Markos Sees Economic Trouble Ahead & Behind
Today's Coffee
Our daily summary of the day's economic data, DC happenings and corporate events today highlights another troubling weekly jobless filings count. We also cover the import/export price data release, natural gas report, a Fed governor's speaking engagement and GM and other corporate news. The market's interpretation of the newswire today is in alignment with Markos': it seems to have clearly determined that while plenty of trouble lies behind us, economic trouble also lies ahead.
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 major media. While writing for Wall Street Greek, he presciently predicted the financial crisis in detail.
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Markos Sees Economic Trouble Ahead
We already covered the shocking Weekly Jobless Claims Report at the blog earlier this morning. Please simply click through the link here to see our analysis of the data. Deflation concerns were only inflated by today's Import/Export Prices Report. Much now weighs on Friday's Consumer Price Index release, where economists are again expecting price rise. However, they've been wrong a lot lately, as has Chairman Bernanke, and stocks are punishing us as a result of those misguided expectations. Only Wall Street Greek readers saw it coming.Import/Export Prices
The Import/Export Prices data for July were released this morning. Economists were off again, with the consensus expecting a 0.4% increase in import prices. Rather, import prices rose 0.2%, but deflation concerns were not quelled. The import price increase was largely due to higher fuel prices. Nonfuel prices fell for the second consecutive month though.
Fuel prices advanced 2.1% in July. Petroleum increased 2%, while natural gas prices increased 5.3%. However, the month's rise came after two consecutive periods of lower fuel prices. That said, nonfuel import prices fell 0.3% in July, following a 0.5% drop in June. The July decline was driven by a 1.2% decrease in the price index for nonfuel industrial supplies and materials on declines in unfinished metals and building materials. Meanwhile foods, feeds, and beverages prices advanced and the major finished goods categories were mixed.
The price indexes for consumer goods and capital goods fell 0.2% and 0.1%, respectively. Automotive vehicles prices increased 0.4%. The drop in consumer goods prices was led by a 4.1% decrease in prices for home entertainment equipment while lower computers, peripherals, and semiconductors prices drove the decrease in capital goods prices. Import prices decreased from most major places of origin, but increased 0.1% from China.
Export prices fell for the second consecutive month, declining 0.2% in July. It's not often that prices decline for two consecutive months, so take note. According to the report, we cannot blame the price swing on weather, as 91% of the decline was attributable to non-agricultural prices. The price for agricultural goods exports did increase 0.1% in July, but non-agricultural export prices fell 0.2% in July, after dropping 0.8% in June.
Falling nonagricultural industrial supplies and materials prices (-0.4%), capital goods prices (-0.1%), and prices for automotive vehicles (-0.1%) all contributed to the decrease in July. However, July's decline was led by a 1.6% drop in fuel prices, although lower prices for chemicals and steelmaking materials also contributed to the overall decrease. The drop in capital goods prices was driven by a 0.8% decline in prices for computers, peripherals, and semiconductors. Given yesterday's soft semiconductors data within the International Trade Report, and today's price notation, we can understand why analysts are downgrading the sector today, and we agree with the call.
Natural Gas Report
The EIA reported on natural gas inventory at 10:30 AM ET. The report for the period ended August 6 showed natural gas stores increased by 37 Bcf. Natural gas stocks were 158 Bcf less than this time last year, but 219 Bcf above the five-year average for this time of year.
Fed Speaking Tour
When the FOMC meeting is through, Fed governors hit the speaking tour. Governor Elizabeth Duke addressed the Community Reinvestment Act in Chicago. You can listen to the hearing at the Chicago Fed via this link.
Corporates
General Motors CEO Ed Whitacre unexpectedly announced he would be resigning from GM today, pushing forward the filing of its IPO with the SEC to possibly next week, if not tomorrow. The US Treasury owns 61% of GM after its taxpayer funded bailout of the firm. US government sales are expected to be spread over the next couple years. GM reported second quarter income today of $1.54 billion, coming on a 44% leap in revenues. GM will look to raise about $16 billion via the offering, making it the second biggest in US history.
In the corporate wire, we have Dell's (Nasdaq: DELL) annual meeting with shareholders. Also, Ericsson (Nasdaq: ERIC) hosted a forum in San Jose for its North American investors. The EPS wire highlights news from Kohls (NYSE: KSS), NVIDIA (Nasdaq: NVDA), Sara Lee (NYSE: SLE), Nordstrom (NYSE: JWN), Autodesk (Nasdaq: ADSK) and Estee Lauder (NYSE: EL).
The rest of the EPS schedule includes reports from 21st Century Holding (Nasdaq: TCHC), Accretive Health (NYSE: AH), Acorn Energy (Nasdaq: ACFN), Adams Resources (AMEX: AE), Advantage Oil & Gas (NYSE: AAV), Aero Grow Int'l (Nasdaq: AERO), Aeterna Zentaris (Nasdaq: AEZS), Ameresco (Nasdaq: AMRC), American CareSource (Nasdaq: ANCI), Antares Pharma (AMEX: AIS), Appliance Recycling Centers (Nasdaq: ARCI), Arc Wireless (Nasdaq: ARCW), Arrowhead Research (Nasdaq: ARWR), Astea Int'l (Nasdaq: ATEA), Aurizon Mines (AMEX: AZK), Autobytel.com (Nasdaq: ABTL), Autodesk (Nasdaq: ADSK), AutoNavi (Nasdaq: AMAP), Bally Tech (NYSE: BYI), Baytex Energy (NYSE: BTE), Birner Dental (Nasdaq: BDMS), Bofl Holding (Nasdaq: BOFI), Bottomline Tech (Nasdaq: EPAY), Briggs & Stratton (NYSE: BGG), Brinker Int'l (NYSE: EAT), Broadridge Financial (NYSE: BR), BSquare (Nasdaq: BSQR), Cache (Nasdaq: CACH), Cambium Learning (Nasdaq: ABCD), Celsius Holdings (Nasdaq: CELH), Cenveo (NYSE: CVO), China Agritech (Nasdaq: CAGC), China Direct (Nasdaq: CDII), China Housing & Land (Nasdaq: CHLN), China Medicine (Nasdaq: CHME), Companhia de Bebidas das Americ (NYSE: ABV), Cinedigm Digial Cinema (Nasdaq: CIDM), Cleveland Biolabs (Nasdaq: CBLI), Corcept Therapeutics (Nasdaq: CORT), Cosi (Nasdaq: COSI), Credicorp (NYSE: BAP), Crown Media (Nasdaq: CRWN), CryptoLogic (Nasdaq: CRYP), Cyanotech (Nasdaq: CYAN), Daily Journal (Nasdaq: DJCO), Darling Int'l (NYSE: DAR), DeVry (NYSE: DV), Digital Angel (Nasdaq: DIGA), Dionex (Nasdaq: DNEX), Dockwise (Nasdaq: DOCK), Document Security (AMEX: DMC), DRI Corp. (Nasdaq: TBUS), eMagin (Nasdaq: EMAN), Energy Focus (Nasdaq: EFOI), Enova Systems (Nasdaq: ENOV), Fieldpoint Petroleum (AMEX: FPP), Flexible Solutions (AMEX: FSI), Flotek (NYSE: FTK), Fronteer Gold (AMEX: FRG), Gentium (Nasdaq: GENT), Gildan Activewear (NYSE: GIL), Global Ship Lease (NYSE: GSL), Gray Television (NYSE: GTN), Green Dot (Nasdaq: GDOT), Guided Therapeutics (Nasdaq: GTHP), Harris & Harris (Nasdaq: TINY), Hong Kong Highpower (Nasdaq: HPJ), Incredimail (Nasdaq: MAIL), Intelligent Systems (AMEX: INS), Interleukin Genetics (AMEX: ILI), Int'l Assets (Nasdaq: IAAC), Intersections (Nasdaq: INTX), Intrusion (Nasdaq: INTZ), Ladenburg Thalmann (AMEX: LTS), Lihua Int'l (Nasdaq: LIWA), LML Payment (Nasdaq: LMLP), Magnum Hunter Resources (AMEX: MHR), Maine & Maritimes (AMEX: MAM), Medidata Solutions (Nasdaq: MDSO), MER Telemanagement (Nasdaq: MTSL), Merriman Curhan Ford (Nasdaq: MERR), MI Developments (NYSE: MIM), Monarch Fin'l (Nasdaq: MNRK), Multiband (Nasdaq: MBND), New Dragon Asia (AMEX: NWD), New England Realty (AMEX: NEN), NexMed (Nasdaq: NEXM), North American Palladium (AMEX: PAL), NovaBay Pharma (AMEX: NBY), NTN Buzztime (AMEX: NTN), OccuLogix (Nasdaq: TEAR), Ocean Bio-Chem (Nasdaq: OBCI), O'Charley's (Nasdaq: CHUX), Oxigene (Nasdaq: OXGN), P&F Industries (Nasdaq: PFIN), Pacific Office Properties (AMEX: PCE), Perrigo (Nasdaq: PRGO), PharmAthene (AMEX: PIP), Primus Guaranty (NYSE: PRS), ProPhase Labs (Nasdaq: PRPH), Prudential plc (NYSE: PUK), Red Robin Gourmet (Nasdaq: RRGB), Royal Gold (Nasdaq: RGLD), SES Solar (Nasdaq: SESI), ShoreTel (Nasdaq: SHOR), Silvercorp Metals (NYSE: SVM), Simcere Pharma (NYSE: SCR), Sinohub (Nasdaq: SIHI), SmartHeat (Nasdaq: HEAT), SORL Auto Parts (Nasdaq: SORL), Spark Networks (AMEX: LOV), Spreadtrum Communications (Nasdaq: SPRD), Sunesis Pharma (Nasdaq: SNSS), Syneron Medical (Nasdaq: ELOS), Talon Int'l (Nasdaq: TALN), Taseko Mines (AMEX: TGB), TAT Technologies (Nasdaq: TATT), TechPrecision (Nasdaq: TPCS), Telestone Tech (Nasdaq: TSTC), Textainer Group (NYSE: TGH), Geo Group (NYSE: GEO), Tim Hortons (NYSE: THI), Transgenomic (Nasdaq: TBIO), Ultrapetrol Bahamas (Nasdaq: ULTR), Universal Security (AMEX: UUU), Veramark (Nasdaq: VERA), Veraz Networks (Nasdaq: VRAZ), Vermillion (Nasdaq: VRML), VirtualScopics (Nasdaq: VSCP), Wendy's Arby's (NYSE: WEN), WillDan Group (Nasdaq: WLDN), Winland Electronics (AMEX: WEX) and Wireless Ronin (Nasdaq: RNIN).
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