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Pre-Market Primer: Report of Larry Summers Fed Chair Nomination Boosts Stocks; Retail Sales Disappoint


Elon Musk has foot-in-mouth disease.

Stocks are slightly higher and bonds declined today on reports that Larry Summers is likely to lead the Fed and retail sales disappointed.

Japan's Nikkei newspaper reported that President Barack Obama plans to nominate Larry Summers as Chairman of the Federal Reserve, citing unnamed White House sources. The nomination might come out as early as next week, following the Fed's September policy meeting, where it will decide the timing and degree to which it will taper off its asset purchases.

Though there is some scepticism of the news report, the market reaction clearly shows that Summers is expected to scale back quantitative easing faster than Janet Yellen would, the other front-runner to replace Ben Bernanke.

The dollar rose against other currencies, US bond yields increased, and US stock index futures rose on news of Summers' potential nomination. Dow (INDEXDJX:.DJI) futures were up 0.10% at 15,261 while futures contracts on the S&P 500 (INDEXSP:INX) ticked up 0.02% to 1,678.70. Nasdaq (INDEXNASDAQ:.IXIC) futures gained 0.15% to 3,174.25. Gold fell 1.36% to $1,312.50/ounce.

Today also brought a large amount of US economic data. August retail sales missed expectations, rising 0.2% on a monthly basis. Excluding autos and gas, sales rose just 0.1%. Producer prices rose 0.3% last month, faster than economists expected. Without food and energy costs, the prices of goods at the factory gate were flat in August.

Later this morning, we will get the preliminary reading for the September Reuters/University of Michigan Consumer Sentiment Index, which economists expect to tick down by 0.1 point to 82. Business inventories are also likely to have risen 0.3% in July.

Yesterday afternoon, Twitter disclosed (in a tweet, of course) that it "confidentially submitted an S-1 form to the SEC for a planned IPO." Twitter is using a rule from the JOBS Act that allows "emerging growth companies" with less than $1 billion in annual revenue to file for a public offering on the down low. SkyNews reported that the offering will be on the NYSE (NYSE:NYX) rather than Nasdaq (NASDAQ:OMX). Goldman Sachs (NYSE:GS) is reportedly Twitter's lead underwriter.

(See also: All the News That Didn't Fit in Twitter's IPO Tweet)

In an interview with Fox Business News yesterday, Tesla (NASDAQ:TSLA) CEO Elon Musk made some off-the-cuff comments that sent the stock down almost 1%.

"In the past, I said it's really crazy to short Tesla," he told reporter Liz Claman. "Is it so crazy to short Tesla right now? I mean, it's not as crazy, but I still think it's probably not a good idea."

Twitter: @vincent_trivett
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