Economic Reports 09/25/07
Summary: John Q pulling back farther as Germany, American Air, Target, Discover, Lowe's all have disappointing news.
The Housing Debacle continues: #1 US Homebuilder Lennar with its biggest loss in 53 years; S&P Schiller Price Index plunging for the 13th straight month.
No jumbo money panic headfake... existing home sales declining further...
as inventories grow YTD +32.7% to a new all time high; Sales out West down 37.5% since the 2005 peak.
Blame it on the Locusts...
Bonds have rallied on weak European data, German business morale sentiment fell to its lowest in more than 1-1/2 years
John Q. pulling back on downward September same store sales guidance from the 2nd largest U.S. discount chain Target.
Comparable store sales will increase 1.5 to 2.5% vs 4 to 6% previously forecast for the five weeks through Oct. 6.
4th largest US payment card network, Discover Financial Services...
said Q3 profit fell 16% as it wrote off more payments as uncollectible and set aside more funds to cover loan losses.
The worlds largest airline, American Airlines...
AMR Corp. parent of AA provided disappointing revenue guidance for Q3.
The new profit targets reflected AMR's Sept. 21 forecast for a 4 to 5% gain in revenue for each seat flown a mile.
Bill Warlick, a Fitch Ratings debt analyst: "The outlook in general is much less rosy than it was six to eight weeks ago, for the whole industry.
Q3 actually seems to be ending quite well, and the industry doesn't appear to have taken a hit, YET.''
Lowe's Cos, the #2 home improvement retailer...
stock fell more than 5% after cutting its profit forecast for this year. Lowes said droughts in some parts of the United States were hurting sales of outdoor equipment.
Lowes expects sales at stores open at least to year to decline 2 to 3% this year and be "flattish" in 2008.
Lennar, the largest U.S. homebuilder,
reported the biggest quarterly loss in its 53 year history after $848 million of costs to write down the value of real estate. EPS -$3.25 vs estimated $0.55.
Q3 revenue fell 44%, the net loss was $513.9 million. 41% decline in the number of homes delivered; new orders down 48%.
Backlog, or homes under contract and not yet sold, slumped 60% from a year earlier with a 32 % cancellation rate.
S&P Case Schiller Home Price Index July Full Report
Inside the number: YOY 10 city composite -4.5%; 20 city composite -3.9%
UBS AG analysts: "the housing market probably won't ``trough'' until 2009."
Peter Schofield at Knott Capital Management:
"The numbers here are just not getting better anytime soon. There's too much supply right now relative to demand. We think bad news is still in the offing."
Existing Home Sales Aug -4.3% to 5.5M Full Report
Inside the number: Inventories up for the 7th straight month, +0.4% to an all time high 4.58M YOY +19.2%, a 10 month supply YOY +37%; YTD +32.7%
Sales prices are down confirming Schiller index declines. YOY: Median price +0.2%; West -3.8%; Average price -0.3%; West -2.1%.
Sequential Sales: NE -2%; MW -5.2%; S -2.7%; West -9.8%. YTD: US -12.8%; NE -5.7%; MW -10.5%; S -12.7%; West -21.7%. Sales in the West since 2005 peak are down 37.5%.
The Nattering One anticipated a headfake in this months numbers...
resulting from early August 6% Jumbo money rate lock in's squeezing the trigger on a panic buy, as the rate jumped to 8%.
The headfake never materialized and this does not bode well for the September number TBD in late October.
Michelle Meyer, an economist at Lehman Brothers:
"The housing market has decidedly taken a second leg down, largely in response to turmoil in the mortgage market.
The huge imbalance between demand and supply should put more downward pressure on home prices. We look for sales to fall through the middle of next year."
The Housing Debacle continues: #1 US Homebuilder Lennar with its biggest loss in 53 years; S&P Schiller Price Index plunging for the 13th straight month.
No jumbo money panic headfake... existing home sales declining further...
as inventories grow YTD +32.7% to a new all time high; Sales out West down 37.5% since the 2005 peak.
Blame it on the Locusts...
Bonds have rallied on weak European data, German business morale sentiment fell to its lowest in more than 1-1/2 years
John Q. pulling back on downward September same store sales guidance from the 2nd largest U.S. discount chain Target.
Comparable store sales will increase 1.5 to 2.5% vs 4 to 6% previously forecast for the five weeks through Oct. 6.
4th largest US payment card network, Discover Financial Services...
said Q3 profit fell 16% as it wrote off more payments as uncollectible and set aside more funds to cover loan losses.
The worlds largest airline, American Airlines...
AMR Corp. parent of AA provided disappointing revenue guidance for Q3.
The new profit targets reflected AMR's Sept. 21 forecast for a 4 to 5% gain in revenue for each seat flown a mile.
Bill Warlick, a Fitch Ratings debt analyst: "The outlook in general is much less rosy than it was six to eight weeks ago, for the whole industry.
Q3 actually seems to be ending quite well, and the industry doesn't appear to have taken a hit, YET.''
Lowe's Cos, the #2 home improvement retailer...
stock fell more than 5% after cutting its profit forecast for this year. Lowes said droughts in some parts of the United States were hurting sales of outdoor equipment.
Lowes expects sales at stores open at least to year to decline 2 to 3% this year and be "flattish" in 2008.
Lennar, the largest U.S. homebuilder,
reported the biggest quarterly loss in its 53 year history after $848 million of costs to write down the value of real estate. EPS -$3.25 vs estimated $0.55.
Q3 revenue fell 44%, the net loss was $513.9 million. 41% decline in the number of homes delivered; new orders down 48%.
Backlog, or homes under contract and not yet sold, slumped 60% from a year earlier with a 32 % cancellation rate.
S&P Case Schiller Home Price Index July Full Report
Inside the number: YOY 10 city composite -4.5%; 20 city composite -3.9%
UBS AG analysts: "the housing market probably won't ``trough'' until 2009."
Peter Schofield at Knott Capital Management:
"The numbers here are just not getting better anytime soon. There's too much supply right now relative to demand. We think bad news is still in the offing."
Existing Home Sales Aug -4.3% to 5.5M Full Report
Inside the number: Inventories up for the 7th straight month, +0.4% to an all time high 4.58M YOY +19.2%, a 10 month supply YOY +37%; YTD +32.7%
Sales prices are down confirming Schiller index declines. YOY: Median price +0.2%; West -3.8%; Average price -0.3%; West -2.1%.
Sequential Sales: NE -2%; MW -5.2%; S -2.7%; West -9.8%. YTD: US -12.8%; NE -5.7%; MW -10.5%; S -12.7%; West -21.7%. Sales in the West since 2005 peak are down 37.5%.
The Nattering One anticipated a headfake in this months numbers...
resulting from early August 6% Jumbo money rate lock in's squeezing the trigger on a panic buy, as the rate jumped to 8%.
The headfake never materialized and this does not bode well for the September number TBD in late October.
Michelle Meyer, an economist at Lehman Brothers:
"The housing market has decidedly taken a second leg down, largely in response to turmoil in the mortgage market.
The huge imbalance between demand and supply should put more downward pressure on home prices. We look for sales to fall through the middle of next year."
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