The Big Picture | May 2008

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Weezer's Ode to You Tube

Saturday, May 31, 2008 | 09:00 PM

in Digital Media | Music | Video | Web/Tech

The official video for "Pork and Beans" from Weezer stars quite a few familiar YouTube faces.

New Weezer disc Red Album" out Monday, June 3rd, 2008

Mortgage Delinquencies Accelerating

Saturday, May 31, 2008 | 12:30 PM

in Credit | Data Analysis | Real Estate

The mortgage crisis is bad and getting worse. The latest evidence suggests that any bottom in real estate is some ways off in the future:

"Newly delinquent mortgage borrowers outnumbered people who caught up on their overdue payments by two to one last month, a sign that nationwide efforts to help homeowners avoid default may be failing.

In April, 73,880 homeowners with privately insured mortgages fell more than 60 days late on payments, compared with 39,584 who got back on track, a report today from the Washington-based Mortgage Insurance Companies of America said. Mortgage insurers pay lenders when homeowners default and foreclosures fail to cover costs.

Foreclosure filings surged 65 percent and bank seizures more than doubled in April compared with a year earlier as rates on adjustable mortgages increased, according to RealtyTrac Inc. Lawmakers and Federal Reserve officials are trying to ease the worst U.S. housing slump since the Great Depression through tax rebates, expanded federal mortgage insurance and other programs."

According to RealtyTrac, one in every 519 U.S. households is in some stage of the foreclosure process.

There is some good news amongst the dire foreclosure data: In April, a 183,000 homeowners were able to work out new borrowing terms with lenders and avoid foreclosure filings. Thats a record, according to the Hope Now Alliance.

However, that month's 54% "cure ratio'' among defaulted mortgages compares unfavorably with 80% a year earlier, and 87% in March 2008. This is mostly due to the accelerating foreclosure filings in April -- more than 243,000 properties, a 65% YoY increase (RealtyTrac).

As long as defaults are occurring faster than workouts, the supply of foreclosure properties and REOs remain at uncomfortably high levels for some time to come . . .

>
Foreclosure By State, April 08

via Realty Trac

Source:
New Overdue Home Loans Swamp Effort to Fix Defaults
Josh P. Hamilton and Bob Ivry
Bloomberg, May 30 2008
http://www.bloomberg.com/apps/news?pid=20601110&sid=arGQ_rKO2ai8

Understanding Contrary Indicators

Saturday, May 31, 2008 | 09:25 AM

in Contrary Indicators | Economy | Markets | Psychology/Sentiment

Yesterday, I mentioned in passing a fabulous cover story from a 1962 Time magazine. While these sorts of contrary indicators are subject to interpretation, they are worthwhile to those who can properly interpret them, as they can provide insight that is not readily available elsewhere.

I have been tracking these sorts of signals for many years. In 2003, I published a research piece, titled Contrary Indicators 2000 – 2003 Bear Market. I thought it was important to remind people that, despite the fact the market had been shellacked, there were plenty of signs of a major bullish reversal that could be followed by tradrs, fund managers, and investors :

"Astute observers of Human Nature have learned to detect the many “Contrary Indicators” on display throughout this crash. Traders who learn to use these contra-signals are better able to deploy capital, manage risk, and anticipate market reversals.

Anyone who manages assets for a living can garner a tactical advantage by learning to properly identify and employ these Contrary Indicators: They can be used as timing signals as well as help determine an appropriate investment posture (i.e., aggressive or defensive); Even for the least technically minded, they have value as risk management tools."

That these indicators exist for both bullish and bearish extremes points to their agnosticism. However, these are easily misinterpreted. In this week's Barron's The Trader column, Kopin Tan discusses a specific JP Morgan research piece, which misuses a sentiment indicator, the Conference Board Consumer Confidence readings:

"Some of you, of course, are miffed at how Wall Street is banking on your largesse even as they trade your pain. The Conference Board said last week that consumer confidence sank to the lowest in 16 years. Your confidence has been this morose or worse only five times since 1967, and each time the stock market has rallied soon after, with the Standard & Poor's 500 index producing average returns of 15% six months later and 23% a year after, according to JPMorgan."

Unfortunately, consumer sentiment surveys are coincident, not leading, indicators. And while JP Morgan is correct that Consumer Confidence Index has only been as bad as it is presently 5 times before (the current reading is 57.2), in 3 of those 5 previous occasions, the index got considerably worse (Approximately: 1992 = 48, 1980 = 49, and 1975 = 44).

Even worse, each of those low index readings in the 40s took place AFTER a 12 month or longer recession or bear market had already ended. At this time, it is premature to declare the worst over for either the Consumer Sentiment Index or the economy.

Consider the 2003 low came after the 78% drop in the Nasdaq; the 1980 low came in year 14 year of a 16 year bear market; the 1975 low came after a horrific 1973-74 bear that saw the Dow Industrials get cut in half. Even the 1992 lows came long after the recession and market trouble in 1990.

Have a look at the chart below, via Joseph H. Ellis' book, Ahead of the Curve. It shows that sentiment bottoms around the same time as the bear market. And, we have yet to get any where near the depths of of many of the 5 prior cycles.

Consumer Sentiment Surveys: Coincident, Not Leading, Indicators

via Joseph Ellis
(note: this chart does not include 2008 data)

Sources:
The Conference Board Consumer Confidence Index Declines
May 27, 2008
http://www.conference-board.org/economics/ConsumerConfidence.cfm

When Consumers' Pain Is Investors' Joy
KOPIN TAN
Barron's THE TRADER, JUNE 2, 2008
http://online.barrons.com/article/SB121218729918634029.html

Consumer confidence: Worst since '92
Catherine Clifford
CNNMoney, May 27, 2008: 1:08 PM EDT
http://money.cnn.com/2008/05/27/news/economy/consumer_confidence/?postversion=2008052713

Feldstein Says U.S. Economic Indicators 'Pointing Down'

Saturday, May 31, 2008 | 03:30 AM

in Economy | Video

Martin Feldstein, an economics professor at Harvard University and president of the National Bureau of Economic Research, talks with about U.S. first-quarter gross domestic product, the outlook for Federal Reserve monetary policy and potential legislation to help homeowners avoid foreclosures.

click for video

Source:
Feldstein Says U.S. Economic Indicators `Pointing Down'
Bloomberg, May 29 2008
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a2M56v3ltLgE

Friday Night Jazz: Chet Baker II

Friday, May 30, 2008 | 06:15 PM

in Friday Night Jazz | Music

I was searching out some of my favorite Jazz artists on YouTube, when I randomly stumbled across this video of Chet Baker. For those of you unfamiliar with Baker, he was a terrific Trumpet player who was later "discovered" as a wistful blues singer, specializing in ballads and love songs.

Chet Baker's vocal style is unmistakably unique -- my favorite description of his his voice is "at times, it seems like he's hanging onto the melody by his fingernails." He seems at times half a tone off where you might expect him to be.

There is a lovely melancholy, a gentle beauty, to the way he wraps his voice around a song. The soft, simple sentiment embodied in his lyrical approach to ballads can turn any song into a brooding lament.

There's quite a few other videos at ChetBaker.net . . .

~~~

Either of these two CDs are good places to start exploring Baker's works:

My Funny Valentine
Funny_valentine_

"His vocals were absolutely distinctive, sung in a high-pitched, even fragile voice seemingly drained of emotion and yet possessing an inherent charm, a detachment that might be both the antithesis of style and its definition, whether it's heard as sensitivity or indifference. The singing is a double of his trumpet playing here, spare and barely present but achieving much through nuance and suggestion. Pianist Russ Freeman is an almost constant partner, supplying deft chords and harmonic daring, amplifying Baker's ideas. Their empathy is especially evident in the beautiful instrumental "Moon Love," but it's just as significant on signature Baker songs such as "My Funny Valentine," "Let's Get Lost," and "Like Someone in Love." --Stuart Broomer

The Best of Chet Baker Sings
Best_of_chet_baker_sings

New videos after the jump

Continue reading "Friday Night Jazz: Chet Baker II"

Technically, Not a Recession

Friday, May 30, 2008 | 03:30 PM

in Economy

Amusing:

Bear vs Bull (1962)

Friday, May 30, 2008 | 01:30 PM

in Contrary Indicators | Psychology/Sentiment

We talked a bit about the magazine cover indicator Wednesday night. I don't think Ken Heebner on the cover of Fortune is not a great example.

How is this June 1, 1962 Time Magazine issue? Perhaps this is a more significant example of the Magazine cover indicator?

That cover, showing a Bear mauling a Bull, took place when stocks were getting whacked.

As you can see from the chart below, this obviously Bearish cover worked well as a contrary indicator -- it was not a bad entry point to get long equities:

Dow Industrials 1962 - 1968
click for larger chart

Revisiting Q1 GDP Revisions

Friday, May 30, 2008 | 11:06 AM

in Data Analysis | Economy

The consensus in the media is that revisions higher in GDP to 0.9% means that the US has successfully avoided a recession.

I highly doubt that is the case.

The good news is that, and once again, I can comfortably slip into a (rather than mainstream) contrarian recession call. I was uncomfortable when the masses were ever so briefly agreeing with me anyway.

Why do I disagree? As the chart below shows, the revised GDP gains were 1) National Defense spending by Uncle Sam; 2) Inventory builds; and 3) net exports. That leaves the majority of the economy -- call it "private domestic demand" -- in contraction mode, with an annual rate of -0.4% (vs. -0.7% in advance GDP). Domestic Consumption, Fixed Investment, Exports, and State & Local governments all showed quarter over quarter losses.

Its important to understand the significance of this factor. In the post WW2 era, this is a relatively rare occurrence. Merrill's David Rosenberg points out that "Over the past five decades, such weakness in private domestic demand occurred barely more than 10% of the time." You can bet those times were not brisk expansions.

click for embarrassingly large charts

charts by Jake

Plenty of folks seem to think we have wished our way out of a recession. They need to spend some more time with the actual data.

April New Home Sales - Revisited

Friday, May 30, 2008 | 07:30 AM

in Data Analysis | Real Estate

On Tuesday, we noted that New Home Sales fell 42%. There was one small piece of the data I failed to mention earlier in the week, which is worth discussing -- the March revisions:

1) Revisions: April's (unrevised) data for new homes was 526k annualized units (+3.3). That is the identical to the number released in March -- 526k units. March sales were revised to -11%
from -8.5%. So but for the revisions, March to April headline number was flat.

How did we show a 3.3% monthly gain? Tuesday’s report saw March revised DOWNWARDS from 526k units to 509k units. In other words, April did not so much showed a positive move upwards (statistical error notwithstanding) as much as the prior month comparison was revised downwards.

2) Apples to Oranges: Why do we compare Revised versus Unrevised data? The overall trend for the past year has been mostly downward revisions. An apples-to-apples comparison would be an original release to original release (that showed flat data, not an increase in new homes sales).

Comparing the original (but soon to be revised) April data to the revised March data presents a misleading picture.

3) Cancellations: Of course, none of the new home sales data includes cancellations, which were running north of 30% -- and with the recently tightened credit, it may be even worse.

UPDATE May 30, 2008 12:55pm

Over at Calculated Risk, Tanta disagrees with my assessment:

"Cancellations are not getting worse. In fact they are getting better. For most builders, cancellation rates peaked in Q3 2007 (with the credit crunch) and have improved significantly since then. And it's the change in cancellation rates that matter when analyzing the New Home data.

This is a key point: right now the Census Bureau is probably underestimating sales!

I do not know if cancellations are getting worse (I wrote "may be even worse"). However, we do know several things:

1. Census Department does not factor in cancellations at all. Let's say for arguments sake that cancellations are improving -- from 30+% to 15+% or better -- that only means the overstatement of sales is less, but still overstated nonetheless.

2. Cancellations represent potential understated sales in some indeterminate

future. Past cancellations might be getting sold today -- or they might not. We don't really know. One would think if they were, however, we should see some evidence somewhere in some data -- sales, homebuilder inventory, etc.

I have yet to see that anywhere (doesn't mean it doesn't exist, i just haven't seen it).

3. Right now, all of the YoY, inventory, and price data suggests that prices & sales are still falling. If and when New Home sales actually see real month over month, YoY improvements, then CENSUS will be understating it New Sales. But thats somewhere off in the (possibly distant) future.

If someone can show me a definitive basis for thinking New Home Sales are better than reported, I mention it on Kudlow & Co. But until then, do not count your chickens before they are hatched!

Previously:
No, New Homes Sales DID NOT Rise . . . (October 2007)
http://bigpicture.typepad.com/comments/2007/10/no-new-homes-sa.html

Source:
New Residential Sales
The Census Bureau MAY 27, 2008
http://www.census.gov/newhomesales

Download New Res Sales_5.27.08.pdf

Related:
Cockeyed Optimists See Housing Recovery
RANDALL W. FORSYTH
Barron's May 28, 2008
http://online.barrons.com/article/SB121194838416825475.html

NYMEX Raises Margin Requirements for Crude

Friday, May 30, 2008 | 06:37 AM

in Commodities | Energy | Trading

Hefty increase in margin rules from the NYMEX, effective earlier this week:

The New York Mercantile Exchange said on Tuesday it will increase margins for its crude oil and related futures contracts, beginning at the close of business on Wednesday.

Margins for the crude oil, crude oil calendar swap, and crude oil financial futures contracts will go up to $7,250 from $6,500 for clearing members, to $7,975 from $7,150 for members and to $9,788 from $8,775 for customers, NYMEX said in a release.

Margins for the NYMEX miNY crude oil futures contract will rise to $3,625 from $3,250 for clearing members, to $3,988 from $3,575 for members and to $4,894 from $4,388 for customers. Margins for the NYMEX MACI index futures contract will increase to $1,450 from $1,300 for clearing members, to $1,595 from $1,430 for members and to $1,958 from $1,755 for customers.

That may be one source of pressure on Crude this week . . .

UPDATE: May 30 , 2008 11:00am

For all you folks who are Google-impaired:

May 29, 2008

NYMEX to Change Margins for Brent Crude Oil, Related Futures ContractsNEW

NYMEX to Change Margins for RBOB Gasoline Futures Contracts

NYMEX to Change Margins for Heating Oil, Related Futures Contracts

May 28, 2008

NYMEX to Change Margins for Crude Oil, Related Futures Contracts

May 27, 2008

NYMEX to Change Margins for Natural Gas, Related Futures Contracts

May 22, 2008

NYMEX to Change Margins for Heating Oil Crack Spread Calendar Swap Futures Contrac

These come from the 2008 NYMEX Press Releases.

Incidentally, this is what the Fed should have done with Stock margin requirements in 1998-99: gradually increase required capital.

Source:
NYMEX to raise margins for crude, related futures
Gene Ramos;
Reuters Tue May 6, 2008 10:25pm BST
http://uk.reuters.com/article/oilRpt/idUKN0651587320080506

KB Homes: U.S. Home Prices Will Drop 10% More

Friday, May 30, 2008 | 03:30 AM

in Real Estate | Video

Eli Broad, founder of homebuilder KB Home

click for video

VIDEO

Excerpt:

U.S. home prices likely will drop another 10 percent from their peak before the housing market begins to recover, said Eli Broad, founder of Los Angeles-based homebuilder KB Home. "Every housing market's different, but you can expect housing prices to continue to decline in most markets for the next year or so,'' Broad said in an interview from Los Angeles with Bloomberg Television.

Sales of previously owned homes in the U.S. fell 1 percent last month and the supply of unsold properties reached a record, the National Association of Realtors said last week, signaling a continuation of the 27-month housing slump. The median price of an existing home fell to $202,300 from $219,900 in April 2007. "I think we've got probably another 10 percent to go'' from the price peak reached in 2006, Broad said today.

Broad said the U.S. economy is "in a recession no matter how you want to measure it,'' and recommended that investors put their money in the energy industry, multinational companies with the largest stock-market capitalizations, and emerging economies such as Brazil, Russia, India and China. The return on U.S. stocks likely will "be in low single digits'' this year, he said.

Source:
KB Home Founder Broad Says U.S. Home Prices Will Drop 10% More
Matt Miller and Daniel Taub
Bloomberg, May 28 2008
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aHOHd1MVIx8Y

Dallas Fed: Oil Heading Back Under Par

Thursday, May 29, 2008 | 04:30 PM

in Commodities | Data Analysis | Energy

“Absent supply disruptions, it will be difficult to sustain oil prices above $100 (a barrel, in 2008 dollars) over the next 10 years.”

-Dallas Fed researchers Stephen Brown, Raghav Virmani and Richard Alm

>

Since we have been spilling so many pixels on Crude lately, I wanted to point out this excellent piece from the Dallas Fed Research department on Oil prices.

While I do not agree with all of their conclusions, I love any research piece that is cogent, well written, and filled with chart porn!

Source:
Crude Awakening: Behind the Surge in Oil Prices
by Stephen P. A. Brown, Raghav Virmani and Richard Alm
Federal Reserve Bank of Dallas, May 2008
http://dallasfed.org/research/eclett/2008/el0805.html

Q1 2008 GDP (Preliminary Revised)

Thursday, May 29, 2008 | 02:30 PM

in Data Analysis | Economy

As expected, Q1 2008 Real GDP Growth was revised up to +0.9% from +0.6% previously.

-Weakest two quarter growth since 2001 recession;
-Private inventory investment added 0.81% to GDP growth;
-Final Sales of domestic product: (GDP growth - private inventories) 0.7% (-0.2% previously)
-Personal consumption expenditure unchanged at +1% (slowest since Q2 2001)
-Gross private domestic investment: -6.5% (previously -4.7%);
-Residential investment "improved" to -25.5% from -26.7% (most since 1981);
-Business fixed investment: -7.8% (improved from -9.7%);
-Exports weakened to +2.8% from +5.5%;
-Imports weakened to -2.6% from +2.5% ;
-Federal Government consumption expenditure and gross investment: +4.4% (+4.6% previously);
-State and Local Govt: 0.6% (+0.5% previously)

Merrill Lynch's David Rosenberg notes: "The key indicator of the strength of the domestic economy, final sales to domestic purchasers (GDP ex trade and inventories) remained in negative territory at -0.1% QoQ (was -0.4%). This is the first decline since 1991Q1 and is signaling a very fragile domestic economy."

via Jake

The Fall of Bear Stearns

Thursday, May 29, 2008 | 11:30 AM

in Corporate Management | Credit | Derivatives | Financial Press | Trading

If you haven't read the Kate Kelly's fantastic 3 part WSJ series about the Fall of Bear Stearns, you are missing out. (I cannot wait for the book!)

These are simply fascinating reading:

Part One: Missed Opportunities As the firm's fortunes spiraled downward, executives squabbled over raising capital and cutting its inventory of mortgages.

Part Two: Run on the Bank Executives believed they were about to turn a corner, but rumors and fear sent clients, trading partners and lenders fleeing.

Today: Deal or No Deal? The Fed pressured Bear Stearns to sell itself, but a misstep in the hastily drawn agreement nearly scuttled the deal.

Kudos to the WSJ editors for making the series available to the public.

Video:

Sources:
Lost Opportunities Haunt Final Days of Bear Stearns
KATE KELLY
WSJ May 27, 2008; Page A1
http://online.wsj.com/article/SB121184521826521301.html

Fear, Rumors Touched Off Fatal Run on Bear Stearns
KATE KELLY
WSJ, May 28, 2008; Page A1
http://online.wsj.com/article/SB121193290927324603.html

Bear Stearns Neared Collapse Twice in Frenzied Last Days
KATE KELLY
WSJ, May 29, 2008; Page A1
http://online.wsj.com/article/SB121202057232127889.html

Oil Exporters Are Unable To Keep Up With Demand

Thursday, May 29, 2008 | 10:00 AM

in Commodities | Energy | Markets

Those of you in the "Oil is a bubble" camp should read this article in today's WSJ, titled, Oil Exporters Are Unable To Keep Up With Demand:

"The world's top oil producers are proving unable to put more barrels on thirsty world markets despite sky-high prices, a shift that defies traditional market logic and looks set to continue.

Fresh data from the U.S. Department of Energy show the amount of petroleum products shipped by the world's top oil exporters fell 2.5% last year, despite a 57% increase in prices, a trend that appears to be holding true this year as well.

There are several reasons behind the net-export decline. Soaring profits from high-price crude have fueled a boom in oil demand in Saudi Arabia and across the Middle East, leaving less oil for export. At the same time, aging fields and sluggish investments have caused exports to drop significantly in Mexico, Norway and, most recently, Russia. The Organization of Petroleum Exporting Countries also cut production early last year and didn't move to boost supplies again until last fall.

In all, according to the Energy Department figures, net exports by the world's top 15 suppliers, which account for 45% of all production, fell by nearly a million barrels to 38.7 million barrels a day last year. The drop would have been steeper if not for heightened output in less-developed countries such as Angola and Libya, whose economies have yet to become big energy consumers."

We not only have strong demand, we have an ongoing supply problem. The map below reveals that the world's top 15 exporters are shipping 1 million barrels a day less in 2008 than in 2007:

Source:
Oil Exporters Are Unable To Keep Up With Demand
Domestic Needs, Sluggish Investment Crimp Shipments
NEIL KING JR. and SPENCER SWARTZ
WSJ, May 29, 2008; Page A8
http://online.wsj.com/article/SB121200725158327151.html

Public WSJ/Digg Version
http://digg.com/world_news/WSJ_com_Oil_Exporters_Are_Unable_To_Keep_Up_With_Demand

The Costanza Energy Policy: 25 Ways to Drive Oil to $150

Thursday, May 29, 2008 | 07:10 AM

in Energy | Politics | Taxes and Policy

On last night's Kudlow & Co., I discussed how absurd US energy policy is.

The United States is heavily dependent on fossil fuels (>80%), most of which come from places we would rather not send our money to. We consume 26% of the world's energy, with only 3% of the world’s known oil reserves.

It turns out that for the past 3 decades, we've had a George Costanza Energy policy -- every decision we have made as a country has worked to drive energy prices higher. Had we made the opposite decisions, Crude Oil prices would be much lower than they are today ($130.17 as I type this).

What follows is a list of energy-related policies of the United States. On many of these, I have no opinion -- but I wanted to list as many as I could to demonstrate why Oil is where it is

US Policies with an impact on Energy:

1. Limited areas available for offshore drilling;

2. Stopped the rise of CAFE standards for automobiles;

3. Restricted nuclear power generation of Electrical;

4. Federal Reserve policies since 2001 led to a very weak US dollar (raising Oil prices);

5. Energy conservation policies? None

6. Iraq and Afghanistan wars contributing to Middle East tensions

7. No major United States funding for R&D on energy;

8. Kept CAFE standards for light trucks/SUVs much lower than autos;

9. Failed to raise efficiency standards for appliances for decades;

10. Provided no tax incentives for consumer purchases of hybrid automobiles for decades (in 2005, provided a modest, now expired tax credit);

11. Suburban Sprawl: Americans, on average, live further from where they work than Europeans do;

12. Mass transit system not a high priority;

13. Allowed tax credits for residential solar power to expire;

14. No special capital gains treatment for VC alt.energy investment

15. Ridiculous corn ethanol policy helped drive food prices higher also;

16. Amongst the lowest gasoline taxes in the developed world;

17. No special capital gains tax treatment for clean energy technology development;

18. Created a tax incentive (ADCS) that encouraged purchases of large inefficient vehicles;

19. Game changing breakthroughs over the past decades in solar, battery, or energy generation technologies? None

20. Exempted light trucks, SUVs, and pickups from gas-guzzler tax;

21. Discouraged clean coal, including gas liquification from coal;

22. Limited (or non-existent) state tax incentives for building energy efficient homes;

23. Failed to aggressively promote compact fluorescent light bulb;

24. Limited hydro-electric power generation;

25. Aggressive tax incentives for battery technology development? None

26. Failed to aggressively promote efficiency improvements for residential energy use, transmission of power, or consumption;

27. No new oil refineries built in the USA over the past 25 years.

And that's just off the top of my head.

Some of the above is being responded to by the private sector. With Oil at $130+, there are significant price incentives for these technologies.

However, markets develop solutions only AFTER the economics of it are feasible. This means we are starting R&D with Oil at previously unthinkable levels. Imagine if we had some form of energy leadership 10 or 20 years ago when Oil was $8.

As I mentioned on the show last night, whoever is elected President in November should put together a blue ribbon panel, and develop a real energy policy. Otherwise, we will revisit this post in a few years with Oil at $200 . . .

~~~

What other policies does the US have that has led to higher Oil prices? Use comments to add to the list . . .

Crude Oil, Cash Contract, 1986-2008 (Log)
click for larger chart

Non-Log Chart
click for larger chart

Blecch: Spam Prices Rising

Thursday, May 29, 2008 | 06:00 AM

in Inflation

So its come to this:

"Sales of Spam — that much maligned meat — are rising as consumers are turning more to lunch meats and other lower-cost foods to extend their already stretched food budgets.

What was once cheeky, silly and the subject of a musical (as Monty Python mocked the meat in a can), is now back on the table as people turn to the once-snubbed meat as costs rise, analysts say."

Source:
Spam spam spam: Sales of Spam rise as consumers look to trim food costs
EMILY FREDRIX
Associated Press, May 28, 2008 - 3:12 PM
http://www.startribune.com/local/19325459.html

Merrill's David Rosenberg on Economy, Housing, Employment

Thursday, May 29, 2008 | 03:30 AM

in Credit | Economy | Real Estate | Wages & Income

David Rosenberg, of Merrill Lynch, discusses his outlook on the economy and the housing market.

click for video

Part I

Part II

Part III

click for video

Kudlow & Company Video

Wednesday, May 28, 2008 | 09:04 PM

in Media | Video

As per the prior post, here is the video feed, parts I & II:

I still don't understand why being Bullish on Energy, Agriculture and select Tech is so hard to get -- I ran out of time, otherwise, I would have mentioned we were short AIG and Monster.com (MNST)

Happy viewing:

click for video (16 mins)

click for video (8 mins)

Kudlow & Co. Appearance (5/28/08)

Wednesday, May 28, 2008 | 05:19 PM

in Media

Another appearance on Kudlow & Co. tonite, from 7:00 to 7:30pm (ish).

Also on tonite:

Ken Heebner, co-founder of Capital Growth Management
Jim Lacamp, portfolio manager at RBC Dain Rauscher
Joe LaVorgna, chief U.S. economist, Deutsche Bank
Peter Morici, University of Maryland business professor and former chief economist of the U.S. International Trade Commission

Should be interesting

Interactive Home Price Graphic

Wednesday, May 28, 2008 | 11:30 AM

in Markets | Psychology/Sentiment | Real Estate

Terrific interactive chart from the NYT comparing various regional prices versus the national average:
>

click for interactive chart
>

courtesy of NYT

Source:
In Housing, the Strong Turn Weak
VIKAS BAJAJ
NYT, May 28, 2008
http://www.nytimes.com/2008/05/28/business/28housing.html

Durable Goods April 2008

Wednesday, May 28, 2008 | 10:03 AM

in Data Analysis | Economy

The initial data on GDP was encouraging -- down "only" 0.5%, much better than the consensus of -1.1%. Ex-transportation, bookings for goods meant to last several years rose 2.5%. But overall, new orders for durable goods fell 3.4% from April 2007.

The March durable goods order was revised down from +0.1% increase to a decreased of -0.3%.

The coverage focused on an the apparent "strength" in the report. "Quite encouraging" said Barron's; Healthy said Marketwatch.

Really? Let's have a look at the chart:

click for ginormous chart

chart via Jake

chart courtesy of Barron's Econoday

States and Cities Impact On GDP

Wednesday, May 28, 2008 | 09:00 AM

in Data Analysis | Economy | Taxes and Policy | Wages & Income

We get the first revision of GDP tomorrow morning at 8:30am. The export portion of GDP showed big improvement, thanks to the still free-falling dollar. Unless the data in everything else fell apart, that should bump GDP up to 1.0 - 1.25% (ex-inflation).

While that is brewing, it might be interesting to look at how States & Cities expenditures are doing. The State and Local Government consumption, expenditures and investment account for ~12.5% of GDP.

Consider the Personal Income tax, Corporate tax, Sales tax, and total Tax Revenue for a State:

1) State Income generally peaked in 2005, and has been decelerating since;
2) Only State Corporate tax receipts has turned negative on a YoY basis;
3) During the Recession of 2001, negative year over year revenue lasted as little as 1 quarter (sales tax) to 8 quarters (personal income tax);

If this cycle is even remotely similar to the mild recession of 2001, we are still in the first or second innings.

The chart below provides some insight:
>
click for ginormous chart

chart by Jake
>