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THE NORTHWEST ECONOMIC MAINLINE 05·04·2009
What to Watch This Week
- Two weeks ago, various home sale-oriented announcements hinted at positive signs in both the new and resale home markets, specifically with regards to inventory levels. Early Monday morning, pending home sale figures will be important to watch. I hope for an increase in pending figures (as with everyone else), which would then, at a macro level, really start to improve conditions in the marketplace.
- Home builder earnings should offer some interesting insight as to what the nationals are seeing thus far in 2009. Pulte, Centex, D.R. Horton and Beazer are among the builders that will offer earnings throughout the upcoming week. With Pulte's move in early April to acquire Centex, it will be interesting to watch the news (possible movements?) in the home builder sector [Centex-Pulte
Article] and, on that note, the following was an informative article posted last week that touched on some this very issue: Yahoo Finance
Article
- I will also be keeping an eye on earnings from the following real estate and local companies: BRE Properties, UDR, Inc., Zymogenetics, Cisco, City Bank Lynnwood, Expeditors, Real Networks, Electronic Arts and a few others.
What I Saw Last Week
- Monday, Seattle Pacific University's Annual Downtown Breakfast brought Robert Shiller into town. Unfortunately I was unable to attend myself, but would love to hear from any of you who did have the chance to see the sage!.
- Wednesday saw GDP figures announced by the Department of Commerce. Coming in at -6.1 percent in the first quarter, GDP figures were significantly worse than analyst expectations of -4.9 percent, and well below my expectation of -4.0 percent.
- Although I did say that such figures would be straight forward, the truth was hidden in the details as business inventories declined by a record $103.7 billion in the first quarter. This is an especially positive sign, because without the realignment of unsold goods, there cannot be improvement moving forward. To put this record breaking decline into perspective, when excluding the impact of inventory figures on overall GDP, first quarter GDP figures would have been -3.4 percent. It's no wonder Wall Street looked beyond the headlines on Wednesday with a significant rally!
- Chrysler, only after a mish mash of conflicting announcements over the past three months, finally succumbed to its debt obligations. The result was the company filing for Chapter 11 bankruptcy on Thursday. As has been touched on in previous columns, this came as no surprise to me, and we continue to wait for more advancements pertaining to GM who remains in a similar situation. (Just announced massive closures at GM, Saturn and Hummer dealerships.) I expect the second shoe to drop shortly.
- Consumers' mood was at the forefront of media headlines last week with April's Consumer Confidence figures soaring 12 points to 39.2; the highest level since November, and much higher than expectation of 29.5.
- Friday's news from the Reuters/University of Michigan Surveys of Consumers indicated that Consumer Confidence also climbed to 65.1 in April from 57.3 in March, its highest point since September 2008, and the largest one- month increase since October 2006. Maybe it was the sun shining last week, but even I felt a bit more positive about things than normal
Quote/Link of the Week
Although a bit of an overly bearish article, this quote definitely caused me to smile... "My notion was, you had Bernie Madoff doing US GDP accounting."
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