Trader's Digest

Diffusion

3/18/2009
[Sustainable recovery]
http://www.bloomberg.com/apps/ne ... SaFZoYxuQ&pos=1

Factories keep adding workers and increasing production to replenish depleted inventories and meet rising global demand. Gains in manufacturing may be the spark that ignites a broader economic expansion, leading to increases in payrolls and consumer spending.

“The manufacturing sector has been the one bright spot for the economy in recent months,” said Scott Brown, chief economist at Raymond James Associates Inc. in St. Petersburg, Florida. “Clearly a sustainable recovery will require an improvement in the jobs. We’re right on the cusp of new hiring.”

[Interbank lending is improving]
http://www.bloomberg.com/apps/ne ... tJsuPXyFU&pos=5

The European repurchase market grew between June and December, showing an improvement in interbank lending as central banks prepare to withdraw support to the industry, the International Capital Market Association said.

The repo market grew to 5.58 trillion euros ($7.63 trillion) on Dec. 9, ICDA said in an e-mailed statement. The number of outstanding trades was up 20.2 percent on Dec. 9 from June 10, the report said. Repos are collateralized loans used to finance investments in Treasury, corporate and mortgage-backed securities.

[If you still believe in the double dip, pay attention to hotel loans and banks]
http://www.economist.com/busines ... m?story_id=15721464 (May require subscription)

It is difficult to determine exactly how much outstanding commercial-property debt was used to finance hotels. But if commercial property has long been seen as the next shoe to drop in financial markets, hotels are the steel toecap. “There is a vast wall of properties out there that is underwater,” says Paul Bartrop of CB Richard Ellis, a property consultancy.

There are two main reasons why hotel loans are so troubled. The first is that in many cases they were taken out by investors who need steady cash flows to repay debt, or were financed using instruments such as CMBS that also require steady income streams. Yet unlike office blocks or shopping malls, which sign leases with tenants for ten years or more, hotels have to let their rooms by the night. The revenue earned for each room (an industry measure of room rates and occupancy) fell by almost 17% in America last year.

Diffusion

3/17/2010
[Disinflation still in play]
http://www.bloomberg.com/apps/ne ... 6tjO31s98&pos=2

“Disinflation is going to be with us for a while,” Julia Coronado, a senior U.S. economist at BNP Paribas in New York, said in a Bloomberg Radio interview. “That’s going to allow the Fed to stay on hold for a lot longer than the market is expecting.”

[Expansion of Fed's balance sheet barely cancelled the deflation]
http://online.barrons.com/articl ... html?mod=BOL_hps_dc (May require subscription)

While the Fed has expanded the monetary base by 35% in the past 12 months, M2 has grown only 2.1%. That reflects banks' commercial and industrial loans contracting at a historically unprecedented 20% annual rate in the past six months. To use the cliché, this is what it means for the Fed to "push on a string."

[Another proof that U.S consumers started spending]
http://www.bloomberg.com/apps/ne ... 4LQEqA5bU&pos=4

Nike Third-Quarter Profit More Than Doubles on North America

March 17 (Bloomberg) -- Nike Inc., the world’s largest maker of athletic shoes, said third-quarter profit more than doubled, beating analysts’ estimates, as North America posted a sales increase for the first time in a year. The stock jumped.

Seal

Thanks.

Diffusion

3/16/2010
[Housing starts / permits drop but still beat expectation]
http://money.cnn.com/2010/03/16/markets/markets_newyork/index.htm

New home construction fell 5.9% to an annual rate of 575,000 in February, according to a government report, from an upwardly revised 622,000 during the previous month.

Economists surveyed by Briefing.com expected housing starts to have fallen to an annual rate of 570,000 during the month.

The report said building permits slipped 1.6% to an annual rate of 612,000 in February. They were expected to have fallen to an annual rate of 601,000 during the month.

Diffusion

3/15/2010
[Companies are more confident about future]
http://money.cnn.com/2010/03/15/markets/thebuzz/index.htm

So an increase in buybacks could be viewed as further evidence that the economy and markets are slowly returning to normal. Even if stocks are not screaming bargains any more, they are still at least reasonably valued enough to be a good investment.

Snyder agreed, saying that while he still would take a dividend over a buyback, a share repurchase program is a better option than a major takeover.

ranchgirl

Thanks!

Diffusion

[And most people still suspect the bull market]
http://online.barrons.com/article/SB126831137208659833.html [may require subscription]

So, savers' loss is investors' gain as the stock market took flight, fueled largely by the Federal Reserve's policy of keeping short-term rates near zero and buying Treasuries and agency mortgage-backed securities. As mutual-fund flows show, there has been little inflow into domestic equity funds while bond funds have seen a deluge of cash from savers looking a substitute for certificates of deposit paying 1% or so.

In all, the latest Fed Flow of Funds data suggest that, to the extent middle class Americans' finances are improving, it's because their liabilities are being reduced by default. The gains in asset values are being concentrated by those so-called households with the ways and means to own equities.

Diffusion

[Too much liquidity in the financial market looking for opportunities]
http://www.bloomberg.com/apps/ne ... Cdkc5iWGc&pos=5

A lack of new deals in the primary loan market also helped drive demand in the secondary market, pushing up loan prices, as well as demand for new issues. This year, $41.4 billion of leveraged loans have been arranged in the primary market, according to data compiled by Bloomberg. While that number is up from the $15.6 billion arranged over the same period last year, it’s down from the $192 billion that came to market during the similar period in 2007.

“We don’t have enough primary issuance,” RBS’s Nadelman said. “Funds are sitting on a lot of cash and they want to put it to work. As long as a deal is a quality credit and the yield is competitive, investors are going to jump in.”

[The same here]
http://money.cnn.com/2010/03/11/ ... edge_fund/index.htm

The return of hedge funds shouldn't come as a major surprise, analysts said. In many ways, the current environment is ripe for starting a new hedge fund. With the global economy appearing to be on the mend, investors have become enamored with riskier assets again, such as emerging markets and corporate bonds.

"They are now somewhat flush with cash from getting paid from a good 2009 and have decided to strike now while they see opportunity and liquidity," said Suber.

Diffusion

[Housing market is in the transition from buyers market to normal]
http://money.cnn.com/2010/03/11/ ... tversion=2010031103

The national foreclosure rate fell 2% in February from a month earlier, according to an industry report released Thursday, the latest sign that the pace of foreclosures is slowing.

The number of homes actually taken back in bank repossessions fell to 78,683 during February, from 87,648 a month earlier.

[Foreclosure rate fell 2%, but bank repossessions fell 10%, the difference would be investors loading properties in the auction]

According to Sharga, once those homes go back on the market, they're selling quickly. "In most parts of the country when a bank-owned home goes back on the market, it's getting multiple bids," he said.