Possible Investor Blues And Ethanol "Food Fight"
Stocks in the U.S. are mixed going into today's opening. The Dow is pointing higher and Nasdaq looks weaker and for the Nasdaq, this week's been the best of times and the worst of times. Nasdaq's 1.3 percent drop yesterday was its worst performance of the year, following its best day of the year. Stocks are weaker in Europe and major Asian markets closed lower.
Some big earnings from Honeywell and Caterpillar, durable goods data and new home sales could help influence direction after yesterday's housing data got the bond market rocking. That move up in rates in turn pared stock prices. Our Rick Santelli says yesterday's move up in bond yields was set off by details in yesterday's existing home sales data that were more positive, such as inventory levels. Today, he thinks if we see improvements in new home sales and durable goods that could push 2-year notes above 5%. The Wall Street Journal's Greg Ip, who we watch for his Fed savvy, wrote today that the Fed is likely to reaffirm its bias toward raising rates when it meets next week due to inflation concerns. That would disappoint some stock investors who expect the Fed to cut rates at some point later this year.
Oil is moving higher this morning. Our Sharon Epperson is taking a special look at the oil market today and will show us what its like for traders when oil prices are swinging wildly, as they tend to do lately. We heard overnight from CNBC Global Energy Analyst Dan Yergin, who heads Cambridge Energy Research. Yergin, writing from Davos, says the energy and climate change discussions topping the agenda there will continue through Saturday. Yergin says the fear of rising oil prices that dominated talk there last year has gone away. "Energy did not seem to have the "worry" surrounding it that it did last year. Unlike last year, there was no talk of $134 oil. Rather, a sense that the world economy had pretty well taken oil prices, at least into the low $60s, well into stride. Climate change is the real juggernaut issue this year, with at least 17 different sessions devoted to reducing carbon footprints around the world," he says.
A LITERAL FOOD FIGHT: Yergin says ethanol and the impact from ethanol in the world economy was hotly debated. "The ambitious new target in the State of the Union added fuel to the subject. With the Mexican energy minister in attendance, the politically-charged jump in tortilla prices in Mexico -- at least partly because of rising corn prices in the United States -- was much discussed. Brazil, as a low cost producer of sugar-based ethanol was well represented. . One of the big discussions is over "second gen" ethanol -- the cellulosic type made from agricultural waste or special crops. Tonight's "Biofueled Dinner" erupted into an argument as to whether cellulosic is "tough technology" or nearer term than many think. The only consensus was that there was no consensus. But, whatever the prospects for biofuels, oil and natural gas are hardly finished" Yergin wrote.
BOARDROOM EXCESS: the Financial Times reports a group of investors, including big U.S. and European pension funds, have written to U.S. regulators, politicians and stock exchanges seeking for non binding shareholder votes on executive compensation packages.