Trader Talk

Japan's Unconvincing Argument

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Stock futures jumped as initial jobless claims, at 341,000, was lower than the consensus expectation of 360,000. U.S. futures had been weak as the euro fell to its lowest level in nearly a month on weak European gross domestic product numbers ... Germany and France both saw a contraction in the fourth quarter. European stocks were also weak.

The Japanese have come under criticism at the Group of 20 nations meeting for its aggressive weakening of the yen. The defense: Monetary expansion is aimed at reviving the economy and the yen weakening was a mere byproduct. Not a convincing argument.

The Japanese position was strengthened by data showing Japanese GDP contracted in the fourth quarter, which strengthens the hands of those who want more aggressive easing.


1) The Heinz announcement has overshadowed the announcement of the US Airways-AMR deal. Here's the good news: Consolidation has been achieved in the airlines. Delta-Northwest, United Continental, Southwest-AirTran, now US Air-AMR. There will now be three big airlines in the U.S., including Delta and United Continental. Capacity is indeed coming down. Debt is being paid down. Profitability is up.

Here's the bad news: With the Airline Index (XAL) near a five-year high, it's not clear how much near-term upside is left.

Oh I know the argument: Now, with consolidation, will come price hikes that will drive profitability. US Airways CEO Doug Parker has denied it. And most attempts at rate hikes don't seem to stick, regardless of the level of competition.

(Read More: AMR, US Airways Merger Good for Customers: CEOs)

2) Cabela's reported better-than-expected earnings, and has an interesting comment: "Comparable-store sales, aided by a surge in firearms and ammunition, increased 12 percent, a new record." These were sales made in the wake of the Newtown, Mass., shooting and concerns that President Barack Obama may try to restrict gun sales.

3) The World Gold Council has just released its 2012 Gold Demand Trends report ... some highlights: Indian full-year demand down 12 percent, China flat, central bank buying up 17 percent, exchange-traded fund investment up 51 percent for the full year, but fourth quarter was down 16 percent compared to the previous quarter.