The day's data produced an International Trade Report that has economists flipping papers and erasing projections. The vast expansion of the trade deficit portends a sharp downward revision to Q2 GDP. Wednesday's news also included the monthly Treasury Budget, EIA Petroleum Status Report and the MBA's Weekly Applications Survey, all found here.
Markos N. Kaminis earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, and Mr. Kaminis has appeared across TV & radio. While writing for Wall Street Greek, he presciently predicted the financial crisis in detail.
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Q2 GDP Revision Coming
Stocks dropped like a ton of bricks after the International Trade Report showed a vastly different degree of deficit than was anticipated by economists. An article at Bloomberg shows two economists revising their Q2 GDP estimates down a full percentage point, to +1.3% and +1.4%, respectively. This is why stocks are down today, and at the hour of this scribble, the Dow Jones Industrials Index was 2.5% lower. However, stocks were lower in Asia already, based on the FOMC statement yesterday, within which the Fed men looked at tough times ahead.
Our work on the Advance GDP Report questioned whether GDP was slowing or crashing. Well, it looks like we have the answer to that rhetorical question this morning. Stocks are selling off globally and the dollar and treasuries are benefiting from a flight to quality. The MSCI World Index experienced its biggest drop since June. The NIKKEI 225 slid 2.7%; the DAX fell 2.1%; the FTSE 100 skidded 2.44%; and the Nasdaq fell 3%.
You can read our coverage of the International Trade data via the link above. There were several other economic data points today that we will cover here.
The Treasury's report for July showed a monthly budget deficit of $165 billion in July. Bloomberg's consensus of economists saw a monthly deficit of $170 billion for July, and last year's comparable deficit was $180.7 billion. July's figure follows June's $68.4 billion deficit (months vary for seasonal reason). July's result took the year-to-date deficit to $1.169 trillion, which in comparison to last year's $1.416 trillion... ain't bad?
The deficit was composed of receipts of $155.5 billion ($151.5 bln. last year) and outlays of $320.6 billion ($332.2 bln.). Social Security, Defense and Health and Human Services were the eaters of income. We expect though, that given intensifying economic concerns, the budget debate will fizzle out.
The Mortgage Bankers Association reported on mortgage application activity for the week ended August 6. The Mortgage Bankers Association website had not updated for the latest report as we wrote here, and so our data is limited to the reports of others. The Market Composite Index gained slightly 0.6%, on Purchase Index increase of 0.3% and Refinance Index improvement of 0.6%. The average contracted rate for 30-year fixed rate mortgages eased 3 basis points to 4.57%. Low rates should persist in the months ahead, given the latest Fed announcement and with little sign of inflation to fear.
For the week ended August 6, crude oil inventory decreased by 3.0 million barrels. Total motor gasoline inventory increased by 0.4 million barrels. Both crude oil and total motor gasoline inventory remain above the upper limit of the average range for this time of year. However, the average world crude oil price increased $4.10 since last week, to $78.79. The spot price for conventional gasoline in the New York Harbor was 204.84 cents per gallon, 1.23 cents less than last week's price but 12.59 cents over this time last year.
In corporate news, Rockwell Collins (NYSE: COL) presented at the Jefferies & Co. Conference. The big EPS releases came from Macy's (NYSE: M), Cisco Systems (Nasdaq: CSCO), Computer Sciences (NYSE: CSC), Advanced Life Sciences (Nasdaq: ADLS), Aegean Marine Petroleum (NYSE: ANW) and AirMedia Group (Nasdaq: AMCN).
The rest of the corporate EPS schedule includes news from 7 Days Group (NYSE: SVN), Advance Auto Parts (NYSE: AAP), American Biltrite (AMEX: ABL), American BioMedica (Nasdaq: ABMC), American Medical Alert (Nasdaq: AMAC), APAC Customer Services (Nasdaq: APAC), Arbinet (Nasdaq:ARBX), Archipelago Learning (Nasdaq: ARCL), Arden Group (Nasdaq: ARDNA), Asure Software (Nasdaq: ASUR), Attunity (OTC: ATTUF.OB), AutoInfo (Nasdaq: AUTO), Avnet (NYSE: AVT), Barnwell (AMEX: BRN), Better Online Solutions (Nasdaq: BOSC), CAE (NYSE: CAE), Cardiome Pharma (Nasdaq: CRME), CECO Environmental (Nasdaq: CECE), China Grentech (Nasdaq: GRRF), China Nepstar (NYSE: NPD), China Real Estate (Nasdaq: CRIC), Colony Financial (Nasdaq: CLNY), Command Security (AMEX: MOC), Companhia Paranaense de Energia (NYSE: ELP), Copa (NYSE: CPA), Core Molding Tech (AMEX: CMT), CPFL Energia SA (NYSE: CPL), Crown Crafts (Nasdaq: CRWS), Deer Valley (Nasdaq: DVLY), deltathree (Nasdaq: DDDC), Document Capture (Nasdaq: DCMT), Dot Hill Systems (Nasdaq: HILL), Edgar Online (Nasdaq: EDGR), Education Management (Nasdaq: EDMC), E-House Holdings (NYSE: EJ), Excel Trust (NYSE: EXL), ExpressJet (NYSE: XJT), Given Imaging (Nasdaq: GIVN), Glowpoint (Nasdaq: GLOW), Henry Bros. Electronics (Nasdaq: HBE), Higher One (NYSE: ONE), Huaneng Power (NYSE: HNP), I.D. Systems (Nasdaq: IDSY), IAMGold (NYSE: IAG), ICOP Digital (Nasdaq: ICOP), ING Groep NV (NYSE: ING), inTEST Corp. (Nasdaq: INTT), Jacada (Nasdaq: JCDA), Jeffersonville Bancorp (Nasdaq: JFBC), Kelly Services (Nasdaq: KELYA), Kent Financial (Nasdaq: KENT), Lakes Entertainment (Nasdaq: LACO), Mahanagar Telephone Nigam (NYSE: MTE), Maidenform Brands (NYSE: MFB), Manitex (Nasdaq: MNTX), Medquist (Nasdaq: MEDQ), Metalink (Nasdaq: MTLK), Middleby (Nasdaq: MIDD), Netlist (Nasdaq: NLST), Newtek Business (Nasdaq: NEWT), NN Inc. (Nasdaq: NNBR), Nortech (Nasdaq: NSYS), Northeast Bancorp (Nasdaq: NBN), NTS Realty (AMEX: NLP), OmniAmerican Bancorp (Nasdaq: OABC), Pan American Silver (Nasdaq: PAAS), PFSWEB (Nasdaq: PFSWD), PNI Digital Media (Nasdaq: PNDMF), RELM Wireless (AMEX: RWC), Resolute Energy (NYSE: REN), Retalix (Nasdaq: RTLX), RXi Pharma (Nasdaq: RXII), Scientific Learning (Nasdaq: SCIL), SeraCare Life Sciences (Nasdaq: SRLS), Silver Wheaton (NYSE: SLW), Somaxon Pharma (Nasdaq: SOMX), SRA Int'l (NYSE: SRX), Stallion Oilfield (Nasdaq: SOFS), Susser (Nasdaq: SUSS), Sutron (Nasdaq: STRN), Synthemed (Nasdaq: SYMD), Teekay (NYSE: TK), Teekay Tankers (NYSE: TNK), Telanetix (Nasdaq: TNXI), Tengion (Nasdaq: TNGN), Trailer Bridge (Nasdaq: TRBR), Triad Guaranty (Nasdaq: TGIC), Tucows (AMEX: TCX), Ultrapar (NYSE: UGP), Universal Power (AMEX: UPG), Verso Paper (NYSE: VRS), Vision-Sciences (Nasdaq: VSCI), WebMediaBrands (Nasdaq: WEBM), World Heart (Nasdaq: WHRT), X Rite (Nasdaq: XRIT) and Xerium Tech (NYSE: XRM).
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