Dr. Eggman writes “Oscar Pistorius, a 21-year-old South African double-amputee sprinter, has won his appeal filed with the Court of Arbitration for Sport. This overturns a ban imposed by the International Association of Athletics Federations, and grants Mr. Pistorius the opportunity to compete against other able-bodied athletes for a chance at a place on the South African team for the Beijing Olympics. He currently holds the 400-meter Paralympic world sprinting record, but must improve on his time by 1.01 seconds to meet the Olympic qualification standard. However, even if Pistorius fails to get the qualifying time, South African selectors could add Oscar to the Olympic 1,600-meter relay squad.”

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D Ninja writes “Yesterday, Lockheed Martin was awarded the $1.4 billion Air Force contract to build the next-generation global positioning satellite system. This occurred after a series of delays as the Air Force decided between Lockheed and the competing bidding contractor, Boeing Co. ‘GPS III, will give new navigation warfare (NAVWAR) capabilities to shut off GPS service to a limited geographical location while providing GPS to US and allied forces. GPS III will offer significant improvements in navigation abilities by improving interoperability and jam resistance. The procurement of the GPS III system is planned for multiple blocks, with the GPS IIIA portion currently underway. GPS IIIA includes all of the GPS IIF capability plus up to a ten-fold increase in signal power, a new civil signal compatible with the European Union’s Galileo system, and a new spacecraft bus that’ll allow a growth path to future blocks.’”

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Science Daily has word of a millisecond pulsar in the wrong kind of binary system that has astronomers scratching their heads. According to current models of pulsar evolution, such a system should have no way to develop. The pulsar J1903+0327, which rotates 465 times per second, seems to be in a highly elongated orbit around a Sun-like star. Quoting: “Astronomers think most millisecond pulsars are sped up by material falling onto them from a companion star. This requires the pulsar to be in a tight orbit around its companion that becomes more and more circular with time. The orbits of some millisecond pulsars are the most perfect circles in the Universe, so the elongated orbit of the new pulsar is a mystery.”

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Filed under: International markets, Forecasts, Housing, Federal Reserve, Recession

Are the world’s major central banks signaling an end to interest rate cut cycle?

Officials from three of the four major central banks - - all except the Bank of Japan - - have recently signaled their concern about rising inflation stemming from rate cuts implemented to stimulate demand following the credit crisis, Bloomberg News reported Friday. The U.S. Federal Reserve, Bank of England, and European Central Bank have commented, in various phraseologies, their concerns about prices and business costs.

Economist David H. Wang told BloggingStocks investors/traders can ignore comments out of the ECB, but not the Fed’s or the BOE’s - - which translates to at least a rate cut pause.

“[ECB President Jean-Claude] Trichet has been on the wires commenting on the need to contain prices, but he’s been doing that since, I think, 1962, so ignore that,” Wang stated. “But the Fed comment blitz we’d earlier this week and the Bank of England comments about rising prices I think are clear signals of a rate cut pause. The central banks have implemented enough monetary stimulus, for now.”

Central banks: in analytical mode

As part of an effort to jump-start a U.S. economy slowed to a crawl by the nation’s worst housing recession in more than 15 years, the Fed has cut short-term interest rates by 325 basis points to 2%. Further, in conjunction with the Fed action, and to stave off a potential regional and global slowdown, the Bank of England has cut its key rate three times to 5%. Meanwhile, the ECB has kept its key rate the same, at 4%.

Further, Wang said the central banks will now shift to the analytical mode, as they await data on job growth and prices. The fundamental shifts that have already taken place in the global economy with regard to manufacturing and commodities suggest that the U.S. slowdown / recession will not result in as many lay-offs as previous economic troughs, but above-normal inflation, due to higher commodity prices, primarily oil, he said. As the above advocates, consumer demand could rebound quicker, putting pressure on prices, and the Fed / other central banks have to expect that potential problem, hence the rate cut pause, Wang said.

And if the U.S. / global economy does not continue to recover in the months ahead?

“Then the central banks go to ‘Plan B,’ ” Wang said. “That would involve a resumption of rate cuts, most likely this time involving the ECB, too.”

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Filed under: Bad news, Lowe’s Cos (LOW), Options, Technical Analysis, Housing

Lowe’s Companies (NYSE: LOW) shares are falling this day after an 8.2 percent increase in new home construction during April was shown to be due largely to apartment construction. Building of single-family homes continued to weaken, which could be a bad sign for LOW. If you think this stock won’t be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on LOW.

After hitting a one-year high of $33.19 in June, the stock hit a one-year low of $19.94 in January. This morning, LOW opened at $25.22. So far today the stock has hit a low of $24.51 and a high of $25.24. As of 11:45, LOW is trading at $24.83, down 31 cents(-1.2%). The chart for LOW looks bullish but deteriorating, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bearish hedged play on this stock, I would consider a June bear-call credit spread above the $27.50 range. A bear-call credit spread is an options position that combines the buy and sale of call options to hedge risk in case the stock doesn’t do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in five weeks as long as LOW is below $27.50 at June expiration. Lowe’s would have to rise by more than 10% before we would begin to lose money. Learn more about this type of trade here.

LOW hasn’t been above $27.50 since October and has shown resistance around $26 recently. This trade could be risky if the company’s earnings (due out on 5/19) are a positive surprise, but even if that happens, this position could be protected by resistance LOW might find at its 200 day moving average, which is currently around $26 and falling.

Brent Archer is an options analyst and writer at Investor’s Observer.

DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in LOW.

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Filed under: Economic data, Housing

U.S. housing starts increased 8.2% in April 2008 — an upside surprise skewed by a 36% rise in multi-family unit construction. Housing starts totaled a 1.032 million annual rate in April 2008, the U.S. Commerce Department announced (pdf) Friday.

Economists surveyed by Bloomberg News had expected housing starts to total a 940,000 annualized rate in April 2008.

Still, housing starts are down 31% in the past year and single-family starts are down 42%, the largest decline for single-family starts since 1992.

Meanwhile, building permits, a measure of future construction, increased 4.9% to a 978,000 annualized rate in April 2008; single-family permits increased 4% and multi-family permits climbed 6.8% during the month.

Buyers in ‘wait-and-see mode’

Economist Glen Langan told BloggingStocks Friday many potential homebuyers remain in wait-and-see mode, as housing’s doldrums persist. “Potential home owners are taking it one month at a time. If prices drop, they wait another month. As you know, many have been waiting for several months, given price trends in various regions of the country,” Langan stated. “Prices are still arcing downward and the housing begin totals reflect that. Foreclosures are pushing down housing prices by adding to the glut of unsold homes on the market, and potential buyers are waiting.”

Further, Langan said April 2008’s jump in multi-family construction also is typical of a soft housing market. “When builders can’t build and sell single-family homes they’ll switch to rental construction and we’re seeing this in the housing start data,” Langan said. “The housing market isn’t recovering, not yet. We need to see an increase in both single-family home sales and single-family construction to talk about a recovery.”

Langan added that he anticipates the nation’s supply of unsold homes, currently about a 9.5- to 10-month supply at present sales rates, to level-off at about an 11-month supply by the late summer 2008, before inventories start to work-off. A healthy home sale market typically has a 3-4 month supply of homes on the market.

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Filed under: Home Depot (HD), Market matters, Federal Natl Mtge (FNM), Clear Channel Commun (CCU), Lowe’s Cos (LOW), Toll Brothers (TOL), Housing, Cramer on BloggingStocks

TheStreet.com’s Jim Cramer says the homebuilders won’t quit, and that’s making the early-cycle plays work.

Have we really bottomed? The stubborn lack of decline in the homebuilders, coupled with the better-than-expected retail sales, the strong transports, and the conclusion of a deal like Clear Channel (NYSE: CCU) (Cramer’s Take), has created an environment where you’re hard-pressed, if you rely on stocks as forecasters, to ignore the possibility of a bottom.

I watch the HGX like a hawk, the homebuilding aggregation, and it simply won’t come down. That’s despite the awful numbers, the covenant violations (Standard Pacific (NYSE: SPF) (Cramer’s Take)) the bad loans, the lack of mortgage money, the insistence of a down payment and an abysmal spring traffic season.

So, why are people buying the group that signaled the downturn? I think it comes down to price. If you force the homebuilders to sell, as Toll (NYSE: TOL) (Cramer’s Take) did this quarter, taking no gains on homes, you clean up inventory. If you clean up inventory, which is what happened in western Florida, you stabilize pricing. When you stabilize pricing, you bring out buyers. It is a virtuous circle.

Which brings us back to the government. The feds, being pushed by Sen. Dodd, could provide real help, or provide some damage to the process depending upon the actions in the upcoming weeks.

If we spend $200 billion to $300 billion to grant the FHA to guarantee loans and stretch out the payments, we’ll allow people to stay in homes. That takes off more inventory, the foreclosure inventory. But if we give the builders a credit, they stop cleaning up their inventory because they have the ability to pay the banks with that credit. One will offset the other. (If they just listened to Bob Toll and offered a $15,000 tax credit on a home, then we could deal with unsold inventory, but the Dems are focused on keeping people in their homes who deserve to be in them, not selling new homes.)

So the Senate matters, as does the president who is completely laissez-faire about this issue and could become the enemy quickly with a veto. Given that we just got a veto-proof farm bill for the least needy group out there — the farmers — anything can happen. (And aren’t we craven about that!)

Now, we got news this morning that Fannie (NYSE: FNM) (Cramer’s Take) is about to scrap a rule about requiring down payments in hard-hit areas. This is breathtaking because it will wipe out a lot of equity for FNM as these are natural defaulters, but it sure helps clear out more inventory.

All of this litany can justify the HGX turn. Against it is unemployment, which is a huge if, and the psychology of the consumer, who is once again proving surprisingly resilient.

Yesterday, Bob Marcin issued a note about whether we are in a recession or getting to one. Obviously the bullish litany says we’ll avoid it. The market is sure saying that.

Either way, the chances that this rally is for real, that the early-cycle plays have some staying power, seems much more destined after this week’s action.

Oh, and don’t forget, the level of bearishness is rather astounding given the potential turn. That matters too, as hedge funds that are bearish don’t go to the sidelines, they place bearish bets, and when those don’t turn out right — as they didn’t in retail this week — the action is pretty explosive to the upside.

Next week we get Lowe’s (NYSE: LOW) (Cramer’s Take) and Home Depot (NYSE: HD) (Cramer’s Take) earnings. In some ways these could be the biggest tells of all because they sell products that you use when you nest or when you fix up to sell.

If they have good numbers, the debate could be sealed and the upside made much more clear.

Probably pays to wait after a large up week like this. But the onus, this week, shifted to the bears to make their case, and that’s a real tough stand to make after this week’s action.

RELATED LINKS:

• The 5 Dumbest Things on Wall Street: Might 16
• Toll CEO: Fourth Estate Razes Real Estate

Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com’s sites and serves as an adviser to the company’s CEO. At the time of publication, Cramer had no positions in the stocks mentioned.

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Filed under: Products and services, Dell (DELL), Hewlett-Packard (HPQ)

Personal maker Dell, Inc. (NASDAQ: DELL) wants to make its laptop and desktop Computers way more energy efficient within the next few years. For those of you who haven’t been following Dell’s “green” initiatives, this is just the latest in a string of them this year.

In addition to powering its entire corporate headquarters using green energy, Dell now wants to make its consumer Personal computers use 25% less power by 2010. For the world’s second-largest Computer maker, making that kind of a radical change in less than 24 months could prove to be an engineering challenge.

But then again, Dell seems to be playing the “one up” game with more massive competitor Hewlett-Packard Co. (NYSE: HPQ), which also played up the “green” card recently. The good news is that Dell’s laptop and desktop computer systems –consumer and corporate — are already some of the most energy efficient in the marketplace. And, if Dell can seize upon this projected change and sell energy reduction to the customer base it has instead of giga this and giga that, perhaps it can boost its sales. For many companies and consumers, even base models have enough horsepower to do most daily computing tasks. The “green-ness” of a new Computer buy could be the next frontier in Personal computer marketing.

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Peer writes “The dutch government has officially decided that it will no longer use voting machines (Babel Fish Translation) for elections. So it’s pencil and paper from now on. Activists have been campaigning against the use of voting machines for some time.”

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atrocious cowpat passes along a call for help from symmetry magazine, the joint publication of Fermilab and SLAC, noting: “Could be just plain gibberish, it could be something like those wonderfully weird letters to the Mount Wilson observatory, or it could be a message from aliens who just occurred to have gotten their hands (tentacles/exoskeleton) on a fax machine.” “A little over a year ago, the Fermilab Office of Public Affairs received a curious letter in code (4.4-MB image here). It has been sitting in our files all that time and we haven’t had much of a opportunity to look into breaking the code, nor are we particularly expert at this!”

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