Here's the scoop on the Labor Department's weekly initial jobs claims report:
Here's my uneducated interpretation - Things remain bad with initial jobless claims still way over the roughly 330K value which historically has represented a bottoming of the economy and stock market.
The AP spin is worse than usual by focusing on the noise (.5% drop in initial claims) rather than the fact that jobs continue to be lost much faster than the economy could possibly be replacing them. 5 of the last 8 "seasonally adjusted" numbers were better than this week's and yet they make it sound like this was a good week!
The number 1 retail guru out there is David Davidowitz. They have not let him on CNBC since Feb, however he is seen regularly on Bloomberg.
This man is rarely wrong on the retail scene. This is what he has to say today:
Posted Aug 27, 2009 07:30am EDT by Peter Gorenstein
Retail maven Howard Davidowitz paid another visit to Tech Ticker this week. And despite signs of improvement in consumer confidence and retail stocks rising, Davidowitz is steadfast in his belief the consumer is dead.
Rather than summarize, let me just highlight some of his best one-liners:
On the consumer:
On the stock market:
But it's not all gloom and doom, believe it or not. Davidowitz, who runs a retail consulting firm Davidowitz and Associates, thinks certain discount retailers, grocers, drug store chains and a select few department stores can survive and prosper in the future.
Most notably he likes the "extreme discounters" like Family Dollar, Dollar Tree (which was up almost 5% Tuesday after the company raised its outlook) and 99 Cents Only Stores. And, in the department store sector, he says, Kohl's will "be the only winner" because of their cost controls. (Davidowitz has no positions in stocks mentioned.)
Davidowitz used to be on CNBC all the time. Haven’t seen him lately. Wonder why?
This next passage is something I have been warning you about, the rise in ARMS mortgages:
However the two big stories came later in the day and they refer to the release of the FDIC results and the Fed asking the judge to more time as it wishes to appeal yesterdays
First the FDIC story:
First of all, it looks like the FDIC got about 9 billion dollars of emergency money from TARP. Thus their negative 6 billion dollars is now about 3.5 billion positive. The FDIC can draw on a line of credit of 500 bilion if they need.
Here are some commentaries on the FDIC. I will try and explain what they mean:
from Bix Weir:
OK lets start with the analysis:
The FDIC had 13 billion dollars of DIF (funds to its credit) at the end of its 1st quarter. It lost 8.2 plus 10.3 billion in the next 2 quarters or 18.5 billion.
Thus a negative 5.5 billion.
However, they received 9 billion in funds from a secret TARP fund. Thus they are revenue positive by a few billion dollars.(3.5 billion dollars)
But and this is the big but: they are sharing in losses of 13.7 billion in the second quarter and a whopping 34 billion in the 3 rd quarter.
On top of that, the FDIC is also on the hook for 320 billion in TLGP loans which includes 260 billion for Bank and Thrist Holdiing companies...in other words the famous company CIT>
The total number of banks at risk total 416, on top of the 81 that failed this year already and the 29 last yr. What is more alarming is the total assets at risk: 300 billion dollars.
(this is not including the 320 TLGP money).
So you can see that Bair is guaranteeing trillions of debt obligations with zero in her checking account.
The FDIC, the insuring arm of the banks is bust!!
Here is story No 2:
This is a big story. If the judge refuses to allow the Fed time and they disclose, then we find out all of those nasty things the Fed did with taxpayers money.
Goldman Sachs would not be a happy camper.
I have been following this story for a while and it is scary! Soybeans went into backwardation today as the front month price exceeds the future months.
The price of this key livestock feed is rising!!:
That is all for today. I will report in on Saturday. I expect to see a few more bank failures.
Over and out