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The Financials Pit Review
For the week of November 16th, 2009
By PitGuru Frank LaMantia
S&P & Currencies
GM reported around a $1.2 billion loss from when they filed for bankruptcy protection and will start paying back government loans by 2011. This is going to be 4 years sooner than they were supposed to pay the loan back.1 Wall Street may like this news and put a bullish spin on the rest of the sectors just on this news. Lowes profits are down from $488 million last year to $344 million today.2 Expectations were apparently met so the loss may not impact Wall Street that big today even though the news was negative. This week earnings will be announced that one might want to keep an eye on with companies such as Home Depot, BJ's, Ann Taylor, Dell, Dicks Sporting Goods, and GameStop. Bullish behavior this morning is due to Japan announcing that their economy grew twice what was expected. In my opinion this is a wash because Lowes news should be viewed as negative while Japan’s growth a positive. It is hard to stomach companies that claim they will be doing great like GM or Lowes. Right now they aren't, so when they announce that they are the market should get excited. Companies can say whatever they want! Numbers tell a truthful story; that is, if the numbers are truthful. Retail Sales numbers were excellent coming in at 1.4% compared to -2.3 when announced last.3 The only issue is the Manufacturing number showed a drop in NYC, falling to 23.51 from 34.57. Rich people cut back once in a while too, so this likely doesn't show the mainstream consumer. This week expect announcements in Business Inventories, PPI, Housing, CPI, Initial jobless claims, and Leading indicators. Tomorrow the 17th both PPI & Core PPI are expected to be up from last announcement. Core PPI is expected to be up 0.1% while PPI up to 0.5%. Housing starts and building permits are expected to be up where they could see a dip. My opinion about housing is simple short sales is a bail out and should not be considered a sale; it is almost like a foreclosure. CPI is expected to be about the same as last forecast at 0.2% and of course jobs are still forecasted to be horrible, around 510k lost. The S&P is trading right at its high of 1099 and could fall back into its range of 1080-1099 during the week as the market digests earnings and economic data.
1 http://online.wsj.com/article/SB10001424052748704431804574539284255805824.html?mod=WSJ_hpp_LEFTTopStories
2 http://www.reuters.com/article/newsOne/idUSTRE5AF2BD20091116
3 http://www.bloomberg.com/apps/news?pid=20601087&sid=aSkgY5qdX7B4&pos=2
Past performance is not indicative of future results.
***chart courtesy Gecko Software
