US - Economic Data & News 01 (May 08 - Jul 08)

[kennynah]

27 Jun 2008 12:30 GMT
BULLET: US DATA: May personal income +1.9%, well above +0.4%.

US DATA: May personal income +1.9%, well above +0.4% expected and the largest increase since Sept 2005.

May PCE +0.8%, slightly above forecast

Core PCE prices +0.1%, at expectations.

Stimulus payments played a large role in May income, the BEA said, affecting disposable personal income, which surged 5.7%.

The rise in DPI was the largest since May 1975. Stimulus payments reduced personal current taxes and boosted govt benefits, 'as a result disposable personal income increased substantially.'

'Excluding these special factors' disposable personal income rose only 0.4%, the BEA said.

Rebate payments totaled $48.1b in May and $1.9b in April.

[millionairemind]

U.S. Consumer Spending Rose 0.8% as Incomes Surged (Update2)
By Shobhana Chandra

June 27 (Bloomberg) -- Spending by U.S. consumers rose more than forecast in May as the tax rebates propelled the biggest gain in incomes in almost three years, enabling households to overcome soaring fuel bills.

The 0.8 percent rise in purchases was the biggest since November, the Commerce Department said today in Washington. Incomes grew 1.9 percent, the most since September 2005, and measures of inflation were lower than anticipated.

After filling up their autos' gas tanks, Americans used the stimulus checks to buy electronics, clothes and furniture last month, helping to keep the economy expanding. At the same time, the slump in confidence, a loss of jobs and tighter credit raise concern spending will slow once the rebate effect fades.

``Consumers aren't fooled -- they know this is a temporary boost to their income,'' Ellen Zentner, an economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York, said in an interview with Bloomberg Television. ``If you strip out tax rebates, personal income probably rose about 0.3 percent.''

Wages and salaries grew just 0.3 percent in May, the Commerce Department figures showed.

Treasuries were higher, with the benchmark 10-year note yielding 4.01 percent as of 8:51 a.m. in New York, down 3 basis points from yesterday.

Economists had forecast spending would rise 0.7 percent, according to the median of 72 estimates in a Bloomberg News survey. Projections ranged from gains of 0.1 percent to 1 percent. The spending estimate for April was revised up to 0.4 percent from an originally reported 0.2 percent increase.

Disposable Income

The gain in income was almost five times larger than the median forecast of a 0.4 percent gain. Disposable income, or the money left over after taxes, surged 5.7 percent, the largest increase since May 1975.

The report also contained good news on inflation for Federal Reserve policy makers. The central bankers' preferred gauge of prices, which excludes food and fuel, increased 0.1 percent, compared with a 0.2 percent median estimate in the Bloomberg survey.

The price measure was up 2.1 percent from May 2007, also less than anticipated.

Adjusted for inflation, spending rose 0.4 percent, the biggest gain since December 2006.

Because the increase in spending was smaller than the gain in incomes, the savings rate jumped to 5 percent, the highest since March 1995, from 0.4 percent in April.

Fed policy makers this week kept the benchmark rate unchanged at 2 percent, ending a series of rate cuts, and said higher energy costs threatened to boost inflation. Still, they maintained a forecast that prices would ``moderate'' later this year, according to their statement.

`Diminished' Risk

Policy makers also said that ``although downside risks to growth remain, they appear to have diminished somewhat,'' partly as a result of ``some firming in household spending.''

A Commerce report earlier this month showed retail sales rose more than twice as much as forecast in May. Private surveys indicate the spending splurge continued this month as discounters, including Wal-Mart Stores Inc. and Costco Wholesale Corp., offered rebate-linked promotions.

About $70.8 billion worth of tax rebate checks were distributed through June 20, according to the Treasury Department.

Temporary Boost

There are signs the boost will not last. American Express Co. Chief Executive Officer Kenneth Chenault this week said credit indicators have deteriorated beyond the company's expectations.

The rebates aren't large enough to benefit manufacturers like Brunswick Corp., the maker of Sea Ray yachts and Boston Whaler fishing boats. The Lake Forest, Illinois-based company said yesterday it plans to close four more North American plants and may fire as much as 10 percent of its workforce after U.S. powerboat sales fell to the lowest in more than 40 years.

Conditions in the energy, housing and labor markets ``continue to erode U.S. consumers' confidence and are reducing their ability and desire to purchase discretionary items,'' Chief Executive Officer Dustan McCoy said in a statement.

Record gasoline prices are also causing Americans to scale back travel plans. The number of travelers over the U.S. Fourth of July holiday will decline for the first time this decade, motoring group AAA said yesterday.

To contact the reporter on this story: Shobhana Chandra in Washington at [email protected]

[millionairemind]

Now that GM, Ford and other auto stocks are tanking, just TOL, when will be a good time to enter again? At the end of the year when oil prices start to ease?

I remember reading that Peter Lynch made a huge fortune for Fidelity by betting on the revival of Chrysler.. hmm.... time for me to re-read his books..

One thing I do know is that Americans LOVE their cars

Pain is all around as Americans shun SUVs
By Poornima Gupta - Analysis

DETROIT (Reuters) - Record fuel prices have ended America's love affair with the SUV.

But the break-up is proving to be more painful than anyone anticipated. Some U.S dealers have stopped buying used trucks. Lenders are bracing for losses. Automakers have slashed output, and Americans have seen the value of their big rides drop by thousands of dollars in recent weeks.

The decline in sales of the heavy sports utility vehicles and trucks favored by Americans for more than a decade has gathered momentum in the last month, leading to a glut on dealer lots and sharply lower trade-in values.

But unlike the last recession in 2001, discounting from Detroit is not showing signs of reviving demand.

"The auto downturn appears to be entering a problematic second phase," Lehman Brothers analyst Brian Johnson said in a recent note for clients. "In this phase, with gas prices remaining stubbornly high, demand for both new and used large pickups and large SUVs is falling precipitously."

For years, North America's truck market has been an outsized anomaly. Cars outsell trucks by a 5-to-1 margin in Europe and by 2-to-1 in Asia Pacific. But in North America, the popularity of SUVs and trucks made that ratio almost 1-to-1 last year, according to Automotive News.

Yet record gasoline prices have driven resale values for big trucks such as the Ford F-150, Chevy Silverado and Toyota Tundra down by 20 percent or more this year.

That decline, in turn, is expected to force lenders, including finance companies like GMAC and Ford Motor Credit, to write down the value of vehicle leases.

General Motors Corp and Ford Motor Co could see write-downs of more than $3 billion on a combined basis for the depressed value of trucks and SUVs coming off leases that are then sold at auctions, analysts have said.

The crunch comes at a time of rising concern about liquidity for Detroit automakers. GM shares on Thursday tumbled to their lowest level since 1955, while privately held rival Chrysler LLC had to deny rumors it was facing a cash crunch.

GM's decision this week to slash truck production by 170,000 units and offer interest-free loans for six years underscored the severe pressure on the automaker.

Ford is already offering its market-leading F-Series pickup trucks with employee pricing, a discount worth up to $5,000 on some models. In an unusual and costly move, Ford has also opted to delay launching a redesigned F-150 to clear out inventory.

Analysts expect the discounting pressure to remain strong for the rest of the year as U.S. auto sales near decade lows.

'THE MATH DOESN'T WORK'

Mike Jackson, chief executive of the No. 1 dealership group AutoNation Inc, said even stepped-up incentives did not begin to address the shift in the market away from trucks.

"It's very difficult because we have consumers who want a new truck, but they have a truck to trade," Jackson said.

Jackson said automakers would have to sweeten incentives or extend rebates to clear 2008 model-year vehicle inventories.

The plunge in the value of large SUVs and trucks has prompted some dealers to stop taking them at trade-in.

"It has been unlike anything I've seen in my career," Tom Folliard, chief executive of CarMax Inc, the largest U.S. used car retailer, said last week, noting the large vehicle depreciation had been especially dramatic since April.

"People just can't afford to write a multi-thousand-dollar check to get out of their sport utility to get into a car that gets better gas mileage," he added. "The math doesn't work."

Used-car prices are a closely watched barometer for new vehicle sales as a majority of purchases involve a trade-in model and better prices tend to spur more trade-ins.

The average wholesale price of used, large SUVs fell 24 percent last month. Prices for used pickup trucks were down 21 percent in May, according to Manheim, a firm that provides auction pricing benchmarks for dealers.

The collapse in demand for large vehicles has automakers and analysts cutting forecasts for U.S. auto sales this year.

Sales in the world's single largest market for new cars and trucks are expected to drop to about 15 million units in 2008, down from 16.1 million for 2007. Few see a recovery in 2009.

Billionaire investor Kirk Kerkorian's chief auto adviser, Jerry York, expects only a limited sales rebound next year. Kerkorian has invested about $1 billion and taken a 6.5 percent stake in Ford, and offered more capital for its turnaround.

"I am very bearish on the outlook for the next year or so," York told Reuters.

(Editing by Braden Reddall)

[millionairemind]

US Chicago June purchasers index rises to 49.6 vs 48.0 expected

6/30/2008 9:49:00 PM

WASHINGTON (Thomson Financial) - Business activity in the US midwest increased unexpectedly in June, but remained in contraction territory for the fifth straight month
The National Association of Purchasing Management-Chicago business index rose to 49.6, up from the 49.1 reading in May

Economists polled by Thomson's IFR Markets were forecasting a drop to 48.0

A reading above 50 signals expansion, and a reading below 50 is a sign of business contraction

The Chicago purchasers group also said the prices paid index fell to 85.5 in June from 87.5, while the new orders index fell to 52.0 from 56.1

[kennynah]

so...this news...bo impact in index movement.... macam, totally ignored....jia lat big mac time man.... when market no rally (or some form of up tick) on good econ data... better sharpen the pocket knife....ready to cut big oak tree with it...

[winston]

Farrell: Good News Amid the Carnage
06/30/08 - 11:02 AM EDT; Vincent Farrell Jr.

Last week's market selloff was caused by the Fed not following through on its prior implication that it would raise rates to support the dollar and fight inflation -- coupled with Goldman Sachs' (GS - Cramer's Take - Stockpickr) negative call on a couple of big-name stocks (Citigroup (C - Cramer's Take - Stockpickr)and GM (GM - Cramer's Take - Stockpickr)). But there was some reasonably good economic news.

Personal income was up 1.9% from the prior month. The tax rebate checks caused most of this, but the number was still stronger than expected. The personal consumption expenditure index (PCE), a measure on inflation that differs from the consumer and producer price indices most often examined, rose 0.4% in May and was up only 3.1% from a year ago.

The hated core, ex food and energy, saw a modest increase of 0.1%, and was up 2.1% from the year earlier. Both measures were much better than expectations. The core is important to look at as it would indicate if rising food and energy prices were percolating down and contributing to a more generalized inflationary movement.

Consumer spending was up 0.8%, which is good with incomes up so much more, and the savings rate soared to 5%. The healthy savings rate indicated that consumers were able to save some of the rebate money and not all of it went into the gas tank.

The U.S. consumer was not fooled by a one-off rebate check and chose to save much of it. Consumers will not spend "tax cuts" or rebates unless they can count on them again. One-time rebates often get saved.

The bad news: Wages were up only 0.3% and plus 4.3% vs. a year ago. With headline inflation up by almost as much as wages, the consumer is struggling to get ahead. If inflation is not attacked, the demand for higher wages will inevitably emerge and create inflationary pressure.

Michael Cembalest, a strategist for JPMorgan (JPM - Cramer's Take - Stockpickr), wrote in his weekly that it "looks like the downturn in new-home sales and starts is bottoming." The rationale for this view is that existing-home sales were up 2% in May to a 4.99 million rate.

One month does not make a trend, but the Case-Shiller home price index also offered a kernel of positive news: While the headline number showed home prices down 15.3% in April from a year ago, the monthly rate of change slowed. April's decline on a monthly basis was negative 1.4%, better than March's decline of negative 2.2%.

This change in the rate of change is called the second derivative. The change in home prices is still down, but it fell in the month at a slower pace than the prior month.

This may be grasping at straws, and I'm not at all sure these trends will continue. About a quarter of home sales are foreclosures and it remains to be seen how much this might push home prices down. But that second derivative thing has to turn positive before we're out of the soup and we at least had one month's data offer some encouragement.

[millionairemind]

B4 one runs out to buy Honda/Toyota, be careful of YEN/USD exchange rate and the impact it has on the Japanese stocks and Nikkei 225.

Honda, Hyundai Avoid Slump as Asians Again Top U.S. Automakers

By Alan Ohnsman and Greg Bensinger
July 2 (Bloomberg) -- Honda Motor Co. and Hyundai Motor Corp. increased June U.S. sales amid an industry decline, leading Asia-based automakers to again outsell the domestic brands of General Motors Corp., Ford Motor Co. and Chrysler LLC.

Demand for fuel-efficient cars boosted sales for Honda and Seoul-based Hyundai about 1 percent each from a year earlier while the U.S. total fell 18 percent. GM, Ford and Chrysler sales declined a combined 26 percent, while those of Japanese and South Korean automakers slid 12 percent. Toyota Motor Corp., the biggest Asian automaker, reported a 21 percent drop.

``Honda is benefiting from a perfect mix of circumstances and production mix,'' said Rebecca Lindland, an analyst at forecaster Global Insight Inc. in Lexington, Massachusetts. ``They have available capacity to build models like Civic and Accord here in North America that are selling really well.''

With gasoline prices averaging more than $4 a gallon, the June sales reflected the rapid shift in U.S. buyer preferences toward cars, which are a majority for Honda, Toyota, Nissan Motor Corp. and Hyundai. GM, Ford and Chrysler get more than half of their sales from pickups, sport-utility vehicles and vans, which usually are larger and less fuel-efficient than cars.

Fuel prices, the housing slump and the weakest economic growth in five years pushed June's annualized sales rate to the lowest in any month since 1993.

``There are things weighing on the consumer conscience that we haven't seen since the oil embargo of 1973,'' Jim Lentz, president of Toyota's U.S. sales unit, said on a conference call yesterday. ``Fuel prices are going to be the trigger that gets things started again.''

The Asia-based companies for the second time in as many months overtook the U.S. makers, with 46.2 percent of new-vehicle sales, compared with 45.8 percent for GM, Ford and Chrysler. That excludes GM's Saab and Ford's Volvo, both based in Sweden.

Toyota

Toyota sold 193,234 cars and light trucks last month, a drop from 245,739 a year earlier. Adjusted for three fewer selling days than a year ago, sales dropped 11.5 percent, Toyota said.

Sales of the company's Prius hybrid plunged 34 percent as supplies of the car ran short. Toyota's Corolla small car and midsize Camry again outsold Ford's F-Series trucks, the perennial top-selling U.S. vehicle.

Limited supplies of batteries and other parts still restrain availability of the Prius and other hybrid models, Lentz said. Toyota has only about a one-day inventory of the Prius, he said.

The Toyota City, Japan-based company won't be able to increase the number of hybrids for dealers until more battery production capacity becomes available next year, Lentz said.

Honda, Nissan

Honda, the second-largest Japanese automaker, sold 142,539 cars and light trucks in the U.S. last month, rising from 140,935 a year earlier, spokesman Sage Marie said in an interview.

Sales almost doubled to 10,003 for its Fit small car, rose 37 percent to 39,704 for the Accord and increased 9.5 percent to 39,967 for the Civic, the Tokyo-based company said.

Nissan, Japan's third-biggest automaker, sold 75,847 Nissan and Infiniti brand vehicles in June, declining 18 percent from 92,213 a year earlier, Al Castignetti, head of U.S. Nissan-brand sales for the Tokyo-based company, said in an interview.

Trucks led the drop, including a 71 percent decrease to 1,260 for the Titan large pickup and a 72 percent slide to 1,436 for the Pathfinder SUV. Adjusted for three more selling days in June 2007, Nissan's sales fell 7.5 percent, Castignetti said.

Hyundai sold 50,033 vehicles in June, a 1.3 percent increase from a year earlier. The gain came from Accent and Elantra small cars and midsize Sonata sedans, its most fuel-efficient models, the Seoul-based automaker said in a statement.

[millionairemind]

U.S. faces tough second quarter
Wed Jul 2, 2008 7:41am BST

BRUSSELS (Reuters) - The U.S. economy is facing a tough second quarter and Europe will not be immune to the impact, U.S Treasury Secretary Henry Paulson was quoted as saying on Wednesday.

"There's no doubt that the second quarter will be a tough quarter," Paulson told the International Herald Tribune in an interview. "There's no doubt in any of our minds that the high oil prices are going to have an impact."

Paulson is on a trip to Europe and Russia to explain how Washington is working to resolve the U.S. economic problems, just as signs emerge of a sharper slowdown in Europe than had been previously detected.

Denmark said on Tuesday its economy was in recession, the first EU state to report that its output shrank for two quarters in a row.

U.S. data also on Tuesday added to concerns that the United States is facing weak growth combined with high inflation.

Paulson told the IHT that the U.S. woes would have an impact on Europe.

"I've never been one to accept the decoupling theory," he told the newspaper. "In a global world, we're all interrelated."

A weaker Europe could also hurt the U.S. economy due to a lower demand for U.S. exports, Paulson said, adding emerging economies would now give the biggest lift to global output.

Paulson has used his trip to reinforce the message from Washington that the U.S. administration believes in a strong U.S. dollar.

But he declined to comment on the divergence in interest rate policies of the U.S. Federal Reserve, which has cut rates, and the European Central Bank, which is expected to raise them on Thursday.

[millionairemind]

U.S. Factory Orders Rise 0.6% in May After 1.3% Gain (Update1)

By Shobhana Chandra and Bob Willis

July 2 (Bloomberg) -- Orders placed with U.S. factories rose for a third month in May as the oil-price surge kept refineries busy and offset stagnating demand for equipment and machinery.

Bookings increased 0.6 percent, more than forecast, after a revised 1.3 percent gain the prior month, the Commerce Department said today in Washington. Fuel and chemicals orders prevented a decline in the total figure.

Record energy costs, a contraction in credit and slowdown in sales are prompting businesses to cut back on purchases of equipment, even as overseas demand helps avert a collapse in American manufacturing. A separate report today signaled the economy may have lost jobs in June for a sixth month.

``Growth will look weak, not disastrous,'' Nigel Gault, chief U.S. economist at Global Insight Inc. in Lexington, Massachusetts, said before the report. ``We continue to get plenty of support from trade.''

Treasuries advanced, sending yields on benchmark 10-year notes to 3.98 percent at 10:11 a.m. in New York, from 4 percent late yesterday. The Standard & Poor's 500 Stock Index was up 0.6 percent at 1,292.07 amid speculation banks have raised enough capital to weather credit losses.

Factory orders were forecast to rise 0.5 percent, after a previously reported 1.1 percent gain the prior month, according to the median estimate of 68 economists surveyed by Bloomberg News. Projections ranged from a decline of 0.7 percent to an increase of 1.7 percent.

Cars, Planes

Excluding demand for transportation equipment such as cars and airplanes, which tends to be volatile, orders rose 0.4 percent.

Earlier today, ADP Employer Services reported companies cut payrolls by 79,000 workers in June after a 25,000 gain the prior month. The ADP figures, which don't include government jobs, underscore the weakening labor market.

Bookings for non-durable goods, including food, petroleum and chemicals, jumped 1.2 percent after a 3.5 percent April gain. Orders for petroleum and coal products increased 4 percent.

Demand for durable goods, which make up just over half of the total, were unchanged after decreasing in the previous two months.

Factory inventories increased 0.5 percent, and manufacturers had enough goods on hand to last 1.23 months at the current sales pace, up from 1.22 months in April.

ISM Report

A report yesterday showed manufacturing unexpectedly grew in June, even as a measure of raw-material costs jumped to a 29-year high. The Institute for Supply Management's factory index rose to 50.2 from 49.6 in May. It was the first reading above 50, the dividing line between expansion and contraction, since January.

The gain was paced by increases in measures of inventories and supplier deliveries. Orders from overseas grew, even as overall bookings slowed for a seventh month.

Bookings for capital goods excluding defense and aircraft, a proxy for future business investment, dropped 0.4 percent in May. Shipments of such goods, which the government uses to calculate gross domestic product, increased 0.5 percent.

Some companies are benefiting from the jump in fuel prices. Cameron International Corp., the second-largest U.S. maker of oilfield equipment by market value, said last week it got a contract worth about $100 million to supply undersea equipment to Brazil's Petrobras Brasileiro SA.

Gas Prices

Others are trimming investments on growing concern that consumer spending will falter as gasoline prices soar, home values drop and the economy loses jobs.

For now, the government's tax-rebate checks have boosted purchases of furniture, clothing and electronics, helping to keep the economy growing.

The rebates haven't been a boon for automakers. General Motors Corp., Toyota Motor Corp. and Ford Motor Co., the biggest auto retailers in the U.S., yesterday said June sales plunged as fuel prices above $4 a gallon drove consumers away from gas- guzzling trucks.

Dearborn, Michigan-based Ford plans to cut North American production and reduce North American salaried employee costs this year.

[kennynah]

and this data did nothing to lift the index....this is how poor the sentiment is right now...

for the Longs....dont hope....if u do.,...it will be very costly....

for the shorts...dont be complacent though....a reversal can happen anytime.

for the rest of us commoners.... we Put cautiously....