The markets are having trouble holding their gains for a very simple reason: the decline in building permits suggests further decreases in housing starts in the months ahead. Here is a point where the bears may have some traction...
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The good news that tech stocks are, for the most part, living up to the recent price run ups is being slightly overshadowed by the growing evidence that the weakness in the U.S. housing business is spreading into other areas...
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United Technologies is THE classic global growth stock. Like truly global stocks, they get more than half their sales outside the U.S.: 49% from U.S., 25% from Europe, 15% from Asia/Pacific, 10% elsewhere.
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Here are my morning observations: 1) Techs come through: after the disappointment of yesterday, when many regional banks hit new lows, the news flow is far more positive. We said last week techs had to make some positive noises to justify their recent runups: Yahoo, Intel, and Seagate all were better than expected.
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Today's disappointing earnings commentary from regional bank giants Wells Fargo and KeyCorp drove many regional banks to new lows. Analysts note that many banks are facing slowing loan growth, weak deposit growth, and potentially higher losses on residential and (in some cases) commercial mortgage.
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While the markets are concerned today about the poor quality of financial earnings, Bank of America’s Joe Quinlan tackles a different—but equally important—subject: the rising tide of protectionism in the U.S., which is threatening the profits of now-global U.S. corporations. Quinlan notes that U.S. firms are enjoying a global boom in trade, earnings, capital inflows.
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Regional banks hit new lows today, as traders gave up on any short-term recovery and the hope that the worst is behind us. Big names like KeyCorp, Zions Bancorp, National City, SunTrust, and M&T hit new lows today.
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We are now seeing the weakness in the U.S. housing business spread into other areas: 1) financials are under pressure because credit quality continues to deteriorate, largely around weakness in home and commercial mortgages.
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The problems today: 1) Financials. For a view of why traders are now very worried about Q4 earnings for financials, look no farther than KeyCorp. Q3 earnings and Q4 guidance were both below expectations; there were strains from fixed income markets particularly in commercial real estate, and rising problems with residential construction loans.
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My thoughts this Tuesday morning: 1) Ben Bernanke's speech widely discussed on the Street this morning. Traders wondering why he didn't talk about energy and food prices; further evidence that core inflation is what matters to the Fed.
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Direct from the floor of the NYSE, Trader Talk with Bob Pisani provides a dynamic look at the reasons for the day’s actions on Wall Street. If you want to go beyond the latest numbers— Bob will tell you why the market does what it does and what it means for the next day’s trading.
A CNBC reporter since 1990, Pisani reports on Wall Street and the stock market from the floor of the New York Stock Exchange. Follow him on Twitter @BobPisani.