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Monthly Archives: June 2012

Old Man Buffett’s Favorite Indicator Still Shows Improvement

“Despite cratering commodities and a weakening globaleconomy domestic rail traffic continues to show signs of strength. Carloads were down -2.5% on a year over year basis, but intermodal jumped 5.2%.   The 10 week moving average for intermodal is now at 4.2%, it’s highest rate since February.   AAR has the details on this week’s data:

“The Association of American Railroads (AAR) today reported mixed weekly rail traffic for the week ending June 16, 2012, with U.S. railroads originating 287,036 carloads, down 2.5 percent compared with the same week last year. Intermodal volume for the week totaled 249,975 trailers and containers, up 5.2 percent compared with the same week last year.”

Full report

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Lacker: More Fed Stimulus Won’t Help Economy, May Stoke Inflation

“The Federal Reserve’s latest monetary stimulus risks higher inflation and will not do much to boost a weakening U.S. economy, the central bank official who dissented against the decision said on Friday.

The Fed on Wednesday announced it was prolonging its efforts to pressure long-term borrowing costs lower even as it slashed forecasts for U.S. economic growth.

But Jeffrey Lacker, an inflation hawk who has opposed every one of the central bank’s decisions since rotating into a voting seat this year, argued the new policy will not work.”

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Fed’s Bullard Sees ‘Pretty High Hurdle’ to QE3

“Federal Reserve policymakers still see a “pretty high hurdle” before they would unleash a third round of quantitative easing, or QE3, a top Fed official said on Friday.

Speaking two days after the U.S. central bank decided to take a more modest policy step to help the flailing economic recovery, St. Louis Fed President James Bullard said the Fed has done “what it can do.”

“QE3 I think is viewed as still having a pretty high hurdle. We can do that, and I think it would be effective, but we would be taking a lot more risk on our balance sheet and we’d be going further into unchartered territory,” Bullard said on Bloomberg TV.”

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Check Out the Mega Trends That are Changing the Global Consumer

“Coca-Cola CEO Muhtar Kent has had much success at the helm of the iconic beverage company, but as he moves forward, he must keep up with the ever-evolving consumer.

In a recent column for the BBC, Kent cites five trends from a Consumer Goods Forum report on the “Future Value Chain,” and stressed how fundamentally important they are to the future of retail and consumer goods: ”

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FLASH: New Greek Finance Minister Taken to Hospital

Report: Greek journalists say new Greek fin min has suffered some form of collapse, has been taken to hospital. PM in hospital over detached retina.

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Gapping Up and Down This Morning

Gapping up

HNR +104.9%, PRGN +10.9%, BMTI +4.8%, BBVA +4.6%, MS +3.4%, SAN +3.4%,

ARNA +2.7%, DB +1.8%, HBC +1.2%, RIO +1.2% ,  FB +1.4%, GLW +1.4%, EL +1%,

ZNGA +1.7% ,  WFT +1.9%, JACK +1.7% ,  TSLA +0.2%,  ETN +2.2% , ETP +0.6%,

SPPI +3.8% , NPSP +6.9%, FTE +2.5%, TEF +2.3%, BT +2.1%,

Gapping down 

R -9%, AEC -3.8%,  EA -3.3%,  ITT -1.1%,  EXPE -0.7%, AEC -3.8% ,  ACI -1.1%,

RGEN -24.7%, SDRL -1.6%, ATPG -1.0%, TOT -0.8%, R -9%, DRI -3.4%

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Iconic Companies Signal Profit Warnings

Weakening business activity worldwide is hitting U.S. companies where it hurts, with more of them signaling disappointing results than at any time over the past decade.

Pepsico's New Plant-Based Bottle
Pepsico
Pepsico’s New Plant-Based Bottle

Many bellwether companies, including two Dow[.DJIA  12573.57  —  UNCH    ] components, have come out in recent days with profit warnings, and the slowing in Europe has been cited as a major factor for those outlooks.

For every company that has raised its second-quarter profit outlook, 3.6 have warned, the worst ratio since the third quarter of 2001, according to Thomson Reuters data.

Firms including PepsiCo [PEP  68.50    -0.41  (-0.59%)   ], package shipper FedEx[FDX  90.63    -0.71  (-0.78%)   ] and tobacco company Philip Morris [PM  85.60   -2.91  (-3.29%)   ] all lowered earnings expectations in recent days, citing concerns about Europe.”

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Wal-Mart Starts to Beat Out Amazon on Pricing – $WMT, $AMZN

“In an era of serial comparison shopping, Amazon.com Inc. (AMZN) has seemed unassailable. Yet for many kinds of merchandise — the first-season DVDs of “Glee,” say – – shoppers can get a better deal at Wal-Mart Stores Inc., both online or at a superstore.

A study conducted by Kantar Retail, a London-based research firm, compared prices on a wide range of 36 items and found that on average they’re 20 percent more expensive at Amazon than at Wal-Mart. The “Glee” DVDs? At $38.99, they were about $14 pricier at Amazon than Wal-Mart when the study was conducted in April. On goods such as food, Amazon’s prices were almost 60 percent more, though some items are cheaper, the study said.”

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Wynn Resorts Wins a Ruling and Sends Suit Back to State Court – $WYNN

Wynn Resorts Ltd. (WYNN) persuaded a U.S. judge to send its breach of fiduciary duty lawsuit against Kazuo Okada, the company’s former vice chairman whom it’s trying to remove from its board of directors, back to state court.

U.S. District Judge Larry Hicks at a hearing yesterday in Las Vegas granted Wynn Resorts’ request to remand the case to Nevada state court, where it was filed in February. In March, Okada had the case moved to federal court, arguing that the underlying issue was whether he had violated U.S. law by allegedly making improper payments to foreign officials.”

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Brent Rallies a Bit on Speculation Downside is Overdone

Brent is up $0.65 while WTI is up $0.02…

Brent crude rose in London, paring a second weekly decline, on speculation that its plunge to an 18- month low below $90 a barrel was excessive.

Brent’s 14-day relative strength index, a measure of how quickly prices have risen or dropped, was at 19.1 today. A reading of 30 or lower can suggest prices have tumbled too quickly. Brent earlier declined to its lowest since December 2010 after German business confidence fell to the weakest level in more than two years in June, and the Federal Reserve Bank of Philadelphia’s economic index yesterday signaled the biggest contraction in manufacturing in almost a year.

“It’s time for a rebound,” said Hannes Loacker, an analyst at Raiffeisen Bank International AG (RBI) in Vienna. “Below $90 per barrel, the marginal cost projects are not economically viable any more. So some oil companies will have to cut capital expenditure if prices fall further.”

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China and Brazil Agree to Swap $30 Billion Worth of Currency

“Brazil and China will sign an agreement in the coming weeks to swap as much as $30 billion in their two currencies, Brazil Finance Minister Guido Mantega said.

The currency swap, worth 60 billion reais or 190 billion yuan, will be the first step in a broader agreement with Russia, India and South Africa to allow members of the so-called BRICS group of emerging markets to pool resources to better weather the global financial crisis, Mantega told reporters yesterday in Rio de Janeiro.

The agreement, which was discussed this week by leaders of the BRICS at a Group of 20 summit in Mexico, marks another step in a deepening trade between the world’s two largest emerging markets. China overtook the U.S. in recent years to become Brazil’s biggest trading partner, though Mantega said yesterday that the $76 billion in bilateral commerce last year, 17 percent of Brazil’s total, is just the beginning.”

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