Stock futures are pointing to a modestly higher open after a solid positive session yesterday. Tech stocks rebounded on Tuesday after leading the market lower to over the last few days. Investors are optimistic of additional stimulus from Europe and China to drive equities and a takeover deal by Facebook (FB) extended the recent M&A activity. Volatility fell sharply on the stock rally as the CBOE Volatility Index (VIX) was down by 7%. Investors are treating every increase in the ‘Fear Gauge’ as a ‘risk-on, buy the dips’ situation. This strategy has worked out well but eventually all good things do come to an end. One interesting note today was a letter sent out to the CEO of every company in the S&P 500 (SPX, SPY) by Blackrock chief Fink. It warned them that stock buybacks and dividend boosts may serve to increase short-term returns at the expense of long-term investment. This comment may solidify what many market-watchers are thinking as company growth is not increasing through traditional sales and revenue numbers.
Treasuries are down this morning in quiet trading. Global bonds were mostly higher after modest gains in Treasuries Tuesday. Asian and European stocks are in the green, taking their cue from Wall Street's rally yesterday. There wasn't a lot of news overnight but German consumer confidence was steady and Korean Q4 GDP rose more than expected and showed an accelerated pace. The Fed's Bullard said the FOMC hasn't changed the intent of policy, and hasn't really committed to a specific end date for QE in an interview from overseas. Today's U.S. calendar includes more supply with the auctions of $35 B in 5-year notes to be auctioned. Data today is light with the February durable goods orders report, the March services PMI and weekly oil inventory figures. The MBA reported mortgage applications declined 3.5% in the week ended March 21. The Fed will also release stress test results late in the afternoon.
Stock Stories:
Facebook (FB) –Liked?! – Facebook announced that it has reached a definitive agreement to acquire Oculus VR for a total of approximately $2B. According to the company’s CEO, mobile is the platform of today, and now we're also getting ready for the platforms of tomorrow. He believes Oculus has the chance to create the most social platform ever, and change the way we work, play and communicate. FB shares are relatively flat ahead of the opening bell.
Major Economic Reports:
6:00 am CT – MBA Purchase Applications – Down 3.5% for week
