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Top Rydex Funds – Mutual Fund Education

Alex Kolb — Wed, 07 Oct 2009 06:03:34 +0000

Rydex Inverse S&P 500 Strategy Inv (RYURX) was incepted in January 1994. The investment seeks to provide investment results that inversely correlate to daily performance of the S&P 500 Index.

The fund normally invests in financial instruments with economic characteristics that should perform opposite to those of its underlying index. It is non-diversified.

Unit holders have to make a minimum initial investment of $2,500 to enter this Zacks#1 Rank (“Strong Buy") fund. It has outstripped the total returns of its benchmark index in the last 1-, 3- and 5-year periods.

Rydex Transportation Inv (RYPIX) seeks capital appreciation by investing in companies engaged in providing transportation services or those engaged in design, manufacture, distribution, or sale of transportation equipment.

The fund invests in securities that are traded in the United States, as well as in futures and options contracts. It has an expense ratio of 1.38%.

The fund’s key holdings include United Parcel Service Inc. (UPS - Analyst Report), Union Pacific Corp. (UNP - Analyst Report) and Burlington Northern Santa Fe Corp. (BNI - Analyst Report).

Rydex Electronics Inv (RYSIX) seeks capital appreciation. It primarily invests in equity securities that are traded in the United States, as well as in futures and options contracts.

The fund focuses on electronics companies, including semiconductor manufacturers and distributions, and makers and vendors of other electronic components and devices. It distributes dividends and capital gains, if any, annually.

Michael P. Byrum has been lead manager at the fund since its inception in April 1998. Before joining Rydex Investments, Byrum worked for Money Management Associates, the investment adviser for Rushmore Funds Inc.

Zacks Investment Research

Long-Term Stock-Market Uptrend to Continue

Contrarian Profits — Mon, 28 Sep 2009 17:15:04 +0000

pStocks moved lower for the third consecutive day on Friday, something that hasn’t happened in more than three weeks, as the bulls just couldn’t capitalize on a short-term overbought condition. Measures of selling pressure eased as the bears rested their knuckles after a two-day pummeling./p pInvestors are worried. The big question – as always – is whether the primary uptrend remains intact./p pAnd the answer is yes./p pTo understand just what that target should be, let’s take a look at where we are right now./p pJust before Wednesday’s sell-off, measures of the supply of stocks moved to new lows, while demand moved to new highs. This means bull-market-trading rules remain in effect. But as the cyclical bull market matures a little, we need to#8230;/p

Durable Not-So-Goods – Analyst Blog

Dirk Van Dijk — Fri, 25 Sep 2009 15:17:00 +0000

New orders for Durable Goods fell 2.4% in August, well below expectations of a 0.4% increase. In July, Durable Goods orders were up 4.8%.

If the extremely volatile transportation equipment segment is excluded, however, orders were unchanged. Transportation equipment includes jetliner orders from Boeing (BA), and a few planes ordered or not ordered can really move the needle from month to month.

That, too, was below expectations of a 1.0% rise and below the July increase of 0.9%. Total new orders were $164.4 billion in August.

Durable Goods inventories continue to fall -- now down 1.3% on the month to $308.9 billion, following a 1.1% decline in July and marking the eight straight month they have fallen.

This was a very weak report, and it's troubling since Durable Goods are traditionally one of the engines to lead an economy out of recession.

The numbers on a year-over-year basis are still rather dismal. Total new orders are 24.9% below a year ago, while excluding transportation they are down 22.2% (given the extreme fluctuations in transportation orders from month to month, it is interesting to see just how close the two are on a year-over-year basis).

If Defense orders are excluded, we were down 2.4% on the month following a 4.2% increase in July and are off 26.6% year over year. Non-Defense aircraft orders (i.e. jetliners) plunged 42.2% on the month, after being up 98.2% in July, which in turn had fallen 30.5% -- as I said, it is a very volatile area. On a year-over-year basis, those orders are off 63.1%.

New orders for Non-Defense capital goods, which is a good proxy for business investment, fell 7.1% in August -- reversing a 7.0% increase in July. On a year-over-year basis those orders are down 30.1%. On the other hand, if aircraft are excluded, orders fell only 0.4% following a 1.3% decline in July, and are off 22.7% for the year.

One area that has been showing some signs of weakness is new orders for computers, which fell 2.5% on the month following a 3.7% decline in July. However, on a year-over-year basis, they have held up relatively well, down only 16.3%.

The recent downturn should give investors in the Tech sector some pause. So far this year it has been pretty strong, and has recently been well supported by earnings estimate increases, particularly in the past few months. However, if orders for computers are falling, analysts might just have to rethink just how much those companies can earn. Companies like Hewlett-Packard (HPQ) and Dell (DELL) might be vulnerable to a pullback as a result.

While it seems that the economy has some momentum in the third quarter, these weak new orders for Durable Goods do cast some doubt about if that momentum will be sustained in the fourth quarter and into 2010. It's just one data point, but a very disappointing one.
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Zacks Investment Research

Zacks Bull and Bear of the Day Highlights: Medtronic, KeyCorp, Boeing, Textron and Ford – Press Releases

Zacks Market Commentaries — Thu, 27 Aug 2009 13:30:44 +0000

For Immediate Release

Chicago, IL – August 27, 2009 – Zacks Equity Research highlights Medtronic (MDT) as the Bull of the Day and KeyCorp (KEY) the Bear of the Day. In addition, Zacks Equity Research provides analysis on Boeing (BA), Textron (TXT) and Ford (F).

Full analysis of all these stocks is available at http://at.zacks.com/?id=2676

Here is a synopsis of all five stocks:

Bull of the Day:

Medtronic’s (MDT) long-term story is intact - product approvals and launches will drive healthy top-line growth. This was witnessed in the first quarter when the company reported sales growth in all its operating segments.

Higher demand for pacemakers and ICDs has rejuvenated growth in the CRDM segment. This will bolster the company's strong position in the cardiac market against its closest rivals, Boston Scientific Corporation and St. Jude Medical.

First quarter earnings of 79 cents per share were higher than the Zacks Consensus Estimate of 78 cents and 72 cents, a year ago. We rate this stock Outperform with a target price of $43.

Bear of the Day:

KeyCorp's (KEY) second-quarter net loss came in at 69 cents per share, substantially worse than the Zacks Consensus Estimate. The downside primarily resulted from preferred dividend payment and a significant increase in the provision for loan losses.

Credit quality worsened significantly during the quarter. However, we are impressed by the company's steps to reduce its exposure to the commercial real estate (CRE) home builders business.

Though the company will benefited by exiting the risky and unprofitable businesses, we expect elevated provision requirements and a weak net interest to put significant pressure on its profitability. As such, the shares carry an Underperform recommendation from us.

A Durable Recovery? – Analyst Blog

Dirk Van Dijk — Wed, 26 Aug 2009 15:07:30 +0000

New orders for durable goods rose 4.9% in July, well above consensus expectations for a 3.2% increase. In addition, the June numbers were revised to a drop of just 1.3% instead of a 2.5% decline. This was the biggest increase in two years.

Since aircraft count as durable goods -- and a few orders for jumbo jets can really jerk the numbers around -- it is important to look at the orders excluding transportation equipment. There the news was good, but not as good. Orders rose 0.8%, just slightly below consensus expectations of a 1.0% rise. However it did mark a thrid straight month of increases, following rises of 2.5% in June and 0.8% in May.

Apparently Boeing (BA) had a good month, as orders for transportation equipment jumped 18.4% -- more than reversing a 12.0% slide last month. It's mostly Boeing, and perhaps some of the private jet firms like Textron (TXT). Non-defense aircraft orders soared 107.2%. It is a very volitile area, though -- last month they were down 30.0% and in May they were up 60.4%.

Auto firms like Ford (F) are also in that catagory, and the now-expired (and wildly successful) "Cash for Clunkers" program cleared out dealer lots. Motor vehicle oreders were up just 0.9% in July following declines of 0.2% and 8.4% in June and May, respectively. and led them to restock. The program really only got underway at the end of July, so we will probably see a big increase in that area in August.

Another part of the report to pay attention to is non-defense capital goods orders, since that is a very good proxy for how much businesses are investing -- the I in the C+I+G + (X-M) = GDP equation. There, the monthly news was also very good, but again mostly driven (flown?) by aircraft. In total, orders were up 8.6% in July, following a decline of 0.4% in June and a 9.1% rise in May. Strip out aircraft though and non-defense capital goods orders actually fell 0.3%, following increases of 3.6% and 4.3% in June and May, respectively.

While the monthly news is good, the year-over-year data reminds us of just how deep a hole we have dug. Relative to last year, total durable goods orders are down 25.8%, while orders ex-transportation are down 22.9%. Transportation equipment orders are down 33.8%. Non-defense capital goods orders are down 31.0%, and if you strip out aircraft they are down 23.0%.

Orders are a leading indicator, since you need the order before you build and ship something. Shipments are a coincident indicator, or at least coinident for the month they refer to. There, activity was up across the board for all five series I have mentioned, ranging from a 2.2% gain in total durable goods ex-transportation down to a a 0.5% gain for non-defense capital goods ex-aircraft. All five were also positive in June, but all were negative in May.

However, we are not totally out of the woods yet. If you compare the year-over-year change in the shipments numbers, the declines are much smaller than for the orders numbers. Total durable goods shipments are down 19.3% from a year ago, ditto for shipments ex-transportation. Transportation equipment shipments are down 19.5%.

On the capital goods front, the non-defense total is off 15.9%, while if aircraft are stripped out, the number is off by 16.3%. Since you need an order before you can have a shipment, this implies there is still some weakness in the pipeline.

Historically, durable goods are an important driver in economic recoveries (housing is not included in durable goods, but in many ways it is the ultimate durable good). So this report is yet another in the string of good economic reports we have been getting. The big question: is this simply inventory restocking going on, or a reflection of improved end demand? If it is end demand, how much of it is due to the artifical stimulus being added to the economy?

Those are the keys to how durable this recovery will be, and how robust. However, it now seems clear to me that the economy is starting to climb out of a very deep hole.
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Zacks Investment Research

Durable Goods Orders Down – Analyst Blog

Dirk Van Dijk — Wed, 29 Jul 2009 15:52:04 +0000

New orders for durable goods fell to $159.6 billion in June, a drop of 2.5% from May’s level. The May increase was also revised to an increase of just 1.3% from its originally reported 1.8% increase.

However, the reason for the decline was a 12.8% drop to $36.5 billion in orders for transportation equipment. Orders for transportation equipment is notoriously volatile, as just a few orders for jumbo jets can really skew the numbers.

Just how volatile? Well, if we look at just non-defense aircraft orders, they were down 38.5% in June following a 60.4% jump in May, while Defense Aircraft orders were up 30.1% following a 0.3 increase in May.

Excluding transportation equipment, new orders actually rose by 1.1%. The swing in transportation orders was much bigger than expected. The consensus was for a total decline of 0.6%, an unchanged reading excluding transport (follow a rise of 0.8% in May, revised down from a 1.1% increase). So those numbers were really something of a mixed bag.

On the other hand, much of the good news came from another volatile area, defense orders. Excluding defense, orders were down 0.7%. Perhaps the most interesting of the numbers in the report is new orders for non-defense capital goods. This is a very good proxy for investment in the real economy, or the “I" in the old C + I + G – Net exports = GDP equation.

There the news was not good, with orders dropping by 3.4%, partially reversing a 9.1% gain in May, but that followed a 3.5% drop in April. However, once again it was the aircraft that suppressed the numbers -- excluding them, orders were up 1.4% following a 4.3% rise in May and a 3.5% drop in April.

Since the numbers can be volatile from month to month, it also makes sense to look at how cumulative orders on a year-to-date basis have been. There, the picture is still one of deep economic contraction, with the pace of total new orders off 26.7%, ex-transportation off 23.4% and ex-defense down 28.4%. Year-to-date, total capital goods orders are down 28.8%, and non-defense capital goods orders are down 32.7%.

Year-over-year numbers show a similar pattern, as can be seen in the two graphs below (from http://www.briefing.com/Investor/Public/Calendars/EconomicCalendar.htm). They both paint a picture of things stabilizing at very low levels. However, keep in mind this recession has been going on for more than a year now, so year-over-year percentage changes are coming off numbers that were already down.

Shipments of durable goods fell by 0.2%, which is not too bad, but that was the 11th straight monthly decline, a new record. Unfilled orders also declined by 0.9%, for the ninth month in a row -- also a duration record. Inventories of durable goods fell to $318 billion, a 0.9% decline following a 0.3% drop in May. Thus, while the longer-term picture was mixed, the coincident and near-term numbers were still quite weak.

The report does give more detail about the specific industries with rising and falling orders. The big winner for the month was primary metals, where orders jumped by 8.9% following two previous near unchanged readings. That should be good news for firms like U.S. Steel (X) and Alcoa (AA).

Orders for machinery were also strong, rising 4.4% following a 7.3% increase in June. I find this to be very surprising in light of the record low levels of capacity utilization. I’m not sure just why anyone is buying new machines in this environment. However, it would be excellent news for firms like Parker Hannifin (PH).

On the downside, the plunge in non-defense aircraft orders, while very volatile and reversing a great May, is not good for Boeing (BA) or major suppliers to it like Honeywell (HON).

Overall I would rate the report as a minor negative. We are in a pattern of three steps forward, two steps back in the economic numbers (at least it looks like that -- not two steps forward, three steps back). This report was, overall, one of the steps backward.

The economy is out of the intensive care unit, but the patient is still quite sick and it will be a long convalescence where it is not feeling too good. The patient is still very vulnerable to secondary infections and other complications, but the prognosis is improving.

Zacks Investment Research

Crude Falls Again

Doug Casey — Fri, 03 Jul 2009 19:00:05 +0000

p class="maintextDRP"In the energy market on Wednesday, crude for August delivery fell again, closing at $66.73/barrel, down $2.58. August reformulated gasoline lost 6.82 cents, to $1.7908/gallon. br / Oil posted its third straight weekly loss as the lousy economic numbers piling up have driven much of the recovery optimism from the field./p pThe jobs report “is confirming what we saw earlier in the week with the dropping consumer confidence,” said Phil Flynn, of PFG BEST Research. “This reinforces the outlook for weak petroleum demand and should put downward pressure crude prices.”/p pFlynn added that, “On the fundamentals level, high levels of inventories, low demand and sufficient supply continue to point to lower prices.”/p pThe only bright note was sounded by the Commerce Department, which reported orders#8230;/p

May 28: Durable Orders up 1.9% – Economic Highlights

Zacks Market Commentaries — Thu, 28 May 2009 15:06:53 +0000

Initial Claims decreased by 13,000 to 623,000 for the week ending 05/23. The 4-week moving average was 626,750, a decrease of 3,000 from the previous week `s revised average of 629,750. Seasonally adjusted insured unemployment last week (ending 5/16) was 6,788,000, an increase of 110,000 from the preceding week's revised level of 6,678,000, bringing the insured unemployment rate to 5.1%. The decrease in unemployment filings last week were cited from fewer layoffs in automobile industries in Michigan (-9,758) which spiked the preceding week, along with fewer layoffs in Kentucky (-4,323) and Illinois (-3,425) slightly offset by increased layoffs in California (+5,447).

Durable Orders for April increased by 1.9% to $161.5 billion, the second increase in the past three months, following a revised 2.1% decline in March from an originally reported -0.8% change, and was expected to increase by 0.4% over the month. Factoring in the huge downward revision for March's levels, the level of durable orders in April did not come as strong of a positive surprise considering that much of the increase offset the revision from the previous release. Over the past 12 months, Durable Orders have dropped by 27.3%. Excluding transportation, new orders increased by 0.8%, while transportation equipment showed the largest increase, $2.1 billion, by 5.4% to $40.5 billion.

New Home Sales for April increased slightly by 0.3% to an annual pace of 352,000, less than the expected 362,000 annual rate. Over the year, this figure has plummeted down 34% from the 533,000 pace in April of 2008. The mean price of a new home sold in April increased to $209,700 from $201,400 in March. Estimated inventory of new houses for sale at the end of April is 297,000 representing a 10.1 month supply at current prices.

Upcoming Releases
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Zacks Investment Research

Seeds of a Recovery?

Dirk Van Dijk — Fri, 01 May 2009 20:02:37 +0000

The initial first-quarter GDP reported was greeted with a great amount of fanfare, despite a terrible headline number. Though the economy contracted at a 6.1% pace - marking the first time we have booked back to back quarters of down 6% or more since the end of WWII - some of the details in the report showed reasons for optimism.

As an investor, I realize that you are less concerned with the details that economists seemingly over-analyze and more concerned with what the report means to your portfolio. So, today, I'm going to show you where some of the investment opportunities and risks lie in the current environment.

Consumers Opened Their Wallets

The biggest positive surprise in the report was that Personal Consumption Expenditures ("PCE") actually contributed 1.50 points to GDP.

Clearly, in the first quarter, consumers took advantage of discounted prices. The much higher than expected PCE is part of the reason that the retailers and restaurants have been earning so much more than was expected. Almost every retailer and restaurant in the S&P 500 that has reported so far has come in with higher than expected earnings. Given the need to rebuild savings and the mounting levels of unemployment, I am skeptical that the strong PCE levels can be sustained.

Inventory Levels Plunged

On a forward-looking basis, perhaps the best part of the GDP report was that inventory investment subtracted 2.79 points from growth (versus -0.11 in Q4). Large inventory draw downs in one quarter have a tendency to be reversed in the next quarter. When the shelves are bare, people start to order more to restock them, causing output to rebound.

The destocking of inventories has contributed to the cash flow of the retailers, but the restocking will reverse that. On the other hand, restocking the shelves will increase orders for manufacturers, both here and abroad. The report is not detailed enough to say where exactly the biggest inventory draw downs were, so it does not give that much guidance as to which manufacturers might benefit the most from the restocking.

A Bad Trend for Equipment Makers and Software Developers

Essentially all investment in the real economy, both fixed and inventory, residential and non-residential, came to a screeching halt in the quarter. While ugly contributions from inventories are a good thing, the same cannot be said about fixed investments. There bad is bad, and this was real bad.

Fixed investments, particularly non-residential fixed investment is what drives increases in the productive capacity of the economy (along with investments in education which is counted as part of PCE and state & local spending). In other words, it is the engine of future growth, not just a part of the current growth. The stunning declines in all forms of fixed investment mean that businesses are in effect eating their seed corn. However, given the huge amount of idle capacity in the economy right now, it is easy to understand why businesses are cutting back.

Until we see a large rebound in capacity utilization, it is unlikely that businesses will start to spend more for equipment and software. Capacity utilization is at a post WWII low, and is below 70% for the first time since it has been tracked. As a general rule of thumb, 80% is normal, 85% is a boom and 75% is a nasty recession. This is obviously not good news for more traditional equipment manufacturers, such as Parker-Hannifin (PH) or Ingersoll-Rand (IR), nor is it good news for software firms like Microsoft (MSFT) or Oracle (ORCL).

Expect this part of the economy to remain weak for at least several more quarters. This is particularly true on the structures side. I suspect that most of the spending we did see in the quarter was simply finishing off projects that were started in earlier quarters. The Commercial Real Estate ("CRE") bust is just getting started and will last at least another year. Investment in structures has only started to decline and was a major contributor to GDP up until the third quarter of last year.

This means that demand for the basic materials that go into building large structures, steel, glass and cement, are likely to remain depressed for at least the next year. Not exactly bullish for Nucor (NUE), PPG Industries (PPG) or Cemex (CX).

Vacancy rates going up and effective rents are going down in almost all areas of commercial real estate. I would be very cautious about investing in REITs here. Commercial foreclosures are going to become a much bigger story over the next year. This will hurt the banks, particularly the mid-sized banks (between $1 and $10 billion in assets). The Wall Street titans do have as much exposure (relative to their overall size) to CRE.

The decline in equipment and software has been unusually steep (it was down 33.8% in the first quarter, following a 28.1% decline in the fourth quarter), and it now represents the smallest share of the economy since the mid 1960s. The decline will probably continue, but is may be at a slower rate in coming quarters.

At some point it will turn up again since equipment wears out and software becomes obsolete. I would focus on those equipment makers where the product most obviously decays over time. For example, spending on transportation equipment was 61% lower in the first quarter of 2009 than it was a year ago. This means that there is some potential pent up demand for firms like PACCAR (PCAR) that is building up.

Residential Investment Still Slumping

Perhaps the most surprising number on the downside in fixed investment was the subtraction of 1.36 points from Residential Investment ("RI"). RI is now only 2.7% of GDP, down from a peak of 6.3% in the Q4 of 2005.

RI turning up is a classic signal that a recession is ending, and there is no sign that it is happening yet, but it seems unlikely that RI will fall to zero. Normally the rebound is very sharp, but I have my doubts that it will be so this time around, given the huge inventory of unsold houses, both new and used and the second wave of foreclosures that is starting to crash upon the shore.

I have long been very bearish on the Homebuilders like D.R. Horton (DHI), however at this point I am becoming more neutral since it is hard to see how much lower residential investment can go as a percentage of GDP. That does not mean that I expect a big rebound anytime soon, but the worst of that particular storm may have passed.

Net exports helped prevent the quarter from being a total disaster, adding 1.99 points to growth. This was however not due to a surge of exports, but rather a collapse of imports.

The decline in imports was stunning, contributing 6.05 points to growth. (Imports are a subtraction from GDP, so when they fall GDP goes up). Put another way, if we had continued to import in the first quarter at the rate we had in the fourth quarter, then GDP would have crashed at an annualized rate of over 12% in the first quarter.

When inventories are drawn down, we buy less from China as well as less from domestic manufacturers. In case you have not noticed a lot of the stuff on the shelves of Wal-Mart Stores (WMT) and Target (TGT) comes from overseas. If PCE can continue its surprising strength going forward, the decline in imports is unlikely to continue. That, however, is a big IF.

No industry is more exposed to a decline in world trade more than the shipping industry. There are lots of ships that were ordered during the boom times that are just putting to sea. It will be a while before enough ships are scrapped to bring capacity into line with demand, thus keeping shipping rates very low. Ships represent very large capital investments and having them idle is very expensive. While the group has been hammered, I would still avoid those firms for anything but a very short term trade.

Understand that the longest recession since the Great Depression is not over by a long shot, but it will not last forever. We are past the steepest rate of decline, but are still going down.

The U.S. consumer is once again proving to be the Rasputin of the world economy, he is very hard to kill thanks, in part, due to some extraordinary measures taken by Dr. Bernanke. This is probably the key reason for the better than expected PCE numbers.

As I said earlier this week, there are still very substantial risks out there that could cause the rate of decline to accelerate again, most notably the prospect of long messy bankruptcies in Detroit, and the worst fears of the Flu epidemic coming true (almost impossible to tell at this point). However, the seeds of recovery have been planted. Inventory will need to be restocked and eventually businesses will have to replace some of their equipment and will start to spend again. However, I would not expect a bumper crop from those seeds. The recovery, when it comes, is likely to be very anemic.

Best of Luck,
Dirk van Dijk, CFA
Director of Research,
Zacks Equity Research

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Apr 24: New Home Sales down 0.6% – Economic Highlights

Zacks Market Commentaries — Fri, 24 Apr 2009 15:10:06 +0000

Durable Orders for March decreased 0.8% to $161.2 billion, less than the expected 1.5% drop, following a 2.1% increase in February, revised from 3.4%. This is the 7th decrease in the past 8 months, with the exception being February 2009. Over the past 12 months, Durable Orders have dropped by 27.1%. Excluding transportation, new orders decreased 0.6 percent. Transportation equipment had the largest decrease, $0.5 billion, by 1.4% to $37.9 billion, which had been down 5 of the past 6 months.

New Home Sales for March fell 0.6% to 356,000, following a 358,000 annual rate in February, revised from 337,000 which jumped from January's revised figure of 322,000 from an originally reported 309,000 which was the slowest pace ever recorded. New sales were higher than the expected 337,000 pace. Over the year, this figure has plummeted 30.6% from the 513,000 pace in March of 2008. The mean price of a new home sold in March fell to $201,400 from $209,000 in February. Estimated inventory of new houses for sale at the end of March was 311,000 representing a 10.7 month supply at the current sales rate.

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Zacks Investment Research

Russia’s Economy Contracts By 7% In Q1 2009

Edward Hugh — Tue, 07 Apr 2009 15:58:00 +0000

by Edward Hugh: Barcelonabr /br /According to Deputy Economic Development Minister Andrei Klepach last week, Russia's economy shrank by 7 percent year on year in the first quarter of 2009, a staggering turnaround for an economy which has just enjoyed eight years of solid oil-fueled growth.br /br /"These figures are worse than we expected," Klepach said at a press conference in Kiev,citing preliminary figures. Klepach also stated that net capital outflows reached $33 billion in the first quarter of 2009, following record outflows of $130 billion in the second half of last year.br /br /pa href="http://1.bp.blogspot.com/_ngczZkrw340/SdsTJmo57XI/AAAAAAAANbI/gYR1beR2NiI/s1600-h/russia+gdp.png"img id="BLOGGER_PHOTO_ID_5321868440380239218" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 229px; TEXT-ALIGN: center" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/SdsTJmo57XI/AAAAAAAANbI/gYR1beR2NiI/s400/russia+gdp.png" border="0" //abr /br /The Russian State Statistics Service have also released official gross domestic product figures for the fourth quarter of 2008. GDP was up 1.2 percent year on year, the worst reading for any quarter since the first quarter of 1999, and down from a revised 6 percent in the previous three months. The World bank are now suggesting that the present slump may be deeper than the one that followed the government debt default and ruble devaluation in 1998.br /br /Certainly the data are bleak. Industrial production contracted for a fourth consecutive month in February - falling by 13.2% year on year - as the credit squeeze and falling incomes eroded demand for metals, cars and consumer goods. Retail sales contracted in February for the first time since February 1999. Unemployment was also up, at 8.5 percent in February, the highest level since January 2005.br /br /Manufacturing output plunged with the collapse in demand in the last two months of 2008, and it is likely to contract further in 2009. According to Rosstat five of 14 major manufacturing industries reported outright output declines in 2008, with electronics, electrical, and optical equipment hardest hit (-7.9 percent), followed by textile and sewing (-4.5 percent) and by chemicals (-4.2 percent). Most of the dislocation took place in November and December 2008, when total manufacturing output respectively fell 10.3 and 13.2 percent (year-on-year). As credit continues to tighten and demand to fall, manufacturing is likely to contract further in 2009. According to recent statistics, manufacturing output dropped 24.1 percent in January 2009, compared with January 2008, and 18.3 percent in February 2009, compared with February 2008. In February 2009 the most significant declines were registered in the production of electro-technical and optical equipment (-46.6%), other non-metal products (-33.3%), and transport and transportation equipment (-31%).br /br /a href="http://1.bp.blogspot.com/_ngczZkrw340/Sds9EueFlGI/AAAAAAAANcQ/rDbqskKq2ds/s1600-h/russia+IP.png"img id="BLOGGER_PHOTO_ID_5321914536071369826" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 239px; TEXT-ALIGN: center" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/Sds9EueFlGI/AAAAAAAANcQ/rDbqskKq2ds/s400/russia+IP.png" border="0" //abr / br /blockquoteTighter credit, collapsing global demand, huge global uncertainty, and rising unemployment have hurt both investment and consumption growth in Russia. According to Rosstat, total fixed capital investment grew 9.8 percent in 2008, compared with 21.1 percent growth in 2007. More worrisome is the investment decline by 2.3 percent in the fourth quarter of 2008 (year-on-year), largely reflecting escalating liquidity problems in the banking sector and the resulting credit crunch and a deceleration in consumption growth due to rising unemployment and lower growth. (World Bank Report, April 2009)/blockquotebr /br /strongGDP Indicator Shows 5.4% Contraction in March/strongbr /br /br /The latest data we have to hand confirm the ongoing character of the contraction. The Russian economy is thought to have declined by 5.4 percent in March compared with March 2008, according to the latest GDP indicator estimate provided by VTB Capital. The VTB GDP indicator also registered an average 4.4 percent contraction for the first three months of 2009, which would be the worst decline since the economy shrank 5.1 percent in the fourth quarter of 1998. The difference between the VTB estimate and the 7% estimate put forward by Klepach would lie in the fact that the VTB indicator does not include contstruction, and construction activity has declined sharply in recent months, so the two pieces of data are consistent with one another.br /br /a href="http://1.bp.blogspot.com/_ngczZkrw340/SdsTrdB-cKI/AAAAAAAANbQ/4XowM_UWDYM/s1600-h/RUSSIA+gdp+inic.png"img id="BLOGGER_PHOTO_ID_5321869021916590242" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 244px; TEXT-ALIGN: center" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/SdsTrdB-cKI/AAAAAAAANbQ/4XowM_UWDYM/s400/RUSSIA+gdp+inic.png" border="0" //abr /br /Purchasing power has been reduced by lower wages and less access to credit, togther with rising unemployment rates. 6.4 million Russians, or 8.5 percent of the economically active population, were unemployed in February, a 5 percent increase over January and a 20 percent increase on February 2008. The World Bank forecast recently that unemployment would rise to 12% in 2009. /ppThe weakening in retail sales and other consumption indicators is not that surprising given the strength of the contraction, and especially since there is now growing evidence that Russia's employers, in order to make cost savings while maintaining staff levels during financial crisis, are more and more resorting to salary reductions or part-time working schedules. This approach is thought to be being used widely and appears to have much more legitimacy under Russian law than simply telling employees to go home and take unpaid leave. Employers are being advised to take special care when unilaterally modifying major terms and conditions in employment contracts, since although under the Labour Code, changing the terms and conditions of an employment contract is permitted only by mutual written agreement of both parties, there is an exemption from this rule – Article 74 of the Code - which specifies that in the event of a change in organizational or technical working conditions which make it impossible for the previously agreed terms of an employment contract to be maintained, an employer is entitled to unilaterally change such terms on his or her own initiative.br /br /As a result of this contraction in output and weakening in the labour market real incomes have declined substantially in Russia since the autumn of 2008. Rising unemployment and worsening enterprise finances (wage arrears have increased considerably) have meant that in the fourth quarter of 2008 alone, real disposable income dropped 5.8 percent year on year, and by 10.2 percent in January 2009 (again year-on-year). And unpaid wages as a share of total enterprise turnover tripled to 0.12 percent in December 2008, compared with August 2008. The stock of wage arrears as of March 1, 2009 (8 billion rubles or about USD 240 million) remains small but is likely to increase as the crisis grows. At the present time such arrears are thought to affect up to 450,000 people, significantly less than 1 percent of total employment. Growth in real wages came to a complete halt in January-February 2009, following double-digit increases in previous years.br /br /strongRussian Services Contract Less Slowly In March/strongbr /br /Activity in Russia’s service sector continued to contracted in March, although the seasonally adjusted headline VTB Services Purchasing Managers Index rose to 43.9 in March from 40.0 in February. Since any readings below 50.0 signals contraction, we can see that while Russia's services are still contracting, they are contracting somewhat less rapidly than in earlier months.br /br /a href="http://3.bp.blogspot.com/_ngczZkrw340/Sds7Do0jA9I/AAAAAAAANcI/HPO-jYq5PHo/s1600-h/russia+services.png"img id="BLOGGER_PHOTO_ID_5321912318351836114" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 241px; TEXT-ALIGN: center" alt="" src="http://3.bp.blogspot.com/_ngczZkrw340/Sds7Do0jA9I/AAAAAAAANcI/HPO-jYq5PHo/s400/russia+services.png" border="0" //abr /br /Activity and new business both declined for the sixth consecutive month, however the rate of decline in the volume of new business was at its lowest rate since last October. However a survey-record decline in employment was registered in March, with redundancies at their most severe in hotels and restaurants. Firms raised output prices at a weaker rate in March, as input price inflation moderated and pricing power remained weak due to falling demand for services./pblockquote“Surging price competition on the back of weak market demand has urged companiesto tighten their cost cutting programs. Among the measures that have been applied are further redundancies that resulted in the fastest rate of employment contraction in the history of the survey. The input price inflation eased slightly, however, the pressure of utilities charges remains significant,” Svetlana Aslanova, an analyst at VTB Capital, commented on the survey. /blockquotepbr /br /strongAs Does Manufacturing/strongbr /br /br /Russian manufacturing contracted at the slowest pace for five months in March as companies reduced their stocks of unsold goods and the decline in new business eased, according to the latest PMI report from VTB Capital. The VTB Purchasing Managers’ Index was at 42 last month after a 40.6 reading in February. A figure below 50 means a contraction and above 50 implies growth. Stockpiles of unsold goods fell at the fastest rate since December 2005, according to the survey of 300 purchasing executives.br /br /a href="http://1.bp.blogspot.com/_ngczZkrw340/SdN0vwccH1I/AAAAAAAANX4/-IfuXesro5A/s1600-h/russia+PMI.png"img id="BLOGGER_PHOTO_ID_5319723948661546834" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 244px; TEXT-ALIGN: center" alt="" src="http://1.bp.blogspot.com/_ngczZkrw340/SdN0vwccH1I/AAAAAAAANX4/-IfuXesro5A/s400/russia+PMI.png" border="0" //abr /br /strongInflation Rising Again/strongbr /br /Russia’s inflation rate rose to a five-month high in March as the weaker ruble boosted import prices. The rate rose to 14 percent from 13.9 percent in February, while consumer prices grew 1.3 percent month on month, compared with 1.7 percent in February.br /br /br /a href="http://4.bp.blogspot.com/_ngczZkrw340/SdsVp3DrWkI/AAAAAAAANbY/EpygPiGDpFI/s1600-h/russia+cpi.png"img id="BLOGGER_PHOTO_ID_5321871193566566978" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 238px; TEXT-ALIGN: center" alt="" src="http://4.bp.blogspot.com/_ngczZkrw340/SdsVp3DrWkI/AAAAAAAANbY/EpygPiGDpFI/s400/russia+cpi.png" border="0" //abr /br /Inflation was spurred at the start of the year by the weakening ruble, which pushed up import prices, helping the annual rate jump to 13.9 percent in February from 13.4 the month before. The ruble has now lost 29 percent against the dollar since August. The most recent spike in inflation is evidently producing quite a headache for the Central Bank, since chairman Sergei Ignatiev last week that if April's inflation is “significantly less” than it was a year ago, the central bank may consider cutting interest rates for the first time since 2007, giving some kind of monetary relief to an economy which is badly in need of it. Russia’s inflation rate went as high as 15.1 percent last June, and has since come down somewhat from that peak, but really the record of the central bank in containing inflation has been pretty abysmal.br /br /Bank Rossii has been forced to raise its refinancing rate twice since last November, to the current level of 13 percent, in an attempt to limit the amount of rubles available to banks and companies and to slow the decline of the ruble against the dollar. On the other hand the central bank may be in danger of excessive optimism at this point, with Ignatiev telling journalists that his expectation was that the economy may pick up within “several months,” thus trying to offer hope that Russia's banks won’t suffer that “second wave” of crisis that Finance Minister Alexei Kudrin said may hit as bad loans eat up capital. I am of the opinion that Kudrin is right to be cautious here.br /br /Rising delinquency “is a serious problem, but I don’t share the opinion that a second phase of the crisis is unavoidable,” is Ignatiev's view. Overdue retail loans rose to 4.4 percent as of 1 March from 3.2 percent on 1 September. “I believe the most serious phase of the economic crisis is over," Ignatiev told journalists. Would that he were right, unfortunately I think he is wrong, the worst is still ahead.br /br /Obviously the continuing inflation is a problem for Russia's central bank since they would obviously like to offer monetary easing to the economy, just as the U.S. Federal Reserve, the European Central Bank and the Bank of England are doing by bringing their benchmark rates close to zero to bolster banks and pull their economies out of recessions. Bank Rossii last cut the refinancing rate in June 2007, and it has now increased the repurchase rate charged on central bank loans four times since November.br /br /a href="http://2.bp.blogspot.com/_ngczZkrw340/SdssHaUndKI/AAAAAAAANbo/u91g5ZHoQjg/s1600-h/bank+rossii.png"img id="BLOGGER_PHOTO_ID_5321895890504873122" style="DISPLAY: block; MARGIN: 0px auto 10px; WIDTH: 400px; CURSOR: hand; HEIGHT: 230px; TEXT-ALIGN: center" alt="" src="http://2.bp.blogspot.com/_ngczZkrw340/SdssHaUndKI/AAAAAAAANbo/u91g5ZHoQjg/s400/bank+rossii.png" border="0" //abr /The refinancing rate, seen as a ceiling for borrowing money and a benchmark for calculating tax payments, is currently at 13 percent after being raised in November and December. The central bank increased the repo rate charged on central bank loans twice in February.br /br /br /Ignatiev admitted that problems with dealing with non-performing loans “could arise", and that he did not "think this is just empty talk,” although he stressed Bank Rossii would seek a solution should the banks be forced to increase reserves to deal with possible losses on loans. Bad loans are still a very low proportion of total debt, nut they are rising. NPLs held by OAO Sberbank, Russia’s largest lender, now make up about 2.8 percent of the bank’s loan portfolio, Chief Executive Officer German Gref last week.br /br /br /Also, on the general economic front the pessimists more or less balance out the optimists. The latest in the pessimist camp, Vladimir Yakunin, head of OAO Russian Railways, said this week that the slowing in the decline of cargo shipments in March doesn’t seem to him to indicate that the country is pulling out of its economic crisis. /pblockquote“We are only at the beginning of the crisis and we should wait for better andbr /more solid indications,” Yakunin, chief executive officer at the Russian statebr /rail monopoly which operates the world’s longest rail network, said in abr /Bloomberg Television interview in his Moscow office today. “We didn’t yet passbr /the middle point of the crisis.”br //blockquotepbr /Railway cargo turnover fell by 15.8 percent in March from a year earlier, compared with a 32 percent fall in January and a 26 percent decline in February. The data is a “leading indicator of the trend in Russian industry,” according to VTB analysts in their GDP indicator. Yakunin said Russian Railways is “fighting” to limit this year’s cargo turnover drop to 19 percent as it is forced to slow down its development amid falling investment.br /br /We also learn this week that Siberian Services, an oil-drilling company among whose clients are to be found OAO Rosneft, has defaulted on $100 million of bonds, thus becoming the first Russian borrower to fail to repay its foreign debt this year. Siberian Services didn’t redeem the 13.75 percent notes due 2010 by an April 3 deadline after bond holders exercised a so- called put option, according to Bloomberg news, citing some of the investors involved.br /br /br /State-owned Finance Leasing skipped an interest payment on $250 million of securities in December, according to Bloomberg. Russian borrowers are struggling to refinance about $100 billion in foreign notes maturing this year as banks reduce lending following $1.3 trillion of losses and writedowns since the start of 2007. /ppstrongConflicting Futures?br //strongbr /While the Organization for Economic Cooperation and Development and the World Bank are forecasting that the Russian economy will decline by 5.6 percent and a 4.5 percent, respectively, in 2009, the Russian government is still stubbornly holding fast to its official forecast of a 2.2 percent fall. Publicly government officials are sticking to their view, and diiging in around the idea that they expect a recovery in the final quarter. Deputy Economic Development Minister Klepach said that the government forecast takes into account a package of anti-crisis measures currently being debated by lawmakers that should bolster domestic demand and help boost GDP. Without it, the economy could contract by 4 percent to 5 percent, Klepach noted. /ppThe Central Bank, on the other hand, continues to forecast a 4.5 percent contraction for the current year. /ppThe Russian Cabinet approved last month a revised budget containing the first deficit in 10 years. The budget anticipates a deficit of 7.4 percent of projected gross domestic product, but since the current forecast is for a GDP contraction of only 2.2%, the final deficit may be considerably larger. The Finance Ministry is now transfering money from the Reserve Fund to cover the deficit, and anticipates using some 2.7 trillion rubles this year to help fund the budget gap. br /br /The Ministry of Finance has released the main parameters of its revised federal budget for 2009 which is based on lower oil prices (USD 41 a barrel, Urals) and a drop in budget revenues from the original 21.2 percent of GDP (under the old assumption of USD 95 a barrel) to 16.6 percent, or RUB 6.72 trillion. At the same time, expenditures will be increased by RUB 667.3 billion to RUB 9.69 trillion, to produce a deficit of RUB 2.98 trillion (about 7.4 percent of GDP), a massive reversal of the fiscal position from the 4.1 percent surplus in 2008. br /br /The total consolidated general government deficit is expected to be around 8 percent in 2009 deficit and will be financed largely from the Reserve Fund (7 percent of GDP) with modest domestic borrowing (up to 1 percent of GDP). With a large fiscal deficit, however, and the need to preserve some reserve fund resources for the uncertainty likely to extend into 2010, the space for more fiscal stimulus this year appears limited.br /br /So the level of the contraction which the Russian economy undergoes in 2009 really is rather big beer, since it will condition the size of the eventual fiscal deficit, and the percentage of the Reserve Fund which will need to be used this year. If there is no rebound in oil prices in 2010 then Russia's position can complicate on a number of fronts, since the Central Bank Reserves will be significantly depleted, the Reserve fund also, and there may be less room for fiscal easing in the face of potential credit rating downgrades, while monetary easing may also prove difficult given the need to support the currency, and protect Central Bank Reserves. All in all, 2010 could be a very hard year for Russia and its citizens.div class="blogger-post-footer"img width='1' height='1' src='http://res1.blogblog.com/tracker/8991369883287712098-2651809959312061467?l=globaleconomydoesmatter.blogspot.com'//div

GDP = Going Downhill Precipitously – Analyst Blog

Dirk Van Dijk — Fri, 27 Feb 2009 20:01:30 +0000

Highlights include Darden Restaurants, Inc. (DRI), Brinker International, Inc. (EAT), Intel Corp. (INTC), Microsoft Corp. (MSFT), and in transportation equipment, which subtracted 0.76 points. This indicates very weak demand for companies like Paccar Inc. (PCAR).

In the 4th quarter, real GDP fell at a seasonally adjusted annual rate of 6.2%, a far worse showing than the initial estimate of a 3.8% decline. This follows a 0.5% decline in the 3rd quarter. This is the worst showing since the 3rd quarter of 1982. Nominal GDP fell at an annualized rate of 5.8% -- the worst decline since the government started releasing GDP on a quarterly basis back in 1947.

Since different parts of GDP are of very different sizes, the analysis below is based on the number of points of growth the category added or subtracted from GDP, rather than the percentage change, unless otherwise noted. The graph below shows the year-over-year change in both real and nominal GDP, and reflects the positive growth in the first half of 2008. It thus does not look quite as ugly as the 4th quarter numbers do on their own.

The biggest drag on GDP was Personal Consumption Expenditures (PCE), otherwise known as consumer spending. That subtracted 3.01 points from growth -- worse than the 2.75% drag it exerted on the 3rd quarter. PCE has 3 sub-categories; spending on Durable Goods -- like cars and furniture -- subtracted 1.67 points, mostly due to a 1.13 point drag from autos.

Non-Durable goods spending also fell, subtracting 1.95 points, following a 1.57 point drag in the 3rd quarter. Surprisingly, most of this drag came from lower spending on food, which subtracted 1.53 points following a 0.75 point drag in the 3rd quarter. You know things are tough when the fall in spending on food has almost as much of a negative impact on the economy as spending on autos.

Some of that is likely from people going out to eat at restaurants less and eating at home more, and also from people trading down to the generic store brands from the more expensive name brands. This is not good news for the Restaurant chains -- especially, I suspect, the mid-range firms like Darden (DRI) and Brinker (EAT).

Let us hope that it is not from lots of people going hungry, although some of it probably is. The decline in food spending was offset somewhat by a 0.28 point addition from increased spending on gasoline and other energy. This is a reversal of 6-straight quarters where energy spending was a drag on GDP growth, including a 0.45% drag in the 3rd quarter. This is not something to be very happy about.

Spending on the 3rd sub-category of PCE, Services, actually added to GDP by 0.61 points, reversing a minor 0.03 point drag in the 3rd quarter. The biggest contributors in this area were increased spending on Health Care and on Electricity & Natural Gas. Again, not areas that indicate much increase in the well-being but rather the relentless rise in the cost of health care and some rebound in energy costs (and colder-than-normal temperatures) in the 4th quarter after energy prices collapsed in the 3rd quarter.

The next big part of GDP is Gross Private Investment (GPI). The Residential Investment (RI) sub-category, mostly new housing, subtracted 0.78 points from growth in the 4th quarter, following a 0.60 drag in the 3rd quarter. This marks the 12th-straight quarter that residential investment has been a drag on GDP. The size of the drag is somewhat surprising given that it has shrunk to just 3.09% of the overall GDP -- down from 4.07% in the 4th quarter of 2007.

Given the decline in both the housing starts and the building permits data, look for RI to continue to be a drag on GDP. In some senses, this is a good thing, since the huge inventory of empty houses needs to be cleared out before the housing market can regain its footing. Building more new houses now is economic stupidity. When you find yourself in a hole, stop digging (new foundations).

Non-Residential Investment (NRI) is broadly broken down into 2 parts -- spending on structures like office buildings and shopping malls, and spending on Equipment and Software (E&S). Overall, NRI subtracted 2.48 points following a 0.19 point drag in the 3rd quarter. Spending on Non-residential structures was a drag of 0.24 points in the 4th quarter, a reversal of the 0.36 point addition to growth in the 3rd quarter.

This is the first time that non-residential structures has been a drag on growth since the 3rd quarter of 2005. It will, however, not be the last. We know that Architectural billings fell off a cliff in 2008, and if Architects were not busy in 2008, then it is a lead-pipe cinch that Construction workers will not be busy in 2009.

The real swing however in NRI came from E&S, which subtracted 2.24 points from growth, a dramatic deterioration from the 0.19 point drag it exerted in the 3rd quarter. Within this category, the biggest drags were in Computers and Software, which subtracted 0.97 points, which is not good news for firms like Intel (INTC) and Microsoft (MSFT), and in transportation equipment, which subtracted 0.76 points. This indicates very weak demand for companies like Paccar (PCAR).

Both Imports and Exports fell. Declining imports add to GDP, while declining exports hurt GDP. The decline in exports subtracted 3.44 points from growth, with more than all of that due to a decline in the export of goods, which subtracted 3.58 points, which was slightly offset by increased exports of services which added 0.14 growth points.

In the 3rd quarter, increasing exports added 0.40 growth points, and in the 2nd quarter exports were booming -- adding 1.54 points to growth. Declining imports were the biggest saving grace for the economy in the 4th quarter, adding 2.99 growth points following a 0.65 addition in the 3rd quarter. Overall, then, net exports were a 0.46 point drag in the 4th quarter, reversing contributions of 1.05 points in the 3rd quarter and 2.93 points in the 2nd quarter.

Government Spending helped cushion the decline in the economy a little bit in the 4th quarter, adding 0.32 points to growth, but this was way down from the 1.14 point contribution in the 3rd quarter. Within that, Federal spending added 0.50 points to growth, split 0.16 point contribution from defense spending and a 0.34 point contribution from non-defense spending.

In the 3rd quarter defense added 0.85 points and non-defense added 0.12 points. State and Local spending subtracted 0.18 points in the 4th quarter, reversing a 0.17 point contribution in the 3rd quarter.

Look for Federal spending to be a much bigger contribution in 2009, while State and local spending will most likely continue to be a drag.

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Feb 26: Initial Claims at 26 Year High – Economic Highlights

Zacks Market Commentaries — Thu, 26 Feb 2009 15:23:14 +0000

Initial Claims for the week ending Feb. 21st were 667,000, exceeding the 638,000 estimate, the highest level since October of 1982, following 631,000 for the week ending February 14th, revised from 627,000. The 4-week moving average was 639,000, an increase of 19,000 from the previous week's revised average, also a 26 year high. Relative to the size of the labor force in 1982, which has grown since, the magnitude of this week's 26 year record doesn't make as high of an impact. The report shows those continuing to receive unemployment benefits rose by 114,000 to 5,112,000 last week, making this highest continuing number ever, again breaking last week's record, and was only 2,744,000 in the prior year.

Durable Goods Orders decreased by 5.2% in January, by $9 billion, to $163.8 billion, following a downwardly revised 4.6% reduction in December (originally reported at -2.6%). Analysts expected new orders to fall 2.5% for the month. This is the 6th month exhibiting a monthly decline. Over the past 12 months, Durable Orders have dropped by 26.4%. Transportation equipment, down five of the last six months, had the largest decrease, $5.7 billion or 13.5% to $36.7 billion Excluding transportation, Durable Goods fell 2.5%, and excluding defense, Durable Goods fell 2.3%.

New Home Sales were reported jointly by the U.S. Census Bureau and the Department of Housing and Urban Development for January at an annual rate of 309,000, the slowest pace ever recorded, following 344,000 in December, revised from 331,000. Over the month, new home sales decreased by 10.2%, while over the year, sales are down 48.2% from the 597,000 pace in January of 2008. The mean price of a new home sold in January decreased to $234,600, following a $246,900 mean price in December and from $287,500 in November.

Upcoming Releases
GDP-Preliminary (02/27 at 8:30 AM EST)
Personal Spending (03/02 at 8:30 AM EST)
ISM Manufacturing Index (03/02 at 10:00 AM EST)

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Feb 12: Retail Sales Unexpectedly Grew 1%

Zacks Market Commentaries — Thu, 12 Feb 2009 09:30:04 +0000

Retail Sales increased unexpectedly by 1% to $344.6 billion in January, ahead of the 0.6% drop grew anticipated , following a decline of 3% in December (originally reported 2.7%), breaking the 6 month streak of declining retail sales which are down 9.7% from January 2008 levels. Sales at Building Material & Garden Equipment & Supplies Dealers was the kind of business with the largest reduction in retail sales, by 3.2% as a result of exceedingly harsh winter conditions. Nonstore retailers increased the most, by 2.7%, while sales at Gasoline Stations increased 2.6% over the month although 35.5% below sales volume 12 months ago. Retail sales excluding autos, which tends to be a more volatile component of spending, increased by 0.9%, also a positive surprise as this figure was also expected to decline, by 0.5%, following a 3.2% drop in December (originally reported as a 3.1% drop) and declined 6.0% over the past year. Sales in motor vehicle parts and dealers are up 1.6% over the month and are down 22.2% over the year.

Initial Claims for the week ending Feb. 7th fell by 8,000 to 623,000, the second highest level since October of 1982, from 631,000 last week (revised upwards by 5,000), which was the 26 year high. This report was in line with analysts' consensus estimate of 620,000, a 0.48% surprise. The 4-week moving average was 607,500, an increase of 24,000 from the previous week's revised average. California made a 20k impact in last week's dismal initial claims figure from layoffs cited in construction and service industries. North Carolina also made a heavy impact with an increase of 8,663 filings from layoffs in textile, transportation equipment, industrial machinery, construction, and services industries. The report shows those continuing to receive unemployment benefits rose by 11,000 to 4,810,000 last week, again the highest continuing number ever, and was only 2,695,000 in the prior year, when the U.S was only in the second month of the current recession.

Today at 10:00 AM EST, Business Inventories for December 2008 will be released by the Census Bureau, expected to shrink by 1.1% following a 0.7% decline in November.

Upcoming Releases
Net Foreign Purchases (02/17 at 9:00 AM EST)
Housing Starts (02/18 at 8:30 AM EST)
Building Permits (02/18 at 8:30 AM EST)
Industrial Production (02/18 at 9:15 AM EST)
Capacity Utilization (02/18 at 9:15 AM EST)
Producer Price Index (02/19 at 8:30 AM EST)
Leading Indicators (02/19 at 10:00 AM EST)

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South Carolina Stocks

Fred Fuld — Sat, 22 Nov 2008 09:09:00 +0000

a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/_T9VXVyuEITg/SSfQXZfpwKI/AAAAAAAAAls/Lj1wys_5L-Y/s1600-h/southcarolina.jpg"img style="float:right; margin:0 0 10px 10px;cursor:pointer; cursor:hand;width: 320px; height: 240px;" src="http://4.bp.blogspot.com/_T9VXVyuEITg/SSfQXZfpwKI/AAAAAAAAAls/Lj1wys_5L-Y/s320/southcarolina.jpg" border="0" alt=""id="BLOGGER_PHOTO_ID_5271410989259669666" //abr /A state of white sand beaches, mountain trails, and historic sites… And it is not Hawaii; we are talking about South Carolina. Some other facts that you may not know about South Carolina follow:br /br /1. South Carolina’s GSP ranks 28th nationally, with a total of $152 billion.br /2. The state offers low corporate income taxes and no state property tax as a way to attract new business to the state.br /3. Tourism industry produces $16.7 billion each year.br /4. The top agricultural commodities are broilers, greenhouse and floriculture products, turkeys and cattle and calves.br /5. South Carolina’s agribusiness provides employment for 200,000 workers.br /6. Forests cover 2/3 of South Carolina’s surface and they provide for one of the state’s most valuable crops: timber, which produces $835 million annually.br /7. Mined minerals within the state have a value of $480 million.br /8. South Carolina is the top of producer of cement, and second in the production of kaolin.br /9. The state exports transportation equipment, chemical manufactures, and machinery manufactures, for a total of $9.8 billion.br /10. The top destination for South Carolina’s export is Germany, Canada, and Mexico.br /br /The following companies are headquartered in South Carolina:br /br /Scana Corporation (SCG) produces transports and sells electricity to customers in South Carolina. The stock has a market cap of $3.63 billion, a PE of 11, a PEG of 2.22, and it pays a yield of 5.8%.br /br /Sonoco Products Company, (SON) produces consumer packaging products, and provides packaging services to the industrial sector in the United States. The stock has a market cap of $2.39 billion, a PE of 12, a PEG of 1.15, and it pays a yield of 5.1%.br /br /AVX Corporation (AVX) produces, markets and distributes passive electronic components in the United States and internationally. The stock has a market cap of $1.43 billion, a PE of 10, a PEG of 0.94, and it pays a dividend of 1.8%.br /br /Blackbaud, Inc. (BLKB) designs and offers software to nonprofit organizations. The stock has a market cap of $666.22 million, a PE of 20, a PEG of 1.15, and it pays a yield of 2.8%.br /br /ScanSource, Inc. (SCSC) is a wholesaler of technology products. The stock has a market cap of $542.53 million, a PE of 10, and a PEG of 0.66.br /br /The South Financial Group, Inc. (TSFG) acts as the holding company for Carolina First Bank and Mercantile Bank. The stock has a market cap of $473.38 million, and it pays a yield of 0.5%.br /br /First Citizens Bancorporation, Inc. (FCBN) is the holding company for First Citizen Bank and Trust Company. The stock has a market cap of $361.68 million, a PE of 6, and it pays a yield of 0.3%.br /br /World Acceptance Corporation (WRLD) is a finance company. Its services include small loans and credit insurance products. The stock has a market cap of $438.39 million; it has a PE of 8, and a PEG of 0.53.br /br /SCBT Financial (SCBT) renders retails services and commercial banking services through its subsidiaries. The stock has a market cap of $340.64 million, a PE of 14, a PEG of 1.38, and it pays a dividend of 2.1%.br /br /First Financials Holdings, Inc. (FFCH) is the holding company of First Federal Savings and Loan Association of Charleston. The stock has a market cap of $244.29 million, a PE of 11, a PEG of 1.18, and it pays a yield of 5.1%.br /br /Don't forget to check out the stocks from the states of a href="http://stockerblog.blogspot.com/2008/10/wisconsin-stocks.html"Wisconsin/a, a href="http://stockerblog.blogspot.com/2008/10/louisiana-stocks.html"Louisiana/a, a href="http://stockerblog.blogspot.com/2008/10/michigan-stocks.html"Michigan/a, and a href="http://stockerblog.blogspot.com/2008/10/kentucky-stocks.html"Kentucky/a. br /br /iAuthor does not own any of the above./ibr /br /By a href="http://Stockerblog.com"Stockerblog.com/adiv class="blogger-post-footer"div class='adsense' style='text-align:center; padding: 0px 3px 0.5em 3px;' script type="text/javascript"!-- google_ad_client="ca-pub-2427831169011625"; google_ad_width=300; google_ad_height=250; google_ad_format="300x250_as"; google_ad_type="text"; google_ad_channel ="8681602088"; google_color_border="FFF3DB"; google_color_bg="FFF3DB"; google_color_link="1B0431"; google_color_url="1B0431"; google_color_text="29303B"; //--/script script type="text/javascript" src="http://pagead2.googlesyndication.com/pagead/show_ads.js" /script /div

Nov 20: Initial Claims at 16 Year High

Zacks Market Commentaries — Thu, 20 Nov 2008 10:35:34 +0000

The Department of Labor reported Initial Claims for the week ending Nov. 15th were 542,000, an increase of 27,000 from the previous week's revised figure of 515,000 (originally reported at 516,000). This is the highest level since July of 1992.Â The consensus was 517,000, which brought today's report at a 4.85% surprise.Â California had an increase of 15,532 but declined to provide comment.Â North Carolina, Tennessee, New Jersey, New York, and South Carolina all reported a significant increase in filings, a combined 23,443, cited from layoffs in primary metals, furniture, transportation equipment, industrial machinery, construction, service, and manufacturing industries.Â The 4-week moving average was 506,500, the highest in 25 years, an increase of 15,750 from the previous week's revised average of 490,750 (which was a 17 year high).Â Less than half of unemployed workers do file for unemployment benefits, while there has been much contraction in economic activity recently (not yet declared a recession by the NBER) more unemployed persons may be filing for state unemployment benefits, however coupled with the statistic that those continuing to receive unemployment benefits is 4,0122,000 this week, up 109,000 from last week, and was only 2,580,000 in the prior year, the unemployment rate for November, to be released on December 5th at 8:30 AM EST, is expected to show another big jump (Oct rate = 6.5%, +0.2% from September) as labor markets have undoubtedly weakened.

The Conference Board's Leading Indicators Index decreased -0.8% in October to 99.6, following a 0.1% increase in September, downwardly revised from 0.3%.Â Stock prices, building permits, index of consumer expectations, index of supplier deliveries, average weekly initial claims for unemployment insurance, and manufacturer's new orders for nondefense capital goods made negative contributions to the index.Â Average weekly manufacturing hours remained flat, and slightly offsetting to the index were positive contributions from the money supply (the highest in 7 years), interest rate spread, and manufacturer's new orders for consumer goods.Â

The Coincident Indicators increased 0.2% to 105.6 following a 0.7% decrease in September.Â Positive contributions were industrial production, personal income less transfer payments and manufacturing
and trade sales.Â The negative contributor was employees on nonagricultural payrolls.

The Lagging Indicators increased 0.1% to 113.3 following a 0.3% in September.Â Negative contributions were average duration of unemployment, average prime rate charged by banks, change in CPI for services, and the change in index of labor cost per unit of output, manufacturing. The ratio of manufacturing and trade inventories to sales remained flat in October.Â Largely offsetting were commercial and industrial loans outstanding and ratio of consumer installment credit to personal income.

Upcoming Releases
Existing Home Sales (11/24 at 10:00 AM EST)
GDP-Preliminary (11/25 at 8:30 AM EST)

Zacks Investment Research

Can the Mega-Rally Hold?

Contrarian Profits — Thu, 30 Oct 2008 14:16:52 +0000

Stocks stage huge rally, but will it hold? Key levels to watch, and some historic perspective… Libor continues to ease; famous Wall Street CEO explains why credit still isn’t flowing… John Williams on the “true cost” of the U.S. financial crisis, with charts to prove it… Byron King with an “exploding” foreign resource market…. Plus, a stinging critique of I.O.U.S.A., and one thing you must do before voting Nov. 4.

The Dow logged its second best one-day point gain, 889 points, in its even more storied history yesterday:

Percentage wise, at 10.8%, the rally ranks sixth. The S&P and Nasdaq trundled alongside the old lady like puppies.

After finding a new “credit crisis” low on Monday, traders on Wall Street snapped back…

Small Cap Voice Featured Client: TechPrecision Corp. (TPCS.OB)

QualityStocks — Wed, 22 Oct 2008 16:23:53 +0000

Headquartered in Westminster, Massachusetts, TechPrecision Corporation, through its wholly-owned subsidiary Ranor, Inc., manufactures metal fabricated and machined precision components and equipment. Their corporate mission is to excel in precision manufacturing that provides their clientele high quality and complete program management and integration services. TechPrecision is an end-to-end solutions provider. They have the ability to engineer [...]

Indiana Stocks

Fred Fuld — Tue, 14 Oct 2008 05:20:00 +0000

Indiana is perhaps best known by its world famous Indianapolis 500 motorsports race, but there is indeed much more to this state. It is also a fast growing and very diverse state. The following are interesting facts about Indiana:

1. Livestock and poultry occupations employ over 42,000 in Indiana.
2. There are three biodiesel plants in Indiana, and one under construction.
3. There are 12 ethanol plants operating within the state and together they produce over 1 billion gallons of ethanol.
4. A third of Indiana’s soybean production is exported.
5. Indiana’s tourism industry contributes almost $7 billion to the economy.
6. Indiana’s top manufacturing industries are: transportation equipment, chemicals, and primary metals.
7. The manufacturing industry employs approximately 640,000 workers in the state.
8. Indiana’s coal industry provides the state with over 2,000 jobs.
9. International manufacturing firms with operations in Indiana employ 90,000 people.
10. Indiana offers several attractive incentives to companies relocating to the state.

The following companies are headquartered in Indiana:

Eli Lilly and Company (LLY) develops makes and markets pharmaceutical drugs and products worldwide. The stock has a market cap of $34.43 billion, a PE of 9, a PEG of 1.43, and it pays a yield of 5%.

WellPoint, Inc. (WLP) is a health benefits company. Its customers are large and midsize employers in the United States. The stock has a market cap of $17.17 billion, a PE of 6, and a PEG of 0.65.

Simon Property Group Inc. (SPG) buys, owns, develops, and manages retail real estate in the United States. The stock has a market cap of $14.95 billion, a PE of 34, a PEG of 1.27, and it pays a yield of 1.8%.

Zimmer Holdings, Inc. (ZMH) develops and sells orthopedic products in Latin America, Europe and Asia. The stock has a market cap of $11.13 billion, a PE of 15, and a PEG of 1.06.

Cummins, Inc. (CMI) makes and sells natural gas engines, and related services and products. The stock has a market cap of $6.18 billion, a PE of 7, a PEG of 0.39, and it pays a yield of 2.0%.

NiSource (NI) delivers natural gas and electricity to customers in the U.S. The stock has a market cap of $30.4 billion, a PEG of 3.48, and it pays a yield of 7.0%.

ITT Educational Services (ESI) offers study programs leading to Associate, bachelor, and masters degree in the United States. The stock has a market cap of $2.63 billion, a PE of 15, and a PEG of 0.81.

Duke Realty Corporation (DRE) leases and manages properties in the United States. The stock has a market cap of $2.04 billion, a PE of 15, a PEG of 1.31, and it pays a yield of 11.3%.

Steel Dynamics Incorporated (STLD) makes and sells steel products in the United States The stock has a market cap of $1.49 billion, a PE of 3, a PEG of 0.29, and it pays a yield of 4.2%.

Vectren Corporation (VVC) engages in the transportation and delivery of energy to customers in the United States. The stock has a market cap of $1.64 billion, a PE of 12, a PEG of 2.84, and it pays a yield of 5.7%.

Don't forget to check out stocks from some of the other central states, such as Missouri stocks, Minnesota stocks, Kansas stocks, and Iowa stocks.

Author does not own any of the above.

By Stockerblog.com

Missouri Stocks

Fred Fuld — Thu, 09 Oct 2008 02:34:00 +0000

Missouri has a very diversified economy. It has a large service sector, wholesale, retail, manufacturing and agricultural. It is a top producer of automobiles, beer and aerospace technology. Some lesser known facts about Missouri follow:

1. Missouri’s top commodities are soybeans, cattle and calves and corn.
2. 14,842 new businesses settled in Missouri during 2007.
3. Top manufacturing industries in the state are: transportation equipment, food products, and fabricated metals.
4. The manufacturing industry employs 13% of the work force.
5. Missouri exports chemicals, machinery and food products to South Korea, China and Japan.
6. The High-tech industry of Missouri employs 4% of the work force.
7. Missouri offers over $306 million in incentives for biofuel energy development, along with tax credits.
8. Forest products contribute $1.69 billion to the economy.
9. Top industries depending on exports are the aircraft manufacturing, and the wholesale trading industries.
10. The optical instrument and less manufacturing industry exports 100% of its products.

The following companies are headquartered in Missouri:

Monsanto Company (MON) makes agricultural products. It is also engaged in the biotechnology industry. The stock has a PE of 23, a PEG of 0.67, and it pays a yield of 1%.

Anheuser-Busch Companies, Inc. (BUD) produces and sells beer worldwide. Some of the most popular brands are: Budweiser, and Michelob. The stock has a PE of 23, a PEG of 2.03, and it pays a yield of 2.3%.

Emerson Electric Co. (EMR) engages in the technology business. It operates worldwide and designs and delivers engineering services. The stock has a PE of 13, a PEG of 0.95, and it pays a yield of 3.1%.

Express Scripts, Inc. (ESRX) renders management services for pharmacies in the United States. The company also home delivers certain pharmaceutical products. The stock has a PE of 28, and it pays a yield of 1.35.

Peabody Energy Corporation (BTU) produces and sells coal worldwide. The company owns plants in the United States, Australia and Venezuela. The stock has a PE of 27, a PEG of 0.48, and it pays a yield of 0.6%.

Ameren Corporation (AEE) is a public utility company. It produces, and delivers energy to businesses. The stock has a PE of 11, a PEG of 3.20, and it pays a yield of 6.5%.

H&R Block, Inc. (HRB) is a business consulting firm. Some of its services include tax preparation and advice, accounting services, and retail banking. The stock has a PEG of 1.24, and it pays a yield of 2.5%.

Sigma-Aldrich Corporation (SIAL) produces and markets chemicals. The company sells its products worldwide. The stock has a PE of 20, a PEG of 2.01, and it pays a yield of 1%.

MEMC Electronic Materials Inc. (WFR) produces and markets wafers used by the semiconductor industry. The stock has a PE of 9, and a PEG of 0.22.

Amdocs Limited (DOX) is a service provider company. Its clients are the service industry throughout the world. It also produces and delivers software used for management purposes. The stock has a PE of 15, and a PEG of 0.83.

Don't forget to check out stocks from some of the western states, such as Arizona stocks, Oregon stocks, and Nevada stocks.
.

Author does not own any of the above.

By Stockerblog.com

Kansas Stocks

Fred Fuld — Wed, 08 Oct 2008 04:24:00 +0000

Kansas was purchased in 1803 by the US government as part of the Louisiana Purchase. Their soil today produces wheat, corn, oats, berries potatoes, and much more. Kansas is also home to some of the leading aircraft-manufacturing companies.
Here are some interesting facts about the state:
1. Kansas is the number one producer of wheat.
2. Kansas is one of top oil producers. The state has also natural gas and helium reserves.
3. Kansas wheat exports had a value of $1,012.8 million in 2007, and ranked it second among the states.
4. Kansas added more than 20,500 new jobs during 2006.
5. 70% of Kansas’ population, age 16 and over, are either working or looking for work.
6. It is expected that Kansas total employment will increase by 13.4% from 2002 to 2012.
7. Kansas demand for Architects, medical assistants and teachers is expected to grow by almost 50% by the year 2012.
8. The trade, transportation and utilities industry contributed more than 18% to Kansas nominal GDP of $111 billion in 2006.
9. Kansas top export is transportation equipment.
10. Kansas top trading partners, in order of importance are: Canada, Mexico, and the United Kingdom.
The following companies are headquartered in Kansas:

Embarq Corporation (EQ) is a service company. It delivers local and long distance calls, internet services, video, wireless and satellite services. The stock has a PE of 8, a PEG of 3.88, and it pays a yield of 6.8%.

Capitol Federal Financing (CFFN) operates in Kansas and it offers its customers savings accounts, money market accounts, CDs and other accounts. The stock has a PE of 76, and it pays a yield of 4.4%.

Westar Energy Inc. (WR) produces and delivers electric energy in Kansas. The stock has a PE of 13, a PEG of 3.44, and it pays a yield of 5.0%.

Spirit AeroSystems Holdings Inc. (SPR) designs and produces aero-parts, such as wings, and fuselage for its commercial, business and military customers. The stock has a PE of 6, and a PEG of 0.54.

Waddell & Reed Financial Inc. (WDR) manages investment accounts, and provides shareholder services. The stock has a PE of 15, a PEG of 0.96, and it pays a yield of 3.1%.

Compass Minerals International, Inc. (CMP) manufactures and sells mineral products, such as fertilizers in the United States, and United Kingdom. The stock has a PE of 15, a PEG of 2.17, and it pays a yield of 2.8%.

Seabord Corp. (SEB) engages in the production and processing of pork. It also exports wheat and other commodities The stock has a PE of 8, and it pays a yield of 0.2%.

Collective Brands Inc. (PSS) is a wholesaler and retailer of footwear for men, women and children. The stock has a PE of 164, and a PEG of 1.08.

Farrelgas Partners (FGP) purchases, transports and resale propane. This propane is used for heating, cooking, and water heating. The stock has a PE o 45, a PEG of 3.56, and it pays a yield of 10.9%.

Euronet Worldwide (EEFT) is in the business of providing electronic payment systems. Some of its products include: ATMs, card issuing and processing. The stock has a PE of 21, and a PEG of 0.81.

Don't forget to check out stocks from some of the western states, such as Arizona stocks, Oregon stocks, and Nevada stocks.
.

Author does not own any of the above.

By Stockerblog.com

Meanwhile, Back on Main Street… – Analyst Blog

Dirk Van Dijk — Thu, 25 Sep 2008 13:46:16 +0000

While the market is up big today on the hopes that the Fire Department will soon arrive with its $700 billion rescue package, we received quite a bit of very bad economic news from the real economy.Â New home sales plunged in August, falling 11.5% from July and are down 34.5% from a year ago.Â This is the lowest pace of home sales for any August since 1982.Â It is also well below consensus expectations of a decline of just 1.0%.Â

Plunging prices didnÂ’t get the housing merchandise moving either.Â The average price of a new home fell by 11.8%, and the median by 5.5%...IN A MONTH!Â The inventory situation is still very troublesome, as declining sales offset the decline in the number of new homes on the market.Â

At the current sales pace, it would take 10.9 months to clear out the existing inventory.Â That is down only slightly from the most recent peak of 11.2 months back in March of 2008 and not far below the all time record of 11.6 months in April of 1980.Â A normal figure for months of supply is more like 4 to 5 months.Â Given that credit markets were still relatively functional in August, at least compared to what we are seeing now, it is very likely that the September numbers will be much worse than August.

In the Manufacturing sector, total orders for Durable Goods fell 4.5% -- the biggest decline since January.Â The January decline was mostly payback for a very big increase in the December number, but this time the July increase was very modest.Â Orders for Capital goods -- excluding transportation equipment and defense, or core capital goods -- were down 2.0%.

On the employment front, the news was not much better.Â Weekly unemployment claims rose by 32,000 to 493,000.Â The four week moving average rose to 462,500.Â Some of that increase was due to the recent hurricanes and the resulting severe gasoline shortages across the Southeast.Â However, given the freeze-up in the credit markets, I would not expect the number to fall back anytime soon. This weekÂ’s number was the worst we have seen since the spike following 9/11.

The credit market remains frozen.Â The spread between the rate on a three month T-Bill and what banks lend to each other for three months, known as the TED spread, is still at 3.00%.Â Normal is about 0.40% and it had been running at about 1.0%.Â In the previous waves of trouble over the last year (i.e. during the Bear Stearns bailout), the spread got to about 2.5%.Â The spread between the yield on the very highest quality commercial paper, for example from General Electric (GE) and what mere mortal firms have to pay to borrow for a month, the A2/P2 spread, is off the charts at near 4.00%.Â It has never before gone over 2.00% and is normally at about 0.30%.

Stay in the companies who have the strongest balance sheets and which either donÂ’t have to use the commercial paper market, or if they have to can get the best rates.Â Firms like Exxon (XOM) and Coca Cola (KO) would be examples of this.Â

Read the full analyst report on XOM

Read the full analyst report on KO

"XOM" Free Stock Analysis: Buy? Sell? Hold?
"KO" Free Stock Analysis: Buy? Sell? Hold?
"GE" Free Stock Analysis: Buy? Sell? Hold?
Zacks Investment Research

Supreme Industries Inc. (STS) Meets Customers Specifications

QualityStocks — Mon, 15 Sep 2008 18:18:32 +0000

It all began in 1974 for Supreme Industries Inc. when Omer Kropf and a business partner started the company in Goshen, Indiana. He felt there was an untapped need for higher quality light-and medium-duty truck bodies. His idea was to build the highest-quality truck bodies available and sell directly to dealers to more efficiently serve [...]

TechPrecision Corporation (TPCS.OB) Secures Solar Contract

QualityStocks — Thu, 12 Jun 2008 16:32:43 +0000

TechPrecision Corporation (TPCS.OB) through its wholly-owned subsidiary, Ranor Inc., is a leading manufacturer of large-scale, high-precision fabricated and machined products. The company produces products for the nuclear, solar, medical, defense, aerospace, and other industries. Some examples of the products that the company produces include: nuclear reactor parts, nuclear waste storage systems, solar-related products, and key [...]