Personal Income: Prior 1.1%, Market expects 0.3%, Actual +0.2%
Spending: Prior 0.7%, Market Expects 0.1%, Actual 0.2%
PCE: -0.1%
Comments »Yearly Archives: 2013
Bond Markets Beg for More Debt
“At a time when politicians are squeezing budgets to cut borrowing, the bond market is clamoring for more debt, pushing yields on almost $20 trillion of government securities to less than 1 percent.
The average yield to maturity for the Bank of America Merrill Lynch Global Broad Market Sovereign Plus Index fell to a record-low 1.34 percent last week from 3.28 percent five years ago. Even though the amount of bonds in the index has more than doubled to $23 trillion — bigger than the gross domestic product of the U.S. and China combined — countries from Germany to Rwanda sold debt in the past month at their lowest yields….”
Comments »Confidence Falls More Than Expected in Europe
“Economic confidence in the euro area decreased more than economists forecast in April as the 17- nation currency bloc struggled to emerge from a recession and the bailout of Cyprus renewed debt-crisis concerns.
An index of executive and consumer sentiment dropped to 88.6 from a revised 90.1 in March, the European Commission in Brussels said today. That’s the lowest since December. Economists had forecast a decline to 89.3, according to the median of 26 estimates in aBloomberg News survey.
Business confidence and investor sentiment in Germany, Europe’s largest economy, dropped more than expected in April. European Central Bank President Mario Draghi said on April 19 that the economic situation in the bloc hadn’t improved since the beginning of the month. At the same time, Draghi expects the economy to recover from a recession later this year and economists forecast growth in the second quarter, a separate Bloomberg survey shows.
Today’s survey “supports other evidence that the euro zone is experiencing its longest recession on record,” said Jennifer McKeown, senior European economist at Capital Economics in London….”
Comments »$SOHU Beats Estimates
“Sohu.com Inc. (SOHU), owner of China’s third-largest search engine, posted first-quarter profit that beat analyst estimates on higher online advertising sales.
Net income rose 14 percent to $23 million, the Beijing- based company said in a statement today. That beat the $18.8 million average of six analysts’ estimates compiled by Bloomberg. Sales rose 36 percent to $308 million, compared with the average of analysts’ estimate of $296 million.
Sohu has expanded into online videos and search in competition with Baidu Inc. (BIDU) to diversify its sales channels and depend less on its Web portal business in China, which has more Internet users than the population of any country except India. Revenue from online advertisements rose 41 percent from a year earlier to $116 million, it said.
“Online advertising was better than expected,” Eric Qiu, an analyst at Guosen Securities Co. in Hong Kong, said by telephone before the results. “Most of the ad growth is coming from its portal website and search business,” said Qiu, who recommends buying the stock….”
Comments »Profits Fall for China’s Industrial Companies
“Growth in Chinese industrial companies’ profits slowed in March, adding to evidence the nation’s economic recovery is losing steam.
Net income increased 5.3 percent from a year earlier to 464.9 billion yuan ($75 billion), down from a 17.2 percent pace in the first two months, the National Bureau of Statistics said on itswebsite on April 27. Profit in the first quarter rose 12.1 percent to 1.17 trillion yuan, it said.
China’s stocks fell for a third straight month in April amid investor concern that the recovery in the country’s economic expansion is losing momentum and will hurt corporate earnings. The benchmark Shanghai Composite Index (SHCOMP) closed 1 percent lower on April 26, the last trading day before a three- day holiday ending May 1.
“Profits are only growing in line with sales and with problems of overcapacity and the sluggish global picture, it doesn’t bode well for a speedy return to higher profit margins,” said Louis Kuijs, chief China economist at Royal Bank of Scotland Group Plc in Hong Kong. “Heavy industries especially still face destocking and higher costs, but if there is a silver lining, industries catering to the consumer, like textiles, food and beverages, seem to be doing much better.”
Inner Mongolia Yili Industrial Group Co., a producer of dairy products, reported an 18.6 percent rise in first-quarter net income, according to an April 26 statement to the Shanghai Stock Exchange.
Industrial companies’ revenue rose 11.9 percent in the first three months to 22.2 trillion yuan, according to the statistics bureau statement. That’s down from 13.1 percent in the first two months. The bureau doesn’t break down January and February data due to distortions caused by the timing of the Lunar New Year holiday. No figure was given for March sales.
Lower Estimates…”
Comments »Capstone to Acquire $BHP’s Pinto Valley Mine
“Capstone Mining Corp. (CS), the owner of copper mines in Mexico and Canada, agreed to buyBHP Billiton Ltd. (BHP)’s Pinto Valley mine and railroad in the U.S. for $650 million in cash, marking its biggest acquisition.
Vancouver-based Capstone is expected to complete the purchase of the Pinto Valley copper mine in Arizona and the related San Manuel Arizona Railroad Co. in the second half of 2013, Melbourne-based BHP said today in a statement.
The deal comes as Capstone scouts for producing copper mines in the Americas to add about 100 million pounds of copper. BHP and Rio Tinto Group are among mining companies selling assets to shore up earnings and cut costs after more than $60 billion of writedowns in the industry. The agreement takes BHP’s divestments to $5 billion over the last 12 months, according to the BHP statement today.
BHP shareholders are likely to respond well to the company disposing of smaller assets like Pinto Valley, which have been taking up “too much management time and too much peripheral capital,” said Vincent Pisani, an analyst at Shaw Stockbroking Ltd. “It’s taken some time, but I think BHP are finally getting it,” he said.
BHP suspended mining operations at Pinto Valley in Feb. 2009 and said mining began again during the last quarter of 2012. Capstone said BHP had spent $194 million on equipment and infrastructure to enable operations to resume.
Cash Cost…”
Comments »The Kiwi Continues on it’s Longest Bull Run in Two Years
“New Zealand’s dollar climbed versus most of its major peers before data forecast to show building permits rose to a five-year high, after the central bank said a housing boom could force it to raise interest rates.
The nation’s currency, nicknamed the kiwi, held its longest stretch of weekly gains in two years against the so-called Aussie dollar on bets the spread to the Reserve Bank of Australia’s benchmark rate will narrow. New Zealand’s currency extended a weekly advance against the greenback after data showed the U.S. economy grew less than expected. Australian bond yields fell to the lowest since November….”
Comments »South Africa’s Middle Class Doubles Since 2004
“The black middle class in South Africa, which held its first all-race elections in 1994, has more than doubled in size over the past eight years, exceeding the number of white people in the same bracket and the amount of money they spend.
The number of black South Africans classified as middle class rose to 4.2 million people last year from 1.7 million in 2004, the University of Cape Town’s Unilever Institute of Strategic Marketing said in a statement. South Africa has a population of 51.8 million people.
“South Africa’s black middle class continues to rapidly expand and is more influential and powerful than ever before,” John Simpson, a director at the Unilever Institute, said in the statement, which was e-mailed yesterday. “The black middle class is helping create a vibrant and stable society by increasing South Africa’s skills base, deepening employment, and widening the tax net.”
South Africans in this group now spend 400 billion rand ($44 billion) annually, more than the 323 billion rand spent by 3 million white people classified as middle class, according to the study. The number of white South African in the group rose from 2.8 million in 2004.
High Unemployment
South Africa’s unemployment rate of 24.9 percent is the highest of more than 30 emerging-market nations tracked by Bloomberg. Retail sales advanced 3.8 percent in February from a year earlier, with South Africa’s Reserve Bank keeping its benchmark interest rate at the lowest level in more than 30 years to spur spending….”
Comments »The Philippines Joins Thailand and S.K. in Tempering Currency Appreciation
“The Philippine central bank is considering adjustments to its so-called special deposit accounts, signaling it may limit access to the facility to cut costs and enhance its scope to cool currency gains.
“We would like to consider ways to make the SDA function more as a monetary instrument rather than an investment vehicle,” Governor Amando Tetangco said on April 27 in an e- mail response to questions. “The exact form of these refinements will be made known in time, but as in our practice, any adjustments we will make will be gradual and phased in.”
The possible change in the SDA, which hold about $46 billion, comes after Bangko Sentral ng Pilipinas on April 25 cut the rate it pays on the deposit facility for a third time this year. The monetary authority has lowered borrowing costs, banned foreign funds from the special accounts and revised rules to spur outflows, joining South Korea and Thailand in stepping up efforts to temper currency appreciation.
“The central bank is trying to manage its costs so it will have greater flexibility to intervene in the currency market,” said Ricky Cebrero, executive vice president and head of treasury at Manila-based Philippine National Bank. (PNB) “If the BSP limits SDA access through trust accounts in the near future, some funds may shift to bank deposits subject to an 18 percent reserve requirement. That will further reduce BSP’s costs.”…”
Comments »Asia Trades Mixed, Europe is Up Slightly, and U.S. Futures are Reaching for New Highs
Yields for Italy, Spain, France, and Germany …
Comments »Pensando en Ti
[youtube://http://www.youtube.com/watch?v=8UcHZ4Swu64 450 300]
Comments »Revenue Rollover is a Worrisome Sign
The company’s stock had climbed 22 percent since the start of the year as the maker of Tide detergent and Crest toothpaste turned in better profits for two quarters in a row. Last Thursday, P&G reported even higher earnings. And its stock immediately dropped 6 percent.
What happened? Like so many other big companies reporting results recently, P&G hit its target for earnings but missed on revenue. Nearly halfway through the first-quarter earnings season, Corporate America is still reporting solid profits, with seven of every ten big companies hurdling over Wall Street’s expectations. Sales, however, are another story.
Nearly the same proportion of big companies — six out of ten — have fallen short of revenue targets, according to S&P Capital IQ. The tally so far looks grim: Revenue has shrunk 2.4 percent compared with last year.
“The norm is becoming, beat your earnings, but miss on revenue,” says Scott Freeze, president of Street One Financial.
“Two problems persist: Europe’s ongoing recession and slower economic growth in China. Because nearly half of revenue for Standard & Poor’s 500 companies comes from abroad, it would seem logical to think the problem is just overseas. But many companies with a U.S. focus have also reported disappointing revenue.
Freeze says that revenue presents a more accurate picture of Corporate America’s health. “You can play with the earnings numbers and have them skewed,” he says. “But you can’t mess with the revenue numbers — they are what they are. If people are not coming in droves to buy your products, your revenue’s going to miss even if your earnings beat.”
Aside from Apple’s falling profit and some other high-profile flops, the headline numbers for first-quarter earnings appear solid. So far, 271 companies in the S&P 500 have said earnings are up 5 percent over the year before. And 189 of them have cleared Wall Street’s estimates.
Investors say that’s no surprise. They believe companies set the bar so low that it’s easy to jump over it. The 3.6 percent earnings growth analysts expect to see after all the results are tallied works out to $26.36. That’s just $1 more than the same period last year.
As one company after another turned in weak revenue results last week, analysts, investors and economists started raising concerns about the prospect for future profits….”
Comments »Former White House Budget Director David Stockman: The Fed is Wrecking the Free Enterprise Sytsem
“Federal Reserve Chairman Ben Bernanke and his allies at the central bank haven’t merely
embarked on a misguided policy — they’re a threat to U.S.-style capitalism, says former White House Budget Director David Stockman.
The Fed now determines the level of short-, medium- and long-term interest rates, he told
Newsmax TV in an exclusive interview. “It’s all rigged. This is administered price-setting by 12 people who are not even elected.”
Financial markets now determine prices and “drive the entire capitalist system,” says Stockman, author of the new book, “The Great Deformation: The Corruption of Capitalism in America.”
And it’s the Fed that sets prices in financial markets. “All of the trading today is not based on price discovery as we talk about in free markets or discounting cash flows and earnings in the future,” Stockman says, who headed the Office of Management and Budget from 1981 to 1985 under President Ronald Reagan.
“They’re all trading against what they think the overlords at the Fed are doing.”
Bernanke is “a Keynesian money printer who believes that debt, debt and more debt is the elixir that helps economies grow and people become wealthier,” Stockman says.
“That is utterly wrong doctrine, and it’s nevertheless in the mind of the guy who’s running a system. And he has four or five colleagues who believe the same, and they are dangerous, and they are wrecking our free enterprise system.”
The notion that we don’t have inflation now is off base, Stockman says. “The issue isn’t inflation of goods and services,” he says. “There is another inflation called asset inflation.” And that’s running rampant, Stockman says….”
Comments »Cool Chart Showing a Wide Range of Overbot and Oversold Markets
Old Man Buffett’s Favorite Indicator Has Ground to a Near Halt
“After a big first quarter rail traffic has come out of the gate extremely soft in Q2. The average pace of year over year expansion in intermodal traffic was a very healthy 5.3% in Q1, but has averaged just 0.08% so far in the first 4 weeks of the second quarter. This is a trend that has been developing since early March as the pace of expansion has averaged just 2.11% since the first week of March. Overall, that brings the 12 week moving average to 4.01%. That’s still a healthy pace, but the recent slowing is a trend worth keeping a close eye on. If rail traffic is any indicator it’s possible that economic growth peaked in Q1.
Here’s more from AAR…”
Comments »Lotz of Data to Chew On This Week
“….The first week of any month is always big, and so this Wednesday (May 1) through Friday will be jam packed with fresh ISM reports (for Korea, China, Europe, and the US), initial jobless claims, and of course the big Non-Farm Payrolls report on Friday.
Monday and Tuesday will also be big, as we get Personal Income and Spending, Chicago PMI, Case-Shiller, and Consumer Confidence.
Other big events this week include auto sales, the ADP jobs report, and FOMC decision, productivity, the trade balance, and construction spending.
By the end of Friday we should know a lot more about the economy.”
Comments »Albert Edwards: $10k + Au, Stocks Will Melt Down, and Hyperinflation Will Come
“This is always reassuring. SocGen strategist Albert Edwards remains an ultra-bear, and predicts everything will go to hell.
In his new note he writes:
We still forecast 450 S&P, sub-1% US 10y yields, and gold above $10,000
My working experience of the last 30 years has convinced me that policymakers’ efforts to manage the economic cycle have actually made things far more volatile….”
Comments »Asia Opens Mixed
Documentary: Blood in the Mobile
Just got back from a little time off.
Not having a mobile phone is not enough for me to be disconnected every now and then.
Given the proliferation of the mobile; here is a topic not spoken about as with many hidden realities tied to our consumer culture.
Remember as a consumer we collectively have the power to force change. If we are not informed and make no demands upon corporations then they will always seek the cheapest means to produce products we consume; ultimately that means we are guilty of child slavery, murder, and disregard for the planet.
Cheers on your weekend!
[youtube://http://www.youtube.com/watch?v=m5TwT69i1lU 450 300] Comments »Behold the Power of the Search Engine
“Google, as many researchers know well, is more than a search engine—it’s a remarkably comprehensive barometer of public opinion and the state of the world at any given time. By using Google Trends, which tracks the frequency particular search terms are entered into Google over time, scientists have found seasonal patterns, for example, in searches for information about mental illnesses and detected a link between searching behavior and a country’s GDP.
A number of people have also had the idea to use these trends to try achieving a more basic desire: making money. Several studies in recent years have looked at the number of times investors searched for particular stock names and symbols and created relatively successful investing strategies based on this data.
A new study published today in Scientific Reports by a team of British researchers, though, harnesses Google Trends data to produce investing strategies in a more nuanced way. Instead of looking at the frequency that the names of stocks or companies were searched, they analyzed a broad range of 98 commonly used words—everything from “unemployment” to “marriage” to “car” to “water”—and simulated investing strategies based on week-by-week changes in the frequencies of each of these words as search terms by American internet users.
A listing of the 98 words used in the study, from most effective at predicting market declines (debt) to least effective (ring). Image via Scientific Reports/Preis et. al.
The changes in the frequency of some of these words, it turns out, are very useful predictors of whether the market as a whole—in this case, the Dow Jones Industrial Average—will go down or up (the Dow is a broad index commonly considered a benchmark of the overall performance of the U.S. stock market).
The strategy was relatively straightforward: The system tracked whether a word such as “debt” increased in search frequency or decreased in search frequency from one week to the next. If the term was suddenly searched much less frequently, the investment simulation bought all the stocks of the Dow on the first Monday afterward, then sold all the stocks one week later, essentially betting that the overall market would rise in value.
If a term such as “debt” was suddenly searched much more frequently, the simulation did the opposite: It bought a “short” position in the Dow, selling all its stocks on the first Monday and then buying them all a week later. The concept of a “short” position like this might seem a bit confusing to some, but the basic thing to remember is that it’s the exact opposite of conventionally buying a stock—if you have a “short” position, you make money when the stock goes down in price, and lose money when it goes up. So for any given term, the system predicted that more frequent searches meant the market as a whole would decline, and less frequent searched meant it would rise.
During the period of time studied (2004-2011), making investment choices based on a few of these words in particular would have yielded overall profits several times higher than a conservative investment strategy of simply buying and holding the stocks of the Dow for the entire time. For example, basing a strategy solely on the search frequency of the word “debt,” which turned out to be the single most profitable term in the study, would have generated a profit of 326% over the seven years studied—compared to a profit of just 16% if you owned all the stocks of the Dow for the whole period….”
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