Morning Call [8:18am ET] This morning we get to look into the US durable goods report to see how bad off the consumer demand for discretionary goods has been. Yesterday, Rick Davis’ Consumer Metrics Institute reported the US economic data he sees has now dropped to the lowest level since late November 2008 and that the current contraction in consumer demand for discretionary durable goods has extended for more than 6 months.
Moreover, he reports, the day to day level of the year-over-year contraction is now worse than a similar reading of the 'Great Recession' of 2008 was after 6 months, stating that the 2010 contraction has now inflicted 43% as much pain on the economy during its first 6 months as the 'Great Recession' did during the first 6 months of that slowdown. He opines that the 2010 contraction (i) has not yet formed a bottom, and (ii) is now likely to last longer than the 2008 event.
In a broader perspective, his Daily Growth Index presently ranks, since 1947, among the lowest 6% of all calendar quarters of GDP growth and that roughly only 1 in 17 quarters of GDP activity have been worse.
Davis concludes “the duration of the current contraction event is becoming a real problem.”
Even Fed chairman Bernanke and Bank of England governor King are now making speeches calling for Quantitative Easing. More QE usually is a boost for precious metals prices unless, of course, the central bankers are suppressing it (which is why the market is demanding much greater transparency from these key players).
http://finance.yahoo.com/news/Bank-of-England-chief-says-apf-3334221110....
So this morning, traders will be watching the US Durable Goods Orders for June. Prior to release of the data at 8:30:00 AM ET, Econoday summed up the situation thusly, “Durable goods orders in May declined a revised 0.6% after jumping 2.9% in April. Excluding the transportation component, however, new durable orders rebounded a revised 0.6%, following a 0.9% decrease in April. The big negative in the report was the transportation component which dropped 6.9% in May-tugged down by a 29.6% plunge in the volatile nondefense aircraft subcomponent. Advances were widespread in other components. Looking ahead, we may see some softening in the underlying trend for new orders. The new orders index in the ISM manufacturing report eased to 58.5 in June from 65.7 in May, with 50 being breakeven. But a rebound in aircraft likely will boost the headline number.”
Aircraft orders for planes to be built in five years will have no impact on the market, which is why I focus on the work of the Consumer Metrics Institute, and watch the charts of UPS (UPS) and Federal Express (FDX).
Should the consumer durables data be dour, the gains in UPS and FDX made on Monday with the gap higher open will be lost with a gap lower open. For some clues, we turn to international markets.
Earlier today, the Asia-Pacific equity markets were broadly higher, at least until the last hour of trading in India, where after almost touching a 52-week high, the Sensex BSE 30 stumbled a bit.
The European bourses are now mostly soft, which is why India went south so quickly at the close.
But so far the US futures are mixed.
Have a great day.
CTA Trading Desk Post-Close Report
No new information today – with the summer doldrums setting in traders headed for the beach. A truly unremarkable session.
If prices decline tomorrow morning we would expect buyers to come into the market between 1090 and 1100. Many traders and money managers seemed to be leaning short as the S&P recently pierced 1040 briefly, and they have been scrambling since then to add risk as the quarter draws to a close.
For the time being we will assume that prices have further to run on the upside as long as S&P 1080 holds. If the market breaks above the June high of 1132, the subsequent price action will give us clues whether this rally has staying power. In doing so, the S&P 500 would then have broken the pattern of lower tops and would force under-invested managers to increase long exposure. However, whether that demand is enough to overcome natural profit-taking will be the ultimate tale of the tape.
Have a great evening
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Comments
Cara 100 Ratings Changes
Good morning.
BRCM - PT Raised from $43 to $47 @ Brigantine. Buy
BRCM - PT Raised from $41 to $42 @ FBR. Outperform
CCJ - Cameco downgraded to Neutral from Outperform at Macquarie based on valuation.
CHRW - C.H. Robinson upgraded to Outperform from Market Perform at BMO Capital
following the better than expected Q2 report. Target $73
FSLR - PT Raised from $138to $173 @ Auriga. Buy
Durable Goods Orders - June 2010
Released on 7/28/2010 8:30:00 AM For Jun, 2010
Prior Consensus Consensus Range Actual
New Orders - M/M change -1.1 % 1.0 % 0.4 % to 4.0 % -1.0 %
(From Econoday)
CPST
I remember some were interested in this one.
08:35:31
Capstone Turbine Corp To demonstrate heavy duty hybrid electric drive system with major US Truck OEM
- Capstone Turbine Corporation initiated a demonstration project with a major U.S. manufacturer of Class 5 through Class 8 heavy duty trucks that will utilize a Capstone 65kW microturbine as a clean, efficient range extender in a hybrid electric drive system. This truck will be the first to take advantage of the complete Capstone Drive Solution, which includes the Capstone microturbine along with liquid cooled power electronics, permanent magnet traction drive motor and vehicle power control system.
- The Capstone Drive Solution will make it easier for vehicle manufacturers to integrate microturbines into a series hybrid electric drivetrain. As part of its recently announced joint development agreement with CalMotors, the Capstone HEV product offering will now include inverter drives, traction motors and a vehicle power control module that will seamlessly integrate with Capstone 30kW and 65kW microturbines.
- The inverters and traction motors are mobile hardened versions of the proven Parker Hannifin industrial motor drive products. The Capstone microturbines are able to operate on traditional liquid fuels such as diesel and biodiesel but can also utilize alternative fuels such as natural gas without sacrificing efficiency. This makes the Capstone Drive Solution suitable for a wide range of electric vehicle applications.
2 Questions
1. CTA Trading Desk: [Very good report last night]Why did you use actual days [weekend & holidays]in your count vs trading days in your rally swing data?
2.Community members: [I have a Stockchart.com account.] Anyone know how to pull up S&P Sept futures on Stockcharts, or on what charting service [free I hope]they can be found?
Thanks!
Re: 2 Questions
Unless you specifically need the sept contract (or any other contract) for some reason, Finviz.com has a near realtime feed for all futures. I haven't looked, but I assume what they use is based on the the continuos contract, thus alleviating issues regarding contract expiration, trading volume, etc. It's very good, (and free).
fnviz.com
Re: 2 Questions
Finviz.com Sorry for the double post. Tried but can't delete mine.
Re: 2 Questions
Free streaming futures charts:
http://www.futurespros.com/charts/real-time-future...
toby,
not sure, think you are in active... was thinking ' bcon '....
aiki100, Fox1 & baz22
Thanks fellows, I'll check it out.
Re: 2 Questions
Why not go directly to the CME Group? 5min, 15min, and up to weekly charts for all contracts
http://bit.ly/R55E3
Re: CPST
Thank you, Vad.... been compressed for over a year.
Re: 2 Questions
Bev,
1. Technical analysis is more art than science and no one gets it right all of the time - meaning that sometimes trading days work better, sometimes calendar days work better. That count was calculated by Patrick's personal preference only.
2. Futuresource.com (free but delayed)
.............
trying to guage ' vrtx ', as nearing cycle low.. phase 3 Hep C follow up this qt... sure a big pharma is watching results very closely..
Re: 2 Questions
Bev, take a look here.
http://www.barchart.com/charts/futures/SPU0
Barcharts is a nice site to nose around, lots of good data.
...
' aray '... new distribution contract with Siemens in June.. I may be mistaken, but beleive CEO helped found Intuitive Surgical... could be a decent long shot, as has been held in check for quite awhile... dd
Re: ...
You might be thinking of Fred Moll at HNSN who earlier was at ISRG.
Re: 2 Questions
Thanks Mr Cara. I was just wondering if there was something special of regular days over trading days. Please pass my praise on to Patrick for me. I look forward each night to his post reports.
Re: 2 Questions
Telestar3d... Very nice ! Thank you...
C+H Questions for VAD
Big thoughts on a slow day.See attached chart.
1. How low can a handle go before it is invalid? Is it proportional to the depth of the cup?
2.Do the higher resistance points (arrows) limit this as a tradeable set up.
3.If this was a tradeable setup, would trigger placement be at the rim or above 71.00. FCX often displays round number resistance.
Bob
FYI I did not bid this because of 2,3 and overall market dullness.
stock ideas
vad,thanks for the update on CPST....I do have some long term holds and this is one, looking at buying some NNVC as a similar position. Baz22's ARAY looks interesting and if will plop under 6 will establish a position. Baz22's ideas have the ability to rapidly outstrip my investable $$$s but do appreciate tham all. Re-read the astrology folks prognostiations about the end of this month and coupled w/stochastics on SPX being extended again am being a bit cautious......have a great day everyone.......
Re: C+H Questions for VAD
bobbyo,
I take it, you mean the area marked by green rectangle. This is more or less valid setup, with two flaws:
1. Volume is not really right. I prefer volume configuration to repeat the formation, dropping off toward the bottoms of both C and H, and rising toward to rim. This pattern is not pronounced here.
2. Time of the day is not very conducive. Lunch time at the height of the summer... things are generally locked in a narrow range... hard to count on breakouts, really. So, your decision to refrain from the trade because of "overall market dullness" is what I'd do as well.
As for those resistance points, well... they provide an additional consideration for partials, nothing more. 71 as a trigger - generally yes, although in terms of FCX is not always easy to determine exact price level - stock is so volatile that it trades in fuzzy "areas" rather than in exact numbers.
Lalwani's Weekly Report on India
IN THIS REPORT:
· Interest rates increased on stubbornly high inflation and strengthening economy;
· After a 16% deficit in June, monsoons recover sharply in July, traditionally the wettest month of the June-September season;
· After last year’s worst drought in 37 years all eyes are on whether the Rain Gods will be kind this year as only 40% of arable land is irrigated and 60% of farms rely on rains for crop production;
· Foreign Direct Investment sector cap in defence equipment to remain at 26%, dashing hopes of an increase to 74%;
· Our forecast of corporate earnings to grow 22% this fiscal year remains unchanged;
· SENSEX hovers near high of the year and would be 1000 points higher were it not for weak global sentiment on caution about European sovereign debt crisis;
· £100 invested 5 years ago (excl dividends and inflation) is today worth: India’s SENSEX: £ 247; UK’s FTSE: £101; US’s Dow Jones IA: £110.
E mail: d.lalwani@astaire.co.uk
HomePath Loans--buying Fannie repos
Following up from last night's question on purchasing REO's as investors: HomePath loans are terrific for buying Fannie Mae repossessed homes. They will fund to residents AND investors no strings attached. They even offer funds to renovate and an appliance incentive((!)so many REO's are damaged). They just really want to offload the inventory to a good cause. Low down payment great terms. The hitch: your bank will feign ignorance so you will have to dig around and find a broker who does them in your state. Ask a local Realtor who is listing the properties if they know who is funding HomePath in your area. You can search REO's on the Fannie site: http://www.homepath.com/ just plug in your zip code.
Another site worth your time is VA 'acquired homes': you don't have to be a Veteran (at a certain point they open the bidding) Investors only need 5% down. You must bid via a VA vendee/Realtor: https://va.equator.com/index.cfm
As long as these GSE's are alive their REO's will fly off the shelf. Happy shopping!
SEC Says New Financial Law Exempts it From Public Disclosure
"Under a little-noticed provision of the recently passed financial-reform legislation, the Securities and Exchange Commission no longer has to comply with virtually all requests for information releases from the public, including those filed under the Freedom of Information Act."
"The law, signed last week by President Obama, exempts the SEC from disclosing records or information derived from "surveillance, risk assessments, or other regulatory and oversight activities." Given that the SEC is a regulatory body, the provision covers almost every action by the agency, lawyers say. Congress and federal agencies can request information, but the public cannot."
http://tinyurl.com/27xgtvt
I think I have seen this before
From
http://home.comcast.net/~lcmgroupe/2010/Article-Su...
"...the powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations."
Professor Carroll Quigley
Tragedy and Hope: A History of the World in Our Time (1966)
President Bill Clinton’s Georgetown Professor
Re: I think I have seen this before
gforce,
Well, if the World Trade Center was targeted because it was a symbol of US capitalism, I'm scratching Basil off my list of places to visit.
Re: I think I have seen this before
Shucks, that would be risky. Perhaps the return is not commensurate with the risk.
Hey Grym, do you think the SDR's will help dicipline the US's obvious structural problems; Americas politicians like to spend just a wee bit too much.
Re: ...
Thank you for the correction, lowell.
Boatload of Charts
I think we are very close to a continued drop down, not the big one....it won't happen that way....and by big one I mean drop to say 500 on S&P, and then rally to whatever, say 650, then drop to 200. A final 60% drop for those buying the dip and buying the hype and the new QE 3 ramp of pimp ( far future, we are still waiting for QE 2).
Cara 100 Ratings Changes
Good morning.
BA - Boeing upgraded to Hold from Sell at Societe Generale. Target $65.
---------
Which Gold Miners Might Be Acquired?
from Morningstar: http://news.morningstar.com/articlenet/article.asp...
futures 7:30 gap up and...?
S&P +5.80 / +0.53%
Level 1,107.90
Fair Value 1,102.81
Difference 5.09
Nasdaq +7.25 / +0.39%
Level 1,877.00
Fair Value 1,870.94
Difference 6.06
Dow +49.00 / +0.47%
Level 10,497.00
we shall see
Re: I think I have seen this before
gforce,
Note: I had to google the term so...
I have no valid opinion on such other than my belief that any form of exchange which has no solid backing is a phantom. This of course has been shown in currencies and with mouse-click money seems to have the potential for a total disaster.
I'd feel better if they simply played for match sticks ;-)
"Perhaps the return is not commensurate with the risk."
Depends on who is involved.
I'm thinking of the radical religious zealots. During WW2 both sides considered biological attacks. The Allies and Nazis withheld due to fears of affecting themselves as well as the enemy. Japan was toying with the use of virus filled balloons in the jet stream attacking our west coast.
If death is seen as a "reward" there would be no such reason to refrain from anything.