Week 32: US Economic Calendar

Weekly Economic Calendar, from Action Economics, Businessweek

I have to sincerely apologize to my readers for upload this calendar late, as i struggle to set up my desktop and online as well. I had started a new venture today and it going to take out some of my precious time. However, i am always very committed as i do. My goal is to update at least 1 or 2 post each week.

Last 8 months Performance of PMI Index

July ISM Index Component

ISM Manufacturing index for July is 48.9% and beat the forecast of 45.8%. Dow Jones immediately trading at 1% upward range.

Summary of Report as below:

PMI

Manufacturing contracted at a slower rate in July as the PMI registered 48.9 percent, which is 4.1 percentage points higher than the 44.8 percent reported in June. This is the 18th consecutive month of contraction in the manufacturing sector. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.


A PMI in excess of 41.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates growth for the third consecutive month in the overall economy, and continuing contraction in the manufacturing sector. Ore stated, "The past relationship between the PMI and the overall economy indicates that the average PMI for January through July (40.6 percent) corresponds to a 0.2 percent decrease in real gross domestic product (GDP). However, if the PMI for July (48.9 percent) is annualized, it corresponds to a 2.4 percent increase in real GDP annually."

Well, the 48.9 index is still below 50, which indicate expansion for manufacturing, but it certainly not far from it now.

The main dish for this week is ISM Manufacturing index and July Employment report (Wed, 8.15am ET). ISM manufacturing has given the market something to cherish on and continue to march towards 10000 for Dow Jones. Employment figure is a lagging indicator and it always recover when; only the business confidence is back. In this case, my opinion is Traders will be eager to bet along the positive upside of Employment figure. Therefore, i foresee that market will continue trend up for time being.

Week 31: US Economic Calendar

Weekly Economic Calendar, from Action Economics, Businessweek

Last week, US Existing Home Sales up 3.6% in June to seasonally adjusted annual rate of 4.89 millions. This is the third straight months up for existing home sales and the highest level since October last year. Market has digested this news well and investors are swarming into the market to push Dow Jones and regional market to new heights in this year.

In the coming week, we will see some several important reports coming out. Traders will closely watching at 3 heavyweights report:

i. New Home Sales report at Monday (10.00 am ET Release)

ii. Consumer Confidence Index at Tuesday (10.00 am ET Release)

iii. GDP at Friday (8.30 am ET Release)

The New Home Sales figure is a good indicator to showcase how far the sentiment at US has recovered. At this time, home buyer is waiting for a bottom before they start to buy house. Based on June Existing Home Sales report, the supply is at 9.4months now. In this case, the housing price will be stable now at 7months supply. Therefore, the mortgage foreclosure should be slowing down. All this are good sign of economy is recovering but albeit at a very slow pace.

Week 29: Market Outlook

The market has reached a tipping point since I was away for the past 2 weeks. No more fuel for the market to throttle ahead. Furthermore, there are strings of heavyweight 2Q financial result coming out this week; for instance, Goldman Sachs & Intel at Tuesday, JP Morgan at Thursday, Citi Group, Bank of America & General Electric. In this case, most of the investors would like to sit at the sideline now and chewing on the upcoming result to find out how far the recovering has progress on.

Actually, there are some clues on the market downside trend. If you watch closely at US 10 years Treasury yield, it has dropped significantly over 60bp (Basis Point) for the past month, since it reach the highest point of 3.936% at June this year. Bond price are reverse with the yield. If the bond price is up, the yield is dropping. In this case, 10 yr US treasury yield is dropping meanings that investor are scoping up the bond; the theoretical safe heaven for investor.

JP Morgan CEO, Jamie Dimon is voicing out his concern on the credit card losses and the continue delinquency of mortgage. Therefore, I suspect the financial company won’t be doing well for the past 3 months. Obviously, the credit market is back to normal and the liquidity is back as well, but the main concern is the confidence of all.

In this 14th of July, we shall see how the June Retail sales fare. My opinion is the sales will be either down or comparison with previous quarter. As I say previously, confidence play a huge role in determine the recovery process. The unemployment rate of June has hit 9.5%. There will be no surprise if the unemployment rate keeps going up. Overall, the so-called Green Shot has not exist, as far as I concerned.

WK 24: Market Outlook

The STI index has gone up by another 5% to 6% since I took 2 weeks off. It is amazing that STI has gone up over 50% since March!

There are a lot of talks about Green shots and Bear rally at the moment. What I have seen right now is simply the cheap liquidity that we have now driving the market up. There is certainly sign of credit system back to normal and dry bulk activity has been buzzing lately. Crude oil price shot up to $68/barrel and steel prices also recovering to above $360/tonne. It is a complete sentiment shift from fears to euphoria!

Back to 1951, where Ben Graham interestingly describe on how the market behave each day in his book – Security Analysis (One of the greatest investment book ever wrote). There is this Mr. Market where he will come to offer you a price everyday. Someday, he is in very optimistic mood and he will come to offer you a very optimistic price. The other day, he suddenly becomes very pessimist and as if the world is collapsing. He offers you a fire sales price!

The most important lesson here is you never get influenced by the market sentiment. The only reason to buy stock is you are buying into a great business when Mr. Market offering you a fire sales price.



1. Save 20%-50% of you monthly salary from now for investment


2. Ensure that you have adequate saving for urgent need and not required from the investment money. (Depend on personal circumstances and needs. For young people without commitment, a saving for 3 months expenses is good enough)


3. Buy into Great Business during huge market correction (-3% to -5%) from now on


4. Avoid the hottest stock at the moment!

Week 22: US Economic Calendar

Weekly Economic Calendar, from Action Economics, Businessweek

Last week, US Leading indicator has increased 1% in April, following a 0.2% decline in March. This is certainly a good sign. Economist at The Conference Board suggests that the leading indicators shows that the recession will continue in the near term, the declines will be less intense. The question is how long before declines in activity give way to small increases. If the indicators continue on the current track, that point might be reached in the second half of the year.

Housing report will dominate in this week activity. Housing activity has show clear signs of stabilizing. As I had stated previously, housing price and activity will determine how fast US economy can recover from contraction. The most badly hit states, like Nevada, Arizona, California and Florida have shown sign of encouraging sales. The existing home inventory has to go down before any significant pick up of new home construction activity.

Like what Warren Buffett say, house is mean for home stay and not mean for speculation!

Warren Buffett: Things Gonna Be Tough a While

Wk 21: Economic Calendar

Weekly Economic Calendar, from Action Economics, Businessweek

This week main focus will be the Leading Indicator & the Federal Meeting Minutes. The Federal Minutes most likely will suggest that the worst is over and coherent with the recent market rally tune.

It is interesting to see how the HomeBuilders’ Survey fares this Monday. This survey will showcase Homebuilders’ confidence and giving hints on the housing market. The housing price is still dropping, but no longer as fast as last quarter of 2008.