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Pre-Market Report
The day's news wire is keyed by the high profile Iranian elections. Iranians are choosing their next president, so clearly this Iranian election is of great significance to the entirety of the world. Meanwhile, the World Health Organization yesterday declared H1N1 (Swine Flu) the first pandemic our world has seen in 41 years. In the wake of all this sour news, the stock market receives the latest consumer sentiment reading and May's take on import and export prices.
(Tickers: BCS, BLK, MSB, DIA, SPY, QQQQ, NYX, DOG, SDS, QLD, XLF, IWM, TWM, IWD, SDK)
Iranian Elections
Mir Hossein Mousavi, President Ahmadinejad's closest rival, is complaining that his people are not gaining access to polling numbers. Mr. Mousavi may do something today that has never been accomplished in Iran, the unseating of a sitting president. Mousavi has incorporated women more than any Iranian candidate of the past, employing his wife actively in his campaign. He has also promised more freedoms and seems to be the guy we might want to win... "We" being the rest of the world...Import & Export Prices
Import prices rose 1.3% in May, meeting consensus expectations. Imports increased 0.2% when excluding petroleum, which marked a significant change. Inflation fear mongers have fuel to burn today, but prices had to eventually recover. Just as petroleum has recovered, so have commodities generally. This pushes all pricing higher as manufacturers must incorporate the change in costs into finished goods. We've noted here often how much more quickly that seems to occur on the way up than on the way down. Thus, there's an intrinsic anchor for inflation present in the pricing scheme. That said, prices were still 17.6% short of last year's levels (including petrol). Export prices rose 0.6%, versus the prior month 0.5% rise. Export prices were still 6.5% short of last year's level.
Reuters/University of Michigan Sentiment
At 9:55 AM, look for the latest reading on the Michigan Sentiment metric. The consumer sentiment take has improved from panic-level lows, but rising beyond much further will likely require labor market improvement. Employed folks can only get so happy! Sentiment is not going to improve for the unemployed and partially employed until that situation changes. Bloomberg's consensus of economists forecasts the June sentiment reading will mark 70.0, versus 68.7 at last take. Sentiment was lowest in the panicky days of last fall.
Corporate News Drivers
Blackrock (NYSE: BLK) agreed to buy Barclays' (NYSE: BCS) investment unit, Barclays Global Investors, for $13.5 billion. The cash ($6.6 billion) and stock (37.8 million shares) deal makes Blackrock the world's largest money manager. Afterward, Barclays will own 19.9% of its former unit. Blackrock will take on new debt and raise capital via equity offering. Barclays' shares were down 3% in the pre-market, while we did not get a quote for Blackrock. Corporate EPS news offers Mesabi Trust (NYSE: MSB) and a handful of non-US names.
Markets Overseas
Markets overseas look shaky after the murder of the top representative of the Iraqi Parliament's largest Sunni Muslim bloc today. The streets of Baghdad threaten to catch fire with religious vengeance as sectarian separation renews. Suddenly, a US withdrawal may not be so soon in coming.Asia:
- MSCI Asia APEX 50: -0.48%
- Japan NIKKEI 225: +1.55%
- Hong Kong Hang Seng: +0.52%
- China CSI 300: -1.87%
- India BSE SENSEX 30: -1.13%
- DJ Euro STOXX 50: -0.53%
- UK FTSE 100: -0.39%
- France CAC 40: -0.33%
- Germany DAX: -0.68%
(Prices as of hour of publishing, which may not be the close)
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