Market Insider

CNBC's Domm: Today's Agenda in the Markets


Stocks are meandering on both sides of the unchanged mark after stronger-than-expected durable goods orders initially pushed futures higher. Investors now await new home sales data due at 10 am New York time.

Orders for durable goods surged in July, rising 5.9% on higher demand for airplanes, vehicles, computers and other kinds of long-lasting manufactured goods. Economists had expected a 1.5% gain.

The debate today continues to be when the Fed will act to cut its target fed funds rate, and whether the U.S. is heading down the road to a recession. Ford CEO Alan Mulally joined the chorus calling for a rate cut in an interview with the Financial Times. Mulally says the economic and credit conditions are a "big headwind" to his plans to drive Ford to recovery.

At What Price?

Home Depot is close to taking a reduced price for its wholesale distribution business from three private equity firms, according to the Wall Street Journal. The Journal says Home Depot may accept $1.2 billion less to make the deal happen. Originally, Bain Capital Carlyle and Clayton, Dubilier were to pay $10.3 billion. The outcome is being watched as a sign of what's to come in the deal business.


If it was just one interview that uncovered the "r" word yesterday it would be easier to ignore.

Countrywide CEO Angelo Mozilo met with CNBC's Maria Bartiromo in his California headquarters to discuss the investment in his company by Bank of America . She asked him if the U.S. is heading for a housing recession. He says yes.

"I think so. I can't believe when you have the level of delinquencies, foreclosures, equity that's disappeared. Equity's gone. The tide has gone out," said Mozilo, adding he expects "a material impact ... on the psyches of the American people and eventually on their wallet."

Pimco's Bill Gross also talked about a recession in an interview with CNBC's Erin Burnett later in the day. "I think we stand a chance of getting close to that zero line and when you have home prices decline 10% year-over-year ... then you have a serious asset price deflation. One saving grace has to do with the global economy," he said.

But CNBC contributor Vince Farrell says all the hand wringing is uncalled for, and for now the idea of a recession feels like bunk.

"Lots of smart folks are calling for/worried about recession," according to Farrell, managing director of Scotsman Capital.

"My old friend, (Sandler O'Neill chief strategist) Robert Albertson, called for one yesterday in an interview with Bob Pisani, Angelo Mozilo today in a talk with Maria, and ... now, Bill Gross expressed worry while on with Erin. Who knows, but I don't think we will go into recession. No doubt that the housing/mortgage mess will impact the consumer spending levels big time, but I don't see housing prices declining 10% as Bill Gross does," writes Farrell in a note to us yesterday.

"... Since the emerging economies are now 30% of world GDP and are growing 5% a year, our weak dollar should spur our export industries and keep the U.S. economy growing, albeit at a low rate, but, no recession. If the stock market were to decline 10-15% from here, I will be wrong, but I don't see that. I think we saw the lows for the year, and we need to test them, which will be scary, but I think the low will hold," according to Farrell.

Subprime Slime

Bank of China revealed it holds $9.7 billion in securities backed by U.S. subprime loans, and the Industrial and Commercial Bank of China says it has $1.2 billion. Singapore's DBS Group Holdings also said it had exposure. Those headlines weighed on Asian stocks, according to CNBC Asia.

Asia's markets finished lower overnight. European markets are mixed.

The Dow finished a choppy day yesterday down just 0.25 points. The Nasdaq fell 11, and the S&P 500 was off 1.57 points.

Oil is firmer after crude rose $0.57 per barrel to $69.83 per barrel yesterday.

The two-year Treasury yesterday fell 3/32, boosting its yield to 4.183%. The two-year continues to trend lower and its yield is at 4.23% this morning. The yield on the 10-year this morning is at 4.63%. Yesterday it rose 1/32, dropping its yield to 4.618%.