Nearly every review of the Veronica Mars movie, which hits theaters this week, has mentioned how fans of the TV show are just going to love it. I’m just not sure about the rest of us.
Warner Bros/Everett Collection Rolling Stone calls it a “mixed bag” but says “fans will have a blast.” The Philadelphia Inquirer calls it “fine as fan fodder.” The New York Daily News says, “So congratulations, loyalists. Veronica's return is everything you've hoped it would be.” The rest of us, however, don’t seem to matter much, which the film’s producers appear to acknowledge by releasing Veronica Mars in 291 theaters; Need for Speed will open in more than 3,000. If all goes well,Veronica Mars will earn $2 million in the theaters–its also being released in video-on-demand–and it will make its fans very, very happy.
Here’s another flashback we didn’t need, this one to the Cold War. See, there’s a little referendum happening in the Crimea, where the region will decide whether to officially join the U.S.S.R, I mean Russia. Nor did it help that China’s economic data once again raised the possibility of a hard landing. The upshot: No one wanted to be long heading into the weekend. The S&P 500 fell 2% to 1,841.13 this week after dropping 0.3% today, while the Dow Jones Industrial Average dropped 2.4% to 16,065.67 after falling 0.3% today.
The Dow’s biggest losers this week included Goldman Sachs (GS), which fell 5.1% to $165.35, United Technologies (UTX), which dropped 4.8% to $112.60 after offering lower-than-forecast guidance, and Boeing (BA), which declined 4.2% to $123.11 after UBS cut its price target. The S&P was led lower by General Motors (GM), which plunged 9.6% to $34.09 as the Justice Department started investigating its recall, and Diamond Offshore Drilling (DO), which fell 8.8% to $44.20.
Deutsche Bank’s Taimur Baig and team ponder what happens next in Ukraine:
The political crisis in Ukraine remains at a dangerous stage. The territorial integrity of Ukraine is in doubt. The implications of the referendum in Crimea this weekend are far from clear. Sanctions are probable. Military conflict is possible. The relationship between Ukraine and its eastern and western neighbors will change depending on how these and other issues play out. But there is also an economic element to the crisis. Ukraine has been heading down an unsustainable economic path for a number of years and was in desperate need of external funding.
The turmoil overseas also overshadowed good news here in the U.S., namely a drop in US jobless claims and a pickup in retail sales. But it also doesn’t help that the Fed will meet next week–and its forward guidance is likely to change to what economists have dubbed “qualitative guidance.” Societe Generale’s Aneta Marowska explains the likely impact:
In thinking about the elasticity of the FOMC's rate forecasts to the underlying economic outlook, it may be helpful to imagine two extremes: a perfectly inelastic forward guidance would be calendar-based, and a perfectly elastic forward guidance would be fully data-dependent. Threshold-based guidance is somewhere in the middle, since the whole point is to reduce the sensitivity of rate forecasts to the data. In our view, moving toward qualitative guidance does not mean that the elasticity will increase. On the contrary, we expect "the dots" to remain incredibly sticky, acting much like calendar guidance. After all, by abandoning the thresholds once they have been reached, the Fed is signaling that it does not want to be tied to the data.
Citigroup’s Tobias Levkovich expects small caps to begin underperforming large:
Arguably, a more domestic focus would suggest that smaller caps with less international presence would be preferred to larger multinationals if the US economy is indeed strengthening any concerns about emerging economies eat into overseas growth prospects, not to mention geopolitical anxiety over places like Ukraine, but we are less convinced by this widely circulated contention.
The most obvious reason for thinking big is based on multiples…[The] difference between large and small cap P/E ratios…[is] near its previous highs. But, the more crucial statistic is the probability of large caps outperforming when valuation gets this disparate. Currently, there is a 70% chance that large caps outperform versus the more random 45% during the observed period and such numbers are hard to ignore…As such, one can assume that small caps might get a far better bid late this year, but the next six months could be quite challenging on a relative basis.
Let’s just get through the weekend.
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