Today's Coffee - Hope Springs Eternal, But Spring Is Seasonal
Enjoy your fresh coffee with our summary and analysis of the market activity of the day and a medley of important information you should find useful. Equities enjoyed a spring fling today, spurred by hopes that the Iranian crisis was perhaps near resolution. This positive driver was joined in the a.m. by positive data from the housing and retail sector. However, be careful folks, as the retail data was limited to a one week period just ahead of Easter, and the housing result came from a period before a significant tightening of credit for home buyers.
OVERSEAS MARKETS
Markets rallied worldwide today, as oil fell on hope for a near-term resolution to the Iranian crisis. The NIKKEI 225 increased 1.27% as the yen weakened against the euro and dollar. The Hang Seng Index moved 0.97% higher today, while China's CSI 300 continued its record breaking rally, rising 1.33% today. Ahead of Wednesday's Australian Reserve Bank decision on rates, the S&P/ASX 200 Index climbed 1.65%.
The rally continued in Europe as positive data from the U.S. retail and housing sectors built upon the move founded on the hope for a resolution to the crisis. The DJ STOXX 50 rose about 1%, while the FTSE 100 found higher footing, up 0.8%. Germany led Europe's major markets, as the DAX rose 1.56%. The Ukrainian PFTS Index collapsed, as President Viktor Yushchenko dissolved parliament based on his view that it has been corrupted by Russian influence. His key rival, Prime Minister Viktor Yanukovych, had established a party majority within parliament. While Wall Street Greek is usually pro democracy, we believe that sometimes force is necessary to insure that right prevails. The trump card evidence here is the rise of the Nazi's in Germany, who under the premise of nationalism brought evil to elected power.
ECONOMIC DATA & ANALYSIS
Yesterday's report of the March Institute of Supply Management index measured 50.9, below Bloomberg's consensus view for 51.5 measure, and short of the 52.3 reading from February. While the service sector now drives the American economy, manufacturing data can help us to imply how consumer demand might be shaping up, as well as how capital spending is progressing among businesses. It should at least provide us with how manufacturers perceive their markets, and the outlook seems weak by this report.
Readings of retail sales for the week ended March 31st came in relatively positive today. The International Council of Shopping Centers reported on the same-store sales of major retail chains, or those within the general merchandise segment, which makes up about 10% of total retail sales. Same-store sales rose 4.9% year to year, a positive development, but one week does not a quarter make. The less reliable Redbook measure, due to calculation methodology, showed a same-store sales increase of 4.7%. If this data proves a trend, it runs counter to our expectations for this year. Easter is this coming Sunday, and possibly played a role here, so we are sticking to our forecast.
The National Association of Realtors published its report on pending home sales today. The group's report showed signed purchase agreements for existing homes rose 0.7% in February over January, while declining 8.5% year over year. We wouldn't get too excited about this report, as we believe a significant degree of credit tightening has occurred since February. We think that yesterday's news from M&T Bank, that it was having difficulty selling its loan inventory, which was not even subprime, is an indication of that. As a result, we expect the numbers in March and April to be less than reflective of the typically strong spring selling season.
Domestic auto sales for the month of March will be reported at 4:00 p.m. EDT. Remember last month showed a surprise period of growth for General Motors. The status of this important American sector is likely to impact the market in some manner on Wednesday. Recent economic data and the credit tightening trend within the industry would seem to indicate a likelihood for that impact to be negative.
COMMODITY MARKETS
The market is benefiting today from an easing of tension regarding the Iranian crisis, and oil prices have dropped sharply as a result. The near term contract for WTI crude futures is down nearly 2% to roughly $64.70.
Earlier today comments out of Iran seemed to imply a desire to end the standoff. Iranian representatives as much as offered to return the sailors if the United Kingdom would admit error and apologize for it. What is this, high school?!? In that case, maybe the United Nations should tell the two that neither can go home from detention until one admits his wrongdoing. This morning, Tony Blair stated that the next two days would be critical for resolution. However, according to CNBC, later this afternoon, a British representative stated that a near term resolution to the issue was not probable. So, it appears that each nation will stubbornly hold position, while these poor 15 souls are kept from their families. We are planning a "Special Report" on the Iranian Crisis, and what stocks might benefit or suffer as a result expansion or resolution.
Natural gas is down 2.5%, and we see no support for prices once the Iranian issue is gone, until hurricane season hits full swing. In other words, we would advise looking for peaks in your natural gas plays here, and consider short ideas as resolution to the crisis seems clear or the situation fades. As time passes, sentiment will assume the British are not going to take military action, at least until the British increase their naval presence in the Persian Gulf. Keep your radar attuned to the many dynamics in play here.
Gold is down fractionally, as conflict seems less likely. Meanwhile, copper is at its highest price in five months as a strike in Peru, declining stockpiles and Chinese demand drive the trend. The corn slide is continuing today, as corn futures are over 2% lower. Corn is down 23% since touching its high on February 26th.
STOCK SPECIFIC NEWS
Toyota reported March sales growth of 12%, year over year, while General Motors (GM) and Ford (F) posted sales declines of 4.2% and 9%, respectively, on lower sales to rental car companies. Among the second tier manufacturers, Honda and Nissan posted growth of 11% and 7.8%, respectively, while Daimler/Chrysler saw sales fall 4.1%.
Tuesday's earnings report schedule includes International Speedway, Oxford Industries, Robbins & Myers and Pope & Talbot.
You can receive "Today's Coffee" in your email inbox at the moment we publish it to the site. Just click here, provide your email address, and we will add you to the distribution list. We respect your privacy, and never share your information with third parties. (disclosure)
OVERSEAS MARKETS
Markets rallied worldwide today, as oil fell on hope for a near-term resolution to the Iranian crisis. The NIKKEI 225 increased 1.27% as the yen weakened against the euro and dollar. The Hang Seng Index moved 0.97% higher today, while China's CSI 300 continued its record breaking rally, rising 1.33% today. Ahead of Wednesday's Australian Reserve Bank decision on rates, the S&P/ASX 200 Index climbed 1.65%.
The rally continued in Europe as positive data from the U.S. retail and housing sectors built upon the move founded on the hope for a resolution to the crisis. The DJ STOXX 50 rose about 1%, while the FTSE 100 found higher footing, up 0.8%. Germany led Europe's major markets, as the DAX rose 1.56%. The Ukrainian PFTS Index collapsed, as President Viktor Yushchenko dissolved parliament based on his view that it has been corrupted by Russian influence. His key rival, Prime Minister Viktor Yanukovych, had established a party majority within parliament. While Wall Street Greek is usually pro democracy, we believe that sometimes force is necessary to insure that right prevails. The trump card evidence here is the rise of the Nazi's in Germany, who under the premise of nationalism brought evil to elected power.
ECONOMIC DATA & ANALYSIS
Yesterday's report of the March Institute of Supply Management index measured 50.9, below Bloomberg's consensus view for 51.5 measure, and short of the 52.3 reading from February. While the service sector now drives the American economy, manufacturing data can help us to imply how consumer demand might be shaping up, as well as how capital spending is progressing among businesses. It should at least provide us with how manufacturers perceive their markets, and the outlook seems weak by this report.
Readings of retail sales for the week ended March 31st came in relatively positive today. The International Council of Shopping Centers reported on the same-store sales of major retail chains, or those within the general merchandise segment, which makes up about 10% of total retail sales. Same-store sales rose 4.9% year to year, a positive development, but one week does not a quarter make. The less reliable Redbook measure, due to calculation methodology, showed a same-store sales increase of 4.7%. If this data proves a trend, it runs counter to our expectations for this year. Easter is this coming Sunday, and possibly played a role here, so we are sticking to our forecast.
The National Association of Realtors published its report on pending home sales today. The group's report showed signed purchase agreements for existing homes rose 0.7% in February over January, while declining 8.5% year over year. We wouldn't get too excited about this report, as we believe a significant degree of credit tightening has occurred since February. We think that yesterday's news from M&T Bank, that it was having difficulty selling its loan inventory, which was not even subprime, is an indication of that. As a result, we expect the numbers in March and April to be less than reflective of the typically strong spring selling season.
Domestic auto sales for the month of March will be reported at 4:00 p.m. EDT. Remember last month showed a surprise period of growth for General Motors. The status of this important American sector is likely to impact the market in some manner on Wednesday. Recent economic data and the credit tightening trend within the industry would seem to indicate a likelihood for that impact to be negative.
COMMODITY MARKETS
The market is benefiting today from an easing of tension regarding the Iranian crisis, and oil prices have dropped sharply as a result. The near term contract for WTI crude futures is down nearly 2% to roughly $64.70.
Earlier today comments out of Iran seemed to imply a desire to end the standoff. Iranian representatives as much as offered to return the sailors if the United Kingdom would admit error and apologize for it. What is this, high school?!? In that case, maybe the United Nations should tell the two that neither can go home from detention until one admits his wrongdoing. This morning, Tony Blair stated that the next two days would be critical for resolution. However, according to CNBC, later this afternoon, a British representative stated that a near term resolution to the issue was not probable. So, it appears that each nation will stubbornly hold position, while these poor 15 souls are kept from their families. We are planning a "Special Report" on the Iranian Crisis, and what stocks might benefit or suffer as a result expansion or resolution.
Natural gas is down 2.5%, and we see no support for prices once the Iranian issue is gone, until hurricane season hits full swing. In other words, we would advise looking for peaks in your natural gas plays here, and consider short ideas as resolution to the crisis seems clear or the situation fades. As time passes, sentiment will assume the British are not going to take military action, at least until the British increase their naval presence in the Persian Gulf. Keep your radar attuned to the many dynamics in play here.
Gold is down fractionally, as conflict seems less likely. Meanwhile, copper is at its highest price in five months as a strike in Peru, declining stockpiles and Chinese demand drive the trend. The corn slide is continuing today, as corn futures are over 2% lower. Corn is down 23% since touching its high on February 26th.
STOCK SPECIFIC NEWS
Toyota reported March sales growth of 12%, year over year, while General Motors (GM) and Ford (F) posted sales declines of 4.2% and 9%, respectively, on lower sales to rental car companies. Among the second tier manufacturers, Honda and Nissan posted growth of 11% and 7.8%, respectively, while Daimler/Chrysler saw sales fall 4.1%.
Tuesday's earnings report schedule includes International Speedway, Oxford Industries, Robbins & Myers and Pope & Talbot.
You can receive "Today's Coffee" in your email inbox at the moment we publish it to the site. Just click here, provide your email address, and we will add you to the distribution list. We respect your privacy, and never share your information with third parties. (disclosure)
posted by The Greek | 12:45 PM
0 Comments:
Post a Comment
<< Home