The Recovery Thread

[Zander]

Some good news

European property sales are up.

The change in mood is also reflected in the latest data. Investment in European commercial property surged 53% in the third quarter to €19.6 billion, from €12.8 billion in the second quarter, according to Cushman & Wakefield, the property-services group. Still, that pales in comparison to earlier years. There was €44 billion in investment in European commercial property in the first nine months of 2009, compared with €203 billion in the same period of 2007.

Commercial Market Gains Footing - WSJ.com

Caterpillar calls a bottom.

"We believe the third quarter marked the low point for Caterpillar sales and revenues in what has been the toughest recession since the 1930s," said Chairman and Chief Executive Jim Owens. "We are seeing encouraging signs that indicate a recovery may be under way."

Caterpillar's Profit Falls 53% - WSJ.com

Business spending is beginning to rise.

Big companies that sell to corporate customers are growing more bullish about their prospects for 2010, a sign that a revival of business investment could buoy the sluggish U.S. economy in coming quarters.

Reporting on results for the latest quarter, bulldozer maker Caterpillar Inc. and hydraulic-parts maker Parker Hannifin Corp. on Tuesday joined a chorus of companies that are saying the worst of the recession is past and customers are buying anew rather than simply drawing down inventories. …

Nonetheless, some firms are already seeing sales increases. Last week, Intel Corp. attributed strong third-quarter results mainly to sales of chips for laptop computers, driven in part by back-to-school sales, but Intel also is seeing healthy sales of a new line of chips for server systems that help lower electricity bills in computer rooms.

Intel Chief Executive Paul Otellini said the upturn wasn't simply the result of restocking of inventories but was part of a broader pattern of rising demand. In an interview this week, he credited consumers, who are now buying netbooks and laptops in record numbers. …

Brian Bethune, an economist at forecasting firm IHS Global Insight, estimates business spending on equipment and software rose at a 7.3% annual rate in the third quarter.

"High tech is definitely doing well and is going to come out of the gate first here in terms of positive growth," said Mr. Bethune, who expects a 12.7% increase in fourth-quarter spending on equipment and software vs. the third quarter. …

The CEO of Advanced Micro Devices Inc., Dirk Meyer, said his talks with chief information officers convince him that companies' tech purchases, which all but stopped in the recession, will resume next year. "Wallets are starting to free up," he said.

A report from the Manufacturers Alliance/MAPI released last week said "forward-looking indexes" such as annual orders are at much higher levels, indicating that manufacturing activity will increase in 2010.

Business Spending Looks Up - WSJ.com

And ...

According to Morgan Stanley, Oracle partners – which represent 60,000 enterprise software consultants – said that their business is at an inflection point and that headcount and pipeline growth is beginning.

I think Caterpillar may experience better sales internationally, but they are dreaming if they expect growth domestically. Why would anyone break ground on a new building when existing structures are now selling at an average of 60% of replacement cost? Infrastructure programs under the "stimulus" amount to only $98 billion - how much of that will go to heavy equipment is unknown, but I don't see more than 5% at best. If Cat is counting on State and local governments to boost sales, they must realize that state and local gov'ts are watching tax revenues drop sharply? I don't thing that public sector is going to experience growth anytime soon and common sense tells us that most of the private sector is tightening their belt in the face of economic uncertainty.

As for AMD and the other tech companies expecting increases, when your sales drop by 50% it takes a 100% increase just to get back to even! 12-15% quarterly increases over the worst quarter in history essentially amount to jack-squat. Year over year figures are still very, very grim......I remain extremely bearish.

 

[Toro]

I keep thinking of the old adage, BUY LOW - SELL HIGH


The dollar is at an all-time LOW and gold is at an all-time HIGH.




How low can we go? THAT is the question.

I still own a lot of gold and think it could go to $1300-$1500 by the Spring. However, I could be completely wrong and change my mind and sell it all tomorrow.

To reach its all time lows, the dollar would have to fall about another 15%. I believe that will happen but it will be difficult to much lower because those levels will hurt foreign economies. Thus, the rest of the world will have to devalue its currencies too. If correct, gold can still go much higher.

However, if the Fed ends quantitative easing next year, the dollar could soar. The Fed is buying government debt, which is keeping interest rates low. If they stop, interest rates could rise hard, which would lead to a spike in the dollar. That would be bad for gold. I expect this to happen some time next year.

 

[Toro]

So essentially what you are telling us is that the opinions of people who have a vested interest in hyping the market is that the market has good cause to go up because they hope it will. Hummmmm? As an historian, I know one thing. The stock market can be hyped just like Gold is and it can move with the hype. In the final analysis, it finds common ground with the economy. Right now, the economy of the US is in the shitter, and it does not look like it is coming out for a long long time.

No, what I am telling you is that corporations are seeing a bottom in their business and some are seeing it pick-up.

 

[Toro]

I think Caterpillar may experience better sales internationally, but they are dreaming if they expect growth domestically. Why would anyone break ground on a new building when existing structures are now selling at an average of 60% of replacement cost? Infrastructure programs under the "stimulus" amount to only $98 billion - how much of that will go to heavy equipment is unknown, but I don't see more than 5% at best. If Cat is counting on State and local governments to boost sales, they must realize that state and local gov'ts are watching tax revenues drop sharply? I don't thing that public sector is going to experience growth anytime soon and common sense tells us that most of the private sector is tightening their belt in the face of economic uncertainty.

As for AMD and the other tech companies expecting increases, when your sales drop by 50% it takes a 100% increase just to get back to even! 12-15% quarterly increases over the worst quarter in history essentially amount to jack-squat. Year over year figures are still very, very grim......I remain extremely bearish.

Actually, it is the 12-15% increases quarter over quarter that matters since companies are managing in real time, not relative to what they were doing a year ago.

 

[Zander]

I keep thinking of the old adage, BUY LOW - SELL HIGH


The dollar is at an all-time LOW and gold is at an all-time HIGH.




How low can we go? THAT is the question.

I think we are going to have a bull market for CASH, eventually. While I am very bullish in CASH and very bearish on GOLD, irrational markets can remain irrational for a long time. One need only look at the stock market today to see that!

At any rate, despite the 98% negative sentiment toward the Greenback, it is still the worlds reserve currency and a safe haven in uncertain times. I see a big move up for the Dollar in the coming months and am in short term cash and cash equivalents. If I am wrong I make a little less money, I can live with that. What I can't live with is losing a fortune on stocks and gold when the upside is so limited. I'd rather be early than late!!

 

[Paulie]

I think Caterpillar may experience better sales internationally, but they are dreaming if they expect growth domestically. Why would anyone break ground on a new building when existing structures are now selling at an average of 60% of replacement cost? Infrastructure programs under the "stimulus" amount to only $98 billion - how much of that will go to heavy equipment is unknown, but I don't see more than 5% at best. If Cat is counting on State and local governments to boost sales, they must realize that state and local gov'ts are watching tax revenues drop sharply? I don't thing that public sector is going to experience growth anytime soon and common sense tells us that most of the private sector is tightening their belt in the face of economic uncertainty.

As for AMD and the other tech companies expecting increases, when your sales drop by 50% it takes a 100% increase just to get back to even! 12-15% quarterly increases over the worst quarter in history essentially amount to jack-squat. Year over year figures are still very, very grim......I remain extremely bearish.

Actually, it is the 12-15% increases quarter over quarter that matters since companies are managing in real time, not relative to what they were doing a year ago.

Right, no more guidance, huh?

 

[Neubarth]

So essentially what you are telling us is that the opinions of people who have a vested interest in hyping the market is that the market has good cause to go up because they hope it will. Hummmmm? As an historian, I know one thing. The stock market can be hyped just like Gold is and it can move with the hype. In the final analysis, it finds common ground with the economy. Right now, the economy of the US is in the shitter, and it does not look like it is coming out for a long long time.

No, what I am telling you is that corporations are seeing a bottom in their business and some are seeing it pick-up.

I will believe it when I see it or see the data that confirms it. So far I have seen neither.

 

[Toro]

Amazon raised Q4 revenue guidance to +20%-35% compared to last year.

Amazon Delivers a Monster Quarter: Tech Ticker, Yahoo! Finance

 

[Neubarth]

Amazon raised Q4 revenue guidance to +20%-35% compared to last year.

Amazon Delivers a Monster Quarter: Tech Ticker, Yahoo! Finance

As I have mentioned specificially for your benefit, individual company financial reports do not make for a recovery. It is what is happening across the board that qualifies for a recovery. Most everybody knows the Internet is growing, so even in a depression Amazon should show profitability.

 

[Neubarth]

UK still in recession after shock Q3 contraction



By David Milliken and Christina Fincher
October 22, 2009. REUTERS/Luke ...



LONDON (Reuters) - Britain's economy contracted unexpectedly in the third quarter of this year, official data showed on Friday, quashing hopes the downturn was ending and instead marking the longest recession on record.

Sterling plunged more than a cent against the dollar and government bond futures surged as traders and analysts

 

[Neubarth]

To offset Amazon, there is Microsoft a company that keeps having tremendous decreases in revenue quarter after quarter.

Total Revenue last four quarters:
12,900,000
13,099,000
13,648,000
16,629,000

They are claiming that their earnings beat expectations, but the expectations are that earnings are going to keep falling and falling and falling.

There is something wrong with this, isn't there? Yet the fools out there are buying MSFT stock because they beat expectations. P/E is twice what it should be.

 

[Toro]

The Conference Board's Index of Leading Economic Indicators is at the highest level since 1983.

The Conference Board Leading Economic Index™ (LEI) for the U.S. Improves Again

What are the components of the LEI? They are

• Average weekly hours worked
• Average weekly jobless claims
• Manufacturer’s new orders
• Vendor performance
• Manufacturer’s new orders for nondefense capital goods
• Building permits for new private housing units
• S&P 500
• Money supply
• Yield curve
• University of Michigan consumer confidence expectations.

Conference Board: Composite Index Of Leading Indicators

 

[Toro]

Home sales were up 9.4% last month, a record.

U.S. Economy: Existing Home Sales Surge on Tax Credit (Update1) - Bloomberg.com

That is certainly due, in part, to the home buyers tax credit. Nonetheless, it is still an all-time high.

 

[Toro]

Industrial production is rising.

Industrial production in the U.S. rose more than anticipated in September, putting manufacturing at the forefront of the emerging economic recovery.

The 0.7 percent increase in production at factories, mines and utilities exceeded every forecast of economists surveyed by Bloomberg News and followed gains of 1.2 percent in August and 0.9 percent in July, Federal Reserve figures showed today. Another report showed consumer sentiment dropped more than projected this month.

The recent burst of activity on factory floors, spurred in part by a rebound at automakers, will likely give way to more moderate and sustainable gains in coming months as companies rebuild inventories and exports grow. The improvement has yet to generate jobs, one reason consumers remain anxious and underscoring why Fed policy makers say they will keep interest rates low for a long time.

U.S. Economy: Output Beats Forecasts, Sentiment Slips (Update1) - Bloomberg.com

 

[Toro]

Consumer sentiment is at the highest level in 20 months.

Bloomberg.com: Personal Finance
Bloomberg.com: Personal Finance

 

[Toro]

According to Case-Shiller, home prices are up 5% since April. Home prices were up 1.2% in August, the fourth consecutive monthly increase.

 

[CrusaderFrank]

I'll tell all my friends in the real estate business that the economy is improving, it will be good for a few laughs

 

[Maple]

The economy is still losing hundreds of thousands of jobs every month. When that stops, you'll see the bottom. We aren't there yet....

Totally agree, there is no such thing as a jobless recovery, jobless recovery's can not sustain the recovery.

 

[CrusaderFrank]

Here's the numbers I deal with and there's still a significant liquidity crunch:

Cost of a direct pay LOC 3+%

Anticipated Return on Equity: 15% IRR

The other numbers are all bullshit.

 

[Maple]

Consumer sentiment is at the highest level in 20 months.

Bloomberg.com: Personal Finance
Bloomberg.com: Personal Finance

Hmmmmmmmmmmmm??? Consumer confidence? Highest level in 20 months, are you sure????????????

Consumer Confidence Index - The Conference Board