Five Things to Watch: Crashing Commodities and More
The commodity complex in free-fall, the Flash Crash in memoriam, and the jobs market in mind. Here's what we're watching…
Commodity Correction: Hear that sound? Might just be the commodity bubble bursting. Oil, gold, silver, everything got whacked Thursday. NYMEX crude closed below the $100 a barrel mark, while silver has fallen an astonishing 25 percent (!!) so far this week. Investors are left trying to make sense of whether to buy on the dip or dodge the falling knife. Either way, the pullback changes the arithmetic for equities. Many sectors will profit from lower input and operating costs, though the S&P 500 can thank energy stocks for a bulk of 2011 gains.
Where the Jobs Are: Following Thursday's wild ride in the markets, the focus turns to the Labor Department Friday morning, where we'll get the monthly labor report at 8:30am ET. The consensus calls for an uptick of 198 thousand jobs(including one Aflac duck), continuing the slow recovery for the employment market that's essential for the next stages of economic growth.
The Flash Crash Effect: It's been a full-year since the remarkable "glitch" which caused momentary chaos in the stock market and left investors reeling. What's changed one year later? CNBC's Bob Pisani notes that the rules implemented in its wake have likely reduced the severity of future crashes. But, the system is still creaky and vulnerable to disruptions... and little has been done to address the systemic risk associated with derivatives. Long story short: everything's fine, until it isn't.
The New AIG: Insurance giant AIG stages its quarterly conference call with investors Friday morning, following the company's Thursday afternoon earnings release, in which it reported a loss of $1.41 per share. The checkup on the crash casualty is of particular interest as bankers plan for the road show promoting AIG's impending stock offering, in which the U.S. government will begin to unload its hefty stake in AIG.
Lloyd vs. Evelyn: An entertaining subplot of questionable significance heading into Friday's Goldman Sachs annual meeting revolves around the one and only Evelyn Y. Davis. In last year's meeting, the shareholder activist took aim at Goldman Sachs Chairman & CEO Lloyd Blankfein, calling for his resignation. The New York Times reported Thursday that Goldman consequently canceled its $7,200 subscription to her regular newsletter. Next round: Friday morning. In all seriousness, it's been a roller-coaster year for the "bank-holding company" that recently settled its debts with Warren Buffett. Since reach 52-week hights in January, the stock has been on a steady ride down.