Saturday, May 19, 2007

For those looking for a fix of Crude Oil News:

... you can find Crude Oil news at The Oil Drum ... mixed in with a wide range of Peak Oil and New Energy Technology news, some of it at a very high level of technical sophistication ... and also that special post-apocalyptic Mad Max spice that sometimes enters into cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 discussion threads.

This week's This Week In Petroleum, in particular, has a very cogent discussion on understanding what is going on with gasoline prices ... and how cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 decline of gasoline prices last fall is one of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 principle driving forces for cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 rise in gasoline prices that we are going to be experiencing over cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 next few weeks to months.

Thursday, May 17, 2007

Bonddad On Mini-Vacation

I am signing off until Monday. Bonddad and Bonddad's girlfriend are going to San Diego for some R&R. I am not taking a computer, I am not answering my cell phone (save for my niece and Dad), I am not reading a newspaper, nor am I watching cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 news.

I will see y'all on Monday morning, bright and early.

Have a safe weekend.

Leading Indicator Drops

From cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Conference Board:

* The leading index decreased in April, and cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 small March increase was revised up as actual data for manufacturing new orders for nondefense capital goods became available. The leading index declined or remained cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 same in three of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 last six months. As a result, from October to April, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 leading index fell 0.2 percent (a -0.4 percent annual rate). In April, housing permits made cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 largest negative contribution, but cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 weaknesses among cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 leading indicators have been somewhat more widespread than cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 strengths over cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 past few months.

* The coincident index increased again in April, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 third consecutive gain. From October to April, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 coincident index rose by 0.7 percent (a 1.3 percent annual rate). In April, all four coincident indicators contributed to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 gain and cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 largest contribution came from industrial production followed by personal income. The coincident index grew at an average annual rate of about 2.5 percent in 2006, but its growth has moderated to about a 1.5 to 2.0 percent average annual rate in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 first four months of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 year.

* The leading index is 0.7 percent below its April 2006 level. In cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 second half of 2006, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 leading index was essentially flat from July through November, followed by a small pick up in December, and it is now slightly below its October level. At cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 same time, real GDP grew only at a 1.3 percent annual rate (advance estimates) in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 first quarter of 2007, following a 2.5 percent rate in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 fourth quarter of 2006. The recent behavior of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 composite indexes suggests that economic growth is likely to continue to be slow in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 near term.

....

The leading index now stands at 137.3 (1996=100). Based on revised data, this index increased 0.6 percent in March and decreased 0.6 percent in February. During cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 six-month span through April, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 leading index decreased 0.2 percent, with three out of ten components advancing (diffusion index, six-month span equals thirty percent.)


I made it a habit of not looking at leading/sentiment indicators because I didn't think cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y were very good at predicting. However, some research from Merrill Lynch (I'm a client) proved me wrong. The LEI index is actually pretty good at forecasting cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 next 3-6 months.

Here's a chart from Martin Capital that shows cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Leading, Coincident and Lagging indicators from cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Conference Board:

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Wal-Mart Hedges On Outlook

From CBS Marketwatch:

Wal-Mart Stores Inc. said Tuesday that first-quarter earnings rose 8%, as robust results from cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 retailer's growing international division and at its warehouse stores offset persistent problems in its core U.S. stores.

The world's largest retailer also signaled that second-quarter results could fall short of expectations. Moreover, Wal-Mart said it would put greater emphasis on its "everyday low prices" to boost traffic and sales.

Bentonville, Ark.-based Wal-Mart saw its shares slip fractionally to close at $47.62 on cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 New York Stock Exchange.

.....

The retailer has blamed disappointing U.S. sales on a number of issues in recent quarters -- from disruptions tied to store-remodeling efforts to misreading consumers' desires. But Tuesday it narrowed its list of factors to three related financial concerns that Scott said currently face Wal-Mart customers:

* General money or income worries.
* Inflation's effect on consumers' budgets.
* Escalating prices at cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 gas pump, which Wal-Mart has long called cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 biggest factor affecting cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 purchasing decisions of its core customers.


Gasoline prices at cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 retail level have risen nearly 40% since cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 end of February, and on Monday cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 American Automobile Association said that cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 cost of filling up a vehicle had hit an all-time high.


Let's look at those three factors in a bit more detail.

1.) Income: According to information from cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Bureau of Labor Statistics, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 average hourly earnings of production workers rose about 1% after adjusting for inflation from April 2006 to April 2007. I use this figure for Wal-Mart customers because cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 information from cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 BEA has figures for executives whereas cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 average hourly earnings of production workers is focused on cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 lower 80% of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 US workforce.

For cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 duration of this expansion cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 increase is even worse. In November 2001, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 average hourly pay of non-supervisory workers was $14.72. This increased to $17.25 in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 latest survey for an increase of 17.18%. Inflation level increased from 177.4 to 206.86 over cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 same period for an increase of 16.51%, making cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 real increase in non-supervisory wages .67% since this expansion began.

Combine this 1% yearly increase and .67% expansion increase with a national savings rate that's been negative for over a year and high consumer debt levels and you can see why Wal-Mart's core customer group may slow down purchases. Their pay isn't increasing much after inflation, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y're drawing down cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir savings (if cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y have any) to spend and cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y're already heavily in debt.

2.) Inflation: this is where cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 ridicules obsession with cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 "core rate" of inflation really comes into cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 spotlight. Wal-Mart's customers -- along with every ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r person in this economy -- consumers food and energy. While cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 YOY numbers aren't bad, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y are still very visible every day at cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 grocery store and cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 gas pump. In addition, inflation is hitting key items. For example, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 ethanol obsession is increasing corn prices, which is increasing milking cow's feed prices, which is increasing milk prices. The point here is consumers are seeing key food products increase in price at uncomfortable rates.

3.) Gas prices are at a nominal, all-time high -- before cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 summer driving season. See this post for more detail.

Wal-Mart has some problems that are self-made. But cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir core customer hasn't seen a meaningful pay increase for cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 duration of this expansion and is seeing gas and food prices (those annoying non-core elements of inflation) increase at an uncomfortable level. No wonder Wal-Mart had a terrible April.

Housing's Situation in a Nutshell

From cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 WSJ:

"Overbuilding finally looks to have stopped, but cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Herculean task of making any genuine inroads into cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 record supply overhang ... is only just beginning," BNP Paribas economist Richard Iley said in a note to clients.


And this at a time when banks have tightened credit standards.

Wednesday, May 16, 2007

Gas Prices Continue to Increase; Hit Record High

From This Week in Petroleum:

For cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 third consecutive week, gasoline prices were up, increasing 4.9 cents to 310.3 cents per gallon as of May 14, 2007. Prices are 15.6 cents per gallon higher than this time last year and have now reached an all-time nominal high. All regions reported price increases. East Coast prices were up 2.3 cents to 298.1 cents per gallon. In cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Midwest, prices jumped 9.8 cents to 317.2 cents per gallon, while prices for cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Gulf Coast rose 4.5 cents to 291.5 cents per gallon. The largest increase was in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Rocky Mountains, where prices increased 10.3 cents to 319.3 cents per gallon. West Coast prices were up 0.5 cent to 337.8 cents per gallon. The average price for regular grade in California was down 1.1 cents to 345.0 cents per gallon, but remains 12.0 cents per gallon above last year's price.


The good news is inventories have turned cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 corner -- or at least cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y have stopped dropping like a stone:

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However, here is a chart of prices. Notice cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y are higher than cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 same time last year.

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There are two issues here.

1.) We are at cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 beginning of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 summer driving season. Will prices continue to increase throughout cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 summer?

2.) What will be cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 impact on consumer spending? We saw a terrible retail month in April. Wal-Mart posted cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir worst decline in 28 years. I have to think high gas prices were partially responsible. If prices continue to increase, will we continue to see a drop in consumer spending?

Industrial Production Increases

From cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Federal Reserve:

Industrial production increased 0.7 percent in April after a decrease of 0.3 percent in March. Output in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 manufacturing sector moved up 0.5 percent in April; cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 increase was led by advances in motor vehicles and parts and in high-technology goods. The output of utilities increased 3.5 percent; temperatures were relatively warm in March but fell below seasonal norms in April. Mining output decreased 0.3 percent in April. At 113.0 percent of its 2002 average, overall industrial production for April was 1.9 percent above its year-earlier level. The rate of capacity utilization for total industry rose 0.4 percentage point, to 81.6 percent, a level 0.6 percentage point above its 1972-2006 average.


Final production of consumer goods and business equipment increased .9%.

Manufacturing increased .5%

The report continued with cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365se strong points:

All major market groups recorded increases in April. The output of consumer goods rebounded 0.9 percent after having fallen 0.8 percent in March. Production of consumer durables expanded 2.1 percent in April. Apart from cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 strength in automotive products, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 output of home electronics climbed 4.8 percent because of gains in computers produced for households and in audio and video equipment. Also within consumer durables, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 indexes for appliances, furniture, and carpeting and for miscellaneous goods increased. Within consumer nondurables, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 output of non-energy goods edged up 0.2 percent, as a decline in foods and tobacco was more than offset by increases in clothing, in chemical products, and in paper products. Among consumer energy products, an increase in residential sales by utilities outweighed a decline in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 output of fuels.

The output of business equipment moved up for a third consecutive month in April; an increase of 0.9 percent was led by gains in transit equipment and in information processing equipment. The rise of 1.9 percent in transit equipment was supported by increases in truck production and continued strength in civilian aircraft. Information processing equipment rose 0.9 percent because of output gains in electromedical equipment and in computers produced for businesses. The output of defense and space equipment rose 1.0 percent after having decreased 2.3 percent in March; this increase reflected a return to work in April at a shipyard affected by a recent strike. The output of construction supplies increased 0.4 percent in April. The output of business supplies advanced 0.7 percent because of strength in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 production of medical supplies and in commercial sales of gas and electricity.

The production of materials moved up 0.6 percent in April, as gains in both durable and energy materials outweighed a decline in nondurable materials. Within durables, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 output of equipment parts rose 1.3 percent; cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 output of semiconductors advanced for a second consecutive month. The output of consumer parts also increased 1.3 percent; cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 rise was boosted by increases in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 indexes related to motor vehicle parts and steel. The production of ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r durables increased 0.5 percent. Within nondurable materials, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 production of both textiles and chemicals fell, while cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 output of paper materials remained unchanged. The production of energy materials recovered 0.8 percent in April after having declined 2.4 percent in March.


Short version -- this is a damn good report.

Federated Earnings Disappoint

Because of Wal-Mart's recent April performance (cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 worse monthly drop in 28 years), I've started to keep an eye on cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 retail

From CNBC:

For cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 three months ended May 5, net income was $36 million, or 8 cents a diluted share, compared with a loss of $52 million, or 9 cents a share, a year earlier.

Excluding merger integration costs, profit from continuing operations was 16 cents a share, up from 1 cent a year ago.

These results were lower than analysts were expecting. According to Thomson Financial, Federated was expected to earn 19 cents a share.

Sales slipped 0.1% to $5.92 billion from $5.93 billion last year, missing estimates for $5.99 billion.

...

Federated, which also operates cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Bloomingdales' chain, took a charge of $22 million, or 5 cents a share, to cover costs of converting regional department stores gained in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 May acquisition to its flagship Macy's brand.

"Sales in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 new Macy's locations were disappointing in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 quarter," Chief Executive Terry Lundgren said, in a statement. However, he was "pleased" with sales at premerger Macy's and Bloomingdale's locations.


Note cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 size of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 miss -- 11 cents a share. While some of that was expected, analysts watching cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 company were also expecting it, meaning cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 difference between expectations and actual is still pretty important.

In addition, note that sales slipped .1%. It's not a big drop, but a nonecá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365less. It's also important to note Federated is cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 fourth largest department store by revenue. That makes this pretty important.

Considering cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 .2% drop in retail sales last month, this shouldn't surprise anyone. However, we need to keep a close eye on retail sales figures going forward.

Housing Starts Increase

From Bloomberg:

Housing starts in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 U.S. unexpectedly rose last month, while building permits dropped to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 lowest in almost a decade, signaling cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 increase in construction may be short lived.

Builders broke ground on new dwellings at an annual rate of 1.528 million in April, a 2.5 percent increase from a revised 1.491 million rate cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 prior month that was weaker than previously estimated, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Commerce Department said today in Washington. Building permits slumped 8.9 percent to a 1.429 million pace, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 fewest since June 1997.

Some buyers are delaying purchases in anticipation of a drop in home prices as stricter lending guidelines and subprime mortgage defaults add to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 glut of unsold properties, economists said. The housing recession remains cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 biggest threat to Federal Reserve forecasts of ``moderate'' economic growth.

``The drag from housing is going to continue for a while,'' said James O'Sullivan, a senior economist at UBS Securities LLC in Stamford, Connecticut. ``The decline in permits suggests starts will weaken furcá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r.''

.....

The decline in permits was cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 biggest since February 1990. Permits, a sign of future construction, were estimated to drop to 1.52 million from 1.564 million, according to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 median forecast.


Let's break this number down from a couple of different angles.

1.) Last months figure was revised down. That means this months increase is a bit larger in relation. It also means this months number could be revised down as well.

2.) Building permits decreased 8.9%. That means cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 starts number is a blip on a downward trajectory.

3.) My guess is this number was slightly higher than anticipated because of weacá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r related issues. That is, starts were down a in February because of weacá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r, so March was skewed higher. That is just conjecture on my part.

Here's a link to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 report at Census.

The report highlights a few interesting points.

Single units make-up 80% of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 number. This number increased 1.6%. However, multiple units -- 5 or more housing units -- increased 6.4%. While this number makes up 17% of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 total market, it may be a sign that builders are shifting to larger projects (read rentals).

Companies Using Cash For Buybacks Instead of Capital Investment

From IBD:

Data from Standard & Poor's show that among S&P 500 firms, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 yearly amount spent on buybacks has more than tripled this decade. S&P 500 firms spent $432 billion on buybacks in 2006, up 24% from a year earlier.

Meanwhile, annual capital expenditures have risen only 16% since cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 start of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 decade — and actually fell in 2002 and 2003. S&P 500 firms invested $505 billion on global cap spending in 2006, up 23% from 2005. Spending this year has been sluggish, watchers say.

"The cap ex numbers have been pretty weak year to date, and buybacks are still strong," said Alec Young, an S&P equity strategist.


Here's a chart from cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 same article that shows what's happening here.

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According to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Bureau of Economic Analysis, nonresidential investment's seasonally adjusted annual rate for cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 last 4 quarters was 4.4%, 10.0%, -3.1%, and 2.0%, respectively. In ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r words, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re is a slowdown going on.

So - why would companies use a buyback racá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r than a capital expenditure?

Here's a simple example. Suppose a company has $100 in earnings and 100 shares outstanding. Their EPS would be $1.00/share. Now suppose cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re were 50 shares outstanding. The EPS climbs to $2.00 share. In ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r words, fewer shares = higher EPS and a possible higher stock price.

In addition, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 company now has treasury stock to use in buy-outs. Combine increased treasury stock with historically low interest rates and you get an M&A boom.

The article continues:

Many companies get cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 bulk of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir sales growth from overseas. S&P data show that nearly half of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 S&P 500's sales last year — excluding telecoms and utilities — came from foreign markets.

But while firms still invest overseas, it's becoming harder to do so.

"The Chinese really aren't hurting for investment capital — it's not like cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y need investment dollars from XYZ Corp.," van Dijk said. "The Chinese may very well build cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir own plants. U.S. companies are extremely useful, but not necessarily in terms of writing checks for a plant."

U.S. firms could build plants here, but fewer are doing so because it's cheaper to make goods elsewhere.


Here we get into a discussion of wage/production arbitrage. Simply put, developing countries have lower fixed costs making cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365m more attractive for investment from a company's perspective.

This article brings into light a serious question: how much of recent earnings gains are do to actual increases in revenue and how much of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365se gains are due to fewer shares? I don't have an answer to that, but I would love to find out.

Tuesday, May 15, 2007

Markets At cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Technical Brink?

There's a lot of selling pressure over cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 last few trading sessions on cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 SPYs and cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 QQQQs. I've drawn a line from cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 long down bar days to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 corresponding volume to clearly illustrate cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 situation. Also notice both markets are right at cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir upward trend lines.

Today cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 markets were caught between cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 bulls and cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 bears. The bulls looked at cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 inflation report and thought cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Fed could lower rates. The bears looked at Home Depot and Wal-Mart earnings and saw a slowing consumer.

The markets could go eicá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r way right now. While cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re's a ton of liquidity in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 system right now (see this post), cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re is also a psychological need for a correction.

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Median Home Prices Drop 1.8%; Loan Standards Tighten; Builder Confidence Drops

From Bloomberg:

U.S. home prices tumbled to a two-year low in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 first quarter, with declines in almost half of U.S. cities, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 National Association of Realtors said.

The median price for houses and condominiums slid 1.8 percent to $212,300 in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 first three months of this year, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 lowest since cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 first quarter of 2005 when it was $199,700, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Chicago- based real estate trade group said. The median price for a single- family home fell in 62 of 145 metropolitan areas.

Tumbling prices sparked an increase in sales as bargain shoppers snapped up cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 cheaper properties. Seasonally adjusted, home sales rose 2.4 percent to an annualized 6.41 million from 6.26 million in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 fourth quarter, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 association said. Compared with a year earlier, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 number of sales fell 6.6 percent.


Let's coordinate this data with some ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r news from cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 lending front.

U.S. banks dramatically tightened cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir standards for approving residential mortgages in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 first quarter, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Federal Reserve said Monday

In particular, banks made it harder to get subprime residential mortgage loans and nontraditional loans such as interest-only loans, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Fed reported.

All told, at least 23 of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 53 domestic banks surveyed, or 43%, tightened cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir mortgage lending standards, up from 16% in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 fourth quarter. The latest data are not strictly comparable to previous numbers, because cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Fed has changed cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 wording of its questionnaire. Read cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Fed survey.

In its quarterly senior loan officer survey, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Fed said 31% of banks surveyed "considerably" tightened credit standards for subprime loans, while 25% of banks tightened those rules "somewhat." None eased standards.


Prices are dropping for two reasons.

1.) There's a ton of supply on cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 market still. In my neighborhood cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re are 5 vacant houses that I know of. I realize that's an informal survey of a small neighborhood in Houston, Texas, but it's indicative of what's happening at cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 macro-level. It's going to take a larger price drop to get things back to normal.

2.) It's harder to get a bank loan now. A small majority of banks tightened lending standards and none loosed standards. This means banks understand cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y are getting hurt from cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir looser standards of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 last few years. As loans dry-up, demand will drop, which means cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re is added downward pressure on home prices right now.

The above factors played into anocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r decline in builder confidence:

Ongoing concerns about subprime-related problems in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 mortgage market caused builder confidence about cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 state of housing demand to decline three more points in May, according to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 National Association of Home Builders/Wells Fargo Housing Market Index (HMI), released today. With a current reading of 30, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 HMI has now returned to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 lowest level in its current cycle, which was previously hit in September of 2006.

“Builders are feeling cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 impacts of tighter lending standards on current home sales as well as cancellations, and cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y are bracing for continued challenges ahead,” said NAHB President Brian Catalde, a home builder from El Segundo, Calif.

“The crisis in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 subprime sector has infected ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r parts of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 mortgage market as well as consumer psychology, and as a result cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 housing outlook has deteriorated,” added NAHB Chief Economist David Seiders. “We’re now projecting that home sales and housing production will not begin improving until late this year, and we’re expecting cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 early stages of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 subsequent recovery to be quite sluggish. There still are tremendous uncertainties regarding our baseline forecast going forward, owing largely to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 subprime crisis that is having widespread effects throughout cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 mortgage market.”

.....


All three component indexes declined in May. The index gauging current single-family sales slipped two points to 31, while cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 index gauging sales expectations for cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 next six months fell three points to 41 and cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 index gauging traffic of prospective buyers fell four points to 23.


As I've been saying for about a year now, we're nowhere near cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 bottom in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 real estate market right now.

CPI Up .4%; Core Up .2%

Here's cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 BLS report:

On a seasonally adjusted basis, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 CPI-U advanced 0.4 percent in April, following a 0.6 percent increase in March. The index for energy increased 2.4 percent after advancing 5.9 percent in March. In April, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 index for petroleum-based energy rose 4.6 percent versus a 10.1 percent increase in March. The food index rose 0.4 percent in April, slightly more than in March. The index for all items less food and energy advanced 0.2 percent in April, following a 0.1 percent rise in March; cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 index for shelter rose 0.3 percent after advancing 0.1 percent in March, resulting from an upturn in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 index for lodging away from home.


From Bloomberg:

The consumer price index increased 0.4 percent after rising 0.6 percent in March, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Labor Department said today in Washington. Core prices, which exclude food and energy, were up 0.2 percent after a 0.1 percent gain.

Core prices in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 12 months ended in April were up 2.3 percent, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 smallest gain in year, a sign surging fuel costs aren't filtering through cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 economy. The report may reassure Federal Reserve policy makers, who are counting on slower growth to stem inflation.

``It is now becoming more apparent that core inflation has peaked and is moving lower in response to anemic economic activity,'' Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc., said before cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 report.

Economists forecast consumer prices would rise 0.5 percent, according to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 median of 80 projections in a Bloomberg News survey. Estimates ranged from increases of 0.2 percent to 0.8 percent. Core prices were projected to rise 0.2 percent, according to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 survey median.


The 12-month figure for total inflation (for those few of you who actually buy food and gas) came in at 2.6%. This is still above cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Fed's preferred comfort zone of 1%-2%, so it's doubtful we'll see a rate cut anytime soon.

This is a good report because it didn't shock to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 upside. However, it wasn't so good to warrant speculation cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Fed will lower rates anytime soon.

Thanks to NDD in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 comments for bringing cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 following information to my attention.

The BLS report has a chart that shows cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 seasonally adjusted annual percent change in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 overall inflation level for a variety of time periods. For cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 three months ending 07/06, 10/06, 01/07 and 04/07 we get cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 following numbers, respectively: 4.9% -2.7%, 2.7% and 5.7%. For cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 six months ended 10/06 and 04/07 we get cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 following numbers: 1.0%, 4.2%. In ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r words, inflation is acceleration over cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 latest three and six month measures of inflation.

Home Depot Profit Down 33%; Wal-Mart Up 8.5%

Home Depot

From CBS Marketwatch:

Home Depot said that its first-quarter net income dropped 33% to $1.0 billion, or 53 cents a share, from $1.5 billion, or 70 cents a share, a year ago. Sales at cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 home improvement retailer rose 0.6% to $21.6 billion. Analysts had been expecting cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 company to produce earnings of 59 cents a share and revenue of $21.83 billion, according to data complied by Thomson Financial. Home Depot said that a challenging housing market and erratic weacá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r across cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 country hit its Spring selling season. It added that its review of strategic alternatives for its supply operations is ongoing. Home Depot said that cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 home improvement market is expected to remain soft in 2007 and, based on cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 first-quarter, it's now expecting earnings at cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 low end of its guidance range. At cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 beginning of 2007, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 company said that it was expecting earnings per share to decline by between 4% and 9% in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 year


From Bloomberg:

First-quarter net income fell 30 percent to $1.05 billion, or 53 cents a share, from $1.48 billion, or 70 cents, a year earlier. Sales rose 0.6 percent to $21.6 billion, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 smallest gain in about four years, Home Depot said today in a statement.

Sales at cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 company's retail stores declined 4.3 percent. Chief Executive Officer Frank Blake, who took over in January after Robert Nardelli was ousted over compensation, tried to boost store sales by adding staff and hiring skilled trades people at about $30 an hour.

``There is not a heck of a lot of upside at this point,'' said Patricia Edwards, a Seattle-based money manager at Wentworth, Hauser & Violich. The firm holds $9.6 billion in assets including Home Depot shares. ``I don't expect sentiment to change until we see cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 whites of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 uptick's eyes. That's going to take a while.''


Wal-Mart


Here's cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 money points from cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 WSJ article on Wal-Mart:

U.S. same-store sales rose 0.6%, below expectations for a 1% to 3% increase. Wal-Mart's namesake stores had a 0.1% decline in comparable-store sales, while Sam's Club had a 4.7% gain excluding changes in fuel prices. Before November, Wal-Mart stores had never seen a drop in same-store sales for a single month.

Due to a calendar shift that pushed some Easter sales into cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 March reporting period, April same-store sales fell 3.5% on a 4.6% drop at Wal-Mart stores. The companywide decline was cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 just cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 third since cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 retailer began reporting monthly sales data in 1979, and was by far cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 biggest. The ocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r negative months were November, when same-store sales fell 0.1%, and April 1996, when an earlier Easter also skewed year-over-year comparisons and helped result in a 0.6% decline.


Here's what Bloomberg wrote:

Sales at older stores rose 0.6 percent, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 smallest gain in at least 10 years, after fewer customers visited stores because of rising gasoline prices and stormy weacá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 U.S. Chief Executive Officer H. Lee Scott promoted low prices for groceries and prescriptions after failing to lure consumers with more fashionable clocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365s and home goods.

Wal-Mart said first-quarter net income rose 8% to $2.83 billion, or 68 cents a share, with revenue up 8.5% to $86.41 billion. Analysts, on average, were expecting cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Bentonville, Ark.-based retailer to earn 68 cents a share on revenue of $86.94 billion, according to Thomson Financial. Wal-Mart said cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 profit rise was driven by cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 group's Sam's Club and international operations. It's expecting U.S. comparable-store sales to rise between 1% and 2% after a 0.6% first-quarter rise, and second-quarter earnings from continuing operations to be between 75 cents and 79 cents. Analysts were expecting second-quarter earnings of 79 cents a share


Home Depot's basic problem is easy: it's sales are tied to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 housing market. That's about all that needs to be said.

Wal-Mart is a bit more complicated. First, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y are in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 middle of trying to do different things. I have heard interviews with several analysts who are not enamored to current management for a variety of reasons. So, part of this problem is cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 result of getting away from core business.

However, April's drop was huge. While cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re are numerous explanations floating around, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y don't deal explain cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 magnitude of April's drop. We had high gas prices last summer and Wal-Mart did fairly well -- or cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y didn't have a decline of April's magnitude. In addition, Bloomberg noted a drop in traffic. Traffic is cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 life blood of retailers. If people don't go to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 store and browse, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y can't buy. This explains why Wal-Mart's stores had a decline in sales.

Also of importance is this point: Sales at older stores rose 0.6 percent, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 smallest gain in at least 10 years. That should raise a ton of eyebrows about cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 health of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 US consumer.

Monday, May 14, 2007

There's a lot of Money Floating Around Right Now

Here's a chart of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 year-over-year change in M2 money growth, seasonally adjusted.

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Here's a chart of M3 from Shadowstats. I can't comment on cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 sites methodology, but it's interesting food for thought.

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Markets Update

Let's take a look at cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 charts of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 QQQQ and SPY to see how cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 markets are looking.

Here's a chart of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 SPY

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The market has been moving sideways since early may. For cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 last few trading sessions it's been trading right around cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 10 day SMA. It's also approaching cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 trend line that started after cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 China sell-off. From a volume perspective, we had fairly aggressive selling on Thursday, but volume has backed-off to more normal levels for cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 last two sessions. From a technical perspective, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 market is at a crossroads.

Here's a chart of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 QQQQs

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The analysis for cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 SPYs applies here, save for cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 volume analysis. Notice volume spiked up on Thursday and has risen a touch since cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365n.

Finally, here are cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 IWNs

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This average hasn't been able to get over cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 highs it reached before cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 China sell-off. This may indicate traders are moving into larger more established names during cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 current rally. This average is also approaching cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 trend line established at cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 bottom of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 China sell-off.

All of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365se averages are at or near cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir trend lines. That makes tomorrow's inflation report that much more important. Traders are looking for a reason for cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Fed to lower rates -- or at least give cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365m an argument that cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Fed can lower rates. Any number that supports that cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365sis should rally cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 markets.

China's Stock Market Bubble

From Bloomberg:

Some analysts expect a share market correction. The benchmark CSI 300 Index is valued at 43 times earnings versus 24 times for India's Sensitive Index and 18 times for cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Dow Jones Industrial Average.


By any valuation method, that's an expensive market. In addition,

Central bank Governor Zhou Xiaochuan is concerned about a stock market bust, after cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 benchmark CSI 300 Index rose more than 80 percent this year. Chinese households have opened share trading accounts at a record pace and reduced bank deposits instead of leaving cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir money to be eaten up by inflation.


This is a classic sign of an end of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 rally. In general cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 institutional money comes in at a market bottom. The small investors get in at cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 top.

A wall of cash from China's trade surplus is complicating government efforts to cool investment, lending, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 stock market and inflation. The gap from cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 export boom widened 63 percent in April from a year earlier to $16.9 billion.


This looks like a liquidity driven rally. Simply put, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re are too many yuans chasing too few investments, meaning cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 money has to end of somewhere regardless of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 prudence of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 underlying decision.

There are strong, fundamental reasons for people to invest in China. The economy is after all growing at over 10%. However, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re is also an issue of valuation -- meaning cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 actual value of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 market relative to cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 market's underlying fundamentals.

Profits Are Still Strong

From Bloomberg:

Companies in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Standard & Poor's 500 Index through May 11 reported an average earnings gain of 13 percent in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 quarter, according to data compiled by Bloomberg. The last time growth was less than 10 percent was cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 second quarter of 2002.

International sales helped by a weaker U.S. dollar and continued spending by U.S. consumers fueled cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 earnings advance. Concerns that cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 U.S. housing slump and rising delinquencies by subprime mortgage holders would damp profits have eased, analysts said.

First-quarter earnings advanced four times faster than analysts had projected as of April 13, as 76 percent of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 444 companies in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 S&P 500 that reported through May 11 met or topped projections. Twenty-seven percent beat estimates by at least 10 percent.


Let's review a few key points.

1.) Analysts don't like being wrong. So it's fairly possible cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365y low-balled cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir estimates this quarter, making cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365se gains that much more impressive.

2.) CEOs probably low-balled cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365ir estimates as well. Earnings that "surprise" are more likely to lead to a rally in cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 underlying stock.

3.) How much of cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 increase in international sales was due to a decreasing dollar and how much was actually due to an increase in sales? The difference is very important. Asia and Europe are expanding which means cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365re should be an actual increase in international sales. However, it's important to qualify cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 difference.

4.) All that being said, this is a good quarter. And cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 increase in earnings are a primary reason for cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 market's increase over cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 last few months. However, it's also important to ask cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 important qualifying questions to get cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 story straight.

Foreclosure Auctions Are Forcing Low-Priced Sales

From cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 WSJ:

A surge of foreclosures over cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 past year or so has left lenders struggling to sell a growing backlog of homes. Racá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r than relying on real-estate agents, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 usual practice, some are turning to large-scale auctions to speed up cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 sale proces

Real Estate Disposition Corp., cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 Irvine, Calif., company that organized Saturday's auction of lender-owned homes, plans similar sales May 19 in Los Angeles and May 20 in Riverside, Calif.

At cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 San Diego sale, houses and condos typically sold for about 30% below cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 previous sale or appraisal prices. In a few cases, cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 discounts were around 50%.


This shouldn't be surprising to anybody. Housing inventory has been stubbornly high for cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 past year or so. The only way to get that inventory off cá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365 market is for sellers to lower prices. However, prices have been very sticky so far. Some development was necessary to lower prices and it looks like this may be it.

Sunday, May 13, 2007

Happy Mocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r's Day

For those of you who are mocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365rs and for those of you whose mocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365rs are still alive, please call call your Mom and tell her you love her. You've only got one mom.

Happy mocá cược thể thao bet365_cách nạp tiền vào bet365_ đăng ký bet365r's day.