8/7/2008
Our concentration on oil waned slightly but today�s news of an attack on a Turkish pipeline brings fresh concerns. Kurdish rebels have claimed responsibility for a fire that may shut down the pipeline for up to 15 days. September delivery crude rose $1.44 to settle at $120.02 on the NY Merc as a result.
Financials continued to stumble, insurer American International Group (AIG) reported looses of more than $5 billion for the second quarter. AIG�s stock fell 18 percent or $5.25 to $23.84. The loss was the steepest decliner among the Dow components.
Citigroup Inc. fell $1.23 or 6.2 percent to $18.47 after regulators announced that the company will repurchase more than $7 billion in auction �rate securities and pay $100 million in fines.
By far the most troubling concerns came out of Wall-mart�s results. The world�s largest retailer said that store sales rose 3 percent in July as consumers finished up using their government stimulus money. The expected increase in sales was 3.4 percent. The implication is that with a weaken consumer, that 2/3�s of the US economic activity may falter or at least weaken. Shares of Wal-Mart fell $3.80 or 6.3 percent to $59.96.
Key economic data for the week starting August 4th, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Friday: |
 | 10:00 Wholesale Inventories Jun 0.6% 0.8% |
8/6/2008
Oil has slid again, this time down 59 cents to finish at $118.58 a barrel. The move lower by oil and greater strength by the US dollar has helped investors come back into the markets.
Cisco systems, the computer network company posted earnings that beat Wall Street estimates. Stock of Cisco rose more than 5 percent to close at $23.96, a move up that help propel the NASDAQ composite index up some 1.3%.
The financial sector remains weak as both Freddie Mac and Fannie Mae fell 19 percent and 15 percent respectively. Freddie Mac the government agency that secures mortgages increased its reserves for souring loans and has lost about three times what Wall Street expected on a per –share basis. The bottom of the housing sector is expected to be reached sometime in 2009.
Key economic data for the week starting August 4th, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Thursday: |
| 08:30 Initial Claims 08/02 NA 448K |
| Friday: |
| 10:00 Wholesale Inventories Jun 0.6% 0.8% |
8/5/2008
Oil moved lower by some $2.24 to finish at $119.17 on the New York Merc today. The once thought of as evil speculators have begun to take bets that with a slowing economy, consumer demand for gasoline with wane. Oil had reached 147.27 only to decline by some $27 dollars in recent sessions.
The fed announced that interest rates would be left unchanged. This was greeted with relief by the markets which had feared that the equity markets would have to deal with a higher rates as well as a weakening economy. The central bank added that there was some economic growth due to consumer spending but also warned that inflation is “high”. Some analysts feel that the Fed will look to increase rates at the beginning of 2009.
Key economic data for the week starting August 4th, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Wednesday: |
| 10:35 Crude Inventories 08/02 NA -81K |
| Thursday: |
| 08:30 Initial Claims 08/02 NA 448K |
| Friday: |
| 10:00 Wholesale Inventories Jun 0.6% 0.8% |
8/4/2008
News on the financial markets continues to revolve around high oil prices that are increasing as high as house prices sink, the aforementioned low house prices, credit issues, rising unemployment and inflation.
Oil prices fell $3.69 to settle at $121.41 a barrel on the NY Merc after earlier grazing $119.50. The move down was attributed to an updated interpretation that still tropical storm Edouard, would likely not damage offshore oil and natural gas drilling platforms. The move down by oil prompted similar moves lower by natural gas and other similar energy commodities.
The Federal Reserve is expected to keep rates unchanged as weak economic growth and advancing inflation continues to threaten the economy. Futures markets show an expectation that sometime later this year the Fed will increase rates. Recent string of rate reductions has aggravated inflation and additional reductions are not thought to help the collapsed housing market or credit markets.
Key economic data for the week starting August 4th, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Tuesday: |
| 10:00 ISM Services Jul 48.0 48.2
14:15 FOMC Policy Statement |
| Wednesday: |
| 10:35 Crude Inventories 08/02 NA -81K |
| Thursday: |
| 08:30 Initial Claims 08/02 NA 448K |
| Friday: |
| 10:00 Wholesale Inventories Jun 0.6% 0.8% |
8/1/2008
In today’s financial news, oil moved higher intra-day to more than $4 a barrel only to finish $1.02 higher at $125.10. The recent declines in oil have helped the economy which is plagued by a weaken labor market, difficult credit and high commodity prices.
The government’s jobs report came in slightly better than expected, nonfarm payrolls fell by 51,000 which was better than the expected decline of 75,000. The unemployment rate rose to 5.7% from 5.5%. This is following ADP’s report of a slightly strong private jobs report yesterday.
The ISM (Institute for Supply Management) reported that the nation’s manufacturing was at 50.0 or unchanged. A number over 50 represents an expansion while a number under 50 represents a contraction.
Key economic data for the week starting August 4th, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Monday: |
| 10:00 Factory Orders Jun 0.7% 0.6% |
| Tuesday: |
| 10:00 ISM Services Jul 48.0 48.2
14:15 FOMC Policy Statement |
| Wednesday: |
| 10:35 Crude Inventories 08/02 NA -81K |
| Thursday: |
| 08:30 Initial Claims 08/02 NA 448K |
| Friday: |
| 10:00 Wholesale Inventories Jun 0.6% 0.8% |
7/31/2008
The two most important market moving bits of news today were the GDP report and the report about jobless claims. Both came in worse than street consensus and trading was slightly lower than expected.
The Commerce Department’s report showed that gross domestic product grew at 1.9 percent in Q2. While the street had expected a 2.4 percent rise. While Treasury Secretary Henry Paulson said that the economy should grow at a moderate pace for the rest of the year, former Fed Chair Allen Greenspan (on CNBC) said that it would be more of a surprise to him if the economy didn’t enter into a recession than if it did.
The Labor Department said that the number of people seeking jobless benefits jumped to the highest level in five years. The Initial Claims report showed that 448,000 Americans sought jobless aid which is ahead of the expected 395,000. These numbers although volatile and are revised often do paint a bleak picture about the state of US economy.
Despite yesterday’s rise of more than $4.50 a barrel, oil fell $2.69 to settle at $124.08 a barrel on the NY Merc.
Key economic data for the week starting July 28th, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Friday: |
| 08:30 Nonfarm Payrolls Jul -68K -62K
08:30 Unemployment Rate Jul 5.6% 5.5%
10:00 Construction Spending Jun -0.3% -0.4%
10:00 ISM Index Jul NA 50.2 |
7/30/2008
News that moved the financial markets include oil’s move of over $4 a barrel in trading today. The September delivery contract moved $4.58 to settle at $126.77, this is after week weeks where the commodity has given back over $20 dollars. Analysts were mixed as to whether the direction would be towards the $147 mark or down towards $100 a barrel. The positive move higher was due to the Energy Information Administration’s weekly inventory report that U.S. gasoline supplies fell by 3.5 million barrels. The street had expected an increase of 400,000 barrels.
In a private report by ADP Employer Services, private employers added 9,000 jobs in July. This contrasts wildly with the street estimate of a slashing of 60,000 jobs. The government’s report is due on Friday and in it, analysts expect a job loss of more than 75,000 jobs.
Mortgage relief for most American’s may come in a bill just signed by President Bush. With an estimated 2.8 million homeowners facing foreclosure by 2009, the bill is intended to provide $300 billion in new loan authority for the government to back cheaper mortgages, $3.9 billion for community to fix up foreclosed properties and $15 billion in tax cuts in the form of an expanded low-income housing tax credit. The measure is designed to help stabilize the markets and alleviate the number of those being foreclosed on.
Key economic data for the week starting July 28th, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Thursday: |
| 08:30 Initial Claims 07/26 NA 406K
09:45 Chicago PMI Jul 49.0 49.6 |
| Friday: |
| 08:30 Nonfarm Payrolls Jul -68K -62K
08:30 Unemployment Rate Jul 5.6% 5.5%
10:00 Construction Spending Jun -0.3% -0.4%
10:00 ISM Index Jul NA 50.2 |
7/29/2008
Oil is making headlines, but this time it is about its deep declines, in trading on the New York Exchange, sweet crude moved down $2.54 to finish at $122.19 a barrel. A lower price of oil has very positive prospects for the U.S. economy.
The Conference Board pegged consumer confidence at 51.9 in July. The previous number was 51 in June. An improvement in consumer confidence also spells good news for the U.S. companies as consumer spending accounts for more than two-thirds of all economic activities.
The financial sector underwent another purging; Merrill Lynch announced late Monday that they have sold mortgage backed securities worth $31 billion for $7 billion. The companied valued their holdings at 22% of their face value. The move was meant to purge the books of bad assets; however some analysts remain skeptical because this trend has been on going where financial companies have announced write-downs – only to announce another round of write downs later. CEO John Thain had announced 11 days earlier that his firm was “in a good positive, [and] well capitalized.” Then his firm announced there were further write downs on Monday.
Key economic data for the week starting July 28th, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Wednesday: |
| 10:35 Crude Inventories 07/26 NA -1558K |
| Thursday: |
| 08:30 Initial Claims 07/26 NA 406K
09:45 Chicago PMI Jul 49.0 49.6 |
| Friday: |
| 08:30 Nonfarm Payrolls Jul -68K -62K
08:30 Unemployment Rate Jul 5.6% 5.5%
10:00 Construction Spending Jun -0.3% -0.4%
10:00 ISM Index Jul NA 50.2 |
7/28/2008
The price of oil rose $1.47 to settle at $124.73 on the New York Mercantile Exchange. With prices over $100 seeming to be the norm, the market seems to be able to live with oil near $125 a barrel.
Next to oil, the main concern of investors is the strength of the financial sector. The news out of the sector continues to be negative. The International Monetary Fund (IMF) released a report that predicted continual problems in the credit and housing market. Specifically, the report stated that “the housing market (bottom) is not visible.” Federal officials at the FDIC (Federal Deposit Insurance Corporation) closed branches of 1st National Bank of Nevada and First Heritage Bank N.A. – both owned by First National Bank Holding Co.
Key economic data for the week starting July 28th, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Tuesday: |
| 10:00 Consumer Confidence Jul 50.0 50.4 |
| Wednesday: |
| 10:35 Crude Inventories 07/26 NA -1558K |
| Thursday: |
| 08:30 Initial Claims 07/26 NA 406K
09:45 Chicago PMI Jul 49.0 49.6 |
| Friday: |
| 08:30 Nonfarm Payrolls Jul -68K -62K
08:30 Unemployment Rate Jul 5.6% 5.5%
10:00 Construction Spending Jun -0.3% -0.4%
10:00 ISM Index Jul NA 50.2 |
7/25/2008
Investors were swayed by three economic reports released today.
New home sales in June were revised down to 530,000, which is down from the upwardly revised 533,000 new homes in May. In the badly downtrodden sector, investors are grasping at any sign that the markets have stabilized and this result, despite negative are better-than-expected and suggest stabilization.
Durable goods rose in June, the increase was 0.8% which is up from the prior increase of 0.1%. The report suggests that businesses continue to spend and not contract in difficult economic times.
The American consumer continues to be buoyant; the consumer sentiment index released by Reuters/University of Michigan puts the mark at 61.2 – much higher than the 56.4 consensus. Last month’s reading was the lowest one in 28 years.
Key economic data for the week starting July 28th, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Tuesday: |
| 10:00 Consumer Confidence Jul 50.0 50.4 |
| Wednesday: |
| 10:35 Crude Inventories 07/26 NA -1558K |
| Thursday: |
| 08:30 Initial Claims 07/26 NA 406K
09:45 Chicago PMI Jul 49.0 49.6 |
| Friday: |
| 08:30 Nonfarm Payrolls Jul -68K -62K
08:30 Unemployment Rate Jul 5.6% 5.5%
10:00 Construction Spending Jun -0.3% -0.4%
10:00 ISM Index Jul NA 50.2 |
7/24/2008
The main impetus for today’s decline stems from data out of the National Association of Realtors which said that sales of existing homes in June declined by 2.6 percent. It was widely expected that sales would be down but by 1 percent. The news of a weaker than expected housing numbers is a reminder that the overall state of the economy is at best mixed. Weakness in housing is contrasted against some stronger than expected earnings reports.
In pharmaceuticals, Bristol-Myers and Eli Lilly reported that earnings were helped by the weaker US dollar. Both companies’ shares were at the low range of their 52 week averages however gained on the strong earnings news. Health care is seen as a defensive play in times of difficult economic conditions.
Continuing on the theme of defensive plays during these economic times is Costco, the volume based retailer announced that earnings in Q2 would come in at least 5% below expectations. The news sent shares moderately lower – down 45 cents to 62.98 dollars. During the conference call, Chief Financial Officer Richard Galanti has said that the earnings for the next quarter would be squeezed by the rising costs of inflation especially fuel. Costco stock is still trading at 23 times 2008 estimated earnings which is relatively high in this environment.
Key economic data for the week starting July 21st, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Friday: |
| 10:00 Mich Sentiment-Rev. Jul NA NA
10:00 New Home Sales Jun 505K 512K |
7/23/2008
Oil has decreased 3.1% while commodities as a whole have also moved lower by 1.6%. Pressure on Equities should subside due to these decreases.
Starting into a season of earnings, Amazon.com reports 37 cents a share, that’s 11 cents above the expected 26 cents consensus. The increase is due to the sale of a European DVD business. Despite difficult conditions on the US market, the rest of the world has shown some strength for the company. Shares of Amazon were up $2.57 or 3.78% to $70.54 in regular hours trading and up more in after hours trading.
The student loan lending company known as Sallie Mae said that second-quarter profits were down 72 percent. Net income for Q2 2008 was $266 million compared to Q2 2007’s $966 million. Much of the loss stems from the continual deterioration of the credit markets as investors have shied away from purchasing debt, specifically mortgaged backed securities.
Key economic data for the week starting July 21st, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Thursday: |
| 10:00 Existing Home Sales Jun 4.95M 4.99M |
| Friday: |
| 10:00 Mich Sentiment-Rev. Jul NA NA
10:00 New Home Sales Jun 505K 512K |
7/22/2008
The relationship between the price of oil and equities continues to improve as the price of oil feel again today. Oil moved lower by 3 dollars, nearly 20 dollars lower than the highs of several weeks back and a shade under 130 a barrel. As a result the equity markets moved higher.
With oil coming off highs and relieving downward pressures on equities, the performance of the equity markets are now closely hinged upon the performance of financials and housing.
Globally, financial institutions have written down some $300 billion of mortgage-backed securities and results continue to come in the form of write downs during earnings outlooks. Today’s, batch shows American Express, Washington Mutual and E-trade Financial Corp all reporting disappointing results.
Philly Fed President Charles Plosser has said that rate hikes would be “sooner rather than later” even in the face of a soft employment and financial conditions.
Key economic data for the week starting July 21st, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Wednesday: |
| 10:35 Crude Inventories 07/19 NA 2952K |
| Thursday: |
| 10:00 Existing Home Sales Jun 4.95M 4.99M |
| Friday: |
| 10:00 Mich Sentiment-Rev. Jul NA NA
10:00 New Home Sales Jun 505K 512K |
7/21/2008
Oil made a move to finish $2.16 higher and settle at $131.04 a barrel on the New York Merc. The move was largely due to fresh concerns that proposed sanctions against Iran could escalate tensions in the Middle East.
While advancers outpaced decliners by 2 to 1 on the New York Mercantile Exchange, the markets were mixed. Some companies reported better than expected results while others reported difficulty in mixed and often turbulent economic times.
The second largest bank in the US – Bank of America reported that earnings per share dropped to 72 cents a share (sustaining a 43% drop). The street was expecting earnings of 53 cents a share. The positive result came due to a lower than expected write down of $1.2 billion. The annual dividend yields 9% at the current share price of $28.52.
On the ongoing saga between activist investor Carl Icahn and Yahoo!, Icahn and two others from a list of nine candidates recommended by Icahn will be appointed to an expanded board. Icahn will in turn withdraw his nominees for vote at the annual meeting.
Key economic data for the week starting July 21st, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Wednesday: |
| 10:35 Crude Inventories 07/19 NA 2952K |
| Thursday: |
| 10:00 Existing Home Sales Jun 4.95M 4.99M |
| Friday: |
| 10:00 Mich Sentiment-Rev. Jul NA NA
10:00 New Home Sales Jun 505K 512K |
7/18/2008
Oil has begun to spell relief for the equity markets. On Friday light, sweet crude fell 41 cents to settle at $128.88 on the NY Merc. The record that it had traded at was $147 a week earlier. Prices at the pump remain high at $4.105.
Citigroup reported a second quarter loss but beat analysts’ estimates. The loss of $2.5 billion due to write-downs in the credit markets help to mitigate some concerns over big losses from Merill Lynch on Thursday.
Some more banks will be among the companies report next week. These include Wachovia Corp., Washington Mutual and Bank of America.
Key economic data for the week starting July 21st, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Monday: |
| 10:00 Leading Indicators Jun -0.1% 0.1% |
| Wednesday: |
| 10:35 Crude Inventories 07/19 NA 2952K |
| Thursday: |
| 10:00 Existing Home Sales Jun 4.95M 4.99M |
| Friday: |
| 10:00 Mich Sentiment-Rev. Jul NA NA
10:00 New Home Sales Jun 505K 512K |
7/17/2008
Oil moved lower $5.31 to settle at $129.29 a barrel. In three days oil has moved down more than $15.
Continuing from yesterday’s strong showing, markets had another positive outing. The positive results were spurred on by earnings of Dow components JPMorgan Chase (40.80, +4.86), United Technologies (64.70, -3.59) and Coca-Cola (50.34, -2.00). All three companies have indicated that despite difficult economic conditions that their core businesses were holding up.
Google, the reputed best internet company, reported weaker than expected rise in quarterly net profits. Excluding stock-based compensation costs, profit was $4.63 per share or 9 cents below the $4.72 consensus estimates of analysts. The company says that the miss was due to financial management of cash during the quarter and not due to the health of the economy. Shares of Google closed at $533.44 but fell in after hours trading and have hovered around 493.00 or down 7.58%.
Housing starts for June increased 9.1 percent. The advancement of housing is seen as the most important sector for the entire economy as it has led the decline in the markets.
7/16/2008
Relief for the equity markets came in the form of lower oil prices. Oil, moved lower $4.14 to settle at $134.60 a barrel on the New York Mercantile Exchange. In two days, oil has declined $10.58.
In a scarce turn of events, several financial entities reported better than expected earnings. Specifically, the San Francisco based Wells Fargo reported second quarter earnings of $0.53 per share. This was 3 cents ahead of Wall Street expectation. The bank announced it would raise its dividend by 10% due to its solid financial position. Shares rose $6.63 to $27.14 or 32%.
Other entities to report better than expected numbers are Charles Schwab (21.91, +2.69), Northern Trust (76.00, +8.81) and Marshall & IIsley (13.61, +2.02). The financial sector as a whole was higher by 12.3%.
Minutes released from the last FOMC meeting indicates that the next move for policy makers is a rate increase. There has been increased concern about the effect of a rate on the strength of the dollar and inflation.
Key economic data for the week starting July 14th, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Thursday: |
| 08:30 Initial Claims 07/12 NA 346K
10:00 Philadelphia Fed Jul -15.2 -17.1 |
7/15/2008
The drop in Oil is the strongest in 17 years. In intra-day trading prices moved lower at one point by 10 dollars. In the end, sweet crude moved down $6.44 (4.4 percent) to settle at $138.74 a barrel. There have been mounting concerns that with the economy cooling the demand for oil should decrease.
Federal Reserve Chairman Ben Bernanke testified to Congress Tuesday that the despite aggressive interest rate reductions and other innovative steps, that the economy was having difficulties. In another session in front of the Senate Banking Committee, he sounded another warning that rising prices for energy and food are elevating inflation risks.
Earlier this week, Treasury Secretary Henry Paulson released a plan to stabilize Fannie Mae and Freddie Mac. Today, Secretary Paulson clarified that no immediate plans have been made to extend emergency loans to these companies. In front of the Senate Banking Committee, that at times expressed anger that the Secretary would propose such a plan because it would amount to a blank check to buy debt from the companies without any assurances that taxpayer monies would be safe.
Projected growth for the year will come in near 1.6 percent, due to in some part the government’s $168 billion stimulus rebates. On the jobs front, it is expected that the unemployment rate will be 5.7 percent this year.
Key economic data for the week starting July 14th, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Wednesday: |
| 08:30 Core CPI Jun 0.2% 0.2%
08:30 CPI Jun 0.7% 0.6%
10:30 Crude Inventories 07/12 NA -5840K
14:00 FOMC Minutes Jun 25 |
| Thursday: |
| 08:30 Initial Claims 07/12 NA 346K
10:00 Philadelphia Fed Jul -15.2 -17.1 |
7/14/2008
Key economic data for the week starting July 14th, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Tuesday: |
| 08:30 Core PPI Jun 0.3% 0.2%
08:30 NY Empire State Index Jul -4.0 -8.7
08:30 PPI Jun 1.3% 1.4%
08:30 Retail Sales Jun 0.3% 1.0% |
| Wednesday: |
| 08:30 Core CPI Jun 0.2% 0.2%
08:30 CPI Jun 0.7% 0.6%
10:30 Crude Inventories 07/12 NA -5840K
14:00 FOMC Minutes Jun 25 |
| Thursday: |
| 08:30 Initial Claims 07/12 NA 346K
10:00 Philadelphia Fed Jul -15.2 -17.1 |
7/11/2008
The market’s declined steeply as the Dow fell below 11,000 for the 1st time in two years. The recovery was equally breathtaking but only managed to bring the index to positive briefly.
Oil continued to surge higher, sweet crude on the NYmex moved up $3.43 to settle at $145.08 (it had been as high as $147.27 intra-day). There were continual concerns that tensions in the Middle East could flare up again. The high price of oil did pressure equities to move lower.
Weakness in the financial sector continues, shares of Fannie Mae and Freddie Mac continue to move lower as talk about government aid continues. The two companies guarantee about $5 trillion dollars worth of mortgages (or half of the mortgages in the US). Yesterday, Treasury Secretary Henry Paulson said that the government would not aid financial bank, however today the Senate Banking Committee Chairman Christopher Dodd hinted that these companies could be given access to emergency Federal Reserve lending.
The trade deficit narrowed in May as exports climbed to all-time highs. The trade gap is down to $58.8 billion a 1.2 percent decrease from April. The weakened US dollar has contributed to this affect.
Key economic data for the week starting July 14th, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Tuesday: |
| 08:30 Core PPI Jun 0.3% 0.2%
08:30 NY Empire State Index Jul -4.0 -8.7
08:30 PPI Jun 1.3% 1.4%
08:30 Retail Sales Jun 0.3% 1.0% |
| Wednesday: |
| 08:30 Core CPI Jun 0.2% 0.2%
08:30 CPI Jun 0.7% 0.6%
10:30 Crude Inventories 07/12 NA -5840K
14:00 FOMC Minutes Jun 25 |
| Thursday: |
| 08:30 Initial Claims 07/12 NA 346K
10:00 Philadelphia Fed Jul -15.2 -17.1 |
7/10/2008
The financial news based on oil, reads oil moves higher more than $5.60 to finish at $141.65 a barrel. The news came after another worrying missile test by Iran and more conflict in Nigeria.
The dollar was mixed against major currencies.
Treasury Secretary Henry Paulson told congress that Wall Street cannot expect the government to bail out troubled financial companies. His quote is “For market discipline to effectively constrain risk, financial institutions must be allowed to fail.”
Paulson’s comments hit very close to home for some companies that are still suffering amidst the current mortgage troubles. Shares of Fannie Mae, Freddie Mac and Lehman Brothers led Wall Street financials down in a dismal day.
Consumer discretionary spending has shifted to benefit Discounters recently as high prices of gas and inflation have squeezed consumers. Costco Wholesale Corp have seen same store sales rise 9 percent in June. Wal-Mart has seen sales at stores opened at least a year rise 5.8 percent in June.
Key economic data for the week starting July 7th, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Friday: |
| 08:30 Trade Balance May -$62.2B -$60.9B
Jul 11 10:00 Mich Sentiment-Prel. 55.5 56.4 |
7/9/2008
In an interesting shift of market psychology, the market’s move lower was not caused by the rising price of oil. This has broken a correlated relationship that has played out for the past several weeks where by panic in oil spread to wide spread selling in equities. The price of oil was somewhat volatility but settled up one penny at $136.05 a barrel on the New York Mercantile Exchange.
The dismal results of the indexes (more than 2% decline on the major indexes) can be attributed to mainly the concern over government-sponsored lenders Freddie Mac and Fannie Mae. Both companies are seen as susceptible to increasing the number of outstanding shares in order to raise further funds to offset losses over default mortgages. Freddie was down $3.20 to $10.26 (a 24 percent decline). Fannie is lower $2.31 to $15.31 (13 percent decline).
Cisco Systems hit a new 52- week lower of $21.54, the tech giant was down $1.30 and closed at $21.58 (5.7 percent decrease). The company has speculated that equipment spending will recover later than the company originally thought.
Key economic data for the week starting July 7th, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Thursday: |
| 08:30 Initial Claims 07/05 395K 404K |
| Friday: |
| 08:30 Trade Balance May -$62.2B -$60.9B
Jul 11 10:00 Mich Sentiment-Prel. 55.5 56.4 |
7/8/2008
The stimulus for the markets in recent weeks, oil, has moved significantly lower for the second straight day. The news surround oil once upon a time spurted negativity has turned sweet. The component from the Middle East essentially Iran has stopped the inflammatory rhetoric. Closer to home, billionaire investor T. Boone Pickens has come out with a more comprehensive plan to decrease the nation’s reliance on foreign oil. His plan includes a move for the government to invest in infrastructure allowing the vehicles to use natural gas. Earlier this year, Pickens’ announced that his company would invest $10 billion in wind farms. The market price of oil has dropped $5.33 to settle at $136.04.
The ailing financial sector continues to require attention. In the latest move, the entire market was relieved to hear fed chairman Ben Bernanke say that he would extend lending efforts to investment banks. The lending facility was extended to big companies to borrow after the near-collapse of Bear Stearns Cos. Earlier this year.
Key economic data for the week starting July 7th, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Wednesday: |
| 10:30 Crude Inventories 07/05 NA -1982K |
| Thursday: |
| 08:30 Initial Claims 07/05 395K 404K |
| Friday: |
| 08:30 Trade Balance May -$62.2B -$60.9B
Jul 11 10:00 Mich Sentiment-Prel. 55.5 56.4 |
7/7/2008
The price of oil fell $3.92 to close at $141.37 a barrel. The lower close did help the indexes recover from significant losses during the mid-day.
Wall Street was slightly down on a volatile session Monday. The Dow was down to levels not seen since Aug 2006. The financials continued to trade negatively with many of the largest companies declining badly.
The volatility as Measured by the Chicago Board Options Exchange (CBOE) is at 25.78, the last time it was this high was during the Bears Stearns buyout.
Key economic data for the week starting July 7th, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Tuesday: |
| 10:00 Wholesale Inventories May 0.6% 1.3% |
| Wednesday: |
| 10:30 Crude Inventories 07/05 NA -1982K |
| Thursday: |
| 08:30 Initial Claims 07/05 395K 404K |
| Friday: |
| 08:30 Trade Balance May -$62.2B -$60.9B
Jul 11 10:00 Mich Sentiment-Prel. 55.5 56.4 |
7/3/2008
Our daily oil report is that the commodity moved past $145 a barrel and the national average moved past $4.10 a gallon at the pump. At the same time last year, consumers were paying $2.95 a gallon at the pump.
The jobs situation continues to deteriorate for the sixth month in a row in June. For this last month, more than 60,000 people lost their jobs. The total for this year comes to 438,000 according to the Lab Department. Currently the jobless rate held at 5.5 percent from 4.6 percent a year ago. It is expected to climb and top 6 percent early next year.
The jobs were most severely in construction, manufacturing and financial services. Cutbacks are also expected in retail, transportation (especially trucking) and publishing.
The Institute for Supply Management reported that the service sector index came to 48.2 from 51.7 in May (a reading lower than 50 represents a contraction). The service sector represents 2 thirds of the economy.
Markets closed at 1pm Eastern and will remain closed for the Fourth of July.
7/2/2008
The latest saga of oil is its move to set a new record above $144 a barrel. August delivery crude moved to $144.32 and finally settled at $143.57 – yesterday’s close was $140.93. Two factors which contributed to the rise was a lower than expected supply and ongoing rhetoric between Iran and the rest of world. Iran has warned that there would be a fierce response if attacked.
A very graphic example of a slumping US economy is the plight of General Motors Corp. (GM). The company closed below $10 for the first time since Eisenhower. Shares of GMP were down $1.77 to close at $9.98. Since the middle of last year the company’s share price has tumbled 75 percent. The company’s fortunes have been battered by rising oil prices which have caused consumers to move away from gas guzzling SUV’s to smaller fuel efficient models.
Key economic data for the week starting June 30th, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Thursday: |
| 08:30 Initial Claims 06/28 NA 384K
08:30 Nonfarm Payrolls Jun -50K -49K
08:30 Unemployment Rate Jun 5.4% 5.5%
10:00 ISM Services Jun 51.5 51.7 |
7/1/2008
In financial news, the price of oil proceeded to gain $1.06 to finish the day at $141.06 a barrel. The move up by oil has been in part due to the weakness in the US dollar.
In other financial news, the Institute for Supply Management (ISM) reported that manufacturing activity expanded during June. The number was 50.2 and was ahead of the 48.5 that was expected around Wall Street. The implication of the greater than 50 number signals some strength in the economy that was unexpected by most economists.
In retail news, the largest retail coffee shop chain in the world announced drastic plan to close 600 underperforming stores and eliminate a totally of 12,000 employees. Starbucks’ plan cuts will be finished by the end of March 2009 and will cost roughly $348 million. The company’s global work force will be cut by roughly 7 percent. Shares of the company moved some 6 percent higher after the announcement.
Key economic data for the week starting June 30th, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Wednesday: |
| 10:00 Factory Orders May 0.6% 1.1%
10:30 Crude Inventories 06/28 NA 830K
|
| Thursday: |
| 08:30 Initial Claims 06/28 NA 384K
08:30 Nonfarm Payrolls Jun -50K -49K
08:30 Unemployment Rate Jun 5.4% 5.5%
10:00 ISM Services Jun 51.5 51.7 |
6/30/2008
Our financial sector would be missing something if the status of oil was not mentioned within the 1st few sentences. The price of which has been a major force in the markets for the past several months. The price of oil reached $143.67 a barrel in today’s session. It eventually settled below $140.
The rise in price of oil is due to continual tensions between Iran and Israel. Iran has stated that they would control the tanker traffic moving in the Persian Gulf and through the straight of Hormuz if it was attacked by Israel. The US Navy has in position, the Fifth Fleet and has said that the United States and its allies would not allow Iran to hamper shipping in the Gulf.
The National Association of Purchasing Management released its Chicago survey. The results of 49.6 from 49.1 in May showed the region contracting for a fifth straight month. The rate of decline was less severe than expected and just slightly below the neutral reading of 50.
Key economic data for the week starting June 30th, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Tuesday: |
| 10:00 ISM Index Jun NA 49.6 |
| Wednesday: |
| 10:00 Factory Orders May 0.6% 1.1%
10:30 Crude Inventories 06/28 NA 830K
|
| Thursday: |
| 08:30 Initial Claims 06/28 NA 384K
08:30 Nonfarm Payrolls Jun -50K -49K
08:30 Unemployment Rate Jun 5.4% 5.5%
10:00 ISM Services Jun 51.5 51.7 |
6/27/2008
The markets continued to be moved by very high and ever increasing oil prices. A barrel of crude moved and touched $142.99 per barrel before setting at $140.25. News on the oil front was relatively calm as no new news stimulus was apparent.
Wall Street has nearly ended the second quarter of 2008 and is bracing for earning reports which threaten to be less than stellar.
Oracle warned of difficult times ahead. While Research in Motion (RIMM) was 8.3% lower after its earnings came in lower than expected.
In macro economic news, the University of Michigan’s index of consumer sentiment for June was 56.4. This marks a decline from May and is slightly lower than the street consensus
Key economic data for the week starting June 30th, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Monday: |
| 09:45 Chicago PMI Jun 48.5 49.1 |
| Tuesday: |
| 10:00 ISM Index Jun NA 49.6 |
| Wednesday: |
| 10:00 Factory Orders May 0.6% 1.1%
10:30 Crude Inventories 06/28 NA 830K
|
| Thursday: |
| 08:30 Initial Claims 06/28 NA 384K
08:30 Nonfarm Payrolls Jun -50K -49K
08:30 Unemployment Rate Jun 5.4% 5.5%
10:00 ISM Services Jun 51.5 51.7 |
6/26/2008
Oil, any news about oil seems to send the commodity to new heights. OPEC President Chakib Khelil was quoted to say that oil could rise to between $150 and $170 per barrel before pulling back later. In an unrelated situation, Libya’s national oil company says that the country may cut crude production because the oil market is well supplied. Both pieces of news helped send the commodity to over $140 intra-day and eventually to settle at $139.64.
The situation in oil continues to be perplexing as many analysts believe that the price of oil is artificially high and caused in some part to traders buying contracts in order to hedge against a weakening US dollar. These analysts believe that the market is well supplied at this point.
News from the housing market was mixed, The National Association of Realtors reported that the units of single-family homes and condominiums moved up by 2 percent in May, the consensus was for an increase of 2.2 percent. The increase marks only the second increase in the past 10 months. Despite rising sales numbers, the median price of the existing home sold continues to decline. Nation wide, the median price of an existing home sold is $208,000, a figure that is 6.3 percent lower than a year ago.
The markets are moving into an end of quarter mode and many market participants are expecting volatility as funds take positions to enhance the appearance of their books.
Key economic data for the week starting June 23th, 2008. Numbers shown are consensus estimates (market anticipates this value) and prior value.| Friday: |
| 22:00 MICHIGAN CONSUMER SENTIMENT (Jun F) (H) 56.8 56.7 |
