G-20 & FASB Overrule Chaos & Anarchy

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Market Moving News

Today's financial news was headlined by the ECB monetary action, the jobless claims data, and G-20 announcement, none of which were truly supportive to stocks. However, the broader markets rose just the same, and many in the media want to point towards the FASB rule change for cause. I just don't buy it. I think it had more to do with France not leaving the meeting and the disarray that would have surely ensued.

(Related Tickers: MWW, KFY, RHI, MAN, DIA, SPY, SDS, DOG, QLD, QQQQ)

Economic Data

Weekly Jobless Claims

Weekly jobless claims grew even further in the period ended March 28th, to 669K. The economy is like a hemophiliac at this point, bleeding jobs with no let down in the flow. The most recent period saw 12,000 more job losses than the week just prior, and considering the persistence and magnitude of loss, tomorrow's employment report could show unemployment easily reaching the consensus estimate of 8.5% for March. Unemployment stood at 8.1% in February.

Monster Employment Index

The Monster Worldwide Employment Index (NYSE: MWW) drifted lower to 118 in March, from 122 in February. Well of course it did! 118 may seem like a high number when considered in absolution, but when comparing it to last year's level of 167, well then you get the picture. Each of the 28 metropolitan groupings and each region of the nation, except East-South Central, saw decline. Most mainstream occupations recorded lower job demand, while strength came from agriculture, forestry, fishing and hunting... Talk about reversion to the mean, the providers of the basics of survival are the only strong businesses now. Otherwise, there were a few opportunities in health care support functions.

Factory Orders

After the market open, we received the first bit of positive news of the day, sort of. Factory Orders jumped 1.8% in February, marking the first monthly rise in seven tries. The consensus of economists, as tallied by Bloomberg, was looking for a rise, but of only 1.5%. There's always a fly in the ointment these days, and with regard to this data point, it was an easy "comp." in January. You see, orders dropped a dramatic 3.5% this past January.

We should also be concerned that unfilled orders and shipments continued to decline, so perhaps a few optimistic buyers later experienced remorse and unduly inflated the orders figure. By the way, we still set records with seven consecutive months of decline in shipments and unfilled orders.

FASB Eases Fair Value Accounting Rule

The change to mark-to-market accounting, perhaps the key driver of the day according to reason-starved popular media peeps, was initially overlooked by most traders. Or maybe it didn't really matter, since the market is efficient... There's been plenty of debate as to the degree of impact this change might have now that the cat is out of the bag. Actually, most of that specific chatter has come from right here. This mark-to-market change might have helped, had it been enacted a year ago. However, now that the whole world is well-aware of the toxic load banks carry, and with so many of those institutions having been forced at gunpoint to raise capital (often via costly government handouts that have wiped out equity holders), it's a little late fellas.

Overseas News

IMF Wins G-20 Lotto

Here's today's real market driver, but look a little deeper into the story for the key. The G-20 meeting broke up without anybody getting killed, as far as we know. Perhaps a few BMWs were flipped, but it could have been much worse. Thank Gordon Brown the meeting wasn't held in Philadelphia, LA or Detroit, or then you would have seen anarchy, chaos and destructive madness... and I'm talking about from the cops! I don't even want to think about what the knuckleheads might do...

The meeting broke up with the largest 20 economies of the world throwing more money at the problem. Yo, I got a problem! Why dont-choo throw some money at me! Yo Adrian! The group agreed to boost IMF funding by $1.1 trillion; that's money that will go toward bailing out poor nations that run into trouble.

Issues that did not appeal to the broader consensus were not enacted into policy. The U.S. hoped to spur wealthy powers, like France and Germany, to increase domestic fiscal stimulus closer to the degree the U.S. and U.K. have. Neither would budge, both fearful of running huge budget deficits similar to the 1920s. The Europeans wanted the U.S. on board with the idea of creating a "super regulator" to oversee world finance, and there was no way we were going to do that.

We also heard more rhetoric about the evils of protectionism, but the fact is that each nation protects its voting constituency (read it's own rear end). The priority of every politician is getting reelected, or at least not being strung up by the hanging tree.

I think the market was enthused that chaos didn't spread from the streets outside the meetings into the conference itself. France's threatening to walk out did not do global stability any good, and so their sticking around was reassuring in the sense that world powers hadn't ditched all sanity just yet.

ECB: Trichet the Trickster

Tricky Trichet did it again. Economists far and wide expected the ECB boss to cut the euro-zone key rate by a half of a percentage point, and he went and sliced it thinner, by just a quarter point. BUT, he said this would not be the end of rate reduction... Can somebody explain to me why the guy is leading expectations uselessly. You do; you do not say. If you have good reason for a quarter point, tell us so. Don't erase all credibility in yourself by saying something else. Oh Trichet, you've done it again!

EPS Schedule:

Novo Nordisk's (NVO) diabetes drug, Liraglutide, is under review by the FDA. The earnings schedule highlights reports from Monsanto (MON), Rite Aid (RAD), A. Schulman (SHLM), Acuity Brands (AYI), Aehr Test Systems (AEHR), Allscripts-Misys Healthcare (MDRX), AngioDynamics (ANGO), CarMax (KMX), Cascade (CAE), DemandTec (DMAN), Global Payments (GPN), Lawson Software (LWSN), Lindsay Corp. (LNN), Micron Tech (MU), MSC Industrial (MSM), MSCI (MXB), Origin Agritech (SEED), Research in Motion (RIMM) and RF Monolithics (RFMI).


Please see our disclosures at the Wall Street Greek website and author bio pages found there. (Article interests: AMEX: DIA, AMEX: SPY, Nasdaq: QQQQ, NYSE: NYX, AMEX: DOG, AMEX: SDS, AMEX: QLD, AMEX: XLF, AMEX: IWM, AMEX: TWM, AMEX: IWD, AMEX: SDK).