Pending Homes Sales
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WHAT THE MARKET IS SEEING...THIS WEEK
By WSS Research Desk
8/29/2011 2:15:09 PM Eastern Time
Doesn't it feel like forever ago when the markets were once again freefalling in a similar fashion to the 2008 financial crisis? Well, in actuality, those strong moves to the downside that broke the bullish momentum from Jackson Hole 2010 were only a couple of weeks ago. My oh my how short-term the mindset of investors are these days, or shall I say the mindset of traders.
The market enters this week clinging to a couple of hopes. Hope one is that the August jobs report will surprise to the downside on Friday, spurring the Fed back into the role of Superman at its soon to be super hyped two-day September policy meeting. Hope two is that economic data in August represents a trough in the string of bad headlines prints, such as in the Philly Fed and consumer confidence measures. For if we have an actionable Fed ready to step back into the game of creating moral hazard, plus a slow climb from the summer abyss of bad economic data, it could set the stage for a rally into the end of the year like so many economists continue to anticipate.
So with this as a backdrop, market bulls prepare to enter September with the following fun facts, in addition to the macro arsenal at their disposal:
* The S&P 500'S trailing-twelve month P/E ratio is now hovering around 12.9 times. That's 3.5% less than the average multiple during the 10 contractions since 1949, and a level last reached in 1982.
* At 1,176.80, the S&P 500 is trading at a P/E ratio 10.8 times forward earnings estimates. For the P/E ratio to reach its five-decade average of 16.4 times without shares appreciating, earnings would have to fall to about $71.76 a share, 22% below the last 12 months. Obviously, the bulls contend that such a sizable retrenchment in corporate earnings will not surface due to share buyback activity, emerging market growth, and continued mindfulness by executives on operating expenses.
Market Breathes Sigh of Relief
By: David Silver, Equity Research Analyst
In the pre-market, stocks were poised for a strong open on the back of the less than horrible results from Hurricane Irene. Insurers were among the biggest winners as the massive flooding and wind damage that was feared never really materialized (at least not in the New York area). There were plenty of complaints this morning on the subway getting to work about how slow the MTA was bouncing back, but I am still in the rather be safe than sorry camp. It may have closed businesses for two days and caused some financial hardships, but at the end of the day, it's better to be wrong and have no one to save, then to be wrong and have lives at risk. I left New Orleans hours before Hurricane Katrina hit, and even that Category 4/5 storm didn't generate the type of news that Hurricane Irene caused. Maybe it is just because it was New York and the super-city that is the Northeast, but it also seems that we learned from our mistakes. No one wants to see a replay of Katrina (and if you are in the New York area, no one wants to see a replay of the blizzard that shut down the city for two days). Home Depot (HD), Lowe's (LOW), and some grocery stores definitely benefited from the storm as plywood and batteries were sold out across the Northeast. I ventured into a grocery store Saturday afternoon to see how bare the shelves were. While the grocery store near my apartment is never one to have shelves that were overflowing, the chaos that I walked into blew my mind. I really wish I had taken a picture of it on my phone. There were people fighting over the few remaining bottles of water, one of which was already open and splashing everyone in a ten foot radius. I found it amusing, and now, after the storm, I really hope the people that were fighting over the bottle of water can learn something.
Pending Homes Sales
By: David Urani, Research Analyst
The Pending Home Sales Index, a forward looking housing indicator, decreased by 1.3% in July versus June. Expectations are already at rock bottom, so the result won't faze investors too much; it was slightly worse than the -1.0% consensus estimate. The West has put in a decent run of four months of increases in a row, although one has to think that a lot of these are foreclosures or short sales, which there is an abundance of in California, Arizona, and Nevada. Realtors are citing very high mortgage lending standards as a major detriment to getting sales done.
Techs Make a Strong Start to the Week
By Carlos Guillen, Research Analyst
Shares of companies in the technology sector are continuing to make nice gains today after experiencing lots of volatility last week. What appears to be driving technology shares this morning is the rather encouraging consumer spending data. Earlier today the Bureau of Economic Analysis reported that Personal consumption expenditures (PCE) increased by 0.8%, higher than the Street's consensus estimate of 0.5%. Given that consumer spending represents about 70% of GDP and that it also significantly drives electronics sales, tech shares are responding quite positively to the favorable news, and as a result the Philadelphia Semiconductor Index (SOX) is up close to 3%.
Shares of Micron (MU) are up, tracking gains made by its Asian peers on a rise in spot prices of DRAM memory chips. Spot prices for DDR3 2 Gigabit type DRAM memory chips rose to as much as $1.04 on the DRAM exchange on Monday after increasing 3.6% on Friday.
Youku.com (YOKU) shares were up 7% at $24.95 after the Chinese video-sharing website announced an online distribution agreement for rights to the DreamWorks Animation KungFu Panda franchise films in mainland China. The deal marks the first time DWA titles will be made available through an online platform in China.
Life, Liberty, & the Pursuit of Happiness
WHAT THE MARKET IS SEEING...THIS WEEK
By WSS Research Desk
8/29/2011 2:15:09 PM Eastern Time
Doesn't it feel like forever ago when the markets were once again freefalling in a similar fashion to the 2008 financial crisis? Well, in actuality, those strong moves to the downside that broke the bullish momentum from Jackson Hole 2010 were only a couple of weeks ago. My oh my how short-term the mindset of investors are these days, or shall I say the mindset of traders.
The market enters this week clinging to a couple of hopes. Hope one is that the August jobs report will surprise to the downside on Friday, spurring the Fed back into the role of Superman at its soon to be super hyped two-day September policy meeting. Hope two is that economic data in August represents a trough in the string of bad headlines prints, such as in the Philly Fed and consumer confidence measures. For if we have an actionable Fed ready to step back into the game of creating moral hazard, plus a slow climb from the summer abyss of bad economic data, it could set the stage for a rally into the end of the year like so many economists continue to anticipate.
So with this as a backdrop, market bulls prepare to enter September with the following fun facts, in addition to the macro arsenal at their disposal:
* The S&P 500'S trailing-twelve month P/E ratio is now hovering around 12.9 times. That's 3.5% less than the average multiple during the 10 contractions since 1949, and a level last reached in 1982.
* At 1,176.80, the S&P 500 is trading at a P/E ratio 10.8 times forward earnings estimates. For the P/E ratio to reach its five-decade average of 16.4 times without shares appreciating, earnings would have to fall to about $71.76 a share, 22% below the last 12 months. Obviously, the bulls contend that such a sizable retrenchment in corporate earnings will not surface due to share buyback activity, emerging market growth, and continued mindfulness by executives on operating expenses.
Market Breathes Sigh of Relief
By: David Silver, Equity Research Analyst
In the pre-market, stocks were poised for a strong open on the back of the less than horrible results from Hurricane Irene. Insurers were among the biggest winners as the massive flooding and wind damage that was feared never really materialized (at least not in the New York area). There were plenty of complaints this morning on the subway getting to work about how slow the MTA was bouncing back, but I am still in the rather be safe than sorry camp. It may have closed businesses for two days and caused some financial hardships, but at the end of the day, it's better to be wrong and have no one to save, then to be wrong and have lives at risk. I left New Orleans hours before Hurricane Katrina hit, and even that Category 4/5 storm didn't generate the type of news that Hurricane Irene caused. Maybe it is just because it was New York and the super-city that is the Northeast, but it also seems that we learned from our mistakes. No one wants to see a replay of Katrina (and if you are in the New York area, no one wants to see a replay of the blizzard that shut down the city for two days). Home Depot (HD), Lowe's (LOW), and some grocery stores definitely benefited from the storm as plywood and batteries were sold out across the Northeast. I ventured into a grocery store Saturday afternoon to see how bare the shelves were. While the grocery store near my apartment is never one to have shelves that were overflowing, the chaos that I walked into blew my mind. I really wish I had taken a picture of it on my phone. There were people fighting over the few remaining bottles of water, one of which was already open and splashing everyone in a ten foot radius. I found it amusing, and now, after the storm, I really hope the people that were fighting over the bottle of water can learn something.
Pending Homes Sales
By: David Urani, Research Analyst
The Pending Home Sales Index, a forward looking housing indicator, decreased by 1.3% in July versus June. Expectations are already at rock bottom, so the result won't faze investors too much; it was slightly worse than the -1.0% consensus estimate. The West has put in a decent run of four months of increases in a row, although one has to think that a lot of these are foreclosures or short sales, which there is an abundance of in California, Arizona, and Nevada. Realtors are citing very high mortgage lending standards as a major detriment to getting sales done.
Techs Make a Strong Start to the Week
By Carlos Guillen, Research Analyst
Shares of companies in the technology sector are continuing to make nice gains today after experiencing lots of volatility last week. What appears to be driving technology shares this morning is the rather encouraging consumer spending data. Earlier today the Bureau of Economic Analysis reported that Personal consumption expenditures (PCE) increased by 0.8%, higher than the Street's consensus estimate of 0.5%. Given that consumer spending represents about 70% of GDP and that it also significantly drives electronics sales, tech shares are responding quite positively to the favorable news, and as a result the Philadelphia Semiconductor Index (SOX) is up close to 3%.
Shares of Micron (MU) are up, tracking gains made by its Asian peers on a rise in spot prices of DRAM memory chips. Spot prices for DDR3 2 Gigabit type DRAM memory chips rose to as much as $1.04 on the DRAM exchange on Monday after increasing 3.6% on Friday.
Youku.com (YOKU) shares were up 7% at $24.95 after the Chinese video-sharing website announced an online distribution agreement for rights to the DreamWorks Animation KungFu Panda franchise films in mainland China. The deal marks the first time DWA titles will be made available through an online platform in China.
Life, Liberty, & the Pursuit of Happiness
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