Investor’s first read – Brooksie’s edge before the open
Thursday, May 10, 2012 9:15 a.m. ET
DJIA: 12835.06
S&P 500: 1354.58
Nasdaq Comp.: 2934.71
Russell 2000: 788.92
This Greek stuff is getting a bit old.
But, how different is what is happening in Greece and France from what is happening in the Mid-East, and to a much lesser extent in the United States with the “Occupy” movement.
In general, youth is rebelling, but their sentiments are shared by older people as well.
What’s my point ?
That what is happening may be far bigger than presently perceived by the press and citizens around the world – A sea charge of sorts.
A lot of people are unhappy with how things are run at any level. Whether they are right or wrong or partly right doesn’t matter.
Bottom line: it smacks of CHANGE and that promises the uncertainty that disruption produces. We saw this in the 1960s and 1970s, the catalyst then was the Vietnam War.
Not so far removed from the sentiment expressed in the movie “Network” – “I’m mad as hell and I’m not going to take it anymore.”
CONCLUSION: Insufferable volatility, not driven so much by the “quants” but by wild swings in investor s’ sentiments – one day bearish, the next bullish, mostly event driven.
Now then, how does Wall Street program their computers for this ?
They can’t, ergo expect irrational volatility at times.
The market wants to turn back up. Institutions are faced with a dilemma: they must buy stocks, since there is nowhere else to attempt to get a decent return on their client’s buck. Their clients demand it, and they demand results. But too many untimely purchases will drive clients elsewhere.
Reoccurring issues like the one in Greece make it difficult to be on the right side of the market. Didn’t we resolve the Greece issue and avoid contagion ? Obviously not.
TODAY: More “probing” for a comfort level that discounts current uncertainties.
Look for a bounce at the open. We are going to need positive news out of Europe regarding Greece if the market is going to hold a gain going into the weekend.
Odds favor another plunge down to test yesterday’s lows (DJIA: 12,928, S&P 500: 1343) starting later today or tomorrow assuming no good news out of Europe.
The market wants to run, but uncertainty is holding it back.
ECONOMIC REPORTS: Now that investors are questioning the sustainability of the economic recovery which started in June 2009, these reports are watched closely. Unfortunately, answers to this question won’t be forthcoming this week, the schedule of reports is light.
MONDAY:
Consumer Credit (3:00) – Rose $21.4 billion in March, driven mostly by purchases of autos and funding of educational costs. Revolving debt which includes credit card debt increased $5.2 billion. The big jump in March follows an $8.7 billion increase in February following a revised $18.6 billion rise in January. A big jump in non-revolving credit for automobile purchases has driven a big seven month surge,
WEDNESDAY:
Wholesale Trade (10 a.m.) – wholesale inventories rose 0.9% in February, sales rose even more (1.2%), however the stock to sales ration remained unchanged.
THURSDAY:
International Trade (8:30 a.m.) The U.S. International Trade gap narrowed sharply in February to $46.0 billion from $52.5 billion. Both petroleum and non-petroleum goods contributed to the decrease.
Jobless Claims (8:30) – declined 1,000 in the week ended May 5 to 367,000 after a healthy 27,000 in the prior week. The 4-week moving average
Import/Export Prices (8:30) – Rose 1.3% in March as imported petroleum prices surged 3.0%.The rise in petroleum prices spilled over to industrial supplies.
FRIDAY:
Producer Price Index(8:30) – Unchanged in March after a big 0.4% rise in February. Core PPI gained 0.3%, following a gain of 0.2% in February. Energy decreased 1.0% after a 1.3% jump in February, however gasoline dropped 2.0% after a 4.3% jump in
February.
Consumer Sentiment Index (9:55 a.m.) –The Index increased to 76.4 in April from 76.4 in March.
George Brooks
*Bloomberg.com
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The writer of Investor’s first read, George Brooks, is not registered as an investment advisor. Ideas expressed herein are the opinions of the writer, are for informational purposes, and are not to serve as the sole basis for any investment decision. Readers are expected to assume full responsibility for conducting their own research pursuant to investment decisions in keeping with their tolerance for risk.
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