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Archive for January 23rd, 2008

Re: BTIG Earnings Recap for January 23, 2008

Posted by Sada Mosler on 23rd January 2008

(an email)

On Jan 23, 2008 8:51 PM, Joshua wrote:
>
> Economy is in dire condition?!?!?! Look at today’s earnings reports and
> forecasts…anecdotal, but not so dire at all!

Yes, they’ve been forecasting recession for about a year and it keeps getting put off a quarter.

Now the term is morphing to ‘growth recession’ which mean growth slows for a few quarters.

Hardly the stuff of rate cuts for a mainstream economist when inflation is ripping.

warren

> Subject: BTIG Earnings Recap for January 23, 2008
>
> Stocks staged a late day rally (biggest in 2 months) on a report NY
> regulators met with banks to discuss aid for bond insurers. Trading on
> earnings (6:15pm): COF +0.30 (+0.7%), CTXS -1.02 (-3.2%), EBAY -1.63
> (-6.7%), FFIV +3.91 (+19.4%), GILD -0.81 (-1.8%), ISIL -0.72 (-3.1%) , NFLX
> -0.06 (-0.25%), PLCM +1.72 (+7.7%), QCOM +2.67 (+7.3%), QLGC +0.17 (+1.3%),
> SANM +0.04 (+2.8%), SYMC +1.40 (+9.1%) and WDC +1.36 (+5.5%). Expected to
> report in the morning: ABC, BAX, COL, CY, DHR, ED, F, HSY, KMB, LCC, LMT,
> MHP, NOK, NOC, NUE, POT, RESP, SPWR, T, TXT, UNP and XRX. Economic data for
> tomorrow includes Initial Claims for 1/19, December Existing Home Sales and
> Crude Inventories for 1/19.
>
> TickerAnnouncementNote
> AMCC+ 1c better, revs better
> AVCT+ 10c better, revs inline
> BKHM+ 5c better, revs betterguides Q3 revs inline
> CAVM+ 1c better, revs better
> CBT+ 24c better, revs better
> CHIC+ 1c better, revs inlineguides Q2 EPS inline
> CNS+ 2c better, revs better
> CTXS+ 6c better, revs betterguides Q1 inline, FY08 inline
> GILD+ 1c better, revs inline
> HXL+ 1c better, revs betterguides FY08 inline
> ISIL+ 1c better, revs betterguides Q1 EPS, revs inline
> KNX+ 1c better, revs better
> LSI+ 6c better, revs betterguides Q1 inline
> MOLX+ 2c better, revs betterguides Q3 EPS inline, revs above
> NFLX+ 10c better, revs inlineguides Q1 EPS inline, revs above; FY08 EPS
> above, revs inline
> NVEC+ 6c better, revs better
> PLCM+ 3c better, revs better
> PLXS+ 2c worse, revs inlineguides Q2 EPS above, revs above
> PRXL+ 1c better, revs betterguides Q3 EPS inline, revs above; guides FY08
> EPS, revs above
> QLGC+ 3c better, revs better
> QTM+ inline, revs lower
> RGA+ 6c better, revs lowerguides FY08 EPS above
> RKT+ 4c better, revs better
> RYL+ 53c (ex-items), vs loss of 17c (First Call), revs better
> SANM+ 1c better, revs betterguides Q2 EPS inline, revs above
> SXL+ 10c better, revs better
> SYMC+ 4c better, revs betterguides Q4 EPS above, revs above
> TSS+ 3c better, revs inlineguides FY08 above, revs inline
> VAR+ 3c worse, revs betterissues Q2, FY08 guidance
> VARI+ 2c better, revs better
> WDC+ 31c better, revs better
> EFII= inline, revs inlinereaffirms Q1 guidance
> FFIV= inline, revs inlineannounces share repurchase up to $200mln
> SRDX= inline, revs better
> ACXM- 2c worse, revs lowerissues FY08 guidance
> CBST- 1c worse, revs inline
> CLDN- 1c worse, revs better
> COF- 3c worse, revs lower
> DGII- 3c worse, revs inlinereaffirms FY08 inline
> EBAY- 4c better, revs betterguides Q1 EPS, revs below; FY08 EPS inline, revs
> below
> MRCY- 9c better, revs inlineguides Q3 EPS, revs below, FY08 EPS, revs below
> MTSC- 10c worse, revs betterreaffirms FY08 guidance
> NE- 1c worse, revs inline
> PSSI- 1c worse, revs inlinereaffirms FY08 EPS guidance
> PTV- 2c better, revs betterguides Q1 EPS below, FY08 EPS, revs inline
> QCOM- 1c worse, revs betterguides Q2 EPS, revs inline; reaffirms FY08 EPS,
> guides FY08 revs inline
> RJF- 11c worse, revs lower
> SOV- 4c worse
> SYK- inline, revs betterguides FY08 inline
> WSTL- loss of 4c vs loss of 6c (may not be comp), revs slightly betterguides
> Q4 below
>


Posted in Email, USA | No Comments »

The Fed’s next move

Posted by Sada Mosler on 23rd January 2008

If I were a mainstream economist and on the FOMC (I’m not either, they are both), and world equity markets were firm going into the meeting next week with the monoline issue put to bed, I’d opt for no cut.

That would be expected to rally the $, take down gold and most other commodities, and be taken as a strong move to ‘keep expectations well anchored’ before they had a chance to elevate.

Equities might sell off initially, but be encouraged with the knowledge the Fed was keeping inflation under control, and therefore not get involved into a prolonged, rate hiking fight against inflation down the road.

Also, confidence in the economy would be conveyed, as the no cut decision would be taken as a statement from the Fed that the economy didn’t need further rate cuts.


Posted in Fed, Interest Rates | 5 Comments »

Jan 23 late update

Posted by Sada Mosler on 23rd January 2008

Monoline problem addressed, stocks suddenly oversold as that risk fades.

Most earning look strong. Guidance may be soft but that’s at least partially a function of the expectation of a recession as per the media reporting and will get ignored as those fears continue to fade.

If initial claims tomorrow are around 325,000 as expected, and continuing claims are reasonably stable, it will indicate the labor markets may not have deteriorated from Q4 as feared.

Existing home sales are still winter numbers, but could surprise on the upside as anecdotal reports indicate aggressive selling of excess inventories.

The Fed and the stock market share the same fears. As the market’s fears fade so will the Fed’s, and the markets and the Fed could start to take away a the cut now priced in for the meeting next week.

This leaves FF futures and ED futures maybe 100 bp over priced, as the improving outlook will price in the possibility that fewer future cuts will be appropriate.

And the fiscal package is growing. This is the first time I’ve ever seen the Fed encouraging adding to the deficit, and in an election year it’s hard to imagine Congress and the President not taking advantage of that opening and in the spirit of bipartisan cooperation expanding the package so all get their favorite tax cut and spending initiative. $250-300 billion wouldn’t surprise me. And they need to do it quick before it’s discovered there is no recession problem, but instead an inflation problem.

Also note WTI and Brent crude have converged quite a bit in the sell off, which probably means WTI was sold off by speculators, and a bounce back to the Saudi’s target price (whatever that is) can be expected.

Exports are also likely to be underestimated in next week’s GDP preview, so there’s a good chance it will be revised up when December trade numbers are announced in February.

And without a rise in unemployment and a meaningful drop in personal income housing can come back very quickly from a very low base. Affordability is up nicely, and the production of new homes is down by maybe a million vs last year.


Posted in Fed | No Comments »

Re: tell Paulson to let the MOF buy $

Posted by Sada Mosler on 23rd January 2008

(an email)

On Jan 23, 2008 9:26 AM, Mike wrote:
> Trichet and his standard model are going to engineer a market crash in
> europe it looks like… wonder if he will be FT’s man of the year next
> year?

and he’s playing with fire with the lack of credible deposit insurance in the ecb’s member banks.

buy some 2 year german credit default ins if you haven’t already!

I think the ‘chess move’ here is for the BOJ to start buying $US. They would like to, but don’t want Paulson coming down on them for being ‘currency manipulators.’

If I were Tsy sec I’d be calling the MOF and giving them the green light to buy $US.

by the way, Jack Welch is on CNBC saying gdp is muddling along at 1.5% based on what he hears from corp america. no recession, yet

warren


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Posted in Email | No Comments »

2008-01-23 US Daily Releases

Posted by Sada Mosler on 23rd January 2008

2008-01-23 MBA Purchase Index SA

MBA Purchase Index SA (Jan 18)

Survey n/a
Actual 439.90
Prior 461.20
Revised n/a

No recession here.

Mtg apps seem to be continuing on the upward trend that started several months ago.


2008-01-23 MBA Refinancing Index SA

MBA Refinancing Index SA (Jan 18)

Survey n/a
Actual 4178.20
Prior 3575.5
Revised n/a

And the refi machine is going full bore as well.

It was feared credit worthy borrowers would not have access to credit to refi from higher rate mtgs.


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Posted in Daily | No Comments »

ECB on inflation, again

Posted by Sada Mosler on 23rd January 2008

Trichet expresses the mainstream view of monetary policy:

“The financial market correction — it’s a very significant correction with turbulent episodes — that we are observing provides a reminder of how a disturbance in a particular market segment can propagate across many markets and many countries, Trichet said in a debate at the European Parliament economic and monetary affairs committee.

But at times of financial turbulence it is the duty of the ECB and other central banks to anchor inflation expectations, he said.

“In all circumstances, but even more particularly in demanding times of significant market correction and turbulences, it is the
responsibility of the central bank to solidly anchor inflation expectations to avoid additional volatility in already highly volatile markets,” he said.

Posted in Articles, ECB | 4 Comments »