Filed under: Forecasts, Press releases, Market matters, Money and Finance This day, Economic data, Oil, Headline news, Housing, Federal Reserve, Recession

The Federal Open Market Committee (FOMC) released the minutes of its recent meeting on August 5. The event itself was a bit of an anti-climax because of the comments by Fed Chairman Ben Bernanke at the recent Wyoming summit.

Everyone knew that even though members of the Fed are quite concerned about inflation, they’re even more concerned about the deteriorating economic situation. This was clearly indicated in comments made at the Jackson Hole meeting. In addition, as I mentioned in my earlier analysis, the decisions by Fed Governors Plosser and Stern to vote to leave rates unchanged instead of dissenting indicates the gravity of the economic and monetary problems facing the United States. This was almost a complete reversal of the recent hawkish comments by both individuals.

The FOMC minutes actually give us insight into the thinking of the Fed. The Fed is very concerned about the fragile nature of the economy. It clearly believes that a rise in interest rates prematurely could damage the already battered credit situation.

However, the Fed is concerned about the inflation situation. It is particularly concerned that inflation could become embedded in expectations. This phenomenon is much more difficult to control once it begins.

It believes that the weak economic situation, combined with the recent decline in oil prices, may help to resolve this dilemma in the coming months. It might require a rise in interest rates if this does not occur.

However, because of the weak economic situation, the Fed is implying that such an event won’t take place anytime in the near future. The minutes also indicate that it “did not see the current stance of policy as particularly accommodative” and thus sees no reason to raise rates prematurely.

The dilemma between growth and inflation is likely to persist for some time. With oil prices declining, the Fed might be able to mitigate some of the problem with inflationary expectations by raising rates. However, this could also change a painful slowdown into a severe recession. In this case, the cure to the inflation problem may be worse than the disease.

Doug Roberts is the Founder and Chief Investment Strategist for ChannelCapitalResearch.com, an independent research firm focusing on investment strategies using the Federal Reserve’s impact on the stock prices, and is the author of Follow the Fed(R) to Investment Success: The Effortless Strategy for Beating Wall Street (www.FollowtheFedtheBook.com ). He previously held executive positions at Morgan Stanley Group and Sanford C. Bernstein & Co.

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Filed under: Forecasts, Press releases, Market matters, Money and Finance This day, Economic data, Oil, Headline news, Housing, Federal Reserve, Recession

The Federal Open Market Committee (FOMC) released the minutes of its recent meeting on August 5. The event itself was a bit of an anti-climax because of the comments by Fed Chairman Ben Bernanke at the recent Wyoming summit.

Everyone knew that although members of the Fed are quite concerned about inflation, they’re even more concerned about the deteriorating economic situation. This was clearly indicated in comments made at the Jackson Hole meeting. In addition, as I mentioned in my earlier analysis, the decisions by Fed Governors Plosser and Stern to vote to leave rates unchanged instead of dissenting indicates the gravity of the economic and monetary problems facing the United States. This was nearly a complete reversal of the recent hawkish comments by both individuals.

The FOMC minutes actually give us insight into the thinking of the Fed. The Fed is very concerned about the fragile nature of the economy. It clearly believes that a rise in interest rates prematurely could damage the already battered credit situation.

However, the Fed is concerned about the inflation situation. It is particularly concerned that inflation could become embedded in expectations. This phenomenon is much more difficult to control once it begins.

It believes that the weak economic situation, combined with the current decline in oil prices, may help to resolve this dilemma in the coming months. It might require a rise in interest rates if this does not occur.

However, because of the weak economic situation, the Fed is implying that such an event won’t take place anytime in the near future. The minutes also indicate that it “did not see the current stance of policy as particularly accommodative” and thus sees no reason to raise rates prematurely.

The dilemma between growth and inflation is apt to persist for some time. With oil prices declining, the Fed might be able to mitigate some of the problem with inflationary expectations by raising rates. However, this could also change a painful slowdown into a severe recession. In this case, the cure to the inflation problem may be worse than the disease.

Doug Roberts is the Founder and Chief Investment Strategist for ChannelCapitalResearch.com, an independent research firm focusing on investment strategies using the Federal Reserve’s impact on the stock prices, and is the author of Follow the Fed(R) to Investment Success: The Effortless Strategy for Beating Wall Street (www.FollowtheFedtheBook.com ). He previously held executive positions at Morgan Stanley Group and Sanford C. Bernstein & Co.

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Filed under: Forecasts, Economic data, Housing, Recession

Today’s housing news on new home sales in July sounds eerily similar to the post I wrote yesterday about July existing home sales. In both cases, we’re given a swift headline that sounds like good news, but once you dig into the details a tiny deeper you realize that the news is just not as pretty as it first sounds.

Let’s first take a look at the positive headline: New home sales rise in July. Great, this is exactly the sort of news that the market needs to hear. After all, weakness in the housing market has been a major catalyst to the current economic slowdown, so any good news is like a breath of fresh air. During July the market saw a jump of 2.4%. Not too shabby.

But what does this really mean?

What the 2.4% jump relates to is a seasonally adjusted annual rate of 515,000 units. The positive side of this is that this is the highest level since April. Hey, in this environment I’ll celebrate any positive news coming out of the housing market, but as you know, there’s a negative side to this story coming as well, and here it comes.

Going into today’s report from the Commerce Department, Wall Street had been anticipating to see a small drop in home sales down to 525,000. Does something sound strange to you? How did actual sales come in at 515,000 units, which was up 2.4%, when the market thought there would be a decline down to 525,000?

To answer that question we have to go back another month to look at June sales. Previously we were being told that there were 530,000 new homes sold in June, but that was well off the mark, and the new revised number shows that there were only 503,000 units sold. Therefor, June was the worst month for new homes sales since back in September of 1991.

More bad news: at 515,000, the numbers of new homes sold in July is a mind bending 35% lower than July of last year.

What all of this is leading to is lower home prices. We looked yesterday at prices for existing home sales. We noted that during July the average price of an existing home sale was down 7.1% year over year, so let’s see how prices of new homes compares to that figure. In July new homes, on average, sold for 4.1% lower than last year. If you look at median home prices, the drop was more steep, with the median price for a new home in July being 6.3% lower than July of last year.

So what should we take from all of this? I wish I knew, but I don’t. On one hand it looks like things could be starting to stabilize, and then on the other hand there are still many signs that things are going to worsen. If I were a betting man, I would bet on things getting worse through the remainder of this year, and stabilizing during the first half of 2009, but then again what do I know?

What are your predictions? When can we anticipate to see the housing market stabilize? This year, early 2009, the latter part of 2009, or even further down the road? Let us hear your thoughts on this troubling housing market.

Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the on the internet investment advisory service Investor’s Observer.

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Filed under: Forecasts, Economic data, Housing, Recession

Today’s housing news on new home sales in July sounds eerily similar to the post I wrote yesterday about July existing home sales. In both cases, we’re given a quick headline that sounds like good news, but once you dig into the details a tiny deeper you realize that the news is just not as pretty as it first sounds.

Let’s first take a look at the positive headline: New home sales rise in July. Great, this is exactly the sort of news that the market needs to hear. After all, weakness in the housing market has been a major catalyst to the current economic slowdown, so any good news is like a breath of fresh air. During July the market saw a jump of 2.4%. Not too shabby.

But what does this really mean?

What the 2.4% jump relates to is a seasonally adjusted annual rate of 515,000 units. The positive side of this is that this is the highest level since April. Hey, in this environment I will celebrate any positive news coming out of the housing market, but as you know, there is a negative side to this story coming as well, and here it comes.

Going into today’s report from the Commerce Department, Wall Street had been expecting to see a small drop in home sales down to 525,000. Does something sound strange to you? How did actual sales come in at 515,000 units, which was up 2.4%, when the market thought there would be a decline down to 525,000?

To answer that question we have to go back another month to look at June sales. Previously we were being told that there were 530,000 new homes sold in June, but that was well off the mark, and the new revised number shows that there were only 503,000 units sold. Therefor, June was the worst month for new homes sales since back in September of 1991.

More bad news: at 515,000, the numbers of new homes sold in July is a mind bending 35% lower than July of last year.

What all of this is leading to is lower home prices. We looked yesterday at prices for existing home sales. We noted that during July the average price of an existing home sale was down 7.1% year over year, so let’s see how prices of new homes compares to that figure. In July new homes, on average, sold for 4.1% lower than last year. If you look at median home prices, the drop was more steep, with the median price for a new home in July being 6.3% lower than July of last year.

So what should we take from all of this? I wish I knew, but I don’t. On one hand it looks like things could be starting to stabilize, and then on the other hand there are still many signs that things are going to worsen. If I were a betting man, I would bet on things getting worse through the remainder of this year, and stabilizing during the first half of 2009, but then again what do I know?

What are your predictions? When can we expect to see the housing market stabilize? This year, early 2009, the latter part of 2009, or even further down the road? Let us hear your thoughts on this troubling housing market.

Michael Fowlkes has worked as a stock trader for seven years and spent the last four years working as an analyst for the on the internet investment advisory service Investor’s Observer.

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Filed under: Major movement, Earnings reports, Options, Housing

After the closing bell last night, Thornburg Mortgage, Inc. (NYSE: TMA) managed to report a second-quarter profit, but the firm warned investors that it’s in jeopardy of collapse as margin calls continue to roll in. Thornburg said that it covered $219 million of demands for collateral on August 21, and may face another $25.9 million of margin calls. Plus, uncertainty still remains about the outcome of an exchange offer that was meant to pull the New Mexico-based mortgage lender back from the brink of bankruptcy.

The jumbo-loan specialist said it swung to a second-quarter profit of $412.3 million, or 84 cents per share, after swallowing a first-quarter loss of $3.31 billion. During the recently concluded quarter, Thornburg wrote down $209.6 million in mortgage losses, which was offset by a $536.9-million gain from the declining value of a liability. Adjusted income for the period was $22.7 million.

Under the terms of a deal with MatlinPatterson Global Advisers, Thornburg concurred in March to conduct an exchange offer for some preferred stock. The offer expires on September 3, and holders of two-thirds of each of four classes of preferred stock must participate. The company warned that uncertainty about the outcome of the exchange offer, combined with the still-shaky market conditions, “raise substantial doubt about the company’s ability to continue as a going concern for the foreseeable future.”

Thornburg shares shut Monday at 40 cents, bringing their year-to-date loss to almost 96%. The stock quickly spiked about 30% (or 12 cents) out of the gate this morning, perhaps due to a rush of short-covering. By 10:00 a.m.. it was trading up 40%.

With the shares trading firmly in penny-stock territory, bearish bettors continued to ramp up their positions on Thornburg in the weeks heading into the earnings report (despite the proverbial “support at zero”). During the latest reporting period, short interest rose by 12.13% to account for more than 7.2% of TMA’s float.

On the other hand, option players have little other choice than to play calls, with totally no put strikes in existence below TMA’s current perch. Over the past 10 trading days, the International Securities Exchange reports that traders have bought nearly 5 calls to open for every 1 put on the shares. In the October series, there are 28,721 calls and 18,627 puts at the 2.50 strike, which is as close as TMA options get to being “at the money.”

Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer’s Investment Research. She is featured in the video series Schaeffer’s Daily Q&A on SchaeffersResearch.com.

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Filed under: Products and services, Consumer experience, General Motors (GM)

Will the Volt provide the jolt that turns General Motors’ (NYSE: GM) around?

In the interpretation of one critic, Chevrolet’s Volt plug-in hybrid might end up being not so much a game-changer as an ice-breaker.

Stock Analyst C. Leonard Bauer, whose ownership of high-performance sports cars through the years has been exceeded only by, perhaps, Mario Andretti, says he doesn’t anticipate the Volt, Chevrolet’s extended-range electric car, to overwhelm the public or generate rave reviews from critics, but those two conclusions still won’t blot out Volt’s positives.

“The key point, and one many have overlooked, isn’t the Volt, but the infrastructure behind the Volt,” Bauer said. “The Volt as a model will most likely underwhelm, but the processes GM has put in place will pay dividends when advances occur.” Bauer added that he does not own shares in or have a rating on any auto manufacturer.

Amped-up R & D

GM, Bauer states, has now committed a large amount of resources to electric and hybrid technologies, whereas previous commitments were modest. Moreover, “it would take an act of idiocy or $10 a barrel oil” for GM to dismantle its current research platform. Bauer expects neither, and as a result, he expects the 2nd, 3rd and 4th generations of Volt and its companions to achieve both battery power storage and power delivery advances not possible during GM’s previous electric automobile projects.

Why is Bauer so bullish on tech advances this time around? “Concentration of assets,” Bauer said. “It’s one thing to have 20 or 30 researchers working on a problem. It’s another thing to have 100 or 120 researchers trying to find a solution. Eventually, someone’s going to do something different or wrong, and, bingo, a better battery or process is discovered.”

GM says the initial Volt model, promised to showrooms by the end of 2010, will have a range of 40 miles on a full charge. The Volt will also have a range of 400 miles when using its internal combustion engine, which also can charge its batteries. Predictably, GM has been beyond secretive regarding the Volt’s revised design, but they did release a small, partial view, published at AutoWeek.com.

And regarding price, Bauer said it’s too soon to evaluate the Volt’s relationship among price, mission and value. “We have to learn more about the Volt’s performance characteristics and overall durability, including drive-train, and the type of energy market the Volt enters,” he said. “A $3 per gallon gasoline market is considerably different from a $6 per gallon market.”

Auto Sector Analysis: We’ll leave a discussion of product timing and previous failed efforts at electric tech by U.S. automakers for another day. For now, GM’s Volt displays initial clues that recommend an alternate-propulsion tech advance — but let’s see how far the vehicle runs on a full charge, first. Stay tuned.

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Filed under: Products and services, Ideal Buy (BBY)

Best Buy, Inc. (NYSE: BBY) has lowered the price of a Sharp Blu-ray disc player this week to $349.99 from $399.99. Why is that so significant? It isn’t. While most buyers in the U.S. sit and wait until Blu-ray player prices reach the $199.99 level, there is a looming problem even with that.

The problem is this: standard DVDs are good enough for most of us, and with upconverting players sitting in all retailers for $50 to $75, will another upgrade cycle to another format be foisted on the buying public? This one will be much harder than the transition from VHS tape to DVD a decade ago.

If Ideal Buy really wants to make the next-generation optical disc format truly a best seller, the pricing will have to come down by a mile. This really won’t be the responsibility of the retailer, but the manufacturer. But Ideal Purchase can do this: guarantee an X amount of sales if the price moves to a certain price point. It’s the only retailer outside Wal-Mart Stores, Inc. (NYSE: WMT) that could possibly guarantee a certain amount of sales in order to get newer consumer electronics format into the mass population. So, will Ideal Purchase take the lead and get Blu-ray into the mainstream?

Toshiba Corp. is rolling out its own upconverting standard DVD player specifically targeted to those buyers who don’t yet want to invest in the high-priced Blu-ray format. This is a good move, even though there are tons of competing products already on the market. Even though Sony Corp. (NYSE: SNE) won a major victory in the Blu-ray format, convincing customers to buy the costly hardware and movie software is still a major challenge. Perhaps a major Blu-ray partnership between Best Purchase and Sony should be on the way?

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Dr Sabine Begall and colleagues from the University of Duisburg-Essen have discovered that cows tend to point north. The researchers studied deer in the Czech Republic and looked at thousands of images of cattle on Google Earth. The animals tended to face north when eating or relaxing. “We conclude that the magnetic field is the only common and most likely factor responsible for the observed alignment,” the scientists wrote in an article. I guess cows will become the must-have item for long-distance hikers now. Having an edible compass would come in handy if you get lost.

Read more of this story at Slashdot.

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ThinkComp writes “In what could possibly be a major blow to a scientific consensus that has held for decades, recent research advocates that the traditional conception of Neanderthals being “stupider” than Homo sapiens might in fact be misleading. As articles about the research findings say, ‘early stone tool technologies developed by our species, Homo sapiens, were no more efficient than those used by Neanderthals.’ The data used in the study is available on-line along with a visual description of the process used.”

Read more of this story at Slashdot.

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Say of Alabama, Department of Finance Awards IT Security … - MarketWatch

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