Volatility's upside; sentimental mood; black-buried
Recapping the day's news and newsmakers through the lens of CNBC.
Three days, three 100 point gains. This is the nice part of volatility, and accordingly, optimists are saying that this is one of those correctional buying opportunities you should jump at. Others say that taper concerns should be set aside for now. But don't get your hopes up too much; volatility will persist through the second half of the year. The Dow has already seen triple-digit moves in 15 of 19 trading days so far this month—the most since October 2011—and not all of them positive, either.
"I think we've had an astonishing first five months of the year where even a donkey on a surfboard was making money. And the correction has been astonishingly fast. And I think that the sentiment indicators had a vague value and clearly when so many of the indicators had been bad for three or four weeks or months you say, 'O.K., this is one of the indicators where things aren't too bad.' So I think that anyone who's actually dumping the market now is probably in the last phase of the dumping. You should be looking to see what to go out and buy."—Jonathan Compton, managing director of Bedlam Asset Management
In a Sentimental Mood
U.S. consumer sentiment was up in late June, way up, and close to the six-year high set in May, beating economists' predictions. Wealthier folks upped their spending and were more optimistic about their incomes, while lower-income families had a less rosy outlook.
The key is disposable income, and given that, there's good reason for pessimism. Salaries are stagnant and prices aren't getting cheaper. Naysayers note that the Chicago PMI index of economic activity missed its target for June, coming in at 51.6, down from 58.7 in May. So more mixed news as the quarter ends.
"For the last six months we've been asking customers 'how do you feel about the economy and to what extent are gas prices affecting your feeling about the economy?' We've been looking at an economic pessimism rate of 55 to 60 percent. That gets worse when prices go up. It gets less pessimistic when prices go down."—John Eichberger of the National Association of Convenience Stores
Remember Thursday when analysts had bullish opinions about both BlackBerry and Apple? Well, just a day after those calls BlackBerry reported its earnings and the news pretty much landed with a giant splat.
Shares of the mobile device maker slumped mightily Friday after posting a first-quarter loss of $84 million and reporting disappointing sales of its BlackBerry 10 device. Jim Cramer's advice was clear: get out now.
Of course, there are optimists who believe that every mobile device maker—Apple and Samsung included—is feeling the heat of competition and that BlackBerry's product is excellent, but not promoted well.
"It was more than bad. And I think what made it really, really bad was the devices, the nextgen devices, the BlackBerry 10 devices. Last quarter was neither here nor there. There was a bit of encouragement and anyone who has been watching BlackBerry for a while, this will be the quarter they've been waiting for. The [new products] should have shown themselves in the results and they haven't."—Sharif Sakr, senior European editor at Engadget
"The high-end device market is fully saturated and it's bad for everyone. Samsung, Apple and BlackBerry just got crushed. We thought they were small enough they could avoid it but they clearly didn't "—Jefferies analyst Peter Misek
Difference of Opinion
Wall Street has assumed that economic growth would pick up in the second half. After all, the market has rallied nicely year-to-date, and it would make sense if the economy followed suit. But economists are divided on whether growth will materialize or continue to putt along at about 2 percent for the remainder of the year. The Fed hasn't helped to clarify the picture, either.
"I think the key to the second half and kind of what we're looking for is really movement in employment growth. I think it's coming I just think it's coming very slowly. That would be the key indicator to look for in the back half."— Kevin Holt, portfolio manager of Invesco's Comstock Fund
Google's share price could hit $1,000, according to one especially optimistic analyst. Others say it needs to rein in costs to reach that lofty valuation. The company's shares were trading above $880 on Friday.
"It's not controversial that this company has many opportunities to keep top-line growth healthy for the next couple of quarters and indeed for the next few years, ranging from improving search through the knowledge graph, with YouTube capturing more print advertising dollars, entering new markets such as the IT infrastructure with the Google Compute Engine and Glass and Fiber, and on and on."—Carlos Kirjner of Sanford Bernstein
—By Doug Cubberley, Special to CNBC.com.