CPI March 2008

Barry,
It is not as bad as you think. Look around you.

1. CPI is inline

2. US Mar Industrial Production +0.3%; Consensus was -0.1%

3. Over the 12 months ending in March, industrial production advanced 1.6%, while capacity use was up 1.9% from a year earlier.

4. The companies continue beating the estimates. Out of 18 companies reported this morning, 15 beat and only 3 missed the estimates.

5. Outside of the financials, the earnings continue growing lower double digits but the stocks have been beaten down 15-20% with the financials. The market is irrational and there is too much of pessimism.

6. I also think, we will have a positive GDP (around 1%) during 1Q08 (helped by 17% jump in exports).

7. Even the financials that have reported so far are beating the estimates.

Wells Fargo – beats
JPM – beats
US Bancorp – beats
State Street – beats
M&T Bank – beats
Commerce Bancshares – beats

~~~

BR: Then what you should do is lever up and go long!

Barry,
It is not as bad as you think. Look around you.

1. CPI is inline

2. US Mar Industrial Production +0.3%; Consensus was -0.1%

3. Over the 12 months ending in March, industrial production advanced 1.6%, while capacity use was up 1.9% from a year earlier.

4. The companies continue beating the estimates. Out of 18 companies reported this morning, 15 beat and only 3 missed the estimates.

5. Outside of the financials, the earnings continue growing lower double digits but the stocks have been beaten down 15-20% with the financials. The market is irrational and there is too much of pessimism.

6. I also think, we will have a positive GDP (around 1%) during 1Q08 (helped by 17% jump in exports).

7. Even the financials that have reported so far are beating the estimates.

Wells Fargo – beats
JPM – beats
US Bancorp – beats
State Street – beats
M&T Bank – beats
Commerce Bancshares – beats

~~~

BR: Then what you should do is lever up and go long!

Armageddon? NO!:
How many of those estimates were revised down?

Nice info. By the way, is there an CPI based index released daily?

J

And of course all those puts expire on Friday..

things could be worse…

Zimbabwe Inflation Hits New Record Of 165,000% –

AMHARARE, Zimbabwe (AFP)–Zimbabwe’s annual rate of inflation soared to an all time high of almost 165,000% in February, according to the latest government statistics obtained Wednesday. In a report seen by AFP, the Central Statistical Office said year-on-year inflation for February stood at 164,900.3% – an increase of 64,320.1 percentage points from the previous month. Official inflation rates have become increasingly difficult to access in recent months as Zimbabwe grapples with a world record hyperinflation.

Don’t those silly Haitians know that clothing prices are down? They should be eating their belts and shoes.

As for all the other good news:

Inflation is at 4% for the past 12 months…guess you could call that “in line”…or not…BTW, as long as you don’t need to eat, you are doing OK…bread up 14.7%, milk up over 13%…

March industrial output is all attributed to ultilities and mining, i.e., energy. But run with the headline, and ignore the trivial facts.

EPS is -25% from last year. Again, WGAS, as long as they are beating lowered estimates, right?

I have to wonder about the relevelance of a goverment report outlining inflation. Anyone who is a consumer knows that prices are moving up hard and fast. I don’t think I need to DOL to tell me my gas and food are more expensive.

OMG anyone been watching CNBC this morning? First of all we get “inflation isn’t bad, it’s only 4%” Talk about moving the goalposts

Second on the trading floor some guy is talking how great it is that shipping and rail companies can pass along their price increases.

(this is now a good thing? sweet jesus)

Dow is up 200 points folks. Exactly why?

Reasons on CNBC

1) JP Morgan says financial crisis is over or nearly so (from the folks who never saw it coming)

2) Somebody on the show repeats “we are 80% to 90% over it” Where the heck is that econometric model anyway? Reminds me of Fischer telling us Fed cuts were in the 7th or 8th inning

3) Mark Haines says “we’ve thrown everything at the market including the kitchen sink and it still won’t go down”
– not exactly an explanation Mark…

4) Some other guy loves the housing report because this shows serious work being done on housing inventory. Hey down means up.

Anybody got anything that makes any sense?

okay, so it’s probably not Armageddon. that doesn’t mean it’s going to be nirvana either. if the economy and market go sideways for awhile, then the very low return of the market is just not worth the risk.

whether or not the econ slows, grows, or is in recession isn’t the issue when talking about markets and valuation. the issue is given the current price of the market and the level of expected future earnings, what rate of return is implied at current prices and EPS estimates….and does that rate of return compensate for the risk of the market?

SPX earnings grew peak to peak at roughly 6% for the past 100 years. the last peak SPX EPS occurred last summer at $85. Grow those earnings at the historic 6% average for 5 yrs. You get 2012 SPX EPS of $114. Give the SPX a historic average trailing PE of 14x and the SPX is about 1,600. That is a CAGR of about 3.3% from todays SPX price of 1,350. not impressive return for the risk of the stock market. If the SPX today was at 1,100, that would imply a CAGR of 8%….a good return for the risk of the market.

that isn’t a forecast at all, but it’s a way to look at what return is implied by current price and earnings outlook and whether that return compensates for the level of market risk.

Lets see

1st quarter real retail sales down 4.2%

1st quarter industrial production down 0.1%

1st quarter manufacturing down 0.5% (population grows 2% per year and dollar is weak)

housing starts down 34.5%

oil up to 115

dollar down to 71.4

food riots

war hawks talking Iran (maybe 200 dollars a barrel if we do them, with gas lines and 10 dollars a gallon at the pump)

China is very unhappy with us over our actions in Tibet

IMF wants to sell gold so we can forgive 3rd world debt (thats our gold and money BTW, or 18% of it is,) so they can buy food at high prices from our agribusiness cartels who have done what Big Oil has done, limit supplies to drive up prices.

IMF wants to use their gold sales, maybe to loan us the money for when China stops and starts dumping the dollar (welcome to the new Zimbabwe – USA, those who borrow from
IMF are doomed, thats why IMF can not loan anyone money anymore)

The lie that is CPI is 3.98%, and they say gasoline only went up 1.3% from last year (LOL 2.55 in 2007, 3.28 in 2008, thats like, 30% ), so we know it is 7-10%, but CPI says we only eat food that is not going up in price as much. And we pay for this crap.

And stocks go up. Why? So the big guys can who drive them up can short them and then sell what they own, as the suckers fall for the line “we are at the bottom, come join us, don’t be left out”, and buy in only to see them fall back again.

This is your life America, living the Big Lie, and being conned out of your jobs and money. Crony Capitalism = globalization and free trade, ain’t it a wonderful thing.