Economic Data Sheds Light
Recession is evident in the wholesale trade report, as the inventory-to-sales ratio experiences a change counter to trend. See this evening's earnings schedule below.
Mortgage Activity Increase is FHA Driven
As lending requirements have tightened, more borrowers are finding use of government sponsored FHA and VA loans. Despite modest weekly increases in 15-year and 30-year interest rates, mortgage activity improved week-to-week.
This morning's data offered by the Mortgage Bankers Association told the story why. The seasonally adjusted Market Composite Index increased 5.4%, driven by an 8.1% rise in the Purchase Index (for new loans) and a 3.4% move in the Refinance Index. Note, the seasonally adjusted Government Index (mostly FHA loans) increased 12.9%. It seems clear to us that the recent increase in sponsored loan limits and tighter credit standards have raised FHA as an option for many. Whatever facilitates the availability of high quality capital is a good thing.
Wholesale Trade Report
Bad news here folks. Inventories expanded and sales declined, a sure sign of recession. What you see to your right is the historical movement of the monthly inventory-to-sales ratio. As we've outlined in the past, the secular trend of this ratio reflects the impact of broad change in the way the world does business. Just-in-time inventory processes have penetrated across borders and become commonplace, even necessary, for the competitive marketplace. Technological efficiencies have greatly aided the process, as has the development of global distribution channels.
Even so, you'll notice a bump in the trend during the last recession at the start of this decade. The processes are still not capable of overwhelming the natural course of cyclical business, but they have helped many more companies to survive economic downturns.
This month, a new graphical bump clearly built upon itself, and recession looks like the clear catalyst for it. While sales decreased 0.8%, inventories built at a rate of 1.1%. Of course, this makes logical sense, but the inability for businesses to compensate at their traditional pace, as evident in the graphical depiction of the sales-to-inventory ratio, says that there's special reason behind the activity.
Today's Earnings Reports
Since we're entering earnings season for the first quarter of the calendar year, we thought we would try something new. We want to prepare you a bit for the earnings reports to come this evening.
For AMEX: DIA, AMEX: SDS, Nasdaq: QQQQ, Nasdaq: APOG, NYSE: CBK, Nasdaq: INOC, NYSE: KED, Nasdaq: NFLD, Nasdaq: RELL, Nasdaq: WDFC. Please see our disclosure at the Wall Street Greek site.
Mortgage Activity Increase is FHA Driven
As lending requirements have tightened, more borrowers are finding use of government sponsored FHA and VA loans. Despite modest weekly increases in 15-year and 30-year interest rates, mortgage activity improved week-to-week.
This morning's data offered by the Mortgage Bankers Association told the story why. The seasonally adjusted Market Composite Index increased 5.4%, driven by an 8.1% rise in the Purchase Index (for new loans) and a 3.4% move in the Refinance Index. Note, the seasonally adjusted Government Index (mostly FHA loans) increased 12.9%. It seems clear to us that the recent increase in sponsored loan limits and tighter credit standards have raised FHA as an option for many. Whatever facilitates the availability of high quality capital is a good thing.
Wholesale Trade Report
Bad news here folks. Inventories expanded and sales declined, a sure sign of recession. What you see to your right is the historical movement of the monthly inventory-to-sales ratio. As we've outlined in the past, the secular trend of this ratio reflects the impact of broad change in the way the world does business. Just-in-time inventory processes have penetrated across borders and become commonplace, even necessary, for the competitive marketplace. Technological efficiencies have greatly aided the process, as has the development of global distribution channels.
Even so, you'll notice a bump in the trend during the last recession at the start of this decade. The processes are still not capable of overwhelming the natural course of cyclical business, but they have helped many more companies to survive economic downturns.
This month, a new graphical bump clearly built upon itself, and recession looks like the clear catalyst for it. While sales decreased 0.8%, inventories built at a rate of 1.1%. Of course, this makes logical sense, but the inability for businesses to compensate at their traditional pace, as evident in the graphical depiction of the sales-to-inventory ratio, says that there's special reason behind the activity.
Today's Earnings Reports
Since we're entering earnings season for the first quarter of the calendar year, we thought we would try something new. We want to prepare you a bit for the earnings reports to come this evening.
| Company | Ticker Symbol | Quarterly Consensus Estimate |
| Apogee | Nasdaq: APOG | $0.45 |
| Christopher & Banks | NYSE: CBK | ($0.08) |
| Innotrac | Nasdaq: INOC | NA |
| Kayne Anderson Energy | NYSE: KED | $0.37 |
| Northfield Labs | Nasdaq: NFLD | NA |
| Richardson Electronics | Nasdaq: RELL | $0.04 |
| WD-40 | Nasdaq: WDFC | $0.52 |
For AMEX: DIA, AMEX: SDS, Nasdaq: QQQQ, Nasdaq: APOG, NYSE: CBK, Nasdaq: INOC, NYSE: KED, Nasdaq: NFLD, Nasdaq: RELL, Nasdaq: WDFC. Please see our disclosure at the Wall Street Greek site.
posted by The Greek | 3:40 PM
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