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Futures Nose Dive on World Bank Forecast

June 22, 2009 By Chuck

The World Bank released their updated global projections and they have reduced the outlook significantly from the previous projection released in March

The World Bank said the global recession this year will be deeper than it predicted in March and warned that a flight of capital from developing nations will swell the ranks of the poor and the unemployed.

The world economy will contract 2.9 percent, compared with a previous forecast of a 1.7 percent decline, the Washington- based lender said in a report today. Growth will be 2 percent next year, down from a 2.3 percent prediction, the bank said.

At this time it appears that all major indices will ‘gap down’ at the open. The chart shown below is that of the S&P 500 e-mini futures. Levels to watch today are highlighted.

S&P 500 E-Mini Futures

S&P 500 E-Mini Futures

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Pre Market Chart Update – S&P 500 Futures

April 21, 2009 By Chuck

A lot of earnings news released this morning, and the majority of the earnings data has been flat or negative. Many companies are lowering their forward guidance again.

S&P 500 Futures

S&P 500 Futures

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S&P 500 Pre Market Update

February 23, 2009 By Chuck

The news of the Government’s possible action of converting preferred shares into common shares to give Citigroup more capital sent futures up in the overnight hours. The logic for the move was that this announcement is being perceived (for now) that nationalization will be avoided.

My argunment is that I feel this is nothing but a ‘pre-nationalization’ process. Time will tell.

I strongly believe that eventually these banks will need much more capital, or will have to be outright nationalized as economic conditions deteriorate further. My confidence in all ‘banking rescue’ efforts so far remains very low. And I base that on the past 2 years of statements such as ‘we are well capitalized’, to only weeks later needing more money.

The S&P 500 futures chart shown here is a 5 minute scale of the past several days. A bearish ascending wedge formation developed and has since confirmed.

At this time I am watching 3 levels: (see gray circles on chart)

Support: Trend line (769 – 772)

Resistance: 782 , 792

S&P 500 Futures - 5 minute scale

S&P 500 Futures - 5 minute scale

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Stock Market – Pre Open Report March 31st 2008

March 31, 2008 By Chuck

Little to report this morning that was not already discussed last night.

Merck (MRK) and Schering Plough (SGP) are being sold off heavily in pre market on the news we reported last night. Their cholesterol drugs have been reported as being a ‘flop’ in a study released yesterday.

Asian markets sold down last night, and European markets are weak also.

A report circulating throughout the trading pits this morning is that there is a reserve shortfall in some Dutch pension funds due to market developments. There is some early strength in ‘safe haven’ bond futures and gold on this news.

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Stock Market – Pre Open Report for March 20th 2008

March 20, 2008 By Chuck

The headline (so far) for the morning is the weekly jobless claims here in the United States.

 

INITIAL JOBLESS CLAIMS: 378K V 360K ESTIMATED; CONTINUING CLAIMS: 2.865M V 2.840ME

 

The weekly claims trend continues upward and more importantly the continuing claims number has also continued to grow. It is always continuing claims that is key in that it shows how many of those already on unemployment are finding jobs. With continuing jobless claims still rising is tells us that people who are already on unemployment are not finding work, so as new unemployment claims hit the system it grows the total unemployment levels.

There is also a rise in Government employment job cuts. Local news media has been covering stories of cities and towns facing budget problems and having to reduce their payrolls. Government jobs had been one of the largest growth areas in the late 1990′s, but this sector is also facing financial troubles and are forced to cut jobs at many levels, from police officers to maintenance workers.

Borders Books (BGP) has suspended their dividend payments and is trying to find a buyer for their business. Borders had found itself in a liquidity problem and has received some cash Pershing Square Capital Management to keep them going while they look for strategic alternatives.

Federal Express (FDX) reported a 6% decline in profit margins and said that they are likely to have limited growth next year. They blamed in part, that rising fuel costs have forced customers to find cheaper shipping methods. While that may be true we see things slightly different, we see the loss in shipping revenues as a direct result of business spending cutbacks as companies are having fewer customers and less business in which needs shipping services. Also, the pullback in the consumer spending also has an impact on the shippers.

Citigroup (C) has said more layoffs will be coming. Reports are for 2,000 job cuts by next week.

Futures have fallen off on the jobless claims and Federal Express earnings. At 10:00 am we will have another economic bit of data as we will see what the Philadelphia Fed index of economic activity looks like. In previous months it had been deteriorating so many will be looking to see how this months data comes in.

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Stock Market – Pre Open Report for March 18th 2008

March 18, 2008 By Chuck

Producer Price Index (PPI) data reveals inflation still rising…

 

FEB U.S. PPI TABLE
Table Of PPI Data From Labor Department, In Percent Changes

                                             FEB.     JAN.     DEC.

PPI, Finished Goods           0.3      1.0     -0.3
PPI, Ex. Food, Energy         0.5      0.4      0.2
Energy                                    0.8      1.5     -3.0
Foods                                   -0.5      1.7      1.4
Consumer Goods                0.3      1.1     -0.4
Residential Electricity       -0.4     -1.2      0.6
Residential Gas                 5.7      0.7     -1.5
Gasoline                             2.9      2.9     -7.6
Home Heating Oil            -3.7      8.5     -0.3
Drugs                                  1.3      1.5      0.4
Autos                                  0.8      0.3     -0.5
Tobacco                              0.1     -0.1      0.6
Capital Equipment             0.5      0.4      0.1
Intermediate Goods            0.8      1.4     -0.2
Ex, Food, Energy               0.6      0.8      0.0
Crude Goods                     3.7      2.5      1.1
Ex. Food, Energy              3.3      4.0      0.2

 

Goldman Sachs (GS) and Lehman (LEH) reported earnings and each has reported a ‘better than expected’. Oh goodie, the crisis is over (if you listen to the talking heads). No need for any rate cuts now… LOL

Today is a wait and watch day. 2:15pm is when we find out what the Federal Reserve will do. I can’t remember a time when the market has been so convinced that the Federal reserve will cut the Fed Funds rate by so much and with so much confidence it will happen. Makes me think of a ‘sell the news’ once it happens, if it happens.

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Stock Market – Pre Open Report for MArch 12th 2008

March 12, 2008 By Chuck

Yesterday’s market rally has appeared to quickly run adrift. When the news from the Federal Reserve was issued yesterday the US dollar quickly gained some upside moves. But overnight the dollar headed back down again. If we use the US dollar as a measure of confidence in the US economy then we can safely say this morning that confidence quickly wore out after yesterday’s excitement.

The health care sector is being hit hard today as the rising cost of health costs are actually hurting the earnings of the major health insurance companies. So why the surprise drop in earnings of the health insurance companies? Loss of jobs and the subsequent loss of insurance premiums and what is very concerning is that people are actually putting off some of their health needs in order to pay other bills.

Housing market problems… best to just let the CEO of Freddie Mac speak for us this morning:

Freddie Mac CEO: We are in a 100-year storm in the housing market; "Worst housing market in a century" the CEO said at an analyst meeting.

- Says home price drops are only about one-third over.

The number of mortgage applications have rolled back over and are back on a negative trail.

MBA MORTGAGE APPLICATIONS W/E MAR 7TH: -1.9% V +3.0% PRIOR
- Refinance  -4.7% to 2448.2

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Stock Market – Pre Open Report March 6th 2008

March 6, 2008 By Chuck

The weekly jobless claims have been reported and the number for this week is 351K, continuing claims 2.831 Million. While the weekly number dropped a small amount with respect to last week, the continuing claims data continues to grow. Continuing claims is what is looked at for signs of the total employment levels of the United States. The market is viewing this data negatively as the employment situation is not showing any signs of improvement.

Monthly same-store sales data has been rolling in this morning from many of the retailers in the US.  If you only listen to the media you would take away that things are improving. But for those of us that are "thinking" analysts we see things differently. The trend is showing us that higher end retail stores are suffering more than the discount chains. Wal-Mart (WMT) reported a February same-store sales value of +2.6%. Now remember that these numbers are always relative, not an absolute. Sales relative to the previous month may have increased but it is far lower than previous revenues and sales. Be that as it may we see Wal-Marts increase as the sign that more of the middle class are shopping at the discount stores, such as Wal-Mart as the cost of living continues to increase. The more prestigious names are showing generally flat to even worse sales data. JC Penny (JCP) and  Nordstrom (JWN) are examples of higher end retail stores that are declining. And Macy’s (M) has decided to stop reporting sales data altogether which is highly unusual in the retail business. The consumer is still contracting and is shopping more at discount chains over the higher luxury stores.

Credit markets are under more stress this morning.

THE WSJ IS REPORTING THAT THE CARLYLE CAPITAL UNIT HAS RECEIVED A NOTICE OF DEFAULT FROM ONE OF THE BANKS THAT HELPS FINANCE ITS PORTFOLIO OF FREDDIE MAC AND FANNIE MAE SECURITIES THROUGH SHORT-TERM REPURCHASE AGREEMENTS.

The European Central Bank and the Bank of England left their interest rates unchanged. The Europeans are smart, they see the risks of inflation while our Federal Reserve continues to rub dirt into an open wound.

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