Durable Goods Orders Up 0.2%, But Below Expectations
by Chart School - May 24th, 2012 11:35 am
Courtesy of Doug Short.
The May Advance Report on April Durable Goods was released this morning by the Census Bureau. Here is the summary on new orders:
New orders for manufactured durable goods in April increased $0.3 billion or 0.2 percent to $215.5 billion, the U.S. Census Bureau announced today. This increase, up two of the last three months, followed a 3.7 percent March decrease. Excluding transportation, new orders decreased 0.6 percent. Excluding defense, new orders increased 1.2 percent.
Transportation equipment, also up two of the last three months, had the largest increase, $1.3 billion or 2.1 percent to $62.2 billion. This was due to motor vehicles and parts, which increased $2.3 billion. Download full PDF
Nnew orders at 0.2 percent came in below the Briefing.com consensus estimate of 0.3 percent. The ex-transportation -0.6 percent was below the consensus forecast of 1.0 percent.
If we exclude both transportation and defense, the core durable goods orders rose 0.8 percent in April following a 0.8 percent decline in March, and a 0.8 percent increase in February. In other words, the trend over the past three months has been relatively flat.
The first chart is an overlay of durable goods new orders and the S&P 500. We see an obvious correlation between the two, especially over the past decade, with the market, not surprisingly, as the more volatile of the two.
An overlay with unemployment (inverted) also shows some correlation. We saw unemployment begin to deteriorate prior to the peak in durable goods orders that closely coincided with the onset of the Great Recession, but the unemployment recovery tended to lag the advance durable goods orders.
An overlay with GDP shows some disconnect in recent quarters between the recovery in new orders and the slowdown in GDP — another comparison we’ll want to watch closely.
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DiggAnd Meanwhile, In The Arabian Sea…
by Zero Hedge - May 24th, 2012 11:04 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
There was a time, late in the winter, that not a day passed without some headline announcing Israel’s preparedness to attack Iran, culminating with the grotesque – a show on Israel TV detailing the actual invasion plans. All these daily updates did was guarantee one thing – that absolutely no war could possibly break out for two simple reasons:
i) you never declare war when the opponent is expecting you, instead you habituate them to news about imminent invasions which never happens, and,
ii) Brent was over $120, which would guarantee no re-election for Obama as outright war would send the energy complex soaring, gas prices surging, and the world economy, but most importantly the Russell 2000, tumbling.
Over the past 2 months two things have happened: chatter of “imminent” war with Iran has died down to barely a whisper, and WTI is now trading 20% lower than 2012 highs. Which means there is far more capacity for a run higher. So putting all that together, does it mean that the prospect of war with Iran is now gone? Below we present the latest naval update map courtesy of Stratfor, and leave readers to make their own conclusions…
Carriage Services Increases Stock Repurchase Program to $8M
by Insider Scoop - May 24th, 2012 10:58 am
Courtesy of Benzinga.
Carriage Services, Inc. (NYSE: CSV) announced that its Board of Directors at their quarterly meeting yesterday authorized an increase in the Company’s common stock repurchase program from $6 million to $8 million. Through May 23, 2012, the Company has repurchased 812,800 shares, or in excess of 4% of its outstanding common stock under this program.
For more Benzinga, visit Benzinga Professional Service, Value Investor, and Stocks Under $5.
Is a 30% decline and “Uncrowded” conditions enough to cause a rally in the mining sector?
by Chart School - May 24th, 2012 10:49 am
Courtesy of Chris Kimble.
One of the most “out of favor/uncrowded trades” at this time is taking place in the mining stocks sector, which have been hit very hard the past 6 months. The metals and mining ETF (GDX) is down 30% since its 2011 highs, a much bigger decline than Gold and the S&P 500 have experienced over the past 6 months.
CLICK ON CHART TO ENLARGE
GDX created a large bullish wick at support last week and is attempting to break a steep falling resistance line, with sentiment levels reflects a very few metals bulls!
CLICK ON CHART TO ENLARGE
Gold finds itself on a potential support line at the same time the number of Gold bulls has reached levels seldom seen the past 4 years.
Oversold bounces often take place when few investors expect a rally to happen… when it comes to the metals complex one thing is for sure right now, very few expect a rally to take place!
Regulatory Capital: Size And How You Use It Both Matter
by Zero Hedge - May 24th, 2012 10:45 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
Via Peter Tchir of TF Market Advisors,
Bank Regulatory Capital has been in the news a lot recently. The Spanish banks have their own set of capital issues. There has been a lot of discussion about Too Big To Fail (“TBTF”) in the U.S. with regulators demanding more and banks fighting it. After JPM’s surprise loss this month, the debate over the proper regulatory framework and capital requirements will reach a fever pitch. That is great, but maybe it is also time to step back and think about what capital is supposed to do, and with that as a guideline, think of rules that make sense.
What Is Regulatory Capital?
Simply it is the amount of capital that the banks are required to hold against their assets. Generically, though the concepts have been evolving with various Basel Accords, regulatory capital for various debt instruments is 8% of the bank’s risk-weighted assets. Risk weights vary dramatically – from 0% to high-rated sovereigns to 50% for an investment grade corporate bond rated “A” to over 150% for high-yield corporate bonds below “BB-”. Under Basel II, there are also regulatory capital charges for CDS with respect to counterparty exposures (under a complicated formula), and rules under which CDS provides partial offsets for cash assets regulatory capital requirements. But those risk weights are multiplied by the 8%. So “AA”-rated sovereign uses NO regulatory capital (infinite regulatory capital leverage), a “A”-corporate is 4% charge (25x leverage), and a high yield “B” bond is 12% charge (8.3x leverage). From regulatory capital perspective, therefore, the banks are incentivized to put on large positions of highly-rated debt.
What Is Regulatory Capital Supposed To Do?
Surprisingly enough, there are actually lots of different answers. Many believe that it should cover a bank’s potential losses in a portfolio with some cushion. That is wrong. No bank ever gets the luxury of seeing if the over the long run the capital is enough to cover actual losses. The real world doesn’t work like that.
Bank runs start when people become concerned that if a bank had to liquidate its portfolio, there wouldn’t be enough money to do that. So no matter what style of accounting a bank uses, at some basic level, investors react to the perceived value of the assets, not eventual value. …
Greece Could Implode the Second Bailout and the EU by Mid-June
by Zero Hedge - May 24th, 2012 10:40 am
Courtesy of ZeroHedge. View original post here.
Submitted by Phoenix Capital Research.
The following is an excerpt from my latest client letter
While most of my analysis so far has concerned France’s elections, it was in fact Greece’s May election which proved more significant for the future of the EU.
I do not want to delve too much into Greek history and political parties. So I’ll simply show the results along with the names and brief descriptions of each party:
| Party | Beliefs | Number of Seats |
| New Democracy (ND) | Old school center right, one of two major parties | 108 |
| Coalition of Radical Left- Unitary Social Movement (SYRIZA) | Progressive, socially liberal, popular with youth | 52 |
| Panhellenic Socialist Movement (PASOK |
…
The Natural Gas Massacre Gets Bloodier
by Zero Hedge - May 24th, 2012 10:38 am
Courtesy of ZeroHedge. View original post here.
Submitted by testosteronepit.
Wolf Richter www.testosteronepit.com
The plight of natural gas driller Chesapeake Energy could almost make you feel sorry for the board of directors and CEO Aubrey McClendon. He lost his chairmanship after his conflicted entanglements and an in-house hedge fund seeped to the surface. The company announced it may run out of cash to fund its drilling operations next year. Fitch, in downgrading Chesapeake’s Issuer Default Rating and senior unsecured ratings to BB-, estimated that the shortfall this year alone would reach $10 billion—in the first quarter, the company bled $3 billion in cash—and that it would be forced to dump up to $20 billion in assets to get through this. But Chesapeake’s ability to get new money should not be underestimated during these crazy times when the Fed keeps iron-fisted control of the credit markets with its zero interest rate policy. Investors are dying for yield, at any risk. So Chesapeake got a loan of $4 billion from Goldman Sachs and Jefferies Group to bridge the current hole until some asset sales come through, hopefully. And all due to the low price of natural gas and the ugly economics of fracking.
Fracking, which allows drillers to get gas and oil from shale deep underground, triggered a revolution. Gas production in the US has been setting new highs, and as supply overwhelmed demand, prices have collapsed. Gas in storage is at a record high for this time of the year, and some doom-and-gloom prophets maintain that storage will reach capacity this fall, and that producers won’t be able to get rid of their gas and will have to flare it, pushing its price to zero.
However, natural gas for June delivery settled on Wednesday at $2.73 per million Btu on the New York Mercantile Exchange. A 44% jump from its April 19 low of $1.90 per million Btu, but still only half the five year average, and below the already low price at the beginning of the year. As this chart shows, the recent uptick isn’t much of a salvation for the beleaguered drillers.
In fracking, during the initial phase of production, high pressure blows a huge quantity of gas out the well—and the quantity of the first 24 hours, the “initial production,” is bandied about to investors and lenders,…
Oslo Stock Exchange Fights Back Against HFT And Quote Stuffing
by Zero Hedge - May 24th, 2012 10:33 am
Courtesy of ZeroHedge. View original post here.
Submitted by Tyler Durden.
As High-Frequency-Trading rapes and pillages its way across global capital markets, perhaps it is no surprise that the country that gave the world ‘Vikings’ would be the first to stand up to the computerized hordes. In a breakthrough moment of clarity, The Financial Times reports, the Oslo Stock Exchange will issue punitive changes to traders if they send too many orders into the exchange that do not result in deals being done.
This first-of-its-kind crackdown on ‘Quote Stuffing’ comes after the exchange has seen a surge in the number of orders flooding its systems and while the bourse does not quite go so far as to say HFT is “in itself necessarily negative for the market”, it says the placement and cancellation frequency of trades has reduced the efficiency of its market. Bente Landsnes, chief executive of Oslo Bors, said: “A market participant does not incur any costs by inputting a disproportionately high number of orders to the order book, but this type of activity does cause indirect costs that the whole market has to bear. The measure we are announcing will help to reduce unnecessary order activity that does not contribute to improving market quality. This will make the market more efficient, to the benefit of all its participants.” From September 1st the exchange will limit each trader to 70 orders for every trade executed and any excess of that ratio will be charged $0.0008 per order. We are sure the NASDAQ, wanting to make up for its SNAFBU, will be next in line to punish the pernicious penny-pinchers.
Naturally, we fully expect those very much irrelevant, and lately totally tarnished US trading venues such as the now ‘butt of all jokes’ Nasdaq, to attempt to poach even more lowest common denominator HFT traffic from Europe, and provide even more “liquidity” rebates to Algo-Matic, in the process pushing electronic trading as a % of total nearly to triple digits.
Rumored Apple and Sony Alliance Grows Stronger on New iPhone 5 Report
by Insider Scoop - May 24th, 2012 10:22 am
Courtesy of Benzinga.
Is Sony producing the next-gen touch panels for Apple’s next-gen iPhone?
If the mounting reports are any indication, the answer is a resounding yes. Earlier this week, a Taiwanese publication reported that Apple (NASDAQ: AAPL) had enlisted in the help of Sony (NYSE: SNE) to build the iPhone 5. Sony was commissioned to produce in-cell touch panels for the highly anticipated smartphone.
Now DigiTimes (via Forbes) has released a very similar report, claiming that Sony has been added to Apple’s list of in-cell touch panel suppliers, which includes several other manufacturers.
“LG Display, Toshiba Mobile Display (TMD) and Sharp have been previously tapped as the three suppliers of in-cell touch panels for the new iPhone,” reports DigiTimes, whose sources claim that the iPhone 5 should launch in September or October. “LG Display has ramped up its yield rate to 70-80%, and TMD is expected to enter mass production as scheduled, said the sources, adding that Sharp has been slow with regard to improving its yield rate, giving Sony a chance to also enter the supply chain.”
Further, DigiTimes said that its sources have indicated that Sony “shipped 50,000 units of 4-inch in-cell touch panels to HTC for product development in the second half of 2011.” At that time, “Sony claimed that the yield rate for the in-cell panel production had reached 70%,” DigiTimes wrote. “Sony will begin volume production of in-cell touch panels for the new iPhone at the end of May, revealed the sources.”
Follow me @LouisBedigianBZ
For more Benzinga, visit Benzinga Professional Service, Value Investor, and Stocks Under $5.
Will the Grexit be Euro positive, or Euro negative?
by Zero Hedge - May 24th, 2012 10:14 am
Courtesy of ZeroHedge. View original post here.
Submitted by hedgeless_horseman.
THE BIG QUESTION…
Will the Grexit be Euro positive, or Euro negative?
Place your bets, ladies and, uhm, err, “gentlemen.”
What is my thesis? Short term Euro positive…long term very Euro negative as the other PIIGS are slaughtered, as and when needed, by the American/British Treasuries covering money printing operations…
WHO REALLY KILLED GREECE.
Germany, like Japan, are post-war pawns. Their currencies are DESIGNED to be debased, as and when needed, to achieve synchronized diving with the pound and dollar. If Germany wasn’t in the Euro, its prior experience with hyper-inflation would prevent it from debasing when instructed to do so (obviously not a problem with the Nips). Both countries go along as willing pawns simply because they have been re-created post-war as export nations totally reliant on weak currencies.
The PIIGS profligate spending has ALWAYS been there, like a fat store, and can be used by the brain when needed to feed the body.
What say ZeroHedge?
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