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Home Sweet Home; Easy Does It; Pressing Apple Questions

Doug Cubberley, Special to CNBC.com
Tuesday, 28 May 2013 | 4:25 PM ET
Jay Laprete | Bloomberg | Getty Images

Recapping the day's news and newsmakers through the lens of CNBC.

Got to Admit It's Getting Better

Notes:

Stocks took off in the first day of trading after the Memorial Day holiday, buoyed by supportive comments from central banks around the world, as well as data that pointed to a strengthening U.S. housing market and rising consumer confidence.

Single-family home prices rose 1.1 percent in March, according to the S&P/Case Shiller composite index of 20 metropolitan areas—the best annual gain in nearly seven years. Economists had forecast a 1 percent gain. Prices in the 20 cities jumped 10.9 percent year over year. All the good news has economists asking whether these gains are healthy (yes) and whether they should be taken with a grain of salt (indeed).

Sluggish global growth had led to a slowdown in production, but increasing consumer confidence (the highest in five years) in the face of income cuts and higher taxes points to an economy on the mend. Still, the labor market is the key to further improvement.

Last week, all three major averages logged weekly losses for the first time in five weeks, rattled by worries that the Federal Reserve may soon start to pare back its bond buying. What a difference a few days make.

Quotes:

"When the Fed realizes they need less aggressive monetary policy, when we need less medicine, the patient is getting better. The rotation from defensive to cyclical will be well underway."
—Arthur Hogan, an advisor with Lazard Capital Markets

"Buying and selling existing homes is very nice. We all feel good. The prices are going up. But it doesn't add anything to GDP."
—David Blitzer, chairman, S&P 500 Index Committee

Not So Fast

Notes:

We have moved from last week's trend of interpreting good news as bad by viewing it through the lens of the Fed tapering its bond buying to "bad news actually equals good news."

Last week's pullback, when considered with Tuesday's market rally, could signal steady, albeit slower, gains. And even declines—such as a relatively shallow, 5 percent drop from the rally since November—present a good buying opportunity.

According to Capital IQ, no fewer than 26 times since World War II have we seen the market up in January and February, and every time, the market has been up for the full year, with an average total return of 24 percent. Accordingly, at least one economist predicts an increase of about 5 percent in GDP for the second half, mainly because of an improved housing sector.

What does all this mean for long-term market performance? Roger Altman, chairman and founder of Evercore Partners, said that though the market may have made most of its gains for the year, there's still money to me made if you go out three to five years.

Quotes:

"For those people who are bullish for the longer term, this is an additional encouragement to say that you would want to buy on these dips."
—Capital IQ Chief Equity Strategist Sam Stovall

"We're slowly building a foundation for […] a stronger 2014, 2015 and 2016, which really ought to be pretty good years in the United States. Three percent [economic] growth or may be a little bit better."
—Roger Altman

From the Malfeasance Files

Notes:

Chinese hackers have gained access to the designs of more than two dozen U.S. weapons systems, including ships, missiles and aircraft. And the operators of digital currency company Liberty Reserve have been accused of laundering more than $6 billion over the last seven years in what could be the biggest international money-laundering prosecution in history.

A government report said plans for the Patriot missile defense system, the F-35 Joint Strike Fighter, the V-22 Osprey, the Navy's Aegis missile defense system and other top-shelf weapons systems were accessed. Meanwhile, one prosecutor described Liberty Reserve as a "PayPal for criminals" that enabled "all sorts of criminal conduct that would not otherwise happen."

And in what's not criminal but feels like it to those lower in the labor food chain, the U.S. remains the only highly developed nation that doesn't require employers to offer paid time off, according to a new report from the Center for Economic and Policy Research.

Quotes:

"Cybersecurity is a key concern. … It will be a topic of discussion when President Obama meets with Chinese President Xi Jinping in June."
—White House Press Secretary Jay Carney

What's Cooking at Apple?

Notes:

Apple CEO Tim Cook will deliver the keynote speech Tuesday night at the All Things Digital D11 Conference. Unlike last week, when he was questioned by members of Congress on Apple's tax strategy (during which Apple shares rose about 2.75 percent), there will be no Q&A session.

In fact, anyone expecting answers to pressing topics such as the status of Apple TV, products in the pipeline, the next step for the iPhone (which is seeing its sales peak) and the tech bellwether's strategy for emerging markets is likely to be disappointed.

Quotes:

"It's interesting that no one is going to ask him tonight why his cap ex has gone from $1 billion before the iPhone to $10 billion today, and that's because he's building his own chip."
—Porter Bibb, Mediatech Capital Partners

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