Debt Management: Economic Reports

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Kamis, 21 Juli 2011

Jobless Data Proves Our Financial Genius

The Department of Labor reported on Weekly Jobless Claims Thursday and perhaps vindicated The Greek on a small economic matter of discernment. You see last week we said the decline in jobless claims may have been due to the lackadaisical environment that precedes and follows long weekends, like the 4th of July. Even though the fourth is accounted for, the lazy mood and absent minded states that precede and follow it are not.

Our founder 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, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

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Jobless Data Proves Our Financial Genius

This week, jobless claims for the period ending July 16 rebounded, rising 10K to 418K. So, perhaps we were correct. Most economists were looking for an increase this week, so it seems our theory was maybe not so special; the consensus view was for 415K. The four-week moving average was hardly energetic, decreasing by 2,750 this week, to 421,250. It was very close to last week’s change, just in the opposite direction.

It’s very clear now that economic activity is stalled, mostly likely due to the deadlock in Congress regarding the debt ceiling and accompanying and impending catastrophe. Manufacturing activity has certainly stalled, as seen again in today’s Philly Fed Index reading of 3.2; it was at least in positive territory, unlike the New York state measure.

For the period ending July 9, the insured unemployment rate improved a tenth of a percent to 2.9%. That amounted to 50K Americans getting a job, losing their unemployment benefits or evaporating under the intense American sun. The total amount of folks receiving a benefit of some sort for their unemployment improved by 159,696K, but still numbers 7.3 million.

The future of labor will have a lot to do with the future of interest rates, and if for some ungodly reason, Standard & Poor’s follows through on its warning and downgrades American credit, well then the cost of capital rises across the board. It’s lucky that American corporations have hoarded cash for so long, but I still don’t see them hiring in that kind of environment.

As always, I provide a few state statistics here:

The highest insured unemployment rates in the week ending July 2 were in Puerto Rico (4.9), Pennsylvania (4.1), Alaska (3.9), New Jersey (3.8), Oregon (3.8), Connecticut (3.7), Nevada (3.5), Rhode Island (3.5), California (3.4), Arizona (3.3), and Illinois (3.3).

The largest increases in initial claims for the week ending July 9 were in New York (+20,599), Minnesota (+9,681), Michigan (+9,030), Florida (+7,544), and Ohio (+5,839) while the largest decreases were in California (-15,751), New Jersey (-7,486), Massachusetts (-3,008), Illinois (-1,399), and Connecticut (-1,316).

Article should interest investors in Paychex (Nasdaq: PAYX), Manpower (NYSE: MAN), Robert Half International (NYSE: RHI), 51Job Inc. (Nasdaq: JOBS), Monster World Wide (NYSE: MWW), Korn/Ferry International (NYSE: KFY), Administaff (NYSE: ASF), Kforce (Nasdaq: KFRC), TrueBlue (NYSE: TBI), Dice Holdings (NYSE: DHX), Kelly Services (Nasdaq: KELYA), SFN Group (NYSE: SFN), CDI Corp. (NYSE: CDI), Cross Country Healthcare (Nasdaq: CCRN), On Assignment (Nasdaq: ASGN), AMN Healthcare Services (NYSE: AHS), Barrett Business Services (Nasdaq: BBSI), Hudson Highland Group (Nasdaq: HHGP), StarTek (NYSE: SRT), RCM Technologies (Nasdaq: RCMT), VirtualScopics (Nasdaq: VSCP), American Surgical (OTC: ASRG.OB), Medical Connections (OTC: MCTH.OB), iGen Networks (OTC: IGEN.OB), St. Joseph (OTC: STJO.OB), General Employment Enterprises (NYSE: JOB), Total Neutraceutical (OTC: TNUS.OB), TeamStaff (Nasdaq: TSTF), Stratum (OTC: STTH.OB), Purespectrum (OTC: PSRU.OB), Corporate Resource Services (OTC: CRRS.OB), Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), TD Bank (NYSE: TD), PNC Bank (NYSE: PNC), General Electric (NYSE: GE), Wal-Mart (NYSE: WMT), McDonald's (NYSE: MCD), Alcoa (NYSE: AA), American Express (NYSE: AXP), Boeing (NYSE: BA), Caterpillar (NYSE: CAT), Cisco Systems (Nasdaq: CSCO), Chevron (NYSE: CVX), DuPont (NYSE: DD), Walt Disney (NYSE: DIS), Home Depot (NYSE: HD), Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM), Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), Kraft (NYSE: KFT), Coca-Cola (NYSE: KO), 3M (NYSE: MMM), Merck (NYSE: MRK), Microsoft (Nasdaq: MSFT), Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), AT&T (NYSE: T), Travelers (NYSE: TRV), United Technologies (NYSE: UTX), Verizon (NYSE: VZ), Exxon Mobil (NYSE: XOM).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Jumat, 15 Juli 2011

Special Factors in the Latest Jobless Claims Data

Weekly Jobless Claims eased sharply, weekly same-store sales soared and mortgage activity dropped off. There was a common denominator that threw a wildcard into the period for which each of these data-points were reported. While much of this data compensated for the July 4th holiday, none of it takes into account the effect of such holidays on business activity in the immediately preceding and following days.

Special Factors in the Latest Jobless Claims Data

Weekly Jobless Claims eased by 22K to 405K in the week ending July 9. That’s good news right? Well, if you read my article earlier this week regarding the slippage in mortgage activity, then you know there’s a fly in the economic ointment through the week inclusive of the July 4th holiday.

In the case of the mortgage application data, the holiday is adjusted for, but (and this is important) the day after is not and it is a business day that is noticeably lethargic. You can see it in your office or on the streets. People are still on vacation after the long weekend, whether it be literally so or just figuratively. They are tired, mentally absent, lethargic slugs, and just not getting much accomplished. Yet, the day after the long weekend is counted like any normal business day, and therein lies the problem.

In the case of this Department of Labor (DOL) data, it is also seasonally adjusted. However, I posit it is not adjusted quite perfectly. It cannot account for the lethargy that keeps the newly unemployed from making it immediately in to apply for their benefits nor the pace at which government workers process the applications that make it through. Have you been to the DMV lately? I realize much of this can be accomplished over the telephone nowadays, but as anyone who has had to go through the process knows, it does also require the individual to visit the unemployment office initially. Very few people absolutely need to run to the office right away, especially since the “benefits” are appropriated to account for the days since last employment, as far as I can remember. So I think a decent number of Americans will even put off money collection over a short holiday.

That said, last week had a counterweight as far as the unemployment insurance report goes. The state of Minnesota shut down, sending a flood of previously publicly employed folks to the office. Minnesota estimates that about 11,500 of their filers last week did so because of the shutdown, and they’re counted in the claims number. Thus, if not for the holiday, this report would have a much different tone to it.

The four-week moving average for claims filings decreased by 3,750, to 423,250, and probably better reflects current reality than the weekly result does. Next week’s result could offer a compensatory increase in filings, a reaction to this week’s lethargy. If we hang on weekly economic results alone, then we’ll swing wildly with them in our investment performance as well. Thus, let’s be careful about how much weight we give to weekly economic data that runs through such holiday periods especially. As always, let’s also remember to look beyond the headline and even the report itself when analyzing economic data, as much can be gleamed through a broader scope.

Kamis, 07 Juli 2011

ADP Report – It’s Like Getting Wrecked on Your Way to the Bachelor Party

I’m not a big fan of the ADP Private Employment Report, however professional and important it is. For me, it’s sort of like getting wrecked on the way to your bachelor party. It spoils the fun for everyone waiting on the DOL data and provides a less satisfying facsimile of what should have been the last night of single life. The memories it leaves only contribute a bitter taste to the wedding that follows. As they gather up their bit of cake, economists and investors won’t even look you in the eye whilst they chuckle amongst themselves about the night that never was. Of course, just like the case of the premature bachelor and his independent satisfaction, we can never know which data point was actually more accurate. After all, this is the government’s data we are comparing ADP’s result to, and the government may or may not be akin to the group of thugs you may call your friends.

Our founder 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, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

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ADP Report – It’s Like Getting Wrecked on Your Way to the Bachelor Party

Each month, ADP presents its estimate of what the Labor Department will report a day or two later. It’s like a publicly available economist’s estimate, yet the stock market and the popular press anticipate it and react to it as if it were a reflection of an economic reality. If it were perhaps more accurate, or better said - more reflective of the data the government reports (which may or may not be accurate), then it might move the market, but the data has lost its punch over the years, in my view.

Now that we’ve discounted the market impact of the data, we’ll progress to report it to you. Enjoy! ADP published Thursday morning that Private Nonfarm Payrolls likely rose by 157K in June. This is a net estimate of course, as some jobs are lost while others are created. It’s a big number though, given that economists are only looking for the Labor Department’s report to show private nonfarm payrolls rose by 125K in June. It would be good news if we were certain the government’s data could reach the same mark. The problem is that we cannot be certain of anything with regard to these two reports of the same data point (one being an estimate and the other being a possible forgery or more likely a fumble). Relax, we jest of course.

Take last month for instance. ADP reported private nonfarm payrolls likely rose by 38,000, and then the government said two days later that the real number was 83K. Now I realize that an eight and a three are present in each figure, but you would have to be a monkey to see similarity between the two. In its ever diligent fashion, ADP adjusted its estimate for last month to better reflect reality, and so it revised May’s data-point to +36K. Yes, ADP lowered its estimate despite the government data showing a greater degree of job creation than ADP initially estimated. It follows no rhyme nor reason, we know, but it says clearly that ADP is not signing off on the government’s data. So it would appear that ADP values its interpretation higher than the Labor Department while the DOL could care less about what ADP thinks. Which is right? Do you have any darts?

What we know about June so far is that ADP thinks the service sector contributed significantly to job growth, adding some 130K jobs on net. That was three times more than it did in May, and ADP had no problem saying so. The Institute for Supply Management seems to concur, but in an appropriately disjointed fashion. It was just this week, after all, within which ISM reported a decline in its Non-Manufacturing Index (read service sector measure). Declines are not generally good, and neither is this one, but a reading above 50 still marks economic expansion, and ISM marked 53.3 for June. More importantly, ISM’s Non-Manufacturing Employment component Index reached 54.1 (versus 54.0 in May), indicating job additions at a minimum. Both ADP and the government are looking for overall additions, so we suppose you can at least count on that Friday.

The goods producing sector, however, only added 27K jobs in June, according to ADP. That was much improved from the goods sector estimate for a loss of 10K jobs in May. Manufacturing employment was seen adding 24K jobs on net, continuing what appears to be a fragile streak of seven of eight months of growth. The always ailing (or seems so) construction sector lost another 4K jobs in June by ADP’s count. 2.1 million construction jobs have been lost since the industry's employment peaked in January 2007. If you think that’s bad, imagine how many jobs have been lost in construction when including undocumented immigrants. The financial sector, including Wall Street unfortunately, lost 3K jobs in June, allegedly.

Smaller companies continued to provide the jobs according to ADP. Companies with fewer than 50 workers added 88K jobs, with mid-sized firms (50-499) adding 59K. Large companies with 500 or more employees only added 10K jobs according to ADP. I guess in a questionable environment, better to fatten up the balance sheet than to feed some lug’s hungry kid huh?

According to ADP, this type of private sector growth reflects recovery from the spring lull. ADP also advises that the unemployment rate might hold steady or even improve modestly in June based on its view. We’re not sure who is right, but economists surveyed by Bloomberg are looking for the unemployment rate to also hold at 9.1% Friday. I suppose also that in the end the bachelor party doesn’t really matter; it’s the marriage that counts.

Article should interest investors in Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), TD Bank (NYSE: TD), PNC Bank (NYSE: PNC), State Street (NYSE: STT), Janus (NYSE: JNS), T. Rowe Price (Nasdaq: TROW), General Electric (NYSE: GE), Wal-Mart (NYSE: WMT), McDonald's (NYSE: MCD), Alcoa (NYSE: AA), American Express (NYSE: AXP), Boeing (NYSE: BA), Caterpillar (NYSE: CAT), Cisco Systems (Nasdaq: CSCO), Chevron (NYSE: CVX), DuPont (NYSE: DD), Walt Disney (NYSE: DIS), Home Depot (NYSE: HD), Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM), Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), Kraft (NYSE: KFT), Coca-Cola (NYSE: KO), 3M (NYSE: MMM), Merck (NYSE: MRK), Microsoft (Nasdaq: MSFT), Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), AT&T (NYSE: T), Travelers (NYSE: TRV), United Technologies (NYSE: UTX), Verizon (NYSE: VZ), Exxon Mobil (NYSE: XOM), Paychex (Nasdaq: PAYX), Manpower (NYSE: MAN), Robert Half International (NYSE: RHI), 51Job Inc. (Nasdaq: JOBS), Monster World Wide (NYSE: MWW), Korn/Ferry International (NYSE: KFY), Administaff (NYSE: ASF), Kforce (Nasdaq: KFRC), TrueBlue (NYSE: TBI), Dice Holdings (NYSE: DHX), Kelly Services (Nasdaq: KELYA), SFN Group (NYSE: SFN), CDI Corp. (NYSE: CDI), Cross Country Healthcare (Nasdaq: CCRN), On Assignment (Nasdaq: ASGN), AMN Healthcare Services (NYSE: AHS), Barrett Business Services (Nasdaq: BBSI), Hudson Highland Group (Nasdaq: HHGP), StarTek (NYSE: SRT), RCM Technologies (Nasdaq: RCMT), VirtualScopics (Nasdaq: VSCP), General Employment Enterprises (NYSE: JOB) and TeamStaff (Nasdaq: TSTF).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Jobless Jive at the Cost of a Sound Bite

I get a little peeved sometimes when I hear a financial journalist twist data for the sake of a sound bite. It’s like this morning when a reporter said jobless claims had improved, implying the economy was simply lovely. I would be fairly certain viewers and listeners could discern reality if not for the Dow’s drive higher, up 0.8% or so today. My perusal through the Labor Department Report seems to support the reporter’s case, however accidentally she may have gotten there. So who’s to say if the latest jobless data offered good or bad news? I suspect 61K Americans have that answer.

Jobless Jive at the Cost of a Sound Bite

Yeah Weekly Jobless Claims improved in the latest reported period ended July 2, but the 14,000 benefits filer decrease only took the weekly claims tally down to 418K. That’s right around the area it’s been meandering about for what seems like an eternity now. I mean that was clearly evident in the four-week moving average, which only improved by 3,000 to 424,750. This is not enthusing news, not in the least.

The insured unemployment rate dropped a tenth of a point in the period ending June 25, to 2.9%. It certainly was good news to see that insured unemployment improved by 43K in that same period, but 3.7 million people are still receiving unemployment insurance checks. If we count all Americans receiving some sort of government aid, including those receiving unemployment insurance through the extension program, well then 7,459,561 million suffering Americans come into the spotlight. Hey though, that’s 61K less than the previous week.

Come to think of it, the drift of this figure lower has been a juicy economic positive over the past few months, which I suppose is only so tasty for an economist’s palette. But I wonder how many of the people falling off this list are simply falling off the radar. And what if this latest pressure about the budget deficit leads Congress to cut off extensions; what if the policing of these benefits has already tightened, leaving Americans high and dry without a job and without any income as well? It would seem that this is possible at the ground level. If this not so savory theory is cooked into the numbers, then the divergence between the unemployed and underemployed should be exaggerated Friday when the Labor Department publishes its latest data.

One thing is certain, extended benefits are still being paid out at least in these states: Alabama, California, Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Missouri, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Washington, and West Virginia (during the week ending June 18).

So whether this report is a good one or not is probably not for us to say. Neither can that aforementioned reporter know for sure. Only those 61K Americans no longer receiving checks can tell us what’s going on and exactly how things are. Are you working or are you panicking? Please tell us.

With this data, I always like to provide you with the latest information from the individual states:

The highest insured unemployment rates in the week ending June 18 were in Puerto Rico (4.7), Alaska (4.2), Pennsylvania (4.0), Oregon (3.9), California (3.7), Nevada (3.6), Arizona (3.4), Connecticut (3.4), Illinois (3.4), and New Jersey (3.4).

The largest increases in initial claims for the week ending June 25 were in New Jersey (+6,827), California (+5,375), Massachusetts (+3,816), New York (+2,591), and Connecticut (+2,097) while the largest decreases were in Pennsylvania (-4,974), Puerto Rico (-1,332), North Carolina (-1,316), Georgia (-975) and the Virgin Islands (-927).

Selasa, 10 Mei 2011

American Economic Value Destruction Seen in Wholesale Trade Data

American economic value destruction inflation

Look closely at the latest Wholesale Trade data, and you’ll find what looks just like inflation. Yet, at the same time, you’ll also note what looks like American demand destruction. But if global demand remains adequate, then prices should not give as we might expect them to. Thus, there will be no counter balance, and life will get harder for Americans and the Middle Class will contract. American economic value is being destroyed, while the emerging world is enriched.

Our founder 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, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

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American Economic Value Destruction Seen in Wholesale Trade Data

The U.S. Census Bureau reported the latest Wholesale Trade data covering the month of March. It showed a 1.1% increase in Wholesale Inventories, which was about in line with the 1.0% forecast by economists surveyed at Bloomberg. Wholesalers’ Sales rose 2.9%, which was even more impressive when considering that February sales were revised higher. March’s burst in sales against slower inventory growth led the inventory-to-sales ratio to improve to 1.13, from 1.16 in February. But closer inspection offers a less than sanguine perspective.

The change to February sales took its decline from -0.8%, up to a decline still of -0.3%. We speculate that February’s relative sales weakness was likely weather hampered. The rough winter, especially for the Northeast and Midwest, affected the economy in a significant way. We saw its affects across small business, as evidenced by decline in the NFIB Small Business Optimism Index, which continued that trend in April. But I also saw anecdotal evidence of trouble, as small businesses I survey were strangling this winter, and that ranged from bars and restaurants to hair salons and art galleries.

The harsh winter weather certainly hampered whatever slim construction activity that may have been scheduled for February. Perhaps that’s why sales of lumber and other construction materials climbed 7.3% in March. Certainly high ticket durable goods played a role in the March expansion, as durables sales climbed 2.3%.

Meanwhile, price increase across commodities definitely drove sales gains. An example of this can be seen in the 6.7% increase in sales of metals and minerals. Sales of petroleum and related products increased 7.9%, obviously on the rise in oil prices. Chemicals and allied products, which are tied to petroleum, saw sales increase of 6.3%.

The automotive sector was basically the only soft spot within the report, reporting wholesale sales down 1.4%. Yet, this should not be a surprise either, considering that as gasoline gets expensive, demand should lessen for gas guzzlers.

Nondurables sales increased 3.4%, driven by gains in drugs (+1.4%), apparel (+1.4%), groceries (+2.3%) and farm products (+1.7%). Those last two lead one to worry about price rise, and then we think about the reported increases in apparel prices at several retailers as well. We’ve seen consumer staple companies complain about margin squeeze for months now, and finally we’re seeing them pass through price pressures to consumers (reference Kimberly-Clark (NYSE: KMB) for just one).

Within inventory changes, we noted a 3.9% decrease in Computer and Computer Peripheral Equipment and Software. This is not a good sign for business investment, and neither is the slim 0.4% increase in durable goods inventories. Automotive inventories were down 0.5%. Excluding the food, petroleum and commodity related industries, we note drug inventories increased 3.0%. As you might imagine, all others were up significantly. Nondurable goods inventories in aggregate rose 2.0%.

Folks, if it looks like inflation, walks and talks like inflation and smells like inflation, then it’s probably inflation. This report stinks of inflation and demand destruction at the same time, and therefore fits the puzzle characterizing today’s American economy. Increasing emerging market demand for goods and services is raising prices for goods, while not necessarily raising the financial well being of Americans. What I’m seeing is economic value destruction of American wealth. We had better figure out quickly how to better benefit from emerging world development, because as American companies benefit from the leverage of their expertise overseas, that is not in turn employing enough Americans. Thus, the middle class we’ve grown so proud of may soon begin to contract.

This article should interest investors in Boeing (NYSE: BA), Raytheon (NYSE: RTN), Digital Globe (NYSE: DGI), GenCorp (NYSE: GY), General Dynamics (NYSE: GD), Goodrich (NYSE: GR), Northrop Grumman (NYSE: NOC), Honeywell (NYSE: HON), Lockheed Martin (NYSE: LMT), Rockwell Collins (NYSE: COL), L-3 Communications (NYSE: LLL), EMBRAER (NYSE: ERJ), FLIR Systems (Nasdaq: FLIR), BE Aerospace (Nasdaq: BEAV), TransDigm (NYSE: TDG), Spirit Aerosystems (NYSE: SPR), CAE (NYSE: CAE), Alliant Techsystems (NYSE: ATK), Hexcel (NYSE: HXL), Triumph Group (NYSE: TGI), Esterline Technologies (NYSE: ESL), Moog (NYSE: MOG-A), Heico (NYSE: HEI), Teledyne (NYSE: TDY), Curtiss-Wright (NYSE: CW), Cavco (Nasdaq: CVCO), Skyline (NYSE: SKY), Nobility Homes (Nasdaq: NOBH), Palm Harbor Homes (Nasdaq: PHHM), Mohawk Industries (NYSE: MHK), Interface (Nasdaq: IFSIA), Albany International (NYSE: AIN), Unifi (NYSE: UFI), Illinois Tool Works (NYSE: ITW), Tyco International (NYSE: TYC), Cummins (NYSE: CMI), Kubota (NYSE: KUB), Ingersoll-Rand (NYSE: IR), Dover (NYSE: DOV), ITT Corp. (NYSE: ITT), Flowserve (NYSE: FLS), Pall (NYSE: PLL), Dresser-Rand (NYSE: DRC), SPX (NYSE: SPW), Gardner Denver (NYSE: GDI), IDEX (NYSE: IEX), Nordson (Nasdaq: NDSN), Graco (NYSE: GGG), Actuant (NYSE: ATU), Middleby (Nasdaq: MIDD), ABB (NYSE: ABB), Eaton (NYSE: ETN), Nidec (NYSE: NJ), Rockwell Automation (NYSE: ROK), Ametek (NYSE: AME), Regal Beloit (NYSE: RBC), Thomas & Betts (NYSE: TMB), Woodward Governor (Nasdaq: WGOV), Caterpillar (NYSE: CAT), Deere (NYSE: DE), CNH (NYSE: CNH), Joy Global (Nasdaq: JOYG), Bucyrus (Nasdaq: BUCY), Agco (Nasdaq: AGCO), Emerson Electric (NYSE: EMR), Parker Hannifin (NYSE: PH), Roper Industries (NYSE: ROP), Pentair (NYSE: PNR), Waste Management (NYSE: WM), Republic Services (NYSE: RSG), Fastenal (Nasdaq: FAST), Vulcan Materials (NYSE: VMC), MDU Resources (NYSE: MDU), Martin Marietta Materials (NYSE: MLM), Owens Corning (NYSE: OC), Valspar (NYSE: VAL), Precision Castparts (NYSE: PCP), United States Steel (NYSE: X), Reliance Steel (NYSE: RS), NVR (NYSE: NVR), DR Horton (NYSE: DHI), Pulte (NYSE: PHM), Toll Brothers (NYSE: TOL), Hovnanian (NYSE: HOV), CRH (NYSE: CRH), CEMEX (NYSE: CX), Eagle Materials (NYSE: EXP), Fluor (NYSE: FLR), McDermott International (NYSE: MDR), Foster Wheeler (Nasdaq: FWLT), Empresas ICA (NYSE: ICA), Stanley Black & Decker (NYSE: SWK), Timken (NYSE: TKR), Kennametal (NYSE: KMT), Leucadia National (NYSE: LUK), Masco (NYSE: MAS), Weyerhaeuser (NYSE: WY), Quanta Services (NYSE: PWR), Chicago Bridge & Iron (NYSE: CBI), EMCOR (NYSE: EME), Snap-on (NYSE: SNA), Toro (NYSE: TTC), GM (NYSE: GM) and Ford (NYSE: F).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Kamis, 28 April 2011

Pending Home Sales Show Solidly in March 2011

The National Association of Realtors regular monthly release, showing Pending Home Sales, indicates the continuation of improvement in the real estate market in March 2011. While growth was fragmented, and as activity remains just mildly positive, the realtor group affirmed its forecast for growth in housing in 2011.

Relative tickers: Nasdaq: ITIC, NYSE: BAC, OTC: FMCC.OB, OTC: FNMA.OB, NYSE: GS, NYSE: MS, NYSE: WFC, NYSE: TD, NYSE: SRS, NYSE: URE, NYSE: IGR, NYSE: XIN, Nasdaq: RYHRX, Nasdaq: TRREX, NYSE: TOL, NYSE: HOV, NYSE: DHI, NYSE: BZH, NYSE: LEN, NYSE: KBH, NYSE: PHM, NYSE: NVR, NYSE: GFA, NYSE: MDC, NYSE: RYL, NYSE: MTH, NYSE: BHS, NYSE: SPF, NYSE: MHO, AMEX: OHB, NYSE: VNQ, NYSE: PNC, NYSE: JPM, Nasdaq: HOFT, NYSE: ETH, NYSE: PIR, NYSE: WSM, NYSE: HD, NYSE: LOW, AMEX: VAZ, AMEX: NKR, AMEX: MZA, AMEX: NXE, AMEX: NFZ, Nasdaq: XNFZX, Nasdaq: FSAZX, Nasdaq: AVTR, NYSE: AIV, NYSE: EQR, NYSE: AVB, NYSE: UDR, NYSE: ESS, NYSE: CPT, NYSE: SNH, NYSE: BRE, NYSE: HME, NYSE: MAA, NYSE: ELS, NYSE: ACC, NYSE: CLP, Nasdaq: AGNC, NYSE: SUI, NYSE: AEC, NYSE: PMT and AMEX: TWO, NYSE: SPG.

Pending Home Sales Show Solidly in March 2011

Slow and steady wins the race. The sprinting hare overexerts himself and tires, and the sure tortoise passes him lying in exhaustion. This is illustrated in every asset bubble, driven by hare-infatuated capital, and it was the case again in the housing bubble of the last decade. The good news is that the death of the hare is behind us and the tortoise is now making his way, progressing.

The National Association of Realtors' (NAR) Pending Home Sales Index increased by 5.1% over the revised lower February mark, reaching 94.1 in March. Still, this index and all other real estate metrics that have been recently reported show a level of activity short of the prior year; the Pending Home Sales Index was 11.4% below the 106.2 March 2010 mark. The NAR points out why, reminding investors that last spring's market was inflated by the deadline to qualify for the First Time Homebuyer Tax Credit. As we approach the summer-low comparables for real estate activity though, year-over-year comparisons should show improvement like the month-to-month comparisons reflect currently. Understanding this allows for the digestion of the NAR's full 2011 forecast for 5 to 10 percent existing home sales growth.

Monthly activity has been choppy, but as we look back at the change since last June, we find pending home sales have increased by 24%. A closer inspection of regional activity also serves to blur observation of general growth. The Northeast, which was burdened by heavy snowfall through January and into February, saw pending home sales slip 3.2% in March. Many theorize that the whole sales process, which includes prospective buyers walking through homes, was set aback by the extreme weather conditions this past winter. The Midwest, where weather again is certainly at issue, only saw a 3.0% increase in March. But in the West and South, where weather is more favorable and where the population of the nation tends to migrate, we saw better growth rates. The Pending Home Sales Index for the West rose by 3.1%, but is closer to prior year levels than any other region. In the South, growth spurted by 10.3% in March.

One troubling trend though is that the percentage of distressed property transactions is increasing, reaching about 40% last month. This serves to lower the average sale ticket, and weighs on overall pricing comparisons. However, these properties are also weeding themselves out of the market and serving to help place a floor for housing to grow from. On the positive, the weaker dollar resulting from Federal Reserve policy and other factors, serves to draw foreign demand for U.S. assets. Thus, while domestic demand is hampered by high unemployment and tighter lending standards, a wider door is opened to foreign investors.

In conclusion, this report serves as yet another signal that a floor in housing seems set. Barring further disruption to the economy, perhaps driven by rising fuel, food and other prices, or other unforeseen event, housing seems to offer opportune alternative investment.

Editor's Note: Article should interest investors in Investors Title (Nasdaq: ITIC), Bank of America (NYSE: BAC), Freddie Mac (OTC: FMCC.OB), Fannie Mae (OTC: FNMA.OB), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), Toronto Dominion (NYSE: TD), UltraShort Real Estate ProShares (NYSE: SRS), Ultra Real Estate ProShares (NYSE: URE), ING Clarion Global Real Estate Income Fund (NYSE: IGR), Xinyuan Real Estate Co. (NYSE: XIN), Rydex Real Estate Fund H (Nasdaq: RYHRX), T. Rowe Price Real Estate Fund (Nasdaq: TRREX), Toll Brothers (NYSE: TOL), Hovnanian (NYSE: HOV), D.R. Horton (NYSE: DHI), Beazer Homes (NYSE: BZH), Lennar (NYSE: LEN), K.B. Homes (NYSE: KBH), Pulte Homes (NYSE: PHM), NVR Inc. (NYSE: NVR), Gafisa SA (NYSE: GFA), MDC Holdings (NYSE: MDC), Ryland Group (NYSE: RYL), Meritage Homes (NYSE: MTH), Brookfield Homes (NYSE: BHS), Standard Pacific (NYSE: SPF), M/I Homes (NYSE: MHO), Orleans Homebuilders (AMEX: OHB), Vanguard REIT Index ETF (NYSE: VNQ), PNC Bank (NYSE: PNC), J.P. Morgan Chase (NYSE: JPM), Hooker Furniture (Nasdaq: HOFT), Ethan Allen (NYSE: ETH), Pier 1 Imports (NYSE: PIR), Williams Sonoma (NYSE: WSM), Home Depot (NYSE: HD), Lowes (NYSE: LOW), Nasdaq: XNFZX, Nasdaq: FSAZX, Avatar Holdings (Nasdaq: AVTR), Apartment Investment & Management (NYSE: AIV), Equity Residential (NYSE: EQR), Avalonbay Communities (NYSE: AVB), UDR Inc. (NYSE: UDR), Essex Property Trust (NYSE: ESS), Camden Property Trust (NYSE: CPT), Senior Housing Properties (NYSE: SNH), BRE Properties (NYSE: BRE), Home Properties (NYSE: HME), Mid-America Apartment (NYSE: MAA), Equity Lifestyle Properties (NYSE: ELS), American Campus Communities (NYSE: ACC), Colonial Properties (NYSE: CLP), American Capital Agency (Nasdaq: AGNC), Sun Communities (NYSE: SUI), Associated Estates (NYSE: AEC), PennyMac Mortgage (NYSE: PMT), Two Harbors (AMEX: TWO), Simon Property Group (NYSE: SPG).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Kamis, 21 April 2011

Jobless Claims Indicate Labor Stall

Last week, we tracked Weekly Initial Jobless Claims as they climbed above the important psychological threshold of 400K. While this week's report from the DOL showed claims eased from that level, it unfortunately illustrated a still troubling bump in claims trend. Last week, we theorized that the government shutdown threat may have played a role in pulling claims forward, and this week's data seems inconclusive in proving or disproving our theory.

Relative Tickers: NYSE: RHI, NYSE: KFY, NYSE: MAN, NYSE: MWW, Nasdaq: KELYA, Nasdaq: JOBS, NYSE: JOB, Nasdaq: CECO, Nasdaq: PAYX, NYSE: ASF, Nasdaq: KFRC, NYSE: TBI, NYSE: DHX, NYSE: SFN, NYSE: CDI, Nasdaq: CCRN, Nasdaq: ASGN, NYSE: AHS, Nasdaq: BBSI, Nasdaq: HHGP, NYSE: SRT, Nasdaq: RCMT, Nasdaq: VSCP, OTC: ASRG.OB, OTC: MCTH.OB, OTC: IGEN.OB, OTC: STJO.OB, OTC: TNUS.OB, Nasdaq: TSTF, OTC: STTH.OB, OTC: PSRU.OB, OTC: CRRS.OB, NYSE: BAC, NYSE: JPM, NYSE: GS, NYSE: C, NYSE: MS, NYSE: WFC, NYSE: TD, NYSE: PNC, NYSE: GE, NYSE: WMT, NYSE: MCD, NYSE: AA, NYSE: AXP, NYSE: BA, NYSE: CAT, Nasdaq: CSCO, NYSE: CVX, NYSE: DD, NYSE: DIS, NYSE: HD, NYSE: HPQ, NYSE: IBM, Nasdaq: INTC, NYSE: JNJ, NYSE: KFT, NYSE: KO, NYSE: MMM, NYSE: MRK, Nasdaq: MSFT, NYSE: PFE, NYSE: PG, NYSE: T, NYSE: TRV, NYSE: UTX, NYSE: VZ, NYSE: XOM, NYSE: DE, NYSE: TIF, NYSE: CO, NYSE: FRO

Jobless Claims Indicate Labor Stall

Weekly Initial Jobless Claims were reported for the week ending April 16 this morning. Claims eased from the prior week's revised mark of 416K, down to 403K. Unfortunately, that still pulled the four-week moving average of jobless claims higher by 2,250, to 399K.

This troubling trend, and the fact that claims have again found steady ground above the psychological threshold of 400K, could increasingly bother the stock market should it continue. The flow of jobless claims paralleled the action of the market in 2010. Of course, other economic improvements also coincided with and followed stock gains through the span, and we cannot say with certainty that deterioration in claims activity would harm stocks now. But it certainly makes logical sense that stocks would be depressed by deterioration in an already weak labor market.

Through the lagged April 9 period, insured unemployment stayed at 2.9%, where it was found the week before as well. Insured unemployment numbered 3,695,000, down 7,000 from the week before. However, the total number of unemployed Americans claiming benefits under all programs, including from unemployment insurance extensions, numbered 8.3 million.

In our last report covering weekly claims, we theorized that the prior week's bump up above 400K might have been tied to a rush of filers and the swift work of DOL employees to file paperwork ahead of the potential government shutdown. This week's data is somewhat inconclusive as to whether there was such an impact, as we would have looked for claims to have returned toward the 380K to 390K range as a result. Just 10K from that range, it's difficult to pass judgment either way.

It is not without possibility that the government shutdown factor combined with natural labor market softening, arising from global uncertainty, budget concern and rising resource pricing, to negatively impact weekly jobless claims. Gasoline prices especially have impacted consumer sentiment, and so hiring personnel at both large and small businesses would be expected to be tentative in progressing with growth now. We'll have to keep an eye on this report in the weeks ahead to discern if the trend is changing, and if labor gains are stalling.

The highest insured unemployment rates in the week ending April 2 were in Alaska (6.0 percent), Puerto Rico (5.0), Idaho (4.4), Oregon (4.4), Pennsylvania (4.3), Wisconsin (4.3), New Jersey (4.2), Rhode Island (4.2), California (4.1), Connecticut (4.1), and Montana (4.1).

The largest increases in initial claims for the week ending April 9 were in California (+25,646), North Carolina (+6,041), Kentucky (+5,202), Texas (+5,108), and Florida (+4,299), while the largest decreases were in Minnesota (-403), Iowa (-389), Maine (-55), and Wyoming (-9).

Rabu, 20 April 2011

March Housing Starts May Indicate the Long Awaited Turn

Real Estate

It appears the news we've long awaited may have arrived Tuesday - the start to some spring housing activity, if not recovery. Just a day after the NAHB's Housing Market Index indicated that builder sentiment was extremely negative in April, March Housing Starts and permitting activity told another story.

Relative tickers: NYSE: BAC, OTC: FMCC.OB, OTC: FNMA.OB, NYSE: GS, NYSE: MS, NYSE: WFC, NYSE: TD, NYSE: SRS, NYSE: URE, NYSE: IGR, NYSE: XIN, Nasdaq: RYHRX, Nasdaq: TRREX, NYSE: TOL, NYSE: HOV, NYSE: DHI, NYSE: BZH, NYSE: LEN, NYSE: KBH, NYSE: PHM, NYSE: NVR, NYSE: GFA, NYSE: MDC, NYSE: RYL, NYSE: MTH, NYSE: BHS, NYSE: SPF, NYSE: MHO, AMEX: OHB, NYSE: VNQ, NYSE: PNC, NYSE: JPM, Nasdaq: HOFT, NYSE: ETH, NYSE: PIR, NYSE: WSM, NYSE: HD, NYSE: LOW, AMEX: VAZ, AMEX: NKR, AMEX: MZA, AMEX: NXE, AMEX: NFZ, Nasdaq: XNFZX, Nasdaq: FSAZX, Nasdaq: AVTR, NYSE: AIV, NYSE: EQR, NYSE: AVB, NYSE: UDR, NYSE: ESS, NYSE: CPT, NYSE: SNH, NYSE: BRE, NYSE: HME, NYSE: MAA, NYSE: ELS, NYSE: ACC, NYSE: CLP, Nasdaq: AGNC, NYSE: SUI, NYSE: AEC, NYSE: PMT and AMEX: TWO, NYSE: DIA, NYSE: SPY, Nasdaq: QQQQ, NYSE: DOG, NYSE: SDS, NYSE: QLD, NYSE: NYX, NYSE: ICE, Nasdaq: NDAQ

March Housing Starts May Indicate the Long Awaited Turn

We intimated in our recent article Home Builder Sentiment Sinks in April that the home builder association's regular release is likely biased by the influence of the inclusion of many smaller, capital constrained builders, and also by political purpose. We found some vindication of this theory in Tuesday's release by the U.S. Census Bureau.

Housing Starts ran at an annual pace of 549K, 7.2% higher than February's revised pace of 512K (from 479K). March's Starts also caught economists by surprise, exceeding the consensus estimate of 525K compiled by Bloomberg. While the pace was certainly short of awesome, sitting 13.4% below the prior year period pace, it offered a glimpse of hope, if not a sign of something more. Single family starts improved by 7.7%, while multi-family property starts of five or more units increased by 14.7%. This is an understandable difference, given the increased tension against home ownership today.

There was even better news to be found in permitting activity, which is the forerunner of Starts. The pace of building permit authorizations jumped by 11.2% in March, to 594K. Bloomberg does not compile consensus estimates for permitting, but it would appear this result would also have beaten expectations. Still, this year's March compared poorly to the prior year level of activity, down 13.3% against last year. Permits for single family properties rose by 5.7%, while those for the construction of five units or more increased by 28%.

As we've indicated in the past, securities markets prefer change in direction and pace over absolute levels of activity, and so change in housing activity should be enough to drive real estate and construction related shares higher should a trend materialize.

The regional details of the report offered prospective information as well. The faster developing markets of the West and South saw solidly improving permitting activity, with the South rising 6.3% and West gaining 37.1% over February, after seasonal adjustment. The Midwest rose 6.9%, and the Northeast saw no change. As far as Starts went in March, the Midwest led all comers, with activity rising 32.3%. The Western portion of the nation marked strong starts up 27.6%. Starts were up 5.4% in the Northeast, but down 3.3% in the South. We again remind that permitting activity justly gets more attention from securities markets due to its prospective value.

In conclusion, I believe that builder confidence is not matching with real activity within the broader real estate market. There are signs of life. While demand for new construction is still burdened by the overhang of lender owned distressed property and foreclosures generally, as a seasoned equity analyst, I reiterate my recurring theme to you that the market will notice recovery early and begin rewarding homebuilder and housing related shares despite a new construction lag. That said, the broader economy remains vulnerable to the slightest of shocks, and is not without burdens, given the pressures of the budget deficit and also rising prices. So there is no clear buy signal free of risk, but a faint buy signal for risk takers.

Editor's Note: Article should interest investors in Bank of America (NYSE: BAC), Freddie Mac (OTC: FMCC.OB), Fannie Mae (OTC: FNMA.OB), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), Toronto Dominion (NYSE: TD), UltraShort Real Estate ProShares (NYSE: SRS), Ultra Real Estate ProShares (NYSE: URE), ING Clarion Global Real Estate Income Fund (NYSE: IGR), Xinyuan Real Estate Co. (NYSE: XIN), Rydex Real Estate Fund H (Nasdaq: RYHRX), T. Rowe Price Real Estate Fund (Nasdaq: TRREX), Toll Brothers (NYSE: TOL), Hovnanian (NYSE: HOV), D.R. Horton (NYSE: DHI), Beazer Homes (NYSE: BZH), Lennar (NYSE: LEN), K.B. Homes (NYSE: KBH), Pulte Homes (NYSE: PHM), NVR Inc. (NYSE: NVR), Gafisa SA (NYSE: GFA), MDC Holdings (NYSE: MDC), Ryland Group (NYSE: RYL), Meritage Homes (NYSE: MTH), Brookfield Homes (NYSE: BHS), Standard Pacific (NYSE: SPF), M/I Homes (NYSE: MHO), Orleans Homebuilders (AMEX: OHB), Vanguard REIT Index ETF (NYSE: VNQ), PNC Bank (NYSE: PNC), J.P. Morgan Chase (NYSE: JPM), Hooker Furniture (Nasdaq: HOFT), Ethan Allen (NYSE: ETH), Pier 1 Imports (NYSE: PIR), Williams Sonoma (NYSE: WSM), Home Depot (NYSE: HD), Lowes (NYSE: LOW), AMEX: VAZ, AMEX: NKR, AMEX: MZA, AMEX: NXE, AMEX: NFZ, Nasdaq: XNFZX, Nasdaq: FSAZX, Avatar Holdings (Nasdaq: AVTR), Apartment Investment & Management (NYSE: AIV), Equity Residential (NYSE: EQR), Avalonbay Communities (NYSE: AVB), UDR Inc. (NYSE: UDR), Essex Property Trust (NYSE: ESS), Camden Property Trust (NYSE: CPT), Senior Housing Properties (NYSE: SNH), BRE Properties (NYSE: BRE), Home Properties (NYSE: HME), Mid-America Apartment (NYSE: MAA), Equity Lifestyle Properties (NYSE: ELS), American Campus Communities (NYSE: ACC), Colonial Properties (NYSE: CLP), American Capital Agency (Nasdaq: AGNC), Sun Communities (NYSE: SUI), Associated Estates (NYSE: AEC), PennyMac Mortgage (NYSE: PMT), Two Harbors (AMEX: TWO).

Senin, 18 April 2011

Home Builder Sentiment Sinks in April

The NAHB Housing Market Index Fell but it Should Not be Construed as the Overriding Barometer for Real Estate

The National Association of Home Builders (NAHB) today released its latest tally of home builder sentiment, and the news reported was not good, especially for the heart of the important spring selling season. However, it does not necessarily reflect poorly for real estate generally, nor does it condemn housing stocks even.

Home Builder Sentiment Sinks in April

The home builders' association reported the NAHB/Wells Fargo Housing Market Index fell one point, to 16 in April. That reflects poorly for the voiced views of most home builders. However, using this index as a broad measure of the state of the real estate market would be a mistake. First of all, there is regional variation currently evidenced within this report, which should be expected at inflection point. Imagine taking a snow globe and rushing it downward to a sudden stop. You would find the "snow" inside unsettled, with some rising and some falling, rather than all rushing downward at once. The "globe" is in a situation of flux, from which broad direction is unclear. That's the state of the real estate market now. This report also does reflect the optimism that exists in some regions of the market.

The Southern Region of the nation basically drove the overall decline in sentiment, with the South falling four points to a regional index mark of 15. However, the congested Northeast saw improvement, gaining two points, to a mark of 20. The Midwest also rose, gaining two points to a slim mark of 14. The important Western region stuck at 17 in April. That said, the South represents the largest and most important new home market in the US currently, so weakness in the South still means a lot to the overall home building industry. Also, the absolute numbers reported here are all clearly weak. While that's important to home builders, change in direction and pace matter more to securities markets than absolute numbers in the determination of investment.

We remind readers that the NAHB includes the views of many small builders who face disadvantage now, given their more constrained capital situation. While large publicly traded builders are typically well capitalized, the smaller players, who are still aplenty, cannot get loans as easily today as they could five years ago. This index includes the small builder's views and is biased by them.

The NAHB lists the usual complaints from a builders' group that stands to benefit from government aid if its collective voice is loud enough. Some of these complaints are certainly true, and all of them carry weight though. These complaints include the effect of foreclosures on the appraisals of homebuyers making a trade up. Those homes for sale are burdened by the effect of foreclosure sales on a comparative pricing model. But the NAHB Chief Economist says "more foreclosures seem to be hitting the market," and that's just inaccurate. Just last week, RealtyTrac reported a 15% decline in first quarter foreclosure activity. It would be hard to fathom April being worse than the preceding months.

The NAHB reported that the index measuring current sales activity slipped one point, to 16. Even so, the measure of foot traffic of prospective buyers gained a point, to 13. However, the metric for the forward six month outlook fell sharply, shedding three points to a reading of 23. We expect this is directly related to rising uncertainty and creeping prices generally.

We believe that the most significant threat to this year's broadly anticipated housing recovery would be that caused by uncertainty with regard to the geopolitical situation and its impact on energy prices, namely gasoline. Gasoline is at a point now that it is affecting every consumption decision, especially those involving big ticket items like homes. Thus, while this data is not supportive of housing recovery on the surface, I'm not sure it should be expected to be an early indicator either.

Kamis, 14 April 2011

Labor Market Analysis – Jobless Claims Spike Examined

Jobs Data Analysis

We received two reports this week that offer a mixed message on the state of the labor market. This morning, Weekly Initial Jobless Claims spiked back up above the 400K threshold. Meanwhile, yesterday, the Labor Department reported that job openings had improved through February. While the periods measured differ, this still left some investors with a view of a labor market in limbo. Our analytical outside-the-box style has us weighing two possible drivers of the spike in claims, one positive and one negative.

Labor Market Analysis – Jobless Claims Spike Examined

The market celebrated on the open yesterday, perhaps partly on news that job openings had increased in February, rising by 12.8%, to 3.1 million. Today though, the Labor Department reported that weekly jobless claims spiked up to over 400K, an important psychological threshold we had only just gotten used to sitting under.

Weekly Jobless Claims

Today's DOL data covering the period ending April 9 showed weekly initial jobless claims spiked by 27,000, to 412K. This comes after several weeks of gradual improvement deeper below the psychological threshold of 400K. Our intuition has us weighing two distinct possibilities with regard to this change for the worse.

This could be an unfortunate result of global instability and increased uncertainty, which has contributed to a loss of consumer confidence with the help of rising gasoline prices (again the result of global uncertainty). Perhaps this factor is likewise impacting business decisions including workforce. Certainly, recent data from Wholesalers and Businesses shows sales rising short of inventory build, which we view as an indicator of spending slippage. Thus, economic deceleration could be the cause, but it would seem early to be driving layoffs.

This strange spike was so important that it nearly took the four-week moving average for jobless claims above the 400K threshold as well. The average rose 5,500, to a level of 395,750. There's one anomalous possibility we can see potentially behind the sudden increase. While we pointed to the near government shutdown as a possible driver for anomalous change in mortgage filings through the relative period, we wonder if perhaps a rush to handle paperwork contributed here as well. Maybe compassionate government workers pushed a little harder last week, to ensure those in need would be taken care of.

It would seem that we will know for sure if this week's increase was anomalous or not when we get next week's data. If it was merely an anomalous paperwork issue, then there should be a light claims figure to balance next week. Unfortunately, if it is the economy, then we should note another poor result next week.

Important Data FYI

Insured unemployment is measured for a lagging period, and was shown to have improved a tenth of a point, to 2.9% in the April 2 period. Insured unemployment fell by 58,000 in that span, to 3.68 million. However, the true number of insured unemployed Americans under all programs, including the benefit extension programs, numbered 8,517,545 in the March 26 period. According to the Household Survey, within the Employment Situation Report, the number of unemployed Americans was 13.5 million in March.

The highest insured unemployment rates in the week ending March 26 were in Alaska (6.2 percent), Pennsylvania (4.8), Puerto Rico (4.8), Oregon (4.7), Montana (4.6), Rhode Island (4.6), Wisconsin (4.6), Idaho (4.5), New Jersey (4.4), and California (4.3).

The largest increases in initial claims for the week ending April 2 were in Massachusetts (+2,575), Pennsylvania (+1,606), Ohio (+1,094), Illinois (1,013), and Georgia (+625), while the largest decreases were in California (-8,095), Texas (-2,913), Florida (-1,731), Missouri (-898), and Oregon (-733).

Where Art Thou Housing Growth

Real Estate

The latest data from the Mortgage Bankers Association showed a decline in weekly mortgage activity. The spring selling season is aging quickly, so where art thou housing growth?

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Where Art Thou Housing Growth?

The Mortgage Bankers Association (MBA) reported on Weekly Mortgage Activity for the period ending April 8, 2011. In the most recent week preceding this reporting, we tracked a spurt of contracting in mortgages tied to home purchases. The MBA attributed those to an impending deadline where-after FHA insurance would increase. We also highlighted the fact that FHA sponsored purchases would be delayed by the government shutdown that threatened last week. Some sort of extraordinary anomaly would seem to have been proven behind the spurt, as this week's report offered no reason for enthusiasm.

The Market Composite Index of mortgage activity declined by 6.7% on a seasonally adjusted basis in this latest measured period. Refinancing activity declined last week, and this week saw no help from mortgage rates to change matters. The average contracted rate on 30-year and 15-year fixed rate mortgages rose to 4.98% (from 4.93%) and to 4.17% (from 4.14%), respectively. This drove the Refinance Index to decline by 7.7%, and led the refinance share of overall mortgage activity to fall to 60.3%, from 61.2% in the week just prior.

Weakness in refinancing was also seen last week, but this time around, trouble was found across the board. The Purchase Index fell 4.7% from the prior week, but perhaps some of that was due to normalization from the previous week's anomalous spurt.

The bigger question to ask is, where art thou housing growth? Through April 8th, you are nowhere to be found. It would appear uncertainty from never or nether expected realm, lighting the Middle East ablaze, driving gasoline prices into desperate reaches, has the American consumer quite tight fisted. The real bad news is that I expect things to get worse, so hold off on that homebuilder liftoff we had previously foreseen, as these "other" factors overrule.

Editor's Note: Article should interest investors in Bank of America (NYSE: BAC), Freddie Mac (OTC: FMCC.OB), Fannie Mae (OTC: FNMA.OB), Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), Toronto Dominion (NYSE: TD), BB&T (NYSE: BBT), CIT (NYSE: CIT), Bank United (NYSE: BKU), First Citizens (OTC: FCNCA.PK), Synovus (NYSE: SNV), United Bankshares (Nasdaq: UBSI), Hampton Roads Bankshares (Nasdaq: HMPR), WesBanco (Nasdaq: WSBC), City Holding (Nasdaq: CHCO), Sandy Spring (Nasdaq: SASR), First Citizens (OTC: FCBN.OB), SCBT Financial (Nasdaq: SCBT), Wilmington Trust (NYSE: WL), WSFS Financial (Nasdaq: WSFS), Southside Bancshares (Nasdaq: SBSI), Stellar One (Nasdaq: STEL), Union First Market (Nasdaq: UBSH), Eagle Bancorp (Nasdaq: EGBN), First Bancorp (Nasdaq: FBNC), Ameris (Nasdaq: ABCB), The Bancorp (Nasdaq: TBBK), First Community (Nasdaq: FCBC), Capital City (Nasdaq: CCBG), Financial Institutions (Nasdaq: FISI), National Bankshares (Nasdaq: NKSH), Citizens & Northern (Nasdaq: CZNC), Charter Financial (Nasdaq: CHFN), Seacoast Banking (Nasdaq: SBCF), TIB Financial (Nasdaq: TIBB), American National (Nasdaq: AMNB), United Community (Nasdaq: UCBI), Middleburg Financial (Nasdaq: MBRG), Heritage Financial (Nasdaq: HBOS), Zions Bancorp (Nasdaq: ZION), East West Bancorp (Nasdaq: EWBC), City National (NYSE: CYN), Bank of Hawaii (NYSE: BOH), SVB Financial (Nasdaq: SIVB), Westamerica (Nasdaq: WABC), Cathay General (Nasdaq: CATY), Umpqua (Nasdaq: UMPQ), Glacier Bancorp (Nasdaq: GBCI), Pacific Capital (Nasdaq: PCBC), PacWest (Nasdaq: PACW), Western Alliance (NYSE: WAL), First National Alaska (OTC: FBAK.OB), First Interstate Bancsystem (Nasdaq: FIBK), Nara (Nasdaq: NARA), West Coast (Nasdaq: WCBO), TriCo (Nasdaq: TCBK), Territorial (Nasdaq: TBNK), Washington Banking (Nasdaq: WCBO), Bank of Marin (Nasdaq: BMRC), Hanmi (Nasdaq: HAFC), PNC Bank (NYSE: PNC), J.P. Morgan Chase (NYSE: JPM), United Bankshares (Nasdaq: UBSI), Bank of New York Mellon (NYSE: BK), MB Financial (Nasdaq: MBFI), Astoria Financial (NYSE: AF), New York Community (NYSE: NYB), Hudson City (Nasdaq: HCBK), People's United (Nasdaq: PBCT), First Niagra (Nasdaq: FNFG), Capitol Federal (Nasdaq: CFFN), Washington Federal (Nasdaq: WFSL), Investor’s Bancorp (Nasdaq: ISBC), Northwest Bankshares (Nasdaq: NWBI), Sterling Financial (Nasdaq: STSA), Ocwen (NYSE: OCN), Flagstar (NYSE: FBC), Provident (NYSE: PFS), Colombia Banking (Nasdaq: COLB), Kearny (Nasdaq: KRNY), Brookline (Nasdaq: BRKL), Dime Community (Nasdaq: DCOM), Flushing Financial (Nasdaq: FFIC), Danvers (Nasdaq: DNBK).