FTI Holiday Retail Sales Forecast : a drop of 1-2%
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Market Mover Tuesday: 3Q GDP revision, Case Shiller Home Price Index, Consumer Confidence, FDIC bank update & Fed Meeting Minutes
Update: Here we go, 3Q GDP first revision is 2.8% (from original read of 3.5%) Consumer spending revised down to 2.9 from 3.4, final sales up 1.9 vs 2.5..When you strip out govt spending looks like this GDP would have been negative…
Heavy day for data:
…Tuesday’s calendar is heavy on news about housing and the consumer, plus there is the revision to third quarter GDP. The Fed’s Nov. 4 meeting minutes are released at 2 p.m. and the FDIC gives an update on banks and bank earnings. There is an auction of $42 billion in 5-year notes at 1 p.m.
Fed minutes are being watched carefully both for an economic update and any inkling of what Fed policy makers are thinking about what could trigger a move in rates. The Fed’s last statement signaled the market that there are no changes coming from the Fed any time soon, which is conducive to the risk rally.
The S&P/Case Shiller home price survey is released at 9 a.m. while consumer confidence is reported at 10 a.m. GDP is released at 8:30 a.m.Economists expect to see GDP revised to show growth of 2.8 percent, down from the initial reading of 3.5 percent. LaVorgna’s estimate is for 3 percent. “I’ve got a downward revision, largely on the back of softer construction spending and a wider trade deficit,” said LaVorgna. He said one wild card that could add to the number is capital spending, which was surprisingly weak in the first report.
“The other thing you want to look for is we get the first read of economy wide corporate profits. In the first half of the year, corporate profits grew at a nearly 20 percent annualized rate. I think you’re going to see a pretty good corporate profit number based on the fact that nominal GDP went positive,” he said.
Traders are split about how long the tightly linked risk trade will work. Steve Massocca, managing director at Wedbush Securities, said Monday that he’s hedging his bet and is beginning to short assets that benefit from the trade.
Sounds like the love affair the markets are having with the weak dollar is winding down (Thank Gawd)…
“The dollar is getting close to 2008 lows, and it could start to become bad news, and you have to prepare for it,” he said. “We haven’t taken the plunge yet but we’re starting to nibble on the idea that the dollar going down is no longer going to create levity.”...
World Bank President gives markets reality check: ‘unemployment may cause loan defaults’ Gee ya think?!
Seriously. That is the CNBC headline: ‘Unemployment May Cause Loan Defaults in US’. Well that is a keeper for the No Shxt Sherlock files. In other news Water is Wet!
Since it is the World Bank President saying it and not we little people maybe the markets will BUY A FRAKKIN CLUE!
Stubbornly high joblessness threatens to trigger loan defaults and drag on consumption next year, hobbling a U.S. economy struggling to rebound from recession, World Bank President Robert Zoellick said Wednesday.
...”You’re going to have problems with delinquencies of credit card loans, consumer loans, people won’t be able to pay their mortgages,” Zoellick told reporters in Singapore. “Some banks are going to continue to be troubled by bad loans.”
Government stimulus spending will likely fuel economic growth through the middle of next year, Zoellick said. After that, consumer spending and business investment must take the baton to boost expansion, he said.
“If you’ve got large scale unemployment, if you’ve got consumers rebuilding savings and deleveraging, I don’t think the consumer is going to play that role,” he said. “What’s the other source of demand?”
Gee that sounds familiar! Cause we have been saying it here at MiM for OVER A YEAR!!
…Governments should execute existing stimulus packages, but hold off on implementing new ones, he said.
Asian authorities should consider ways to tighten monetary liquidity, such as raising interest rates, before asset price bubbles get out of hand, Zoellick said. Asian stock indexes and some property markets have soared since March….
Can you say China bubble? Hong Kong real estate bubble?
Market Mover: August Consumer Confidence way up!
This is from the Conference Board. BIG POSITIVE!
HA! The public feels better now that the healthcare plan was stalling in August, no doubt…
Rick Santelli breaking it on CNBC now, we are up 73 on DOW off Ben and Case Shiller housing numbers let’s see how high we can go off this gem…
54.1 August up from 47.4 July ….consumer expectations now highest since December of 2007…
BAM! DOW now up 105….
Market on ‘Sugar High,’ Economy Still Asleep: El-Erian – CNBC.com
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The stock market spent July on a “sugar high,” rising to levels not justified by an economy that is still limping along, Pimco’s Mohamed El-Erian told CNBC. Despite proclamations from some that the recession is over, El-Erian, co-chief executive officer of the largest bond fund manager in the world, said much more needs to happen before the economy registers real growth.
“The July part of the rally is a bit of a sugar high,” he said in a live interview. “We need final demand. We need a feeling that deleveraging in the private sector has run its course, that people feel confident now to engage in consumption, investment.” It’s not happening yet on the national level, it’s not yet happening at the global level.”El-Erian stuck with predictions from various Pimco executives recently that the economy would be mired in gross domestic product growth of about 1 to 2 percent for the foreseeable future.”We’re not going to go back to where we’ve come from,” he said.
While the banking sector has taken much of the focus during the current recession, El-Erian said it’s now about the real economy, particularly wages and unemployment. Those two areas must recover, and that will take a while, he added.
Update: Market Mover Tuesday: Consumer Confidence drops; Case Shiller Index: home prices down 17% y/y; up .04% m/m, first increase in 3 years — CNBC.com
Update: Timmeh tells China we will shrink our budget deficit!! BWAAAAHAA FRAKKIN HAAAAA!!! Suuuuuure we will…
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Geithner, Donovan (HUD) are meeting with the top 25 mortgage servicers in the WH today, let’s hope we get something meaningful from it….if they simply correct the new appraisal code we can get some movement on refis and purchases and mods..
S&P said its index of 10 metropolitan areas rose 0.4 percent in May after a 0.7 percent drop in April, for an 16.8 percent year-over-year drop.
“To put it in perspective, this is the first time we have seen broad increases in home prices in 34 months,” David M. Blitzer, chairman of the index committee at S&P, said in a statement. “This could be an indication that home price declines are finally stabilizing”. The 10 and 20-city indexes reported positive returns for the first time since summer of 2006.
Sales of new homes jumped 11 percent in June, the biggest monthly gain in eight years, the Commerce Department said on Monday, … Existing home sales rose for the third straight month in June, the National Association of Realtors said last week, surpassing forecasts and feeding optimism about the beleaguered housing sector.
Still, caution is warranted as long as the U.S. unemployment rate keeps rising, economists advised. That rate is at its highest in nearly 26 years and is headed to double-digit levels. Signs of stability are far more likely than prospects for near-term recovery in housing, many economists agree. For a rebound, consumer confidence needs to improve, foreclosures need to start falling from their record pace and potential buyers need to have a sense that it won’t be even cheaper to purchase if they keep waiting.
On that note, Consumer Confidence FELL again, see here- The Conference Board, an industry group, said its index of consumer attitudes slid to 46.6 in July from 49.3 in June.
More after the break:
Moderate in the Middle 