Today’s Markets
- In Asia, Japan +0.2% to 9467. Hong Kong -0.2% to 22610. China -1.7% to 2703. India -0.1% to 18385.
- In Europe, at midday, London flat. Paris flat. Frankfurt +0.1%.
- Futures at 7:00: Dow +0.2%. S&P +0.3%. Nasdaq +0.2%. Crude +0.2% to $100.91. Gold -0.3% to $1534.70.
Thursday’s Economic Calendar
- 5:00 Fed’s Plosser: Economic Outlook
7:00 BoE Announcement
7:30 Cleveland Fed Conference: Housing and Human Capital
7:45 ECB Announcement
8:30 Initial Jobless Claims
8:30 Trade Balance
10:00 Wholesale Trade
10:30 EIA Natural Gas Inventory
1:00 PM Results of $13B, 30-Year Note Auction
4:30 PM Money Supply
4:30 PM Fed Balance Sheet
The S&P 500 closed the day down 0.42%, the sixth consecutive finish in the red. According to my quick visual scan, this is the first string of six losses since before the market bottom in March 2009. The correction is now 6.16% below the interim high of April 29. The index is 89.1% above the March 2009 closing low but 18.2% below the nominal all-time high of October 2007.
We received a pretty clear message yesterday – if you are looking for additional monetary stimulus, you need to find a new hobby. Not going to happen. Yes, we know we have said this before, but this time we are serious.
Fed officials simply believe the weakness in the first and second quarters of this year is largely transitory, the impact of commodity prices and tsunami-related supply disruptions. In other words, nothing to see here, move along.
With the housing market faring poorly, the top economist at the National Association of Home Builders lowered his forecast for home construction this year.
Builders are likely to break ground on 582,000 homes this year, down slightly from 585,000 in 2010 and a far cry from a peak of more than 2 million in 2005, David Crowe, the NAHB’s top economist said Wednesday. Crowe also forecasts that builders will start construction on only 431,000 single family homes this year — the lowest level of the housing bust.
In an interview, Crowe said the start of the year was “much worse than I expected,” noting that overall economic growth was weak, the labor market grew less than forecast and consumer confidence hasn’t picked up. High gasoline prices, he said, are “just a joy-killer” that makes consumers less interested in purchasing a new home.
At the start of the year, Crowe expected a much healthier rebound. At the time, he was forecasting builders would start construction on 575,000 single-family homes this year.
The housing market has been a consistent source of weakness for the U.S. economy, and builders have been hit hard.
BEIJING—After years of housing prices gone wild, China’s property bubble is starting to deflate.
Residential prices are heading downward in some major cities, damping some undesired real-estate speculation but raising the prospect that the Chinese economy may slow more rapidly than anticipated with profound consequences for global growth.
Real estate is a foundation of China’s phenomenal growth record in the past two decades, and its health is crucial to China’s construction, steel and cement sectors. Real estate is also a favored investment of Chinese looking to get better returns than bank deposits pay.
James Dimon is sweating.
The J.P. Morgan Chase chief on Tuesday breathed new life into a longstanding spat between bankers and their regulators, who are trying to rein in the financial sector. Speaking during a televised question-and-answer session after an important speech by Federal Reserve Chairman Ben Bernanke, Mr. Dimon said he feared an onslaught of regulation is why the economy and job creation are sputtering.
Mr. Dimon’s real nightmare, though, concerns the future of his own bank. J.P. Morgan and its too-big-to-fail peers—Bank of America, Citigroup, Goldman Sachs and Morgan Stanley—have found themselves in a battle with regulators that will determine their future shape, size and profitability.
While directed at Mr. Bernanke, Mr. Dimon’s comments were actually aimed at another Fed governor, Daniel Tarullo. The point person within the Fed for bank regulation, Mr. Tarullo gave a speech last Friday that jarred bankers by suggesting that those deemed “too big to fail” could be required to hold a capital buffer equal to as much as 14% of certain assets, double the current expected requirement.
Here are a few more technical indicators that tell me that the investing environment is not so great right now.
The first is a simple ratio of the price of copper to the price of gold. Copper is often considered to be a barometer of economic activity due to its uses in many industrial applications from electrical wiring to water pipes. It tends to rise when the economy starts to improve and fall when the economy starts to struggle.
Gold, on the other hand, has limited industrial use and is often bought as a hedge against bad times. Therefore, a ratio of the performance of copper to gold can tell us how investors perceive the risks in the economy and in the stock market.
Chip maker Texas Instruments (TXN) this afternoon said it was cutting its Q2 view for revenue and profit, without offering any reason.
TI shares are down $1.51, or almost 5%, at $31.16.
The company said it now expects revenue of $3.36 billion to $3.5 billion, versus a prior range of $3.41 billion to $3.69 billion. TI expects EPS of 51 cents to 55 cents, versus a prior 52 cents to 60 cents.
The Street has been modeling $3.55 billion in revenue and 57 cents EPS.
TI is in the process of acquiring analog chip maker National Semiconductor (NSM).
The company plans to conduct a conference call with analysts at 4 pm, Central time, 5 pm, Eastern, which you can catch here.
European Central Bank President Jean- Claude Trichet may today play the interest-rate card and signal to European governments that the euro region’s debt crisis is theirs to solve.
Two days after German Finance Minister Wolfgang Schaeuble opened a rift with the ECB over how to fix Greece’s debt crisis, Trichet is likely to signal that the ECB is ready to raise interest rates for a second time in three months in July, a Bloomberg News survey showed. The central bank today will keep its benchmark at 1.25 percent, a separate survey showed.
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