Market Flailing Like A-Rod Trying To Hit a FastballOctober 15, 2012 @ 9:22 AM EST
The IMF kicked the markets in the gut this week with its downgrade of global growth forecasts, but Apple (AAPL) and the tech sector also delivered a serious sucker punch. And concerns over Euro area “progress” and worries over the earnings season made the market flail like A-Rod trying to connect with a 90-MPH fastball.
But at least we received some semblance of high spirits from “Laughing Joe” at the VP debate, an upbeat report on Consumer Confidence, the awarding of a Nobel Prize to Europe and some of the most exciting MLB baseballs playoffs in quite a while. And “The Truthers” were certainly a happy bunch, with several new issues to sink their teeth into.
When all was said and done, however, it was one of the poorest weekly market showings in about four months, with the SPX off -2.2%, the Dow down -2.1% and the Nasdaq the big loser, shedding -2.9%. For the first time in quite a while, we heard traders saying “Sell the rallies” instead of “Buy the dips”.
But honestly, there was not really any earth-shaking “bad news” other than the usual “Wall of Worry” and with the SPX testing down almost exactly to its 50-day SMA, traders were left to wonder if this was a run of the mill pullback or a somewhat more serious “take the money and run” move.
Barrons’ Alan Abelson commented this weekend, “The stock market continues to act unfathomable, at least to innocent bystanders like us. Thursday was an excellent example, with advancers at 2-1 over decliners, but indices mostly down…reflecting the action of some heavyweights like Apple (AAPL).” (AAPL was down again, off close to 4% on the week).
So let’s get to it and see what was out there this week, starting with the first and only Vice Presidential debate. Both sides of course claimed definitive “no doubt about it” victories in the debate, and unlike Romney vs. Obama, there was certainly more of a split camp.
Bill Maher, as usual, had one of the funnier tweets, in obvious support of Biden:
“@BillMaher Hello 9 1 1? There’s an old man beating a child on my TV”
Republicans of course had a field day with “Laughing Joe”, characterizing Biden’s performance anywhere from “disrespectful and contemptuous” to “inappropriate laughter over serious foreign policy and jobs issues” . Liberal commentator Rachel Maddow said she “thought Biden's facial expressions were intended to show that he believed Ryan was lying.” (Hollywood Reporter)
Alex Castellanos, a Republican strategist, said Biden bought Obama a week of enthusiasm to help his campaign make it to the next presidential debate, but said “they could have taken away his [Biden’s] laughing gas a little earlier.”
Many “impartial” analysts called it a “draw”, but whatever one believes on who won, it certainly set the stage again for compelling theater on Tuesday night’s 2nd Presidential debate and another “TweetFest”.
Moving along here, what else was out there this week?
After the global growth downgrades this week, the IMF was out with another statement over the weekend (ABC News):
"Global growth has decelerated and substantial uncertainties and downside risks remain," an IMF advisory committee said in a communique. It exhorted advanced economies to carry through with needed structural reforms and "credible fiscal plans." Decisive action is needed to "break negative feedback loops and restore the global economy to a path of strong, sustainable and balanced growth.” (We just have one question, with IMF Managing Director Christine Lagarde seemingly in endless meetings over the Euro crisis and myriad other issues, how does she maintain that fabulous tan?)
“Consumer Sentiment in U.S. Rises to Pre-Recession High” --Bloomberg headline Friday, adding, “The Thomson Reuters/University of Michigan preliminary October consumer sentiment index increased to 83.1, the highest level since September 2007, from 78.3 the prior month.” An economist on Bloomberg Surveillance Radio said, however, “Confidence does not necessarily equal optimism.” On the same show another guest remarked, “Markets are all about fear and greed…we have plenty of fear, where is the greed?”
“The Feds are getting ready to pull the trigger on an antitrust lawsuit against Google for allegedly using its massive scale to squash competition and keep online advertising prices high.” --Wired and other sources on the reports of the FTC preparing a suit after a year of probing many elements of Google’s business. An oft-used and now iconic response from Google (GOOG) regarding similar criticism, “On the Internet, competition is one click away.”
The housing market “has turned the corner.” --Forbes reporting on Jamie Dimon’s JPM earnings conference call. Even though JPM was “crushing the consensus earnings view” , the stock was off Friday, as was Wells Fargo (WFC), with a lot of emphasis being paid to “Net Interest Margin.”
According to Daily Finance, “Banks are seeing their net interest margin—the difference between their yield on interest-earning assets and cost of funds—contracting…JPM’s by 4 basis points and WFC’s plummeting by 25.” </p>
“@PIMCO (from Bill Gross) He who hesitates is lost. Pride goeth before a fall. #Spain should swallow its pride and ask for help now!” --Gross tweet on 10/11 as reported by The Guardian. Many observers were commenting last week that the Spain downgrade might be market positive, increasing the short-term pressure on Spain to ask for the long and painfully-awaited bailout.
“Unemployment Claims Fall To Lowest Level Since February 2008” --Huffington Post on Thursday, with the better than expected numbers inflaming “Truthers” again, who can’t help but remark on the pre-election series of data points working in the President’s favor. There were many rumors flying on possible errors or incompleteness in Thursday’s report, with the same piece reporting, “Economists noted that much of last week's drop was due to seasonal volatility in the data. A Labor Department spokesman said one large state accounted for much of the drop in applications for unemployment aid.”
“Please open a location on Rodeo Drive.” --LA Times quoting the CEO of “99 Cents Only Stores”, as he characterized his customers wants and needs. "We know many customers are driving from Beverly Hills to shop at 99 Cents…We buy name brands like Wolfgang Puck, we have Jamba Juice items, Toblerone candy bars. Some customers don't recognize the gourmet items, but someone who values and knows the brand gets excited because they are getting a $4 item for less."
“Ig-Nobel Peace Prize” --New York Post editorial as The Nobel Committee awarded the 2012 Peace Prize to the European Union on Friday. The Post commented, “sort of like congratulating a barnacle for attaching itself to a fancy yacht. Because when it comes to the 20th century and lasting peace in Europe, the heavy lifting was done by the United States of America and its junior partner in the endeavor, NATO.” The Wall Street Journal was a little bit more generous, saying,” the choice could have been worse…. And nobody can gainsay that the EU has helped secure the peace on a Continent that until 1945 was often