CEO’S GROWING INCREASINGLY CONFIDENT IN ECONOMY

14 December 2010 by TPC 6 Comments

The latest CEO Survey from Business Roundtable shows a similar improving trend that we saw in the Small Business survey this morning.? On the whole, things are looking better (via Business Roundtable):

Washington – The CEOs of America’s leading companies plan increases in employment, sales and capital expenditures over the next six months – according to the results of Business Roundtable’s fourth quarter 2010 CEO Economic Outlook Survey.

“Demand is returning as evidenced by anticipated sales increases, and that is good news. When demand increases, capital expenditures and employment follow – which is what we expect to see in the next six months,” said Ivan G. Seidenberg, Chairman of Business Roundtable and Chairman and CEO of Verizon Communications. “However, our CEOs expect GDP to grow at rate of only 2.5 percent in 2011, so there is still more work that needs to be done to get the economy back on the path toward strong, sustainable growth.”

“Copper prices and corn prices are at near record highs. Cotton prices and most metals prices are also very high,” added Seidenberg. “As a result of these marked increases, materials are being cited as the greatest cost pressure, with health care costs coming in next as a significant cost pressure.”

Source: Business Roundtable

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OPTIONS IN FEDEX COULD BE GOOD SIGN FOR ECONOMY

30 November 2010 by TPC 0 Comments

I don’t generally put much faith in the stock market’s ability to forecast future economic outcomes, but action in the options market in FedEx is worth noting.? The economically sensitive bellwether saw some very bullish action in an otherwise bearish day yesterday.? Shares of UPS were also strong performers during the session with gains over 1%.? The strong sales figures from the early portion of holiday shopping has some investors feeling quite confident in the U.S. consumer:

FDX – FedEx Corp. – Shares of the delivery services firm increased as much as 3.4% in the first half of the trading session to secure an intraday high of $90.49 after it was upgraded to ‘outperform’ from ‘neutral’ with a target share price of $111.00 at Credit Suisse. The positive ratings change and subsequent rally in the price of the underlying shares spurred demand for near-term call options. Bullish players expecting FedEx to extend gains purchased at least 2,800 now in-the-money calls at the December $90 strike for an average premium of $2.13 a-pop. Call buyers are poised to profit should FedEx Corp.’s shares increase another 1.80% over today’s high of $90.49 to exceed the average breakeven price of $92.13 ahead of December expiration. More than 5,800 calls changed hands at the December $90 strike versus previously existing open interest of 4,243 lots at that strike. Options strategists also exchanged 1,400 calls at the higher December $95 strike by 1:15 pm in New York trading. The surge in demand for near-term call options on FDX lifted the stock’s overall reading of options implied volatility 5.9% to 29.91% this afternoon.

Source: Interactive Brokers

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THE “SUPER GOLDILOCKS” ECONOMY

This would make even Larry Kudlow blush.? It’s amazing how quickly opinions can change from deflation and doom in late August to “super goldilocks” in November.? Citigroup strategists issuing a very bullish note on emerging markets AFTER a 23% move in these markets (via the WSJ):

Citigroup strategists upgraded Brazil and Poland’s stock markets to overweight in the bank’s latest research report.The bank recommends the largest emerging market in a report released Friday that updates its asset allocation model. Strategists cite their attractive value and key global position. For instance, Brazil is called an “important beta play on strong emerging market performance.” Poland is also upgraded to match Citigroup’s current overweight in China and Korea.

Meanwhile, Taiwan and the Czech Republic are cut to neutral in line with Russia and India. Turkey is downgraded after recent outperformance to underweight to match South Africa.

Citi expects dollar returns of 35% in emerging markets to the end of 2011, and forecasts the benchmark MSCI Global Emerging Markets index to end next year at 1,500, still below valuation peaks of 1993 and 2007. Strategists say valuations remain far from bubble territory in emerging market equities, although developing world debt may be a different story.

A second round of quantitative easing underpins the positive emerging market fundamentals, says Citi. The bank notes zero U.S. interest rates, a weak dollar, higher growth in the developing world strong funds flows.

“The weak, but not recessionary, macro situation in developed countries is a ‘super-Goldilocks’ environment; we see the best parallel as the massive run in global emerging markets in 1991-93,” according to the report.

Within emerging market sectors, Citi raises financial to overweight, to match informational technology, consumer discretionary, and health care. Materials remain at neutral, while Citi is underweight energy.

Source: WSJ

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The content on this site is provided as general information only and should not be taken as investment advice. All site content shall not be construed as a recommendation to buy or sell any security or financial product, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of firms affiliated with the author(s). The opinions of all guest authors or contributors can and will differ from those of Mr. Roche. These opinions do not necessarily represent the opinions or investment decisions of Mr. Roche. The author(s) may or may not have a position in any security referenced herein and may or may not seek to do business with one another or companies mentioned via this website. Any action that you take as a result of information or analysis on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

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ECRI: NO DOUBLE DIP, BUT ECONOMY TO SLOW FURTHER

1 November 2010 by TPC 3 Comments

I’ve had one heck of a difficult time seeing how the ECRI’s Weekly Leading Index is in any way useful (as it tends to have near 1:1 correlation with equities), however, I have to give credit where credit is due. Lakshman Achuthan and the team at ECRI not only predicted the recession, but also predicted the recovery. In their most controversial call earlier this year they called for a slowdown, but not a double dip. That call is looking pretty good based on recent data. Achuthan sees no double dip going forward, but believes the economy is going to slow further.

Source: Fox Business

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The content on this site is provided as general information only and should not be taken as investment advice. All site content shall not be construed as a recommendation to buy or sell any security or financial product, or to participate in any particular trading or investment strategy. The ideas expressed on this site are solely the opinions of the author(s) and do not necessarily represent the opinions of firms affiliated with the author(s). The opinions of all guest authors or contributors can and will differ from those of Mr. Roche. These opinions do not necessarily represent the opinions or investment decisions of Mr. Roche. The author(s) may or may not have a position in any security referenced herein and may or may not seek to do business with one another or companies mentioned via this website. Any action that you take as a result of information or analysis on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

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