‘white mouse no longer being dangerous,’ “DON’T…YOU…BELIEVE…IT.” So we’re lower, and continue to head lower, and for those of you new to the markets, this is what’s called a selloff.

The big question: Will the Federal Reserve defer its tapering campaign in recognition of emerging-markets difficulty? One could say the Fed cannot be expected to act as the underwriter for global risk-taking, but you’d be laughed out of the room, given the performance of assets around the world in the last several years as the Fed went into full-QE mode.

    • About David

      "David Gaffen oversees the stocks team, having joined Reuters in May 2009. He spent four years at the Wall Street Journal, where he was the original writer of the web site's MarketBeat blog. He has appeared on Fox Business, CNN International, NPR, and assorted other media and is the author of the forthcoming book "Never Buy Another Stock Again.""
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