American Roses - Coincidence or Smart Economic Strategy?

It's funny how all the cogs are falling into place for US economic stability. Circum- stances have interest rates falling along with oil and gasoline prices, while the dollar strengthens and US debt comes back into vogue. Hmm, what a coincidence...

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American Roses - Coincidence or Smart Economic Strategy?

(Tickers: NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, Nasdaq: NDAQ, NYSE: ICE)

Monday's economic data showed that even the Chinese want to hold US Treasuries again. Meanwhile, the US dollar strengthens and interest rates and oil prices collapse. Don't you love it when an evil plan comes together? America is coming up roses, but is it coincidence or smart economic strategy? Have you ever considered the prospect that the US might be as devious as the Chinese or Russians when it comes to the economic race? I think you can bet on it. I certainly have, and it's nice to see we can protect ourselves and our economy, while others cheat and prematurely plan our demise. Unless it's all just a big coincidence!

Housing Market Index

While it was not exactly a blockbuster result, the National Association of Home Builders (NAHB) Housing Market Index showed signs of life in May. Builders' enthusiasm improved, as the HMI moved to 22, from 19 in April. Certainly the gains reflected builder sentiment, following the April deadline to qualify for the First-Time Homebuyer Tax Credit. However, builder expectations for the next six months also gained 3 points to 28, the highest level since November 2009. The index measuring current sales conditions also gained 3 points, reaching 23 (best since July 2007), while the index measuring traffic of prospective buyers rose 3 points to 16. None of the numbers were at all enthusing on an absolute basis, since a mark of 50 measures a market where the majority of builders view conditions as "good" versus "poor". Still, at least there is a heartbeat. Let's see if it avoids flatlining in the absence of government incentive next month.

Empire State Manufacturing Survey

The New York Federal Reserve's Empire State Manufacturing Survey also offered less-positive good news this month, as the General Business Conditions Index slipped 13 points to +19.1. May's data still represents an expanding regional manufacturing sector, but there was one prominent component of the survey that troubled your analyst.

Prices paid by manufacturers rose significantly over the past 12 months, and expectations for the next 12 was not much different. The average price paid for inputs was estimated about 6% higher on average, but only 3% higher based on median. The variance was because some manufacturers reported increases as high as 25%, which while caught by the average was missed by the median.

Prices, of course, are determined by demand (and supply), and so just as prices fell into economic trough, commodity prices rise now as demand increases. The problem is that, outside of real estate, everything is costing more as currency generally loses value. I worry that domestic demand for goods and services in Emerging Asia and a recovering American economy might run at a faster pace than money supply contraction can keep up with (or will be allowed to keep up with).

Treasury International Capital (TIC)

US borrowing needs will surely be met now that Europe is in such disarray. There was no shortage of foreign demand for US debt in March, when the trouble started to brew over-Mediteranean-seas. Today's published Treasury International Capital (TIC) report showed a net capital inflow of $140.5 billion on foreign demand for US securities. Even China was interested, as it boosted its holdings of US treasury debt for the first time in six months. That takes more pressure off of long rates, and likely adds support for the real estate sector, not to mention the cut to business investment costs. China's holdings of treasuries rose by 2%, and total foreign holdings increased by 3.5%. It's kind of funny how all the important pieces are lining up for the benefit of US economic stabilization, just when it seemed all might be lost.

Euro Touches 4-Year Low

It's not all peaches and cream on the other side of the pond though. Rather it's arsenic and glass to swallow for the Europeans. The value of the euro dropped to a four-year low Monday morning ($1.2234), and commentators on Bloomberg radio were estimating how long it would take for the dollar/euro exchange rate to reach parity. By the end of the day though, European shares and the euro both found renewed demand. Contrarian investors, and their public voices, spurred interest in the well-beaten financial instruments.

Oil Reaches 5-Month Low

With austerity measures the new trend in Europe (Greece, Portugal and Spain), concern sprouted that European economic recovery might be stifled. You'll recall a certain blogging analyst wrote about a strong potential for double-dip recession in Europe. It seems certain to me that if a thriving black market does not develop in Greece (it will), the country is destined for a depression like environment. So the government wants its citizens to swallow austerity like nice Greeks, but the riots will only get worse when these measures drive deep economic contraction. Tax tourism I tell you, or you'll lose it anyway. Nobody is going to visit a country on fire, not even my lovely Greece.

With austerity the new trend, oil prices dropped to a five-month low, now only slightly topping $70 a barrel (June contracts). Gasoline also fell 4% to $2.01 a gallon, and everything smells like sweet roses for US economic survival. Hmm, might we be engaged in stealth economic warfare, with one battleship named (credit agency of your choice, but you know which one I would choose) leading the fight.

Corporate Earnings

The day's EPS reports included news from 21st Century Holdings (Nasdaq: TCHC), Abraxas Petroleum (Nasdaq: AXAS), Advanced Environmental Recycling (Nasdaq: AERT), Aeolus Pharmaceuticals (Nasdaq: AOLS), Agilent Technologies (NYSE: A), Alseres Pharmaceuticals (Nasdaq: ALSE), Ambient (Nasdaq: ABTG), American Defense Systems (AMEX: EAG), American Independence (Nasdaq: AMIC), American Int'l Industries (Nasdaq: AMIN), American Oil & Gas (AMEX: AEZ), Analytical Surveys (Nasdaq: AXIH), Applied Energetics (Nasdaq: AERG), Arc Wireless Solutions (Nasdaq: ARCW), Astrotech (Nasdaq: ASTC), AutoInfo (Nasdaq: AUTO), Avatech Solutions (Nasdaq: AVSO), Axion Power Int'l (Nasdaq: AXPW), Beacan Enterprise Solutions (Nasdaq: BEAC), Bell Microproducts (Nasdaq: BELM), Best Energy Services (Nasdaq: BEYS), BioLargy (Nasdaq: BLGO), BioLase Technology (Nasdaq: BLTI), Bitstream (Nasdaq: BITS), Blue Dolphin Energy (Nasdaq: BDCO), BlueGreen (NYSE: BXG), Brooklyn Federal Bancorp (Nasdaq: BFSB), Callisto Pharmaceuticals (Nasdaq: CLSP), Camco Fin'l (Nasdaq: CAFI), Cascade Bancorp (Nasdaq: CACB), Cellcom Israel (NYSE: CEL), CEL-SCI (AMEX: CVM), China Distance Education (NYSE: DL), Coastal Banking (Nasdaq: CBCO), Comm Bancorp (Nasdaq: CCBP), Community Central (Nasdaq: CCBD), Core Molding (AMEX: CMT), Cortex Pharma (Nasdaq: CORX), Cowlitz Bancorporation (Nasdaq: CWLZ), Creative Vistas (Nasdaq: CVAS), Cytomedix (AMEX: GTF), DAC Technologies (Nasdaq: DAAT), DCB Fin'l (Nasdaq: DCBF), Debut Broadcasting (Nasdaq: DBTF), Decorator Industries (AMEX: DII), Deerfield Capital (Nasdaq: DFR), DGSE Cos. (Nasdaq: DGSE), Document Security Systems (AMEX: DMC), Dynatronics (Nasdaq: DYNT), Echo Therapeutics (Nasdaq: ECTE), Ecotality (Nasdaq: ETLE), EF Johnson Tech (Nasdaq: EFJI), Emisphere Tech (Nasdaq: EMIS), Empire Resorts (Nasdaq: NYNY), Emrise (PCX: ERI), Encorium Group (Nasdaq: ENCO), Energroup (Nasdaq: ENHD), Energy (Nasdaq: EGAS), Enova Systems (Nasdaq: ENOV), First Federal Bancshares Arkansas (Nasdaq: FFBH), FirstCity Fin'l (Nasdaq: FCFC), Fonar (Nasdaq: FONR), Footstar (Nasdaq: FTAR), Fortune Industries (AMEX: FFI), G. Willi-Food Int'l (Nasdaq: WILC), Gateway Energy (Nasdaq: GNRG), Giant Interactive (NYSE: GA), Global Clean Energy (Nasdaq: MLSC), Great American Group (Nasdaq: GAMR), GreenHunter Energy (AMEX: GRH), Greenman Tech (Nasdaq: GMTI), Hastings Entertainment (Nasdaq: HAST), Hollywood Media (Nasdaq: HOLL), Hometown Bancorp (Nasdaq: HTWC), Hyperdynamics (AMEX: HDY), Hypertension Diagnostics (Nasdaq: HDII), IGI Laboratories (AMEX: IG), Impac Mortgage (AMEX: IMH), Income Opportunity Realty Trust (AMEX: IOT), Independence Holding (NYSE: IHC), Infologix (Nasdaq: IFLG), Innotrac (Nasdaq: INOC), Inovio Biomedical (AMEX: INO), Integral Vision (Nasdaq: INVI), Internat Isotopes (Nasdaq: INIS), Irvine Sensors (Nasdaq: IRSN), Jesup & Lamont (AMEX: JLI), KIT Digital (Nasdaq: KITD), Ladenburg Thalman Fin'l (AMEX: LTS), Lectec (Nasdaq: LECT), The LGL Group (AMEX: LGL), Lifevantage (Nasdaq: LFVN), Lifeway Foods (Nasdaq: LWAY), Linkwell (Nasdaq: LWLL), Lowe's (NYSE: LOW), MCF Corp. (Nasdaq: MERR), Mechanical Tech (Nasdaq: MKTY), Medicinova (Nasdaq: MNOV), MGT Capital (AMEX: MGT), Mitek Systems (Nasdaq: MITK), Mitsubishi UFJ Fin'l (NYSE: MTU), MMR Information Systems (Nasdaq: MMRF), Myriad Pharmaceuticals (Nasdaq: MYRX), Napco Security Systems (Nasdaq: NSSC), NASB Fin'l (Nasdaq: NASB), National Coal (Nasdaq: NCOC), National Western Life Insurance (Nasdaq: NWLI), Neuralstem (AMEX: CUR), New Concept Energy (AMEX: GBR), Northern Dynasty Materials (AMEX: NAK), Ohio Legacy (Nasdaq: OLCB), OnStream Media (Nasdaq: ONSM), Orbit (Nasdaq: ORFR), P&F Industries (Nasdaq: PFIN), Pacific Webworks (Nasdaq: PWEB), People's Liberaton (OTC: PPLB.OB), Perfect World (Nasdaq: PWRD), Pinnacle Bancshares (Nasdaq: PCLB), Pressure Biosciences (Nasdaq: PBIO), PrimeEnergy (Nasdaq: PNRG), PRIMUS Telecommunications (Nasdaq: PMUG), ProPhase Labs (Nasdaq: PRPH), Prospect Medical (Nasdaq: PZZ), Provectus (Nasdaq: PVCT), Radiant Logistics (Nasdaq: RLGT), Ready Mix (AMEX: RMX), RegeneRx Biopharma (AMEX: RGN), Reliability (Nasdaq: REAL), Retractable Tech (AMEX: RVP), Rit Tech (Nasdaq: RITT), SES Solar (Nasdaq: SESI), Siebert Fin'l (Nasdaq: SIEB), SINA (Nasdaq: SINA), Sinohub (Nasdaq: SIHI), SouthPeak Interactive (Nasdaq: SOPK), SpectraScience (Nasdaq: SCIE), Spreadtrum Communications (Nasdaq: SPRD), Stallion Oilfield (Nasdaq: SOFS), Stratus Properties (Nasdaq: STRS), Summit Fin'l (Nasdaq: SFNS), SunLink Health (AMEX: SSY), TeamStaff (Nasdaq: TSTF), Tengasco (AMEX: TGC), Tiens Biotech (AMEX: TBV), Trailer Bridge (Nasdaq: TRBR), Transcontinental Realty (NYSE: TCI), Trio-Tech (AMEX: TRT), United American Healthcare (Nasdaq: UAHC), Valspar (NYSE: VAL), Westwood One (Nasdaq: WWON), WidePoint (AMEX: WYY), World Heart (Nasdaq: WHRT) and Xenonix (AMEX: XNN).



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