I am off to a few meetings/appearances this morn, so I will miss the mornings data releases:
Housing Starts — 8:30 AM
Producer Price Index — 8:30 AM
Be sure to check out Peter Boockvar’s first take on the data.
And feel free to jump in to discuss the data as it gets released.
Category: Weblogs
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
Housing starts in the U.S. unexpectedly fell in July, pulled down by multifamily dwellings, while single-family starts which make up most of the industry rose to the highest level since October. The 1 percent decline in starts to an annual rate of 581,000 was the first drop in three months and followed a 587,000 rate in June, the Commerce Department said today in Washington. Construction of single-family houses, which account for 75 percent of the industry, rose 1.7 percent to a 490,000 rate, today’s report showed.
loomberg) — Wholesale prices in the U.S. fell more than forecast in July as energy costs receded, capping the biggest 12-month drop on record and showing inflation will not be an immediate concern for Federal Reserve policy makers. The 0.9 percent decrease in prices paid to factories, farmers and other producers followed a 1.8 percent gain in June, the Labor Department said today in Washington. Excluding food and fuel, so-called core prices unexpectedly fell 0.1 percent.
Didn’t miss them after all did ya BR?
1st drop in three months on housing starts?
It pretty much sounds to me like the 10y yield needs to get back down below 3%. Or is it that those TARP recipients are just holding onto their cash for the CRE shoe to drop, and/or a wave of credit card charge-offs, and/or a move back towards some semblance of M2M?
Wholesale prices?
Well it doesn’t make much sense to conntinue to pay $72+ for oil to have it floating around harbors does it. Oh wait…I forgot that all those “genius” commodity traders needed to get their bonuses…Well SURE, it makes sense now! Cue the bonuses, cue the commodities selloff!
another important data release:
Cargill 4Q Profit Falls 69% On Fertilizer, Processing Slump
9:32 AM ET 8/18/09 | Dow Jones DOW JONES NEWSWIRES
Cargill Inc.’s fiscal fourth-quarter earnings fell 69% amid further declines at its fertilizer and processing operations and a loss at its risk management and financial services unit.
Privately-held Cargill is a bellwether for the global agribusiness sector, with operations in more than 60 countries and revenue of $120 billion in its last fiscal year. The company has struggled as the processing and fertilizer units that had buoyed it through falling commodities prices both weakened.
@BR 8:51 am
“Housing starts in the U.S. unexpectedly fell in July,…”
There’s that word again…do people even know what ‘unexpectedly’ means?
@BR 8:56 am
“…fell more than forecast …”
…been hearing a lot of that one too.
@karen
News from the farm…
When milk prices are depressed, you have to cull herds of dairy cows…When you don’t have herds of dairy cows to feed, you don’t need hay & corn…when you need less hay & corn…you get to Cargill…
@mobiaxis
In November 2008, people voted for change…but “unexpectedly”…
Headline: Looks like deflation will check inflation in check.
@karen
and I’m sure you know this aspect of it, but, the “risk management” loss probably came as result as their commodities HEDGERS aren’t as qualified as those BIG BONUS guys sitting in manhattan…
Sure helps to have taxpayer $$ at your disposal…
and there is the horror from Vermont.
http://economistsview.typepad.com/economistsview/2009/08/odd-wsj-story-on-vermont.html#comments
where they don’t have the same problems the rest of us do
contrasted with Florida
http://www.nytimes.com/2009/08/16/weekinreview/16cave.html?_r=2
great juxtaposition of articles, willi! but that first one takes the cake.
Vermonters my secede or simply join the Great White North at this rate.
LB’s idea of hedging with TBT was a reasonable one, but not every good idea works out. LB will cut this one today.
No point in taking losses to prove a point. The y/y PPI was spectacularly low. Gold bugs, be very afraid.
@LB
Wannabee GOLDBUGS and seekers additional bullion are licking their chops and dreaming of the number 840…
then there is this! fake valuations of assets. the continuing saga
http://economistsview.typepad.com/economistsview/2009/08/how-should-complex-securities-be-valued.html
Anyone know what Cashin was talking about this morning? We will see “historic trading” in the next 6-8 weeks?
Red October™, baby! LB wonders whether someone at UBS knows about a big European bank failure…
CV: I am on that – buy gold late in the year – bandwagon.
Hi Barry,
I just wanted to thank you again for presenting Peter Boockvar’s notes in your Think Tank.
Good show
Out come the bag-holders, I mean, dip-buyers.
@lb: Just watched his video online. He is saying what most of us have been saying – sharp correction in early Sep. I still think today we will put in a indecision doji. Opex week is always interesting to watch, isn’t it?
This week could be 3 up days and 2 down days, let’s hope LB guesses correctly…. we are flat/slightly long today.
@manhattanguy
agreed on the indecision doji…They’ll draw this thing out as long as they can…They’re going to make you SLEEP on your shorts if you want to go that way…
Seeing how the “forecasted estimates were unexpectedly less bad”, is that why the markets have bounced up this morning?
@going broke
I’d say the markets are where they are thin morning to give the “illusion” of a H&S formation before the floor drops out on a 10% correction that plays out over the next few weeks…
FXE, oil and gold are all bouncing perfectly. This is setting up like a textbook short. Patience….
Indeed me bredren… indeed. My nose catches a faint whiff of distribution this morning…
@LB,
i wrote about that cashin comment in another thread, heard that also.
I’ve got my eyes set on around 991…Anyone have any better ideas?
“drop of 10.2% in gasoline prices hit the headline # lower while a drop in car and truck prices impacted the core.”
Ah yes, that’s what liquidating excess inventory will do to you. And what kind of pricing power will they have going forward with all that excess capacity in the industry that we’re helping to prop up?
The € has a little bit of room overhead here, but not much. Enough for another 5 pts on SPX, perhaps.
I was waiting on 990 CV… thats my “start looking at SDS” number.
36.30 on USO is my “start looking at SCO” number.
oh btw the peeps, I smell deflation still in this data. unexpectedly of course.
@ben22
BTW ben…now it’s up to 3,500 cts on the 3/10 25′s if you kno what I mean…
Shorts are salivating here. Not sure if that means the areas of resistance are just going to be areas of short squeezes, but that’s my concern. Otherwise, 990 looks like a good place to start. I would say 1000 is the line in the sand where the “bear trap” may get sprung.
XLF making a “padded bra” formation – a delightful double top with bare shoulders.
@LB
SPX ramping for the “quadruple Evel Knievel” formation…
It’s official!! Aug 18, 2009, 12:18 p.m. EST
Global recession over, but will leave scars: IMF By Rex Nutting
WASHINGTON (MarketWatch) — The global recession is over and a recovery has begun, Olivier Blanchard, the top economist for the International Monetary Fund, said Tuesday. “The turnaround will not be simple,” Blancard wrote in an article released by the IMF. “The crisis has left deep scars, which will affect both supply and demand for many years to come.” Growth is coming for most countries, he said, but it won’t be strong enough to reduce unemployment for a while. Potential output may have been permanently reduced. Growth is still highly dependent on government stimulus from fiscal and monetary policies. Sustaining growth “will require delicate rebalancing acts, both within and across countries,” he said.
C at a key resistance zone here at $4.14.
Even as one recession ends, the seeds for the next have been sown. The wages of sin.
LB just watching. SCO/DUG/DZZ are the targets du jour.
Whatcha think? One more thrust across the board?
I’m not sure I-Man…
They already covered the part of the gap that was exposed…
But a 5 wave a=c could probably get you to 997…I counsel nibbling…
@I-Man
The “conspiracy” part of me thinks that possibly we level off in the 990 – 991 area and hang there all afternoon…
If you want to go “short” at 3:55 PM, they’re going to make you sleep on that position…
Then, tomorrow AM, the market gaps up to 997, makes those scared shorts run for cover, then quickly pulls back…
Anyone else seeing the fireworks in FXI?
Crude and China are puttin’ on a show. I see the spx 990-995, so nibbling seems appropriate for shorties.
Note that LB’s nibbles are mostly at oil, oil stocks and gold because of the ever-present PUMP for financials.
Giles must have fixed the bloody machine over at 85 Broad. Of course, Thursday he will be OFF – for the cricket.
I’m thinkin 993 would be a possible number for today… that was the intraday high of the spinning top from 7/31…
You know there’s that saying that the market hates uncertainty. But how much more uncertainty on a grand scale could you have than the prospects for this recovery? I do believe that old nugget only applies to a market in a funk, not one high on hope, like this one.
another data point that points to recession over (?)
Edmunds.com: Sales Activity From ‘Clunkers’ Is Fading Fast 1:08 PM ET 8/18/09 | Dow Jones
The dramatic jump in auto sales attributed to the “cash for clunkers” incentive program is fading fast, according to Edmunds.com, which said automotive purchase intent slid 31% from its peak in late July.
U.S. auto sales staged a partial recovery in July after the overwhelming demand for the government’s incentive program. Declines narrowed for large auto makers General Motors Co. and Toyota Motor Corp. (TM), and Ford Motor Co. (F) posted a small year-over-year rise in sales, its first in 20 months.
The summer housing rally was another Cash for Clunkers. Plenty more foreclosures where that lot came from.
LB is taking positions in the markets one at a time as they close, gold first, then oil, and finally equities.
Bear in mind that early tomorrow morning may see moves completed that were started today, i.e. a bit more rally.
SLV sure has been draggin ass relative to GLD today… hmm…
Saw that even early this morning, I-Man. Got ZSL? LB has started some SCO, DZZ, playing small for now.
not sure about gold but the trade on silver remains on the short side imo.
@karen,
I am starting to sense that you might be thinking that things aren’t so great…. .lol.
zsl was a huge bargain recently in the low 7′s. Now was everyone on board again this time like they were the last time it went there and quickly ran to above $10?
I’m in, holding for more than a day too.
karen
I guess all that “pent up demand” wasn’t so great after all; even with subsidization. That’s not too bullish.
Boy, those perma-bulls are going to have to go back to the drawing board on trying to explain how the consumer is on the come back and the recovery will be much stronger than we think.
@CV,
re: contracts. Yes, I see it. I think our big question now is if stocks can move up while the dollar does. That happened very early during this countertrend rally March 19 – April 20. It can happen again, (you are right, Kudlow would wet himself over something like that) maybe again for a month or so, but it cannot last imo so this could be an early warning signal potentially.
Tiny bit of a steepener going on, 2s/10s. That’s good for LB’s TBT position…
ben, no way the $ and stocks rally together.
This whole rally has been held together by Dollar Unlimited Carry Trade: Toxic Asset Pumping Exercise.
@lb,
yeah, I think if does happen it will be very short lived, 20 trading days is nothing, no longer than that I’d imagine, if it can even go that long.
@ben
toss another 1,000 onto the dec 21′s
@ben
someone is gettin ready to repay a carry trade…
CV: LB enjoys a good carry trade unwind. The last one was extraordinarily entertaining. Got popcorn?
Pumping crude into the close at the NYMEX. Melissa Francis must be getting her knickers in a twist.
Added to SCO.
Breach of SPX 990!! Attention, shorties.
It keeps nudging higher with continued RSI divergence…
Not even the computers are excited about buying here!
Redbook:
Prior Actual
Store Sales Y/Y change -4.2 % -4.5 %
http://www.nasdaq.com/asp/EconodayFrame.asp
Highlights
Chain-store sales continue to weaken according to Redbook whose same-store sales index shows a minus 4.5 percent year-on-year rate. Like ICSC-Goldman, Redbook sees August sales weakening relative to July, down 0.7 percent. Redbook said back-to-school demand is spotty but that it’s too early to assess the success or failure of the season. They say consumers are value oriented and buying closer to need.
…Oh ye of great faith…let ye not be surprised if retail sales next reported by the Great Oz mighteth be a little off kilter once again…
…and be careful in the use of the word “unexpectedly”…your unexpected and my unexpected may not coincide..
BNT,
that redbook has unexpectedly been a damn disaster lately. lol. the action in debt and the dollar today is where its at, this is the thread to be on if you are wondering what to be looking at for trades.
Had to grin Ben…at your unexpected use of disaster…long day at the salt mine…
with just over an hour to go into the close, turnaround tuesday is still playing by the book.. nothing will surprise me at this point, but neither will a buying failure…
Dana Telsey on CNBC said back-to-school is looking weak, and she is one of the better retail analysts out there.
Tiptoeing along at spx 989. A bit of late pumping and then a morning rally would be typical for this market.
LB’s best guess is that any rally tomorrow would end promptly after oil inventories at 10.30am. Usually when they run oil up into inventories it falls on the number, whereas if there is a sell-off ahead of the numbers it will rally.
@ben
besides that other thing…
You also have TLT going…
2,000 dec 103′s at PAR
2,000 dec 97′s at 2.50
2,500 sept 95′s at 1.45
@Bruce,
I’m going to start using that word in all my posts. I wonder if I really screw up for clients if I tell them that it was all so unexpected they just won’t care. I think not….
@LB,
agree on Telsey, she’s solid, says what sees from what I can tell. I think back 2 school should tell a lot. I did some ground floor work this afternoon by going to target and two malls in DE as school starts here in about a week for a lot of the higher end private schools. There are lots of deals, even defacto price cuts by Apple so we’ll see if the lower prices attract customers or if retail remains stuck with the deflation spiral and no pricing power at all. I’m betting on the latter and have shorted a few retail names in particular rather than using an ETF for that.
@LB (2:56)
Agreed…I-Man pegged 993 earlier…He might be right…
I said before that anyone who wanted to get in today will have to have the guts to sleep on it tonight (and probably even suffer an early AM pump to 997 – 1,000 or so…
@ben22
“I’m betting on the latter and have shorted a few retail names in particular rather than using an ETF for that”
I bought 2011 puts on Macys last week when it ran up…Hell, if it goes bankrupt by then I could hit a 14 bagger…I’m already up 25% on the puts tho so one big move down and I might just ring the bell…
I wouldn’t want Eddie Lampert or someone coming in and spoiling my party down the line…
@CV,
Interesting, hadn’t looked at any of the options on TLT today. I’m all over the place right now. We have had to unwind about $18 million in positions in the last two days so in between looking at a bunch of screens while on and off the phone almost all day, … what a blast this is. I’ll sleep like a baby every night this week for sure, I couldn’t even manage to stay awake for BR’s appearance last night, I think I lost it about 10 minutes before he came on, tv was on when I woke up this morning.
CV: “anyone who wanted to get in today will have to have the guts to sleep on it tonight”
Johnny Retail buys early in the morning and sells in the afternoon. Don’t be Johnny.
@Ben
I still have my eye on the TLT calls because I only took off half my position there yesterday…
It looks “possible” for a move down to 93.45…If that happens, I’m going to muscle back up to my previous position…
Re: I-man’s call above.
I had missed that earlier.
that might end up being almost exactly right. I is the man.
This may be all she wrote. The € at resistance now. Dipping a toe.
SCO, DZZ, DUG. Plenty of cash, LB is expecting a little more rally action in the morning.
Had to run out for the last hour and a half… see I didnt miss much really, besides an obvious pump in crude.
Did nothing today. Nada. Zilch. Hand sat.
Pondered that the “they” might run USO up to 37.5 ahead of inventory numbers tomorrow AM… which would be an excellent place to hit up the SCO. I almost pounced a few times earlier today, but didnt feel like getting gamed on intraday reversal patterns that never panned out.
Never did hit 993 on SPX tho… maybe we see that for a spell in the AM… but more likely a shot at taking out what used to be support at 994- 996… which should fail if we really are correcting here. It would seem kinda logical to have the SPY top out this time at 100… which would be right around SPX 996 I think.
UUP hung tough today on support… that was grand to see.
So… expect some morning shenanigans, and then dread gets back to shorting USO and SPX right around 10:30 EST.
That’s it for LB. Pretty much in agreement with the man from Dread Capital there on the morning shenanigans.
Watch the dollar overnight. Life is currency. The rest is just details.
Left was that you who snagged some SCO at 16.5? :)
Life is currency. The rest is just details.
A new poster for the office?
I-Man at 4:30 pm
SCO @ 15.98 :)
Good snag….