- Consumer credit fell at an annual rate of $3.51 billion in October. As opposed to the $9.3 billion by Economist.
- Demand for revolving credit, fell 9.3%, while borrowing in the category that include auto loans rose at an annual rate of 2.6%
- Americans are still borrowing less as they try to replenish depleted investments. Many are finding it hard to get credit as banks have tightened lending standards.
- The 1.7% fall in overall consumer borrowing left that total at an annual rate of $2.48 trillion in October. The $3.51 billion fall in October followed a decline of 48.77 billion in September.
- The 9.3% decline in the credit card category followed declines of 10.5% in September and 10.6% in August.
- All in all, credit card borrowing has fallen for a record 13 straight month.
Consumer credit improves much better than expected
Companies that has been growing throughout the recession
Company | Market Cap | Product Categories | 2007 Sales Growth | 2008 Sales Growth | TTM Sales Growth |
|---|---|---|---|---|---|
Green Mountain Coffee Roasters (Nasdaq: GMCR) | $3.2 billion | Specialty coffee and brewing systems | 51.6% | 46.4% | 56.1% |
Hansen Natural (Nasdaq:HANS) | $3.4 billion | Nonalcoholic specialty beverages | 49.3% | 14.3% | 9.7% |
TreeHouse Foods | $1.1 billion | Packaged foods and sauces | 23.3% | 29.6% | 9.5% |
Jarden (NYSE: JAH) | $2.4 billion | Home, recreation, and outdoor | 21.2% | 15.5% | (2.8%) |
Hasbro | $3.9 billion | Toys and games | 21.8% | 4.8% | (4.0%) |
Tupperware Brands (NYSE:TUP) | $2.9 billion | Food storage, beauty, and personal care | 13.6% | 9.1% | (8.7%) |
Data from Yahoo! Finance and Capital IQ as of Oct. 26. TTM = trailing 12 months.
Exxon-Mobile’s breakout (XOM)
Beautiful triangle breakout on Exxon-Mobile. Bought this on the pinkish colored red line @ $66.55 on October 2nd, 2009 and am so glad to have made the purchase especially after seeing it break out finally on the upside. A wedge formation like this statistically results in a huge move depending on where the triangle breaks and today’s break is on the upside. Hoping to see a continuation tomorrow with a much higher volume especially when everyone’s back from Columbus day holiday.
Rally in $AAPL is insane
Just want to say that the rally in Apple shares is insane. Barely even crossed the oversold levels on the Stochastics RSI of 20 every time it rushes to new highs since July 9th, 2009.
Unemployment rate now at 9.8%
- US unemployment rate rose to 9.8% in September as employers cut more jobs than expected.
- US economy lost a net total of 263,000 jobs for September, up from 201,000 in August which is way above market expectations of 180,000 job losses.
- It is said that if laid-off workers who have settled for part-time work or who have given up looking for new jobs are included, the unemployment rate would actually be 17%. Which is the biggest record since the peak of the 1994 recession.
- More than 500,000 unemployed gave up looking for work, if they had continued looking for work, the jobless rate would have been higher.
- 15.1 million Americans are now out of work, more than 7.1 million jobs have been eliminated since the recession began in December of 2007.
- It is highly likely now that unemployment will now break about the 10% line.
- Since now, the economy has received a fair amount of boost from the cash for clunkers auto rebate program and other government stimulus efforts, but many economists believe that growth will slow the current quarter and early next year as the impact of those trades fade.
- Persistently high unemployment rate could weaken the recovery as consumers concerned about their jobs and income, refrain from spending. Which accounts for 70% of the US GDP.
- Average hourly work week fell back to record low of 33 in September. Economists were looking for employers to add more hours to current workers before they hire new ones which doesn’t necessarily mean so based on the data.
"I don't think it argues against a modest recovery in the U.S. economy ... but this is why we are not in a rapid V-shaped recovery," Stuart Hoffman, chief economist at PNC Financial Services in Pittsburgh.
Source: Businessweek, Wells Fargo Economics Group, Barron's & Reuters
US Automobile sales for September
- Porsche +8.4%
- Daimler -13.4%
- Chrysler –42% (OUCH!!)
- Hyundai +27%
- GM –45%(OUCH!! too…)
- Nissan –7%
- Toyota –12.7%
- Honda –20.1%
- BMW +3.6%
- Kia +24%
- Volkswagen +1.5%
- Ford –5.1%
Source: Marketwatch
US consumer woes overshadow housing cheer
- Consumer confidence unexpectedly decreased in the month of September to 53.1 in September from 54.5 in August.
- Economist had been expecting the index to increase to 57 from 54.1 originally reported for the previous month.
- Despite the unexpected decrease the index remains well off the low of the 25.3 set in February 2009.
- Report showed that those claiming current business conditions are “bad” rose to 46.3% in September from 44.6% in August, although those claiming conditions are “good” also edged up to 8.7% from 8.5%.
- Those claiming jobs are “hard to get” increased to 47% in September from 44.3% in August and those claiming jobs are “plentiful” fell to 3.4% from 4.3%
- Consumers’ short term outlook was also slightly more pessimistic, with the expectations index edging down to 73.3% in September from 73.8% in the previous month.
- Consumers expecting business conditions to improve over the next 6 months fell to 21.3% in September from 22.2% in August. While those expecting conditions to worsen decreased to 15% from 15.2%
- Outlook for the labor market was nearly unchanged, with those expecting more jobs in the months ahead edging down to 17.9% in September from 18% in August and those expecting fewer jobs unchanged at 23.1%.
- Those expecting an increase in the incomes increased slightly to 11.2% in September from 10.8% in August.
"While not as pessimistic as earlier this year, consumers remain quite apprehensive about the short-term outlook and their incomes. Plus, with the holiday season approaching, this is not very encouraging news.” – Lynn Franco (Director, Conference Board Consumer Research Center)
Source: RTT, Barron's & Marketwatch
US home prices in July rose for the 3rd Consecutive month
- US home prices in July rose for the 3rd straight month, surpassing forecasts and suggesting that the housing market is stabilizing after a 3 year plunge.
- Home prices in 20 metropolitan areas rose 1.6% in July from June, more than triple the estimate of a 0.5% rise found in Reuters poll.
- Index rose 1.4% the month before.
- 10-city index gained 1.7% in July after a 1.4% rise in the previous month.
"The upshot is that the housing market is starting to clear ever so slightly, that sustains hope that housing will get to a stable place which is good news for consumer balance sheets and, ultimately, for the economy,"" said Pierre Ellis, senior economist at Decision Economics.
- A record stockpile of foreclosed homes have been exerting pressure on home prices overall, but recent home sales reports show an easing up of the massive unsold inventory.
- A first time buyer credit of $8,000, which ends in November 30, has jump-started housing activity this year but there are concerns about the impact when the incentives disappears.
"These figures continue to support an indication of stabilization in national real estate values, but we do need to be cautious in coming months to assess whether the housing market will weather the expiration of the Federal First-Time Buyer's Tax Credit in November, anticipated higher unemployment rates and a possible increase in foreclosures," - David Blitzer, chairman of the index committee at S&P, said in a statement.
- The monthly price increases helped the annual rates, with the yearly pace of declines in home prices slowing to a 12.8% drop in the 10-city index and 13.3% downturn in the 20-city index.
- All 20 metro areas showed an improvement in the annual rate of decline in July compared with June. On a monthly basis, only Seattle and Las Vegas showed declines.
- Prices have plummeted 33.5 percent for the 10-city index and 32.6 percent for the 20-city index from the peak in the second quarter of 2006.
Source: Reuters, Federal Reserve Bank of Cleveland, Barron's
Thoughts on the Market
It has been a while since I last posted anything, since I have been giving my self a fairly descent length vacation until this Wednesday the 23rd. So there’s plenty of articles that I have to catch up on reading. So based on technicals only… The market looks to be heading into one MAJOR resistance, dating back to when this whole crisis around the market’s peak in October 2007. Since the trendline was formed, the market has been responding to it with full conviction. If the market is to remain strong I am expecting the market to pull back to 1043 before it resumes and attempts to break that trendline again. If that 1043 level fails than 1020 is my next target.
Meredith Whitney: Home prices going down further
- Renown analyst, Meredith Whitney predicts home prices will go down more dramatically from here.
- Believes we still have another 25% more on the downside
- Less demand = supply = home prices go down further
- No bank underwrote the loan with 10% unemployment and its still rising.
- Over $7 trillion were underwritten with 6% unemployment assumptions
- No doubt that home prices go down, just a question of when.
- When government incentives get removed home prices will go down more again.
- Banks are not keeping a lot of mortgages on their own books, rather they are selling.
- Doesn’t see the driver for unemployment reversing anytime soon.
- Those who can afford credit are trying to trim down their debt
- Those who can’t afford credit are trying to get more credit in which they don’t have access to.
- Consumer debt has gone down dramatically.
- People spending more on credit card rather than debit card
- 80% of most household economic decisions are made by women
- Most housing regulators see 65% homeownership level.
Source: CNBC
Fed’s Beige Book Commentary
- RETAIL PRICES WERE STEADY IN MOST DISTRICTS
- MOST DISTRICTS REPORTED TIGHT CREDIT STANDARDS
- CONSTRUCTION REMAINED AT LOW LEVELS
- HOUSE PRICES INDICATED DOWNWARD PRESSURES
- WAGE PRESSURES WERE MINIMAL IN ALL 12 DISTRICTS
- LABOR MARKETS WERE WEAK IN ALL 12 DISTRICTS
- REPORTED MANUFACTURING SHOWED MODEST IMPROVEMENT
- LOAN DEMAND WAS WEAK
- DEMAND FOR COMMERCIAL REAL ESTATE WAS WEAK
- RESIDENTIAL REAL ESTATE IMPROVED
- MOST DISTRICT BANKS REPORTED FLAT RETAIL SALES
- 12 FED DISTRICT BANKS NOTED SIGNS OF IMPROVEMENT
- DISTRICT BANKS SAID ECONOMY CONTINUED TO STABILIZE
- Homeowners lost more than $5 trillion in wealth from the collapse of the bubble.
- Consumer spending was flat, retailers are not adding to inventories, instead keeping them in line with low sales levels.
- Majority of reports indicated that manufacturers were “cautiously optimistic”
- Credit remains scare, according to the report.
- Most districts reported weak loan demand and tight credit standards.
- Demand for commercial property remained weak and that businesspeople in some areas believed recently higher vehicle sales levels were likely not sustainable after the government’s cash for clunkers" incentive program
- “Labor market conditions remained weak across all districts, but several also noted an uptick in temporary hiring and a decline in the pace of layoffs.
Source: FXDD, Marketwatch, CNBC & Federal Reserve Board
Jobless claims better than expected
- Jobless claims edged down to 570,000 from the previous week’s revised figure of 574,000.
- Economists had been expecting jobless claims to slip to 564,000 from the 570,000 originally reported for the previous week.
- Though Jobless claims have stabilized in recent weeks, it is still at a relatively high level indicating continued weakness in the labor market.
- Report also showed that continuing claims, which measure the number of people receiving ongoing unemployment help rose to 6.234 million in the week ended August 22nd.
- Closely watched continuing claims number rebounded after coming in at 6.142 million in the week ended August 15th.
- ADP said that employment losses are clearly diminishing, although it noted that employment usually trails overall economic activity and is still likely to decline for at least several more months.
"At this point, with all the stimulus money as well as seasonal factors, we should be seeing the jobless number below 500,000. This is looking more and more like a jobless recovery," - Todd Schoenberger (Managing Director at Landcolt Trading in San Antonio, Texas)
Bill Gross: On the “Course” to a New Normal
- If you are a child of the bull market its time to grow up and become a chastened adult.
- its time to recognize that things has changed and that they will continue to change for the next 10 years and even the next 20 years.
- We are heading into what we call the new normal, which is a period of time in which economies grow very slowly as opposed to growing like weeds, the way children do; in which profits are relatively static; in which the government plays a significant role in terms of deficits and reregulation as they do in Japan.
DDR = Deleveraging, Deglobalization & Reregulation
As of now, PIMCO observes that the highest probabilities favor the following strategic conclusions:
- Global policy rates will remain low for extended periods of time.
- The extent and duration of quantitative easing, term financing and fiscal stimulation efforts are keys to future investment returns across a multitude of asset categories, both domestically and globally.
- Investors should continue to anticipate and, if necessary, shake hands with government policies, utilizing leverage and/or guarantees to their benefit.
- Asia and Asian-connected economies (Australia, Brazil) will dominate future global growth.
- The dollar is vulnerable on a long-term basis.
Bill Gross: End of Stimulus May Cause a double dip Recession
- The inability of the government to continue pumping stimulus into the economy could promote a double dip recession.
- As inflation becomes less a possibility due to the weakening economy, 10-year notes and 30-year bonds could provide solid investment opportunities.
"To the extent that we have had a trillion dollars worth of stimulus, from the standpoint of deficits, and more, the government basically has to continue to do that and to add to that in order to keep the economy chugging along, To the extent that that's limited, to the extent that they pull back on some of those stimulus programs—Cash for Clunkers and those types of things—then the double-dip moves into the realm of possibility." – Gross Said
- Gross said investors will need to continue to watch the Federal Reserve for the central bank’s future intent with regard to quantitative easing.
"As long as the Fed and other central banks keep policy rates low and as long as inflation doesn't rear its head ... intermediate and longer bonds do well,”
Long Mosiac (MOS) @ 50.71
Long MOS @ 50.71 after noticing the breakout through the yellow trendline and showing a strong bounce off the $48.00 level. Target price of $53.11 with a stop loss of $49.59.
August US automobile sales
By manufacturer:
- KIA 60.4%
- Toyota 6.4%
- Honda 9.9%
- Nissan –2.9%
- BMW –21.3%
- GM –20.2%
- Chrysler –15%
- Ford 17%
- Hyundai 47%
- Porsche 9%
- Volkswagen 11.4%
- Daimler –10.5%
Source: Marketwatch
First Solar update (FSLR)
FSLR broke through intraday upward sloping trendline and is now back below $117.77 support. Phew….
S&P 500 rejected numerous times to go beyond 1000 so far
As noticeable on the intraday charts of the S&P 500, the S&P has failed to break the 1000 level throughout the day… Let’s hope this resistance level holds so that I can be confident about my SDS for the remainder of the week.
$117.77 a key level for me to maintain my short on FSLR
$117.77 a key level for me to maintain my short on FSLR based on the intraday charts.
Short Patriot Coal (PCX) @ 8.69
Short PCX @ 8.69 after noticing the stock dip below the support level of $8.98. Short term target price of $8.22 but I hope it can break through the 100 & 50 DMA especially with the negative sentiment now building around coal & China. If those technical levels break, $6.50 is my next price target.