When all you read is gloom, turn here for a much different perspective.

Tuesday, July 28, 2009

Investor Confidence Surges to Five Year High

Confidence among institutional investors rose sharply in July according to the State Street Index report released on Tuesday.
Unlike other consumer and investor confidence surveys, the State Street Index measures institutional investor confidence by looking at actual levels of risk in their portfolios. This is not a subjective attitude survey. It measures confidence directly by assessing the changes in investor holdings of equities.

The index climbed 3.6 points to 119.4 for a five-year high. According to the State Street press release Tuesday, "Investors are now adding risk to their portfolios at an impressive rate, faster than we have seen in several years. In fact, this is the highest level the ICI Global index has reached since mid 2004. That is an impressive turnaround over last October, when the ICI Global reached its lowest-ever-recorded level of 82.1. Note the marked contrast with Consumer Confidence, which remains more focused on lagging unemployment."

According to State Street, "the more of their portfolios that professional investors are willing to devote to riskier as opposed to safer investments, the greater their risk appetite or confidence."

This is just one more set of data that demonstrates that most monetary experts see clearly that recovery has begun.

Monday, July 27, 2009

New Home Sales Jump; Supply Plummets; Prices Bouncing

New home sales added to our run of good news in the housing market on Monday. Sales jumped 11.0 percent in June to an annual rate of 384,000 and the highest rate this year -- well above any economists' estimates. In fact the month-to-month percentage change was the highest in nearly 9 years. But the best news in the data was that the strong sales sucked down new home market supply. Supply fell precipitously from 10.2 months in May to 8.8 months in June for the lowest supply reading in 23 months. With the significant supply shrinkage, the total number of new homes now on the market is the lowest in 11 years.

Fishing for something negative, doomsayers continued to point to year over year home price declines. However, when closely examining data for the more recent 4-5 months, it should be no surprise that home prices have bottomed and that in many markets the prices are rebounding.

Sunday, July 26, 2009

Weekly Good News Wrap - July 19-25

  • Cash for Clunkers Kicks New Car Sales into High Gear

    Posted: Sun, 26 Jul 2009 03:06:00 +0000

    In June, President Obama signed the Cars Act. It makes $1 billion available for Americans that trade their fuel inefficient vehicles for brand new, greener ones.

    Some dealerships have accepted cars in the program since July 1. However, most dealers were waiting for Friday in order to closely examine the program's final guidelines released by the National Highway Traffic Safety Administration. Dealership interest was so great on Friday and Saturday that the fed's computer certification system crashed several times. Over the weekend, other federal sites that distribute consumer information about the program were also reportedly sluggish due to the overwhelming demand by new car buyers.

    The program provides for up to a $4,500 consumer credit on an inefficient used car and applies that rebate to the purchase of a brand new fuel efficient vehicle. The motivation is to get more environmentally friendly cars on the road and at the same time boost new car sales. Judging from spot market reports on Saturday, the program may have hit it's mark -- initially at least.

    Spokane, WA, Ford dealer Wend le Ford said that their car lot was the busiest it has been all year. "This is the biggest thing to hit the new car side of the business in a long time," said Andy Keys their General Sales Manager. "We had probably 70 to 80 people in the store on the program yesterday."

    Clunkermania was also reported in the Los Angeles area. "We've clearly had traffic coming in that's being driven by 'cash for clunkers,' " said Marc Cannon, spokesman for AutoNation Inc., which owns 77 dealerships in California, "We started doing deals early this morning."

    At Koons Ford of Baltimore, Russell Martin reports that customer traffic at their dealership has picked up by 30 percent to 40 percent since the program was signed into law last month.

    Additionally manufacturers are now stacking additional rebates atop the "clunker money" to create some of the best new car deals that drivers have ever seen. Chrysler, for instance, says it will match the government's money for consumers who turn in a clunker and buy a 2009 model.

    In St. Louis, MO, Steve Cancila, of Cancila Chrysler, exclaimed, "I never imagined that something the government came up with would be so successful... and I haven't seen [manufacturers] rebates like this in 10 years. It's insane the amount of money they're offering right now."

    The new car sales kick-start followed surprise after surprise this past week. Early in the week conference board indicators gave more proof that recovery has started in the US Economy. Throughout the week, the vast a majority of stocks posted better than expected earnings, including a multi-billion dollar profitable quarter from Ford. US taxpayers got a 23% return on a huge TARP payback from Goldman Sachs. Existing home sales increased for the third straight month while starts of single-family homes have risen four straight months through June.

    Finally the week saw stocks break various records, as the Dow Jones Industrial Average topped 9,000 to set a new highest close for the year. Continuing the recovery pattern of 1975, the index moved sharply higher, leaving many skeptical investors in the dust.

  • Taxpayers Earn 23% Return on Goldman TARP Investment

    Posted: Thu, 23 Jul 2009 04:36:00 +0000

    Federal taxpayers received a 23% annualized return on their investment in Goldman Sachs. On Wednesday Goldman announced that calculation by combining the interest it paid before repaying the Treasury’s $10 billion principal loan with the warrant buyback payments it made this week.

    Goldman as led the way this week with surprise Q2 earnings... profits made on the back of government support for the firms.

    Several analysts agree that Sachs paid fair value for the warrants. But JPMorgan Chase continues to haggle with the government over the value of its warrants. Whether or not JPMorgan ultimately settles or forces the government to auction the warrants on the open market, the TARP program is certainly turning out to be aboon for taxpayers.
  • Q2 2009 Earnings Results Continue to Impress

    Posted: Wed, 22 Jul 2009 02:46:00 +0000

    Of the 72 public companies followed by Briefing.com on Tuesday, only 9 stocks missed their earnings estimates. That follows an extremely positive market performance on Monday when only 3 of 30 firms missed their number.

    Of the 59 issues that beat their estimates Tuesday, they beat them handily. Those companies providedsurprise after surprise to the upside -- averaging $.10 per share better earnings than consensus projections.

    Of particular note, Apple (APPL) blew past analysts forecasts of only $1.17 per share. The iPhone and Mac maker, posted an extremely impressive $1.35 per share earnings or a net profit of $1.23B in Q2. Apple joined IBM (IBM) and Intel (INTC) in setting expectations for Q3 2009 GDP growth that will be anything but lackluster.
  • Conference Board Indicators: Recession Is Over, Recovery Has Begun

    Posted: Tue, 21 Jul 2009 06:01:00 +0000

    Since early June we've been observing more and more markers that US economic recovery has started.Monday brought even more data to support that assertion.

    A close look at the elements of Monday's Conference Board report supports the view that the recession ended in June and recovery has indeed begun. The CB's leading index posted a third month of consecutive gains rising 0.7 percent in June. Again the gain was much stronger than most economists had expected.

    With reporting of the June data, several recession-ending items within the CB’s report are now in place. Most economists agree that these data need to be in place before a recession is officially considered over...

    1. Three straight gains in the ratio of coincident-to-lagging indicators, (check)

    2. Three months of 50-plus readings in the diffusion index, (check)

    3. Three consecutive gains in the leading index along with an annualized reading over that period in excess of 10 percent. (The data shows a 12.8% annual rate -- the best since Jan 2002) (check)

    The three check boxes follow last week's Economic Cycle Research Institute (ECRI) Weekly Leading Indexwhich surged to an annualized five-year high of 7.0%.

    This is just more data to support the claim that when NBER's cycle-dating committee finally marks the official 2008-2009 recession end, it will point to June 2009.

    You may recall a professor from Kansas make that recession-ending prediction back in November 2008.

    Given the strength of the current ECRI growth indications and the CB's LEI trends, those predicting a lackluster Q3 of growth are likely to be significantly surprised.

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