Gasoline Consumption Continues to Fall, But Prices Rise

“Gasoline demand continues to fall in the U.S. as pump prices keep climbing.

Reports from government and industry groups show motorists have been cutting back on the amount of gas they put into their tanks for more than a month. That could signal trouble for the economy since Americans typically cut spending on other activities before they do less driving.

Since January, the national average for a gallon of regular unleaded has risen 91 cents, or 30 percent, to $3.98. The main reason is a 20 percent gain in the price of oil this year. Gas rose more than 30 cents in April alone, as refinery problems led to an unusually big drop in supplies.

Gas is now above $4 per gallon in 13 states and Washington D.C.

Reports this week provided more evidence that with prices so high motorists are spending less on gas.

MasterCard SpendingPulse, which tracks retail gas spending, and the Energy Information Administration, which measures gas supplied to wholesale markets, both say that average gasoline demand has dropped for six straight weeks.

Some analysts are calling for $5 per gallon gas by summer. Others see signs the price is near its peak…”

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“The Rasmussen poll, which tends to have a Republican-leaning “house effect,” is now showing “support for repeal of [health care reform] has fallen below 50%” for the first time since enactment of the legislation on March 23, 2010 (via Daily Kos). Rasmussen has been using the following question wording:

A proposal has been made to repeal the health care bill and stop it from going into effect. Do you strongly favor, somewhat favor, somewhat oppose or strongly oppose a proposal to repeal the health care bill?

I’ve always thought the measure to be vague; for example, does “somewhat favor” mean that someone would like parts of the legislation to be repealed, but not others? For what it’s worth, though, here is a trend graph I made from percentages listed on Rasmussen’s site and a little artistic flourish on my part:”

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For now it would hurt debt repatriation….

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“Cisco Systems said Thursday that it is streamlining its sales, services, and engineering organizations.

The company said the majority of the changes, which includes the restructure of its worldwide field operations, will occur over the next 120 days.

Shares of Cisco [CSCO  17.47        ] were slightly lower in pre-market trading.”

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They love the shiny metal….

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Upgrades

K – Kellogg target raised to $59 from $55 at RBC Capital Mkts

LEAP – Leap Wireless upgraded to Buy at Collins Stewart; tgt $22

ASIA – AsiaInfo initiated with a Buy at Jefferies; tgt $27

GRMN – Garmin target raised to $35 from $33 at RBC Capital Mkts

CE – Celanese upgraded to Buy from Neutral at Goldman

FBNC – First Bancorp initiated with a Market Perform at Raymond James

CMCSA – Comcast target raised to $30 from $28 at Kaufman Bros

CBEY – Cbeyond Comms upgraded to Market Perform from Underperform at Raymond James

Downgrades

MU – Micron initiated with a Neutral at JP Morgan

AGN – Allergan downgraded to Underperform from Outperform at Credit Agricole

MCD – McDonald’s downgraded to Neutral from Overweight at Piper Jaffray

SFD – Smithfield Foods downgraded to Hold from Buy at BB&T

RAH – Ralcorp Holdings downgraded to Neutral from Buy at Suntrust

ENOC – EnerNOC target lowered to $22 from $30 at Needham

HFBC – Hopfed Bancorp, Inc downgraded to Market Perform from Outperform at Raymond James

COT – Cott downgraded to Sector Performer from Outperform at CIBC

VIVEF – Vivendi downgraded to Hold from Buy at Deutsche Bank

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Gapping Up

QNST +15%, LEE +12.7%, JDSU +9.3%, SHS +9%, NUVA +6.2%, SVNT +3.8%, TSLA +3.2%, CLD +3.1%, PPO +9.7%, TSO +1.6%, SYT +1.7%, WFR +1.7%,ERTS +1.4%, KMB +1.5%, KMP +1.4%,  LRAD +6.2%, WFMI +5.5%, HNSN +4.6%, CENT +2.2%, NGD +2.1%, WMGI +2%, ARIA +1.9%, GERN +1.7%

Gapping Down

IO -9.3%, SMSI -9.1%,  ATML -5.1%, SLV -4.1%, , MUR -3.1%, MELI -2.9%, AVP -2%, RIO -2%, RIG -1.8%, SLW -1.7%, LYG -7.9%, ABX -1.7%, HBC -1.3%, GLD -1.2%, MT -1.1%, DRWI -6.5%, FARO -5.5%,  NWSA -2.8%, DXCM -2.6%, STO -2.3%, RBS -4.1%, WIN -3.6%, SWIR -3.2%, ISTA -2.3%, BCS -2.1%

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In Play

On the Wires

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Weather is a usual suspect, but also Japan’s crisis has been thrown into the mix for a terrible report….

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Meridith will stay the course on her dire prediction for municipal bonds….

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“NEW YORK, May 5, 2011 /PRNewswire/ — Aeropostale, Inc. (NYSE:ARO – News), a mall-based specialty retailer of casual apparel for young women and men, today announced updated expectations for the first quarter.

For the first quarter of fiscal 2011 net sales increased 1% to$469.2 million, from $463.6 million in the year ago period. Same store sales for the first quarter decreased 7%, compared to a same store sales increase of 8% last year.

Thomas P. Johnson, Chief Executive Officer, commented, “Clearly we are not satisfied with our sales and margin performance for the first quarter. We were more promotional than anticipated on our spring assortment and clearance merchandise. Additionally, our core customers continue to be pressured by challenging macroeconomic conditions while, at the same time, the teen retail sector remains intensely promotional.  As we move forward through the year, our entire management team is keenly focused on our key initiatives: regaining the balance and clarity of our merchandise assortment, managing our cost structure, and leveraging our strong financial position. We remain very confident in our business model, in the ability and determination of our organization, and in the strength and positioning of our brand.”

Based on the lower than expected sales and margins for the quarter the Company now expects first quarter earnings of approximately $0.20 per diluted share, versus its previously issued guidance in the range of $0.35 – $0.38 per share.”

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“MINNEAPOLIS–(BUSINESS WIRE)– Target Corporation (NYSE:TGT – News) today reported that its net retail sales for the four weeks ended April 30, 2011 were $4,874 million, an increase of 13.7 percent from $4,288 million for the four weeks ended May 1, 2010. On this same basis, April comparable-store sales increased 13.1 percent.

“April comparable-store sales were somewhat below our expectations, as guests continued to be very cautious in their spending leading up to Easter,” said Gregg Steinhafel, chairman, president and chief executive officer of Target Corporation. “Target remains focused on delivering an outstanding shopping experience, providing unbeatable value on high quality, well-designed items throughout our assortment. This is more important than ever for our guests as they face increasing pressure on their household budgets due to higher energy costs and increasing prices of food, apparel and home merchandise.”

As a reminder, the 2011 Easter holiday was three weeks later than in 2010, which caused pre-Easter sales to move from March into April this year.”

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“SAN FRANCISCO–(BUSINESS WIRE)– Gap Inc. (NYSE:GPS –News) today reported that April 2011 net sales increased 10 percent compared with last year.

Net sales for the four-week period ended April 30, 2011 were $1.15 billion compared with net sales of $1.05 billion for the four-week period ended May 1, 2010. The company’s comparable sales for April 2011, which include the associated comparable online sales, were up 8 percent compared with a 2 percent decrease in April 2010.

“While our overall April performance was solid, we’re very focused on driving improvement across all of our businesses in North America, as we also continue to grow internationally and online,” said Glenn Murphy, chairman and CEO of Gap Inc.”

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Head Designer out

“Gap, dealing with faltering sales and clothing that do not seem to hit the right note, has dismissed its star design chief, Patrick Robinson.

No successor has been named yet.

Mr. Robinson, who joined Gap in 2007, was a hire that fashion insiders loved. He had designed for Paco Rabanne, Perry Ellis, Giorgio Armaniand Anne Klein before going to Gap, and had been nominated for a Council of Fashion Designers of America award, the industry’s equivalent of an Oscar. (And his wife, Virginia Smith, is a Vogue editor.) Soon after joining the Gap, he was dispensing styling advice on the pages of Glamour and Teen Vogue, and was covered like a celebrity by fashion blogs.”

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“Oil prices are likely to continue rising because the world’s oil reserves are dwindling, but silver is likely to come down because it rose too fast, famous investor and commodities bull Jim Rogers told CNBC Thursday.

In March, Rogers predicted that crude prices will rise over the next decade…”

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“General Motors handed in quarterly results which beat Wall Street estimates, but shares fell in premarket trading even as the company’s profit tripled.

The automaker reported first-quarter earnings of 95 cents a share excluding one-time items, while sales for the most recent quarter reached $36.19 billion.

Results were driven by driven by a recovery in the U.S. market and strong sales in Asia.

The company was seen earning 91 cents a share on revenue of $35.6 billion, according to a consensus estimate from Thomson Reuters.

Shares of GM [GM  33.04   0.05  (+0.15%)   ] fell nearly 1 percent in pre-market trading Thursday. Get real-time quotes for General Motors here.“

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Stocks fell for a third day after earnings from Lloyds Banking Group Plc (LLOY) and Societe Generale SA disappointed investors, while commodities dropped the most in three weeks. The yen strengthened.

“The Stoxx Europe 600 Index slid 0.8 percent at 7:50 a.m. in New York, and Standard & Poor’s 500 Index futures lost 0.4 percent. The S&P GSCI index of 24 commodities sank 1.9 percent as silver futures dropped 3.8 percent and oil retreated 2.5 percent. The yen appreciated against its major peers. The two- year German note yield climbed as much as four basis points to 1.95 percent, the highest since December 2008. Spanish five-year bonds fell as the government sold less than the maximum planned.

Lloyds, the biggest U.K. mortgage lender, reported a loss after setting aside 3.2 billion pounds ($5.3 billion) for improperly sold loan insurance, and Societe Generale (GLE)’s profit was less than analysts estimated. A report today may show U.S. jobless claims fell last week, economists said a day before monthly payrolls data.”

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The sell off continues. Downside like this not seen since 1983….Gold off a minor $8.50 this morning

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“European stocks retreated for a third straight day, the longest losing streak in seven weeks, as banking shares tumbled. U.S. index futures were little changed and Asian equities fell.

Lloyds Banking Group Plc (LLOY) slumped the most in almost a year after reporting a quarterly loss. Societe Generale SA, France’s second-largest bank by market value, slid 3.7 percent as earnings missed analyst estimates. TGS-Nopec Geophysical Co. ASA soared 8.6 percent after profit beat expectations.

The Stoxx Europe 600 Index decreased 0.3 percent to 277.76 at 10:37 a.m. in London. The measure had the biggest monthly increase so far this year in April as companies from PSA Peugeot Citroen to Ericsson AB reported earnings that topped analyst estimates and the Federal Reserve maintained its pledge to keep interest rates low for an “extended period.”

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“Oil declined for a fourth day in New York, the longest losing streak in eight weeks, as a drop in gasoline demand added to signs of slowing growth in the U.S., the world’s biggest crude consumer.

Futures fell as much as 0.7 percent after the Energy Department said yesterday that crude stockpiles climbed to the highest since October and gasoline consumption slipped to a four-week low. Separate reports showed a slower-than-forecast expansion in U.S. service industries and employment.

“The data is signaling that the recovery isn’t as rapid as some were expecting,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne, who predicted oil will average $113 a barrel in the third quarter. “It’s going to be a slow grind back for the U.S.”

Crude for June delivery lost as much as 81 cents to $108.43 a barrel in electronic trading on theNew York Mercantile Exchange. The contract was at $108.76 at 2:22 p.m. Singapore time. Yesterday, it slid $1.81, or 1.6 percent, to $109.24, the lowest since April 19. Prices, which decreased for four days through March 11, have gained 36 percent in the past year.

Brent crude for June settlement on the London-based ICE Futures Europe exchange fell as much as 70 cents, or 0.6 percent, to $120.49 a barrel. Yesterday, the contract lost 1 percent to $121.19, the lowest since April 12.

Gasoline Demand “

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“The Swiss franc rose against all of its 16 major counterparts, reaching a record versus the dollar, as declines in stocks and commodities damped demand for higher- yielding assets.

The dollar erased earlier gains versus the euro amid concern theFederal Reserve will trail the European Central Bank in raising interest rates. Canada’s dollar fluctuated after rising earlier as Prime Minister Stephen Harper’s Conservatives won a majority in Parliament for the first time, and the Australian and New Zealand dollars fell for a second day.

“To some degree it’s a risk-off environment, and that’s keeping a pretty good footing on the Swiss,” said Mary Nicola, a currency strategist at BNP Paribas SA in New York. “We’re expecting dollar weakness to resume.”

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