Tuesday, December 16, 2008

Sentiment and Retail Anecdotes...

Today's rally was a little stronger than I think many (myself included) anticipated. There were a number of very strange option trades today that usually are paired with stock trades. Those trades represented a fair amount of volume in the market today and there were rumors that they were tied to the unwinding of the Bernie Madoff ponzi scheme. If you had to unwind a big stock position (to repay investors) doing in on a day that the market is up would be the ideal circumstances.

Chief Financial Officers (CFOs) are the guys that write the checks inside corporate America. CFO's tend to be more realistic in their vision than their CEO's that tend to wear rose colored glasses.

Duke University conducts a survey of 1,200+ CFOs quarterly to gauge spending plans, hiring plans and their expectations for growth. This quarter's results were startling.

--A record 81 percent of U.S. CFOs are more pessimistic about the economy this quarter (twice as many as last quarter), and 85 percent of European and Asian CFOs are more pessimistic. (See chart at bottom of release.)

-- Nearly 60 percent of CFOs say the U.S. economic recovery will be delayed until the fourth quarter of 2009 or later, while 71 percent of European CFOs expect Europe’s recovery to be delayed until at least the fourth quarter of 2009.

-- Employment is expected to fall by 5 percent in the U.S. and Europe in 2009, and by 0.5 percent in Asia. Capital spending is expected to fall by about 10 percent in all regions.

-- Weak consumer demand and financial market woes are major concerns for CFOs around the world. More than 70 percent of U.S. and European firms are concerned about the state of their financial institutions. Among users of financial derivatives, 75 percent are concerned about the risk of default. European and Asian CFOs are also worried about currency volatility.

In September 2007, CFO optimism about the future declined sharply, correctly anticipating the current recession. Throughout the history of our survey, CFOs have shown remarkable ability to predict future economic conditions,” said John R. Graham, director of the survey and a finance professor at Duke’s Fuqua School of Business. “Therefore, the record pessimism CFOs are currently expressing is ominous. Eighty percent of U.S. CFOs have grown more pessimistic about the economic outlook for 2009, and pessimists outnumber optimists by a 9-to-1 margin.

One of the many successful new infrastructure projects that the Federal Government will embark upon.......
That is brilliant!!!

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