SteveCase Smooth seas do not make skillful sailors. ~African Proverb (via @CoryBooker) about 1 hour ago
Friday, September 25, 2009
Monday, September 21, 2009
FW: Leading Economic Indicators - up 5 months in a row
From:
Sent: Monday, September 21, 2009 9:03 AM
To:
Subject: Leading Economic Indicators - up 5 months in a row
Monday, September 21 (10:00 a.m.)
Leading Economic Indicators (Conference Board)
About as expected in August (the median forecast was +0.7%). July revised to +0.9% (from +0.6%). Three components (supplier deliveries, the slope of the yield curve, and stock prices) accounted for most of the increase. The coincident index appears to have flattened over the last couple of months, consistent with the economy having reached a bottom.
| | Mar | Apr | May | Jun | Jul | Aug |
| Leading Economic Indicators | -0.3 | +1.0 | +1.3 | +0.8 | +0.9 | +0.6 |
| factory workweek | -.06 | .13 | -.13 | .06 | .19 | .00 |
| jobless claims | -.10 | .16 | -.04 | .08 | .31 | -.09 |
| orders, consumer gds and materials | -.15 | .07 | -.13 | .05 | .04 | * .00 |
| supplier deliveries | -.21 | .09 | .33 | .05 | .09 | .35 |
| new orders, nondef cap gds | -.02 | -.07 | .16 | -.01 | .15 | * -.06 |
| building permits | -.20 | -.07 | .11 | .26 | -.03 | .07 |
| stock prices (S&P500) | -.24 | .44 | .24 | .10 | .04 | .30 |
| money supply (M2) | .34 | -.26 | .25 | -.09 | -.11 | * -.34 |
| yield curve (10-yr Tsy – ff) | .26 | .28 | .31 | .35 | .34 | .34 |
| consumer expectations | .08 | .27 | .18 | -.01 | -.17 | .05 |
| Coincident Economic Indicators | -0.8 | -0.5 | -0.4 | -0.4 | * 0.1 | * 0.0 |
| nonfarm payrolls | -.27 | -.21 | -.12 | -.19 | -.11 | -.09 |
| real personal income | -.15 | -.08 | -.01 | -.12 | .01 | * .03 |
| industrial production | -.24 | -.09 | -.16 | -.05 | .14 | .12 |
| real business sales | -.13 | -.08 | -.08 | -.07 | * .02 | * .01 |
| Lagging Economic Indicators | -0.5 | -0.7 | -0.6 | -0.9 | -0.5 | -0.1 |
| coincident-lagging ratio | 89.1 | 89.3 | 89.5 | 90.0 | 90.5 | 90.6 |
* In the LEI, the Conference Board estimates manufacturers’ orders and the price adjustment for the money supply (the PCE Price Index). In the CEI, the Conference Board estimates personal income for the latest month and business sales for the two previous months. Note also that most components are subject to revision.
From the report: “After having fallen steadily since reaching a peak in July 2007, The Conference Board LEI for the
Bottom Line: No surprise.
Scott J. Brown
SVP - Chief Economist
Raymond James & Associates
(727) 567-2603
Sunday, September 20, 2009
Dow - Dorsey Wright
The Dow Jones Industrial Average [DJIA] cleared another hurdle last week, breaking a spread triple top on the longer-term 200 point per box chart at 9,800. This breakout follows a move into a positive trend back in July, and exceeds the Dow's November rally high. While still lagging the other domestic equity indexes this breakout is another confirmation of new demand entering the equities market (or returning to it). On a near term basis the equity market, in general, is overbought, but the long term trends remain positive and recent events continue to fall in the category of technical improvement
Monday, September 7, 2009
Wednesday, September 2, 2009
ETF's from Dorsey Wright
The Wall Street Journal had a headline article entitled, "Deutsche Bank to Close a Popular Oil Fund." The subtitle gave even more specific information:
"'Double Long' ETN Is Victom of Scrutiny of Exchange-Traded Investments With High Leverage."
In a nutshell, due to the crackdown by regulators with respect to position limits, the PowerShares DB Crude Oil Double Long ETN [DXO] will be shutting down, effective September 9th. At that time, DB said it will be redeeming all DXO shares, of which amount to something around a $425 million market cap. After having launched in June 2008, the DXO had grown into one of the most popular leveraged commodity ETN's. As a result of this popularity, the ETN had reached a size that brought into play an issue of position size limits that are allowed by the CFTC with respect to Crude Oil futures. Technically speaking an ETN does not physically own futures contracts, but it does obligate the issuer (Deutsche Bank in this case) to provide a return to the investor as if the ETN held such contracts. To fulfill this obligation without absorbing massive leverage of their own Deutsche Bank would need to do one of two things: 1. attract an equal amount of assets in a double leveraged inverse oil ETN to balance risk, or 2: hedge their own risk by purchasing Crude Oil Future Contracts on their own. There is a DB UltraShort Oil ETN [DTO], but it does not currently have assets approaching the $425 Million in DXO, in fact is has less than $200 Million under management, which brings us to option #2.
The problem arises when position limits are reached, and therefore no more buying of the underlying contract (commodity) can occur. This obviously makes it harder for the ETN to track its underlying index because the issuer can no longer issue new shares and also hedge their own balance sheet risk. For those that do own DXO, Deutsche Bank has said they will determine the "repurchase value" on September 9th, but ETNs may be redeemed from the issuer at the close of any session. We will keep you abreast of this latest, albeit discouraging, development as more news becomes available
"'Double Long' ETN Is Victom of Scrutiny of Exchange-Traded Investments With High Leverage."
In a nutshell, due to the crackdown by regulators with respect to position limits, the PowerShares DB Crude Oil Double Long ETN [DXO] will be shutting down, effective September 9th. At that time, DB said it will be redeeming all DXO shares, of which amount to something around a $425 million market cap. After having launched in June 2008, the DXO had grown into one of the most popular leveraged commodity ETN's. As a result of this popularity, the ETN had reached a size that brought into play an issue of position size limits that are allowed by the CFTC with respect to Crude Oil futures. Technically speaking an ETN does not physically own futures contracts, but it does obligate the issuer (Deutsche Bank in this case) to provide a return to the investor as if the ETN held such contracts. To fulfill this obligation without absorbing massive leverage of their own Deutsche Bank would need to do one of two things: 1. attract an equal amount of assets in a double leveraged inverse oil ETN to balance risk, or 2: hedge their own risk by purchasing Crude Oil Future Contracts on their own. There is a DB UltraShort Oil ETN [DTO], but it does not currently have assets approaching the $425 Million in DXO, in fact is has less than $200 Million under management, which brings us to option #2.
The problem arises when position limits are reached, and therefore no more buying of the underlying contract (commodity) can occur. This obviously makes it harder for the ETN to track its underlying index because the issuer can no longer issue new shares and also hedge their own balance sheet risk. For those that do own DXO, Deutsche Bank has said they will determine the "repurchase value" on September 9th, but ETNs may be redeemed from the issuer at the close of any session. We will keep you abreast of this latest, albeit discouraging, development as more news becomes available
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