How many minutes to earn the price of a Big Mac in Major Cities?

:S

Source: Economist

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: Economy still has long ways to go

 

Source: CNBC

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

How rich countries are predicted to grow this year

 

Source: The Economist

Most influential online outlets

Pretty surprised that FOX news is among the top most influential.

Source: The Economist

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)

Source: RTT News, Barron's & CNBC

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:

1. Global policy rates will remain low for extended periods of time.
2. 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.
3. Investors should continue to anticipate and, if necessary, shake hands with government policies, utilizing leverage and/or guarantees to their benefit.
4. Asia and Asian-connected economies (Australia, Brazil) will dominate future global growth.
5. The dollar is vulnerable on a long-term basis.

 

Courtesy of Zerohedge & Pimco

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. 

Short S&P 500 @ 999 with (SDS)

Short S&P 500 through SDS @ 999 using SDS. 

This one was a shocker in the last 10 minutes of trading especially after Wells Fargo announced that they were able to Repay TARP without Raising new Equity according to Bloomberg.  But that was quickly rejected when the S&P retested the 1000.95 level and got denied to close off @ 998.04. 

Short First Solar (FSLR) @ $115.10

Short First Solar @ $115.10 after noticing the stock break new support levels and making a new technical resistance every time the support breaks.   

On the Intraday, FSLR has broken another support level although a minor one @ 117.  Stop buy to cover @ 114.  Target price of $100.