Tuesday, December 29, 2009

The definition of quiet

The markets have been quiet this week as expected. I'd expect more of the same through the balance of the week as many traders will look to get out of town early if a snow storm bears down on NYC. The one variable is tax selling that can occur at the end of the year. However, given the relatively small number of losing stocks in many accounts I'd expect limited tax selling.

Some really interesting data has come out in the last couple of days....

1) Truck Tonnage increased !! in November --- The American Trucking Associations’ advance seasonally adjusted (SA) For-Hire Truck Tonnage Index increased 2.7 percent in November, following a 0.2 percent contraction in October.

It should be noted that the "not seasonally adjusted index" fell 8.0 percent from October. I have a tough time reconciling the differences in these numbers. Tonnage "increased" due to inventory restocking, but total tons shipped were down almost 10% when you back out seasonal factors.

2) Delinquencies skyrocket! This has building through out the year, but the rate of delinquencies is starting to scare me. Fannie Mae reported today that the rate of serious delinquencies - at least 90 days behind - for conventional loans in its single-family guarantee business increased to 4.98% in October, up from 4.72% in September - and up from 1.89% in October 2008.
It's too early to make any bold calls on what this means, but I suspect that we may be undergoing a cultural shift caused by the Great Bailouts of 08-09. Borrowers may be feeling that there is less stigma associated with default and in fact, it could be a financially savvy move to stop paying their mortgage. This is the sort of moral hazard that we all feared when we started the bailout process.
3) I find the story of US Fidelis particularly interesting. If that name rings a bell, they were the company running lots of ads on late night cable TV selling extended warranties for cars. Well, they've now cut 80% of their workforce and stopped selling new policies. The company blames the economy and criticism from media (accurate criticism in my opinion).
I wonder what impact "cash for clunkers" had on their business model? For every, auto scrap yard that added 4 jobs stripping old cars, there seem to be plenty of jobs lost at companies like US Fidelis.
4) Data games... Some smart cookies have actually decided to look at some state data relative to Federal data on unemployment. For example, in the month of November when the BLS said the US economy lost 18,000 jobs we all rejoiced. However, as some have pointed out NJ reported a loss of almost 11,000 jobs in November. So, if both sets of numbers are to be believed a NJ -- a fairly strong economy based in financials, pharmaceuticals and consultants -- accounted for 60% of all jobs lost in the US last month.
Hmm, something doesn't pass the smell test. Revisions to be timed with a request for stimulus part deux?

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