Thursday, December 10, 2009

When the Money Goes, Will the Honey Stay?- 12/10/09

"Money itself isn't lost or made, it's simply transferred from one perception to another. "
-Gordan Gecko

Via Bloomberg:

Trade Report
The latest international trade report shows exports continuing an uptrend, boosting U.S. manufacturing. Imports also rose, likely reflecting inventory rebuilding for autos and cautious hope about the consumer and business investment. The overall U.S. trade deficit narrowed to $32.9 billion from a revised $35.7 billion gap in September. The deficit was smaller than the market forecast for a $36.4 billion differential. Exports advanced 2.6 percent while imports gained 0.4 percent. The improvement in the trade deficit was primarily due to a narrowing in the petroleum deficit, which came in at $17.8 billion compared to a gap of $20.5 billion the previous month. The nonpetroleum gap shrank to $25.2 billion from $25.7 billion in September.

Looks like the decline in oil prices coupled with depressed demand played a major role in the narrowing of the gap.

But apparently, U.S. businesses are a little optimistic about domestic demand for both capital equipment and consumer goods. Import gains were led by a $1.1 billion boost in capital goods ex autos, followed by a $1.0 billion rise in consumer goods imports and $0.4 billion for autos. Industrial supplies imported fell $1.8 billion, with the crude oil component falling even more-by $2.4 billion. However, some of the auto imports may be lagged effects from the surge in auto sales under the cash-for clunkers program as import auto dealers restocked.

If the consumer continues to spend we should see robust GDP growth in the 4th quarter. Though, I would be cautious to predict anything over the 3-3.5% forecast by Mr. Bernanke and Mr. Dudley of the Federal Reserve.

Initial Jobless Claims
Initial jobless claims ended five weeks of improvement, rising 17,000 in the Dec. 5 week to 474,000 for the highest level since mid-November. But the four-week average continues to improve and is right at the current level, down 7,750 to 473,750. Market News International also notes that seasonal contraction in construction, tied to heavy weather, is another offsetting factor in the latest week's rise. Continuing claims in data for the Nov. 28 week fell very sharply, down 303,000 to 5.157 million. The drop in continuing claims reflects an uncertain mix of new hirings and the expiration of benefits. The unemployment rate for insured workers continues to come down, 2 tenths lower to 3.9 percent. This rate peaked in July at 5.2 percent in a major contrast with the overall unemployment rate which, at 10.0 percent in November, hit a 10.2 percent peak in October. Today's report is a bit of a disappointment and will lend modest support to those who question whether the November jobs report, with its big improvement, will prove to be a fluke

Claims missed analyst Consensus estimates of 460,000 for the week. This will be a very important trend to watch over the month of December leading into the Employment Situation on January 8th. Additionally, these numbers will have the potential to avalanche the Santa Clause Rally. Specifically, I will look for action from Washington as Obama looks to subsidize jobs with left over Tarp money. If this action is taken it will probably be viewed as bearish on the economy.

Natural Gas Inventories
Natural gas in storage fell 64 billion cubic feet in the Dec. 4

Nat Gas continued its volatility today and is up a whopping 7.7% at $5.28/btu on the session due to bullish supply numbers. I was able to lock in a favorable long position at the close of the trading day yesterday through the UNG. I have already taken profits today, and I will look to re-enter around $9.10.

Other News & Notes
  • CIT exits Bankruptcy
  • Citi looks to raise $20B through common offering to help repay $45B Tarp loan
  • London bankers set for exile as Darling approves Bonus Tax in excess of £25,000
  • U.S. Treasury will extend the Tarp until October 2010
On a a personal note, Tiger Woods is a great golfer and not a role model. Stop expecting him to live a flawless life. Everyone makes mistakes. I am sure Disney is loving ESPN's rating right about now. There is no news like Bad news...

Patrick M. Ambrus
Managing Partner
Analyze Capital LLC


  1. Pat, you have become a proficient and avid blogger that never ceases to amaze me. Keep up the great work! you make everyone at AC smile.

  2. Thanks man. I appreciate the praises alot.


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