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THE NORTHWEST ECONOMIC MAINLINE 04·06·2009
What to Watch This Week
- Monday kicks off with the release of NWMLS statistics for March. Although there has been some stirring from some large regional names lately, with stories of successful open houses, marketing campaigns, incentive programs and various other activities, I don't anticipate March's figures to be anything to write home about.
- While many wait for a spring market bump, there are few indications that there have been any apparent shifts in the local market, or the weather for that matter! Patience is still the name of the game.
- Alcoa's first quarter 2009 earnings announcement is scheduled for 1 p.m. (after market close) on Tuesday. The company's announcement officially marks the start to first quarter earnings season, and the likely poor results will surely keep things interesting on the news front. Earnings from Pier 1 Imports (Q4) are also scheduled for Tuesday. With recent reports that Williams-Sonoma's Q4 profit dropped 90 percent and suggestions that Pier 1 is doomed for bankruptcy, this announcement should prove attention grabbing. April 16 and soon thereafter, though, will really prove to be the time to watch earnings because this is the time when many major financial players are scheduled to announce their respective earnings for the first quarter.
- Initial unemployment claims is, arguably, the only economic indicator to truly observe this week. My reasoning behind such a suggestion stems from last Thursday's announcement from the Labor Department that initial claims for unemployment insurance rose to 669,000, up from one week earlier when claims stood at 657,000.
- Throughout the week there are few economic indicators of importance scheduled for announcement. When this is the case, we often see volatility in the market, and government news and corporate rumors take precedence. Under this assumption, and given that the recent market rally carried through much of last week, together with reports that Wall Street is "bracing" for the coming week, this week has all the necessary ingredients for a turbulent one...
What I Saw Last Week
- Maybe I was just in a great mood, but from my standpoint, much of last week's news and announcements turned out to be fairly positive.
- On Wednesday, the National Association of Realtors announced that its seasonally adjusted index of pending home sales rose 2.1 percent to 82.1 in February. A leading indicator of future home sales, this announcement fell in line with analysts' expectations.
- Unfortunately, sentiment in the market could not escape GM, Ford, and Chrysler who reappeared on the radar Wednesday when they reported that March sales were down 37 percent, 41 percent, and 39 percent respectively from one year ago.
- This almost immediately sparked a government response, with President Obama swiftly stating that both GM and Chrysler would need to make drastic changes to their operations in order to receive the billions planned for additional support. It is my belief that GM will not survive.
- The Commerce Department reported that factory orders, another leading indicator, posted an increase in February after six straight months of declination. Thursday also provided news from the G-20 Summit where world leaders announced plans to give the International Monetary Fund $1 trillion and create stricter rules for hedge funds. Also, changes to mark-to-market accounting from the Financial Accounting Standards Board gained traction. This is news that was certainly welcomed by Wall Street.
- News that proved less than favorable came in the form of the National Association of Realtors' announcements that second homes sales in 2008 were down 38 percent, S&P/Case-Shiller announcing that its index of home prices dropped 19 percent in January, and that office lease rates in Seattle shaved 10-12 percent in the first quarter.
- The announcement pertaining to office rates reaffirmed expectation by many that new supply, consolidation, and large spaces vacated during fourth quarter would have a substantial effect on asking rates moving forward.
Quote/Link of the Week
Two different thoughts sprang to mind when reading the first article shown from last week -- first, is this the best timing for this? Second, the list doesn't include Seattle! The second article should, well, basically just bring a smile to the faces of builder members who have had to deal with the opposite calls being made for the past three years now!
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