Archive for June, 2010
From the Federal Reserve: Beige book
Economic activity continued to improve since the last report across all twelve Federal Reserve Districts, although many Districts described the pace of growth as “modest.”
On Real Estate:
Residential real estate activity improved since the last report. Most Districts noted an increase in home sales and construction prior to the April 30th deadline for the homebuyer tax credit, with contacts in many of these Districts also indicating a corresponding slowing in activity in May. Tight credit, the elevated inventory of homes available for sale, and the “shadow inventory” of foreclosed properties on banks’ balance sheets held back residential development in the New York, Cleveland, Atlanta, and Chicago Districts. Commercial real estate activity generally remained weak. Office, industrial, and retail vacancy rates continued to drift upward in many Districts putting downward pressure on rents. However, lower rents were said to have led to an increase in leasing activity in New York, Philadelphia, Richmond, Kansas City, Dallas, and San Francisco. The elevated inventory of existing properties for sale or rent continued to weigh on new private nonresidential construction. However, stronger industrial demand was noted in several Districts. Public construction increased in Philadelphia, Cleveland, and Chicago, but slowed in Minneapolis.
This is the first mention of shadow inventory on banks’ balance sheet (at least recently).
Even non-sports fans have heard by now about the recent debacle known as Baseballgate.
With two outs in the ninth inning, a first-base umpire called “SAFE” when the runner was clearly “OUT.” But this was no ordinary missed call; it cost Detroit Tigers pitcher Armando Galarraga a perfect game.
And as the blogosphere flooded with memories of other historic slip-ups that cost “so and so” star “this and that” honor. Demands for the commissioner of baseball to reverse the bad call grew louder by the hour.
It was indeed a very bad call. But the biggest, baddest call of all was not made on a sports field. It was made in the field of finance — specifically on the stock market. To wit: The mainstream umpires of finance stood near first base, and in April made this emphatic call for the uptrend in stocks:
“SAFE!!”
Call Your Own Shots — Remove Dangerous Mainstream Assumptions from Your Investment Process. Elliott Wave International’s FREE, 118-page Independent Investor eBook shows you exactly what moves markets and what doesn’t. You might be surprised to discover it’s not the Fed or “surprise” news events. Click here to learn more and download your free, 118-page ebook.
In case you missed the event, here’s an instant replay:
- “Stocks Remain In A Powerful Bull Market.” (April 10 Bloomberg)
- “Stocks Haven’t Lost Their Appeal As The Market Goes Up, Up, And Away.” (April 21 US News & World Report)
- “You can use any number of words to describe this bull market. Frothy is not one of them. This market is reasonably priced.” (April 21 AP)
- “US Stocks Post Longest Winning Streak Since 2004. The recovery should be sustainable and that will drive the market.” (April 24 Bloomberg)
- “All the economic reports are pointing up… despite lingering worries over debt problems in Greece. Right now, there is virtually no evidence of a top.” (April 30 USA Today)
Yet from its April 26 peak, the DJIA turned down in a jaw-dropping 1000-plus point selloff. The market suffered its worst May since 1940.
The markets have no commissioner to reverse the bad call of the financial mainstream. But at least one team of analysts remained ahead of the most game-changing moves in the world’s leading stock market, including a forecast that called the rally “OUT” in April 2010. Consider the following insight from EWI President Robert Prechter:
On April 16, Prechter published his April Elliott Wave Theorist titled “”Deadly Bearish Picture.” Notice the dates.
“We can project a top…between April 15 and May 7, 2010. It is rare to have technical indicators all lined up on one side of the ledger. They were lined up this way — on the bullish side — in late February-early March of 2009. Today, they are just as aligned, but on the bearish side.”
April 26 marks the high for the DJIA, followed by the devastating drop on May 7 — exactly within the date range Prechter’s forecast called for.
Call Your Own Shots — Remove Dangerous Mainstream Assumptions from Your Investment Process. Elliott Wave International’s FREE, 118-page Independent Investor eBook shows you exactly what moves markets and what doesn’t. You might be surprised to discover it’s not the Fed or “surprise” news events. Click here to learn more and download your free, 118-page ebook.
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( click to enlarge )
( click to enlarge )Earnings Announcements for Wednesday
Alliance One International, Inc. – AOI
AMERCO – UHAL
Analogic Corporation – ALOG
APPLIED NEUROSOLUTIONS INC – APSNE.OB
Ciena Corporation – CIEN
DPAC Technologies Corp. – DPAC.OB
Enzo Biochem – ENZ
Ferrellgas Partners – FGP
GameTech International – GMTC
ITEX CORP – ITEX.OB
Korn Ferry International – KFY
Luby’s, Inc. – LUB
Magal Security Systems – MAGS
Men’s Wearhouse – MW
Navistar International – NAV
ORAMED PHARM INC – ORMP.OB
Piedmont Natural Gas – PNY
PURE Bioscience – PURE
Repligen Corporation – RGEN
Shuffle Master, Inc. – SHFL
Spartech – SEH
Stewart Enterprises, Inc. – STEI
SYNUTRA INTL INC – SYUT
Thor Industries – THO
Titan Machinery Inc. – TITN
Ulticom – ULCM
Vail Resorts – MTN
VIMICRO INTERNATIONAL CO-ADS
Virco – VIRC
Pattern is cup and handle
MFA – Mfa Financial
CAL – CONTINENTAL AIRLINES
AAI – AirTran Holdings, Inc
ADCT – ADC Telecommunications
LO – Lorillard Inc
CTRP – CTRIP.COM INTL LTD ADS
NHP – NATIONWIDE HLTH PRO
ARBA – Ariba, Inc.
EGY – Vaalco Energy Inc
DECK – Deckers Outdoor Cor
ALSK – Alaska Communications
LGF – Lions Gate Entertaiment
ANSS – ANSYS, Inc.
Unusual volume
TLCR – Talecris Biotherape
KRY – Crystallex International
APPY – ASPENBIO PHARM
HNAB – Hana Biosciences
VIVK – Vivakor Inc
HRBR – Harbor Bioscience
BTOW – Britton International
DANOY – GROUPE DANONE
GRZ – Gold Reserve Inc
EVTN – Enviro Voraxial Tec
BKPG – Bark Group Inc
MBYL – Endeavor Exploration
RDIAF – ROCKWELL VENTURES INC
MYMX – Mymetics Corporation
DCGNQ – Decode Genetics
ALRT – ALR Technologies Inc
UUGRY – UNITED UTILITIES P L C
EVSP – Glas-Aire Industries
GYSN – Greyson International
RLGT – Radiant Logistics Inc
ALPMY – Astellas Pharma Inc
SLTZ – American United Glo
ZNOM – Znomics Inc
LIHRF – Lihir Gold Limited
EROCR – Eagle Rock Energy P
AHBIF – Inbev SA
PAI – Western Asst
ETEV – Ethos Environmental
WLSA – WIRELESS AGE COMMUN
OCTI – OCTuS Inc
CCMM – Charter Communications
SPHT – Secure Path Tech
FMNPQ – Fremont General Corp
PXMFF – Philex Mining Corp
Bullish Signal Reversal Alerts
ACUR Acura Pharmaceuticals, Inc.
AVNW Aviat Networks Inc.
BRCD Brocade Communications Systems, Inc.
BRKR Bruker Corp.
CAEI China Architectural Engineering, Inc.
CNMD CONMED Corp.
CVVT China Valves Technology Inc.
CXDC China XD Plastics Co. Ltd.
DDIC DDi Corp.
DLLR Dollar Financial Corp.
EBAY eBay, Inc.
ESIO Electro Scientific Industries, Inc.
FBCM FBR Capital Markets Corp.
FMER FirstMerit Corp.
GXDX Genoptix Inc.
IFSIA Interface, Inc.
LFUS Littelfuse, Inc.
MTRX Matrix Service Co.
MYRG MYR Group, Inc.
NWSA News Corp. Ltd.
OPLK Oplink Communication, Inc.
OXPS OptionsXpress Holdings Inc.
PSUN Pacific Sunwear of California, Inc.
RGEN Repligen Corp.
SHLM A. Schulman, Inc.
SMOD SMART Modular Technologies Inc.
STEL StellarOne Corp.
SUPG SuperGen, Inc.
VISN VisionChina Media Inc.
WFSL Washington Federal, Inc.
WMAR West Marine, Inc.
The Labor Department reported that nonfarm payrolls rose by 431,000 in May, however, a full 411,000 of these jobs were temporary positions for work on the 2010 U.S. Census.
Aside from the high level of government hiring, there were only modest job gains in manufacturing (+29,000), professional and business services (+22,000), and education and healthcare services (+17,000) while construction payrolls tumbled (-35,000).
Total nonfarm payrolls for March were revised lower, from a gain of 230,000 to 208,000, while the April gain of 290,000 saw no revisions, meaning that, when the Census hiring is excluded, nonfarm payrolls were virtually unchanged in this report.
In the household survey, the unemployment rate fell from 9.9 percent to 9.7 percent, however, total employment also fell, down 35,000 to 139.4 million.
Some 322,000 people dropping out of the labor market (i.e., no longer officially counting as “unemployed”) allowed the jobless rate to fall and the broader U6 under-employment rate (including those who have given up looking for work and those settling for part-time work) also fell, from 17.1 percent to 16.6 percent.
RanSquawk report that according to “well-placed sources in Beijing” China is now buying EUR above 1.20 to stabilize the currency in advance of a G20 meeting later in June, per a previous agreement with the G20 members. This surely explains why the euro magically got vacuumed up by 60 pips in a manner of seconds as soon as a breach of 1.20 was imminent. Alas, as we pointed out previously, the half life of central bank interventions is now laughable: at some point interventions using fiat methods will have no impact whatsoever. On the other hand, all those who are short the market, and thus the euro, and in the process are facing the Fed, the ECB, the SNB (or not so much anymore), and now the PBoC, now have a whole new appreciation of the word “Sparta”
The May ISM Non-Manufacturing index was at 55.4%, unchanged from April (slightly below expectations). The employment index showed some growth after 28 consecutive months of contraction.
From the Institute for Supply Management: May 2010 Non-Manufacturing ISM Report On Business®
Economic activity in the non-manufacturing sector grew in May for the fifth consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM Report On Business®.
The report was issued today by Anthony Nieves, C.P.M., CFPM, chair of the Institute for Supply Management™ Non-Manufacturing Business Survey Committee; and senior vice president — supply management for Hilton Worldwide. “The NMI (Non-Manufacturing Index) registered 55.4 percent in May, the same percentage as registered in both April and March, indicating continued growth in the non-manufacturing sector. The Non-Manufacturing Business Activity Index increased 0.8 percentage point to 61.1 percent, reflecting growth for the sixth consecutive month. The New Orders Index decreased 1.1 percentage points to 57.1 percent, and the Employment Index increased 0.9 percentage point to 50.4 percent, reflecting growth for the first time after 28 consecutive months of contraction. The Prices Index decreased 4.1 percentage points to 60.6 percent in May, indicating that prices are still increasing but at a slower rate than in April. According to the NMI, 16 non-manufacturing industries reported growth in May. Respondents’ comments remain mostly positive about current business conditions and the general direction of the economy.”
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