Monday, April 23, 2007

Blue Monday - Tuesday Curtain Raiser

Texas Instrument's (TXN) CEO, Rich Templeton, may be the Master of Ceremonies for Turnaround Tuesday festivities should overseas markets not roll over tonight. Templeton says, "We believe the inventory correction that began in the second half of last year largely ended in the first quarter. Orders are beginning to rebound, and we expect sequential growth to resume in the second quarter." The company says it sees earnings of up to 45-cents a share vs previous estimates of 37c.

So, TI's bullish comments have helped to lift stock futures following post expiration Monday weakness helped along by another spurt in the price of crude oil.

Nigeria - not so lovely this time of year: OIL FUTURES: Nymex Crude Ends At Week High; Nigeria Violence.

While TI will help tech avoid a wreck (and will keep my ALTR puts under water), the "For Every Action, There Is An Equal and Opposite Reaction" rule was also in effect. Target (TGT) surprised: Target lowers April sales view, shares fall. Egads consumers what's going on here? Gosh, could it be $3+ gasoline in many locales, or maybe the popping of the Bazooka Housing Bubble?

If we get a hurri-kin (as some are apt to strangely say) in the wrong place in the Gulf, $5, or $6 gasoline is not hard to imagine now that $4 gazzoline is likely a reality by Memorial Day with presently calm weather along the Gulf. What would $5 gas do to sales at Target or Wal Mart? And could it be that already $3+ gasoline is helping to push more subprime and alt-a laden home borrowers off the side of the cliff let alone impact foot traffic into the box retailers? GM seems to think weak housing figures cause weak car sales - gosh, there could be some spill over at those red check out aisles (er, point of purchase stations) at Target - ya think? GM's Lutz says mortgage 'meltdown' hits US auto sales. The brew here is on the septic side and just doesn't leave one feeling warm and fuzzy about consumer demand and robust GDP in the weeks and months ahead.

But then again, There's Mr. Templeton of TI telling us things are about to brighten up in chip world. Interesting. Perhaps folks are condemning purchases of things like makeup, or clothing, or even Campbell's Chunky Soups at Target, but will buy stuff at Best Buy with DSP chips made by TI? Yep, that's it.

Two important economic reports are due on Tuesday: The Conference Board's Consumer Confidence. Confidence has been trending lower, but with official figures showing continued low unemployment, confidence is expected to fall only a few points to 105.

Existing Home Sales, which I feel is a pretty flawed data series from the National Association of Realtors (see my diatribe from last month), are due Tuesday as well. An annual rate of 6.4 mln is expected. Will sales miraculously jump again?? On Wednesday, New Home Sales come our way. Here's a forecast for when the new home market might rebound: US new home market may take til 2009 to rebound-S&P. Reminder, it's 2007; for a feeble mind like mine, I had to think about that for a moment - yes, it is 2007, S&P thinks new home market won't rebound until 2009.

While I am still in a variety of long positions, I will close out this post with this chart which is making the rounds on web 1986-87, vs the last couple of years. Good night.

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