Morning Report – Earnings Season 7/15/13

Vital Statistics:

  Last Change Percent
S&P Futures  1674.0 3.7 0.22%
Eurostoxx Index 2680.7 5.8 0.22%
Oil (WTI) 105 -1.0 -0.92%
LIBOR 0.268 0.000 0.00%
US Dollar Index (DXY) 83.4 0.416 0.50%
10 Year Govt Bond Yield 2.63% 0.05%  
Current Coupon Ginnie Mae TBA 101.6 0.1  
Current Coupon Fannie Mae TBA 99.95 -0.4  
RPX Composite Real Estate Index 203 -0.2  
BankRate 30 Year Fixed Rate Mortgage 4.48    

 

Markets are higher on no real news. The NY Empire Manufacturing Survey came in higher than expected, while retail sales were weaker. Citi’s 2Q numbers beat estimates. Bonds and MBS are flattish.
 
Lots of data this week, punctuated by the Bernank’s testimony on Wed in front of the House Financial Services Committee. On Tues, we have the Consumer Price Index; now that QE4EVA is officially done with, inflation numbers are becoming relevant again. We will also get capacity utilization, industrial production, and homebuilder sentiment. Wednesday, we get housing starts and building permits, Thursday is Philly Fed, and Leading Economic Indicators. 
 
Last week’s rally in bonds was probably due to an overshoot on the jobs report after the 4th. We saw the average 30 year mortgage rate hit 4.64% on Friday, July 5 and the 10 year hit 2.74%. It looks like a lot of the Street took a 4 day weekend, so the market was illiquid and you had forced REIT selling in a thin market. While rates can certainly go higher, I would almost put an asterisk on those prices. I would be looking for a trading range in the 10 year of 2.45% – 2.65%. 
 
While earnings season officially started last week, it begins in earnest tomorrow. Heavyweights like Coca Cola, Goldman, American Express, IBM, Intel, Microsoft, Google, and GE will report this week. With the stock market at record highs, it is vulnerable to earnings disappointments. I would expect any sell-off in stocks to be bond bullish, but with the backdrop of ending QE, the effect may be modest.
 

13 Responses

  1. Hospital posts prices online. prices drop.

    Oklahoma City hospital posts surgery prices online; creates bidding war

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  2. Brent, 70% of American currency is in circulation overseas.

    I am asking the proverbial chicken-egg question. Did the Fed flood the world with so much currency that this was the result, or did demand for US currency allow the Fed to print money that would be worthless but for the trust foreigners place in it?

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  3. Mark:

    Did the Fed flood the world with so much currency that this was the result, or did demand for US currency allow the Fed to print money that would be worthless but for the trust foreigners place in it?

    I think it is the latter. The $ is the world’s reserve currency not because the US declares that it be so, but because it makes economic sense for foreigners to hold $. If foreigners didn’t want to hold US currency, they wouldn’t.

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    • Worse than Obama.

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      • Another politician caught in a sex scandal:

        The claims against Mayor were detailed and alarming. According to Gonzalez, in the Mayor’s office, there was something known as the “Filner headlock.” It was described thusly: the Mayor puts his arm around a woman’s shoulder, pulls her in tight, gets in close to her face, asks about husband/boyfriend, says things like “you know you love me, lets go up to my office, no one will know.”

        There was a “move” known as the “Filner dance” where, if the Mayor feels hesitation, he will force a kiss on a woman, the woman will try to evade and he will end up kissing a cheek. Women in his office called him a “dirty old man.”
        Donna Frye described other specifics about one of the victims: “He grabbed her, kissed her, jamming his tongue down her throat.” Frye went on to describe another encounter: “The Mayor quickly had his hand down the inside of her bra.”

        “I am the Mayor you can’t kick me out of any office” one employee of Filner allegedly said after she kicked him out of her office for his unwanted advances.
        Marco Gonzalez said his client stated the Mayor “grabbed her A** and touched her breasts.” Gonzalez said he had heard from women that Filner would say to them that “they would do a better job if they worked without their panties on.” Gonzalez also informed the press “there will be a sexual harassment suit filed against the city.” He indicated once again there were numerous women with allegations against the Mayor.

        At least he had the good sense to be a Democrat, so the chances of coming back from this scandal are probably pretty good.

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  4. At least he had the good sense to be a Democrat, so the chances of coming back from this scandal are probably pretty good.

    Recovering from sex scandals is a bipartisan skill. Diaper Dandy Vitter is still in office and Sanford easily won his congressional comeback.

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  5. unless it’s a crime, i think it’s easier to come back from a sex scandal. This guy in San Diego seems to have stepped way beyond crude remarks/behavior (which isn’t acceptable) into assaulting women.

    the money scandals are the ones that don’t go away.

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    • NoVA – we used to call that Packwood Territory, for unwanted male touching of female subordinates, and Foley Territory for male on male youth subordinates.

      Consenting private adult sex is more easily forgiven by the public, and usually by me [but not always].

      Personally, I have difficulty with Spitzer, engaging prostitutes while fighting crime, or Weiner, for flat out emotional immaturity, or Sanford, for having no sense of parental obligation. I would not vote for any of them again.

      I am odd about this, I guess. I thought WJC should have resigned for diddling an intern but I did not think he should have been impeached, even for lying about it under oath. OTOH, if a pol has a private consenting affair with an adult s/he is not supervising, I wouldn’t give it much attention.

      Cocaine is a killer for me, too. Recovery from cocaine habituation is very iffy.

      And bribery. How did we almost got stuck with Hastings as chair of the the House Intelligence Committee? I wrote Speaker Pelosi lengthy letters about how a former federal judge who was removed for accepting bribes should not even be security cleared, never mind on an Intelligence Committee, and God forbid, its chair. I think my letters convinced her to pull his selection. Or mine in concert with thousands of other lawyers, some of whom she actually knew, anyway.

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  6. This is what we watched on the news last night. It wasn’t huge but it was bad enough. Our oldest daughter drives through there avoiding the freeway for several miles. Luckily she missed it by a couple of hours. Her internship is in that general area.

    About 350 Los Angeles Police Department officers swarmed the Crenshaw district after groups of youths broke away from a peaceful protest in Leimert Park and stomped on cars, broke windows, set fires and attacked several people. Among those attacked were a television reporter and his cameraman, according to law enforcement authorities.

    Late Monday, at least 13 people were arrested on suspicion of committing various offenses, the LAPD said. Reporter Dave Bryan and his cameraman, both of whom work for Channels 2 and 9, were attacked and one of them was taken to a hospital with a possible concussion, Lt. Andy Neiman told The Times.

    Police estimated that about 150 people took part in the violence after the peaceful vigil at Leimert Park following the acquittal of Zimmerman, 29, on Saturday in Florida on second-degree murder and manslaughter in the shooting death of 17-year-old Trayvon Martin last year.

    At a late-night news conference, Los Angeles Mayor Eric Garcetti blamed the violence on a “a small group [that] has taken advantage of this situation.”

    He said that protesters have the right to voice their disagreement with the verdict. “But people also deserve to be safe on the streets and in their cars.”

    http://www.latimes.com/local/lanow/la-me-ln-zimmerman-verdict-city-leaders-urge-calm-20130715,0,1546139.story

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  7. I am odd about this

    I’m even odder, I lost all respect for Hillary for sticking by the guy.

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  8. i’m glad your daughter is okay and didn’t get caught up in that, lms.

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Be kind, show respect, and all will be right with the world.