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Morning Notes For July 14th 2010 at Trader’s Narrative

Morning Notes For July 14th 2010

The following is a guest post by a buy-side analyst working in a US asset management firm. The author’s comments are in italics. Please provide feedback in the comments:

  • RGE EconoMonitor by Nouriel Roubini: It looks as if the global economy is heading for a serious slowdown this year. Emergency austerity programs in some countries will put a drag on growth. Inventory adjustments will run their course. The effects of tax policies that steal demand from the future – such as the U.S. “cash for clunkers” scheme, tax credits for home buyers or cash for green appliances – will fizzle out. Labor market conditions will remain weak. The slow and painful deleveraging of balance sheets and income-challenged households, financial institutions and governments will continue.
  • INTC – v strong earnings for June Q + Sept outlook; key takeaways: 1) inventories up both on absolute basis and days; however, mgmt says very comfortable w/inventory overall and that channel inventories saw a marked decline; 2) mgmt says China + Europe started Q slow but finished strong; 3) mgmt was upbeat on enterprise and SMB (while consumer was seasonal) – corporations now buying in addition to consumers; 4) v bullish comments on new Sandybridge. – Signs of Capex coming alive as corporations get off their hands and spend the record cash levels, which are earning a donut in money markets.
  • BP – testing on the new well cap was delayed late on Tues as gov’t and BP officials said further analysis needed to be conducted; Even if the integrity test ultimately fails, U.S. officials said the company could use the same cap to capture all of the oil flowing from the well by the end of the month. (WSJ)
  • YUM – Reports Q210 Earnings, Shares trading off 3.5% after the close as Q beats but China SSS fall short of elevated expectations and FY guidance was raised (+12% eps growth vs. prev. at least 10%) but falls shy of the St.’s +14% expectation.
  • Hedge fund industry seeing rush of start-ups as trading teams formally part of large commercial banks are spun out as independent companies (FT)
  • Business groups to confront White House over policies deemed damaging to job creation and growth - the U.S. Chamber of Commerce, the Business Roundtable and the National Federation of Independent Businesses will air a list of concerns about government policy at a “Jobs for America Summit” at the Chamber’s offices Wednesday (WSJ)
  • Port traffic jumps ay Long Beach, LA; Demand at the twin port complex in June also prompts the hiring of hundreds of part-time workers. But experts warn that the upswing could weaken in the coming months (LA Times)
  • EXPD - transports - co preannounces to the upside. Sees EPS 0.38-0.40 (vs. the St 0.30). “We’ve experienced very significant year-over-year volume increases in both our airfreight and ocean freight business,” EXPD’s upside preannouncement follows pos. news out of other transports cos (in Europe, Maersk and Hapag Lloyd both had pos. earnings revisions in recent days). – Yet the Baltic Dry Index continues its plummet to new depths.

Baltic Dry Index:
baltic dry index Jul 2010

And the correlation between Baltic Dry and Transports continues to plummet:
correlation Baltic Dry Index Dow Transports Index Jul 2010

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