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GaltMachine

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  • More on Richmond Fed: New orders gains 5 points to -20. Capacity utilization gains 7 points to -9. Employment weakens, down 6 points to -5, average workweek down 4 points to -11, the wage index down 6 points to 3. (full report[View news story]
    This is so weird to interpret given that all the "strengthening" is to a lower level of contraction.

    Courtesy of Business Insider:

    "Manufacturing continued to contract in the South East and mid-Atlantic region of the country, although it did so at a less prononced rate, new data out of the Federal Reserve Bank of Richmond shows."

    Read more: http://read.bi/PYnFvW
    Aug 28 10:26 AM | Likes Like |Link to Comment
  • August Consumer Confidence: 60.6 vs. 65.8 expected, 65.4 (revised from 65.9) prior. Expectations 70.5 vs. 78.4 prior. Present Situation 45.8 vs. 45.9 prior. [View news story]
    This has a big weighting in the LEI - might be enough to drive it negative on its own in the next release.
    Aug 28 10:24 AM | Likes Like |Link to Comment
  • For the first time in four years coffee roasters use more robusta beans than arabica as consumers shift toward cheaper options. According to analysts, the impact on specialty seller Starbucks (SBUX) could be positive for margins as long as demand holds up and also opens up the question if the company will alter its blend recipes to adjust to the industry trend. [View news story]
    Bad move for anyone doing this. Coffee will taste worse (green) so short-term profits will come at the expense of long-term brand value and profits.

    Folgers blew it doing this years ago.
    Aug 28 09:35 AM | Likes Like |Link to Comment
  • A great chart of the dispersion of S&P 500 returns over nearly the past 200 years via Heritage Capital. At first glance, it looks like how they might draw up a bell curve in Stat 101, but a closer look reveals the powerful upward drift of returns from human endeavor. [View news story]
    Perhaps the relative volatility of the current modern period versus the past is also a direct reflection of the boom and bust of a credit bubble. Very similar to the boom and bust of the 1920's - very similar pre and post bubble bursting corresponding with extreme return spreads from year to year and the prior 10 year period.

    Look at 1935, 1933 versus 1930, 1931, 1937 that's pretty wild.

    Funny 1929, despite the "crash", wasn't that bad on a relative basis and the 5 years previous were just phenomenal.
    Aug 27 03:02 PM | Likes Like |Link to Comment
  • In tandem with the start of its VMworld conference, VMware (VMW -0.2%) is introducing upgrades to its vSphere virtualization platform and vCloud cloud management suite. vSphere, which has ditched a DRAM-based license fee structure that gave rivals Microsoft (MSFT) and Citrix (CTXS) an opening, now includes more advanced networking and data protection capabilities, and vCloud now promises the ability to provision "virtual data centers" featuring thousands of virtual servers. [View news story]
    "vCloud now promises the ability to provision "virtual data centers" featuring thousands of virtual servers."

    That's a powerful vision. Very good for corporate America and SMB's if this is reality and not vaporware.
    Aug 27 01:12 PM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Expecting Too Much From Jackson Hole? [View article]
    Tack,

    Bernanke said the following to Darrell Issa in an letter as reported by the FED's mouthpiece, John Hilsenrath on August 22nd which caused the intra-day positive reversal and end of day rally and probably explains the title of Jeff's article:

    http://on.wsj.com/NqT6Rs
    "Federal Reserve Chairman Ben Bernanke, in a letter responding to questions posed by U.S. Rep. Darrell Issa (R., Calif.), chairman of the House oversight committee, defended actions the Fed has taken to support the economy and said there is room for the Fed to do more.

    "There is scope for further action by the Federal Reserve to ease financial conditions and strengthen the recovery," Mr. Bernanke wrote in a letter dated Aug. 22, a copy of which was obtained by The Wall Street Journal."

    I am not making anything up, just reflecting what is driving markets whether you want to believe it or not. I agree completely that there should be no further QE's and my hope is that you are correct on this but Ben Bernanke keeps floating the idea that it could happen so who are you gonna believe?

    Nonetheless the answer to what happens next will be self-evident soon regardless of my opinion or yours.
    Aug 26 11:08 PM | 2 Likes Like |Link to Comment
  • Weighing The Week Ahead: Expecting Too Much From Jackson Hole? [View article]
    Tack,

    "The markets have not been being driven by QE3, or even its expectation,"

    That's an interesting perspective. What's your proof?

    The market moves up and down on every single little comment from a FED official on QE and especially on any article from Hilsenrath and that's a fact. Every LTRO or QE is met with a positive market reaction and the lack of one has a negative reaction. I don't think that's a very controversial position given the recent history but I guess you disagree.

    Right or wrong the market wants it and if it doesn't get it, you will see a sell-off.
    Aug 26 05:05 PM | 3 Likes Like |Link to Comment
  • Weighing The Week Ahead: Expecting Too Much From Jackson Hole? [View article]
    Stanley,

    I keep thinking about the inventory sell-off that China could trigger if they really are in a hard landing scenario. If the NY Times reports along with others are correct about the "mountains" of finished goods being built up then it is only a matter of time before they start dumping/liquidating on the world markets.

    That will hurt corporate profits and create a lot of deflationary pressures. Combine that with a Eurozone in recession and it has the ingredients for an interesting economic soup.
    Aug 26 04:07 PM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Expecting Too Much From Jackson Hole? [View article]
    Hopefully you are correct but that will cause a sell-off if no announcement is made.
    Aug 26 04:02 PM | 1 Like Like |Link to Comment
  • General Motors (GM) has grand plans to see the new Cadillac ATS rise to the top of the compact luxury segment. In the hopes of refreshing the Cadillac image to appeal to a younger market, the new model features a new rear-wheel-drive platform and the latest tech gadgetry along with its still-powerful V-6 engine. The ultimate goal for GM is to see the Cadillac brand unseat the dominance of the BMW (BAMXY.PK) 3-Series. [View news story]
    A BMW is an aspirational vehicle for most people which includes me.

    I finally got my first BMW, a 550i, and I have never have owned anything close to it in the past. I love it but I am sure I would have also loved any other high-end car. The difference is that owning a BMW is like saying "you have arrived/made it" and it still has a relatively hip image overall. Mercedes is a great car but still gives you that old person feel no matter how exciting the look of the car and its driving appeal.

    Brands and their positioning have a lot of power beyond the concrete physical aspects of the vehicle and this is where GM won't have a chance until they can create that same type of desire and psychic fulfillment.

    In some ways it is similar to the AAPl cult for its buyers. Really hard to displace someone from buying a bimmer once they have their mind set on it.

    Cadillac once had this positioning but not anymore.
    Aug 24 03:18 PM | Likes Like |Link to Comment
  • July Durable Goods: +4.2% vs. +1.9% expected, +1.6% prior. Ex-transport -0.4% vs. +0.4% expected, -1.1% prior. [View news story]
    bbro,

    That's why it pays to look at the details.

    I was totally confused by the market action this morning as I would have expected a big positive reaction in the futures to this number and it did not happen.

    I was surprised by your first post above and yet it seems to be the way the market was looking at it as well.

    Anybody thinking they could trade on this data has to be scratching their heads. Thanks for the clarification.
    Aug 24 10:35 AM | Likes Like |Link to Comment
  • July Durable Goods: +4.2% vs. +1.9% expected, +1.6% prior. Ex-transport -0.4% vs. +0.4% expected, -1.1% prior. [View news story]
    Tack,

    CNBC has done exactly that quoting Reuters:

    "US Durable Goods Surge in July on Boeing Orders
    Published: Friday, 24 Aug 2012 | 8:34 AM ET Text Size
    By: Reuters

    New orders for long-lasting U.S. manufactured goods surged in July, but a second straight month of declines in a gauge of planned business spending pointed to a slowing growth trend in the factory sector."

    However, it includes the same warning as everyone else.

    I am not "cherrypicking" anything.
    Aug 24 10:17 AM | Likes Like |Link to Comment
  • July Durable Goods: +4.2% vs. +1.9% expected, +1.6% prior. Ex-transport -0.4% vs. +0.4% expected, -1.1% prior. [View news story]
    bbro,

    I know that. That wasn't the point. The article from Bloomberg says the same thing. They are hardly doomers. I also don't think Roubini is a hack either regardless of his moniker.

    I am not cherrypicking anything just providing links from 3 diverse sources. CNBC reports it this way:

    "US Durable Goods Surge in July on Boeing Orders
    Published: Friday, 24 Aug 2012 | 8:34 AM ET Text Size
    By: Reuters

    New orders for long-lasting U.S. manufactured goods surged in July, but a second straight month of declines in a gauge of planned business spending pointed to a slowing growth trend in the factory sector."

    The reversal of the Qantas orders is a done deal so yes it will affect the durable report next month. That's not crazy but it is known data and probably expected.
    Aug 24 10:10 AM | Likes Like |Link to Comment
  • July Durable Goods: +4.2% vs. +1.9% expected, +1.6% prior. Ex-transport -0.4% vs. +0.4% expected, -1.1% prior. [View news story]
    bbro/Tack,

    This is how this report is being covered by Bloomberg:

    http://bloom.bg/Nq3S4D
    "Demand for U.S. capital goods such as machinery and communications gear dropped in July by the most in eight months, indicating companies are pulling back on investment.

    Possible U.S. tax increases and spending cuts and a global economic slowdown are hurting companies such as Caterpillar Inc. and Deere & Co., indicating manufacturing will no longer be a driver of the expansion.
    Bookings for non-military capital equipment excluding planes slumped 3.4 percent, a Commerce Department report showed today in Washington. Total orders for goods meant to last at least three years jumped 4.2 percent, paced by a 54 percent surge in demand for civilian aircraft."

    This tweet from Dr. Doom, Roubini:

    "Nouriel Roubini ‏@Nouriel
    Dismal capex report: core capital goods orders are falling at a 9.3% 3months over 3months SAAR rate. Capex is contracting at very rapid pace"

    Apparently the negative revisions to last month's core data are the issue they are focused on.

    Zerohedge's take:
    http://bit.ly/Nq3TW5
    "Today's Durable Goods number was blistering, if only on the headline. Coming at $230.7 billion, it was up a whopping $9.4 billion or 4.2%, on expectations of a 2.5% increase. The reason for the surge: the volatile transportation segment, which rose 14.1% to $80.4 billion. This is entirely due to Boeing aircraft orders, which rose to 260 this year compared to 10% of that a year ago, which however, as Quantas reminded us yesterday, can and will be promptly reversed (see: "Boeing hit by 'biggest-ever 787 order cancellation'"). In other words next month will be a headline disaster. So what happened beneath the headline when excluding volatile series: well - Durable Goods ex-transportations decline -0.4% in July, missing expectations of a +0.5% print, with the June number revised down from -1.1% to -2.2%. It gets worse: Nondefense capital goods excluding aircraft tumbled in July, and imploded to -3.4%, crashing below expectations of a -0.2% print, with the previous print revised from -1.4% to -2.7%). This means that indeed the brief blip higher in economic activity in the summer was largely transitory and was purely a byproduct of seasonal adjustment. Expect cuts to Q3 GDP forecasts to commence imminently by the sellside lemmings."

    Wow, I have never been more confused by a report then this one.
    Aug 24 09:51 AM | Likes Like |Link to Comment
  • July Durable Goods: +4.2% vs. +1.9% expected, +1.6% prior. Ex-transport -0.4% vs. +0.4% expected, -1.1% prior. [View news story]
    bbro,

    What does this mean?

    "Inventories of manufactured durable goods in July, up
    thirty of the last thirty-one months, increased $2.7 billion
    or 0.7 percent to $369.3 billion. This was at the highest
    level since the series was first published on a NAICS
    basis and followed a 0.3 percent June increase."

    Not sure if that is an issue that's why I ask. Seems like a pretty strong report but ex-transport not so hot.

    You are the expert on this data. What do you think?
    Aug 24 08:38 AM | Likes Like |Link to Comment
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