the Trade-Radar + TradingStockAlerts blog

In the wake of the November elections and the State of the Union speech, the differences in outlooks between the Democrats and the Republicans are clear. With respect to the economy, the Republicans contend reducing government spending will lead to prosperity while the Democrats fear a significant reduction in spending will hurt the economy at a time when it is still fragile. Republicans and Democrats alike might do well to keep an eye on England. Fourth quarter GDP was just reported by the U.K. and it was surprisingly weak, down 0.5% after expanding 0.7% in the previous quarter. Analysts had been expecting 0.4%. Factors in play -- Some say the quarter was so bad due to the severe snow storms and cold weather that the U.K. at the end of 2010.  That could be true but it does remind me of how retailers always blame the weather when they have a bad quarter. Other analysts, politicians and even some members of the Bank of England worry that the decline in GDP is the result the ...

How awful was today's non-farm payrolls report? Let's start with the bad news: Nonfarm payrolls for October fell 190,000, which is worse than the decline of 175,000 that had been widely forecast.  Job losses for the previous month were upwardly revised to reflect nonfarm job losses of 219,000.  The unemployment rate surged to 10.2%, which is up from 9.8% and higher than the 9.9% that was widely forecast. It also marks the highest unemployment rate since 1982. The manufacturing sector saw payrolls drop by 61,000. This is worse than the 45,000 jobs lost in the prior month. But not everything was awful. There was some good news buried in there as well: A drop of 190,000 is bad but it is still an improvement over the previous month's 219,000 Average weekly hourly hours were unchanged at 33.0, which is a bit below the 33.1 that had been forecast. At least there was no decrease. Average hourly earnings increased 0.3% month-over-month, which is stronger than the 0.1% ...

Last Thursday the advanced Durable Goods report for April 2009 was released by the U.S. Census Bureau. I always look for clues in the report to see what is happening in the high tech industry. What does this month's report tell us? Whither Semiconductors? Initially, I was pretty encouraged by the surge in semiconductor shipments in April. Shipments were up 34.4% from March. Then I plotted the data for the last couple of years in the following chart. This chart certainly shows a significant rebound in shipments in the most recent month. Unfortunately, it doesn't yet confirm a change in trend. You could a line from the January 2008 data point to the April 2009 data point and it would pretty much result in a straight line downtrend. A bottom in Computers? April resulted in continued minor weakness in the Computers and Related Products category. This is the sub-sector that includes PCs, servers and various other similar hardware. The following chart shows the data for Shipments. H...

Today the Fed released Industrial Production numbers for April. For the most part, the "less bad" theme remains intact. The chart below presents month-over-month percent change for the three Technology sub-sectors. The Computers and peripheral equipment sub-sector continues to show contraction but it has been contracting less and less each month after hitting a low point back in November 2008. Communications equipment has had a few weak months since January 2009 but here also contraction is now greatly reduced. Semiconductors have carved a pretty erratic path since July of last year but now seem to be much more stable. Though there is still contraction here, too, it is much, much less than that seen last year. It is troubling that this past month saw production decrease a bit more than in the prior month but if the other sub-sectors continue to improve, this decrease could be easily erased. Conclusion -- I have often said that technology will lead us out of this recession and...

So how do we view the most recent data from the tech sector? We two economic reports and comments from a CEO. They can be looked at as lagging and leading indicators respectively. How much weight do we give to each? First, a lagging indicator -- From today's report of the ADVANCE MONTHLY SALES FOR RETAIL TRADE AND FOOD SERVICES , we see that retail electronics sales fell sequentially March to April 2.8%. The table below summarizes the weakness in sequential and year-over-year sales. Apr 2009 adv. from -- Mar 2009 prelim. from -- Kind of Business Mar 2009 (p) Apr 2008 (r) Feb 2009 (r) Mar 2008 (r) Electronics & appliance stores -2.8 -12.0 -7.8 -8.8 We know the enterprise technology sector is more or less just limping along. Without the retail consumer buying gadgets and big screen TVs, the tech sector will find it difficult to mount a true recovery. Now the leading indicator -- Yesterday, Intel's CEO Paul Otellini spoke at a conference at the company's headquarters. Otel...

The Bureau of Economic Analysis today released the advanced report on GDP for the first quarter on 2009. The headline number came in at -6.1%, significantly worse than expected. The stock market, however, rallied on the news. Two factors were looked at as positives. Consumer spending was up a surprising 2.2% where another drop had been expected and inventories saw a large decline. With spending up and inventories down, investors are hoping that manufacturing can finally begin to ramp up again. What about the tech sector? The GDP data is presented in a set of tables and a few of them break out the numbers by sector. The chart below is taken from one of these tables. Note that the Information processing equipment and software category is the summary line for the whole table. Extract from Table 2.--Contributions to Percent Change in Real Gross Domestic Product [Quarters seasonally adjusted at annual rates] 2008:Q1 2008:Q2 2008:Q3 2008:Q4 2009:Q1 Information processing equipment and softw...

The Advanced Durable Goods report for February 2009 was released today. The headline number was positive and the market took off though gains were moderated by the close. The headline number for New Orders registered a gain of 3.4% where most analysts expected another decline. Much was made of the improvement but things were not all that great when digging into some individual sectors. As we always do, we will focus on tech and once again the news is dismal. The following chart shows the Shipments data for the entire tech sector as represented by the Computers and electronic equipment category. January data was revised downward and the February shipments number showed another decline though of only 2%. This next chart looks a little deeper into this category at the Semiconductor sub-category. Chip ETFs were screaming higher earlier in the day then someone must have realized the data in the Durable Goods report didn't actually support a rally in chip stocks. January shipments were r...

The Durable Goods report for January 2009 was released by the U.S. Census Bureau today. Everyone anticipated it would be bad but it managed to solidly exceed expectations on the downside. Headline numbers were as follows: New Orders down 5.2%, Shipments down 3.7%, Unfilled Orders down 1.9% We'll focus as we usually do on the tech sector. The Durable Goods report bundles a number of technology sub-sectors into the Computers and Electronic Products category. Here are the numbers for that category: New Orders: down month-over-month 5%, down year-over-year 14.6% (wow!) Shipments: down month-over-month 3.7%, down year-over-year 15.6% (wow again!) Unfilled Orders: down month-over-month 1%, up year-over-year 1.8% The following chart shows Shipments and New Orders. Note how both are still accelerating downward. Buried within the Shipments results are some startling numbers. Computer and Related Products shipments down 10.7% month-over-month and down 29.8% year-over-year. Semiconductor ship...

The advanced numbers for December 2008 Durable Goods were released today and they were considerably worse than expected. The headline numbers were as follows: New orders for manufactured durable goods in December decreased $4.7 billion or 2.6 percent to $176.8 billion. Shipments of manufactured durable goods in December, down five consecutive months, decreased $1.4 billion or 0.7 percent to $191.3 billion. Unfilled orders for manufactured durable goods in December, down three consecutive months, decreased $10.3 billion or 1.3 percent to $803.2 billion. Inventories of manufactured durable goods in December, up seventeen of the last eighteen months, increased $1.3 billion or 0.4 percent to $343.5 billion. This was at the highest level since the series was first stated on a NAICS basis in 1992. As we always do, we will focus on the tech sector, looking at the summary category of Computers and Electronic Products and updating our charts with the December data. The following chart shows how...

If you weren't sure how bad sales in the U.S. have been lately, take a look at the chart below. Last week the Census Bureau released the Manufacturing and Trade Inventories and Sales report for November 2008. At this point, November seems like ancient history but the chart seemed dramatic enough to me that I wanted to share it with readers. This chart tracks the ratio of inventories to sales. What we are seeing is the effect of sales falling at a much faster rate than inventories. Here are the underlying numbers: Sales were down 5.1% from October to November while inventories were down 0.7%. These are the adjusted numbers. The unadjusted numbers were much worse: sales down 12.5% with inventories down only 0.5%. Year-over-year, adjusted sales were down 8.9% while inventories were up 3.3%. Unadjusted sales were down 12.2% and inventories up 3.1%. Note that we are just about at the worst level realized during the recession following the bursting of the dot-com bubble. In the years sin...

Last week markets received some pretty ugly news related to employment, or the lack thereof. ADP came out with their estimate of nearly 700,000 jobs lost in December. The Bureaus of Labor Statistics released their non-farm payrolls report which included job losses of 524,000 and an unemployment rate hitting 7.2%. Big numbers but what do they mean? And how do they compare to unemployment in previous downturns? I'd like to share with readers the following two charts from Citi's "Comments on Credit" that provide some interesting comparisons. Citi has looked at job losses over time starting at the cyclical peak of the stock market prior to each recession. They have plotted this data for the current recession and compared it to the same data for several earlier recessions. The have further differentiated between "mild" recessions and "deep" recessions. Job losses -- This first chart shows job losses. Our current recession is the blue line. Note that it ...

The preliminary numbers for November 2008 manufacturing were released today. Headline numbers on factory orders were terrible - twice as bad expected: down four consecutive quarters and falling by 4.6% month-over-month. Focus on tech -- We previously wrote on the advance number for November and focused on the tech sector (to read it, click this link to that post ). As our proxy for tech, we'll again look specifically at the Computers and Electronic Products category. This segment includes computers and related products, communications equipment and semiconductors. In today's release there were some small downward revisions for Shipments but some small upward revisions for New Orders. The following chart shows the situation with Shipments: At a summary level, Shipments were down 4.5% month-over-month from October to November but down only 1% year-over-year. Some of the most hard-hit sub-categories were as follows: Computers: down 12.4% month-over-month and down 11.1% year-over-y...

The Durable Goods report was published just before Christmas. It presents the advanced numbers for the month of November 2008. The headline numbers were bad but not as bad as feared: New Orders: This was the fourth consecutive monthly decrease and followed an 8.4 percent October decrease. Excluding transportation, new orders increased 1.2 percent. Excluding defense, new orders decreased 0.9 percent. Shipments: Shipments of manufactured durable goods in November, down four consecutive months, decreased 2.6 percent. This followed a 3.4 percent October decrease. Focus on the technology sector -- As always, we'll focus on tech and look for any signs of improvement. As our proxy for tech, we'll look specifically at the Computers and Electronic Products category. This segment includes computers and related products, communications equipment and semiconductors. First, we'll look in the rear view mirror and see what happened with Shipments. Shipments were down sequentially 4.6% f...

Today, the Fed released the Industrial Production report for November. The market generally considered the headline number, which registered a decline of 06%, to be not as bad feared. We always dig into the report to see how the technology industry fared. The news is not good. Below we show two sets of charts of Industrial Production: one set for the sub-category of Computers and Peripheral Equipment and one set for the sub-category of Semiconductors. Computers and Peripheral Equipment -- The first chart below the presents data from February through October. This report was released in November. Starting in spring of 2008, growth virtually came to a halt. Production just managed to hit a minor peak in June and then started to fall off slowly. Clearly not a good thing but not exactly a disaster for the industry. This next chart presents the data from February through November and was released today. This time we display revised data for the June through September months. It can be seen ...

With the holidays, house guests and turkey, I fell behind in my posting. Today I wanted to catch up on the results of the Durable Goods report that was released last week. In the following charts, we are presenting the Shipments and New Order data from January 2006 through October 2008 which includes the latest data points available. We also display a trend line derived from a 6th-order polynomial filter. As usual, the focus is on technology. Today we are looking at the summary data for the tech sector, the high-level category of Computer and Electronic Products. Included in Computer and Electronic Products are the following sub-sectors: Electronic computer manufacturing Computer storage device manufacturing Other computer peripheral equipment manufacturing Communications equipment manufacturing, nondefense Communications equipment manufacturing, defense Audio and video equipment Semiconductor and related device manufacturing Other electronic component manufacturing Search and navigati...

The Federal Reserve just released the Industrial Production numbers for October. The headline number, a 1.3% gain, was unexpectedly good due to the resumption of refining and manufacturing activities in the Gulf region after hurricanes Gustav and Hanna. But what about tech? Below we show a chart of Industrial Production for the sub-category of Computers and Peripheral Equipment. There is a clear drop off in production. In terms of percentage change, the current down-trend is not huge. What is disturbing is that typically the months of September and October show growth as manufacturers of computers and peripherals build inventory for the holiday shopping season. Here we see the opposite effect: rather than growth we have a decline. The numbers for the semiconductor sector look pretty much the same. The next chart comes from the Federal Reserve. It includes Industrial Production and Capacity Utilization for high tech industries. There are some interesting features in this chart. For one,...

The US Census Bureau just released the advance Durable Goods report for September. It shows that the tech sector took another beating. At a summary level of Computers and Electronic Products , Shipments were down sequentially 2.1% and New Orders were down 1.4% . This was after a terrible August number where shipments were down 5.6% ; therefore, we are seeing further declines in September from an already bad number. Looking at the sub-categories, first up we have Computers and Related Products . In this sector we see Shipments were finally up slightly at 0.8% after two bad months in a row but New Orders were down 2.1% . Given that New Orders were down 13.1% in July and up only 0.7% in August, we again have further deterioration from a prior run of bad numbers. We have mixed results in the Communications sector where a 2.6% gain in Shipments was recorded while a big 14.6% drop in New Orders was registered. Finally, we have Semiconductors . New Orders are not tracked in this sector...

Nearly lost in the din surrounding the failure of Lehman Bros and the take-over of Merrill Lynch was the industrial production and capacity utilization report. The Federal Reserve released the numbers for August today. The results were below economists expectations and did nothing to help the tone of the market. As I have been trying to focus my writing on the technology and Internet sectors, in my review of the Fed's report I'll provide a little overview and then concentrate on the results in high-tech. What it is -- The index of Industrial Production is a fixed-weight measure of the physical output of the nation's factories, mines, and utilities. Manufacturing production, the largest component of the total, can be accurately predicted using total manufacturing hours worked from the employment report. 2002 is used as a reference and corresponds to 100%. August results -- Industrial production decreased 1.1 percent in August and was revised down in June and July to show sma...

"Was a sunny day, not a cloud in the sky. Not a negative word was heard." - Paul Simon, Was A Sunny Day Today's durable goods report surprised investors by posting a rise of 1.3% in new orders for the month of July. This was way more than the anemic 0.2% expected by economists. Shipments clocked with a robust gain of 2.5%. Digging down a level, it turns out that much of the gains were due to transportation equipment, specifically aircraft. New orders were up 28%. (Now if Boeing could just deliver...) Excluding the volatile transportation sector, new orders were up only 0.7% Exports were generally identified as the driver behind these good numbers. This led some analysts to worry that we are unlikely to see growth like this continue with world economies slowing and the dollar rising. In the meantime, though, it was time for stocks to bask in the sun; the major averages all made healthy moves to the upside today. Still, there were a few sectors casting shadows on the good t...