Thursday, May 13, 2010

Market Update – stocks for sale as noon passes; Spain Unions Organizing a Strike

Market Update – stocks for sale as noon passes but more just a lack of buyers than a lot of high-conviction selling; the situation in Europe remains calm and quiet, which is helping sentiment towards risk assets. Headlines out of Europe light b/c of the Ascension Day holidays but there were some reports in Spain today about unions calling for strikes after Wed’s austerity announcements (although they don’t appear to be as severe as Greece from last week). Italy today had a strong debt auction, following the decent sale from Portugal yesterday, while Greece making its big debt payment next week should help sentiment further. European currencies (namely the GBP and EUR) remain heavy and are hitting fresh
lows, but this isn’t being taken as a big negative as far as US equities are concerned (if anything, people anticipating further downside in the euro as the ECB ramps up its QE activity). The regulatory noise around the financials in the last few days (the WSJ/NYT reports about ramped up inquires around CDOs, etc) not having the same impact as those original charges against GS did a few weeks back (if anything, the more firms that are brought into the investigations, the more investors are becoming comfortable w/the issue). The economic calendar is pretty light (today’s jobless claims were really a non-event). On the desk, flows remain quiet w/the SP still in technical purgatory (we are vacillating around the critical 1170 level on cash and can’t seem to make a definitive move in one way or the other). The larger long-onlys still largely on the sidelines w/more short-term focused investors dominating flows. There remains a big macro focus vs. single stocks (so using ETFs for sector bets or hedging single stock ideas w/a larger broader index offset). Top of mind for investors going forward: 1) will Europe remain stable/calm (people are watching European banks and sov debt spreads) and 2) the progression of the Dodd bill. Tech also will see a ton of activity in the next couple weeks (CSCO kicked off a busy Apr-end earnings season that inc. NVDA tonight and DELL, HPQ, BRCD, ADSK, MRVL, others, next week; also JPMorgan’s tech conf starts Mon).

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