S&P Futures 1323.2 – 2.40 (Last Updated 09:04:07 AM)
Along with all of the weak macro data (spending, consumer confidence, you name it), inflation just keeps getting worse in the UK. Even core inflation. Core CPI for April came in at 3.7%, worse than economist estimates of 3.2%.
Housings starts in the U.S. unexpectedly fell in April as home builders continued to struggle almost two years into an economic recovery.
Work began on 523,000 houses at an annual pace, down 11 percent from the prior month and less than the 569,000 median forecast of economists surveyed by Bloomberg News, figures from the Commerce Department showed today in Washington. Building permits, a sign of future construction, also decreased.
Hewlett-Packard Co. (HPQ), the world’s biggest personal-computer maker, cut a billion dollars from its sales forecast for the year and said profit is falling short as consumers hold back buying PCs.
Full-year sales will be $129 billion to $130 billion and earnings excluding some items will be at least $5 a share, Palo Alto, California-based Hewlett-Packard said in a statement today. Analysts estimated sales of $130.3 billion and earnings of $5.24, the average projections in a Bloomberg survey. Third- quarter forecasts from HP also missed analysts’ estimates.
Whitney Tilson On Our Period Of “Unusual Uncertainty” And The Two Stocks He’s Wildly Bullish About
In a new note, Citi’s well-known equity strategist Tobias Levkovich has turned decidedly less bullish.
While not too gloomy, he writes:
The path of least resistance may be to the downside near term. With traditional summer seasonality and some significant uncertainties, especially the US deficit and spending plans plus their impact on long-term discount rates for asset valuation purposes, it does not appear likely that equity markets can bounce higher this summer unless a truly remarkable agreement emanates from Washington on fiscal responsibility. Moreover, economic data tends to ease back in the second half which probably weighs on the mindset of investors.
He goes on:
The simple good news can be found in three areas: the cost of capital via eased credit conditions, the substantial amounts of cash sitting on the sidelines that can be used to buy stocks, and the seeming need for pension funds to allocate more money to their equity exposure given return requirements that surpass most bond yields. The difficulties appear to center on likely margin pressures, the lack of depressed sentiment, and, lastly, valuation that is not necessarily as attractive as many presume. Add in uncertainties about emerging economies’ rising inflation, sovereign debt woes in periphery Europe, as well as geopolitical developments, and there does not seem to be an easy set of catalysts to lift share prices at the moment especially on the cusp of typical seasonality and issues such as the end of QE and the need to raise the US government debt ceiling.
Bonus WTF? (Guardian)
The escape of nearly 500 Taliban prisoners without a shot being fired was a spectacular coup for the group.
But the version of events that appeared last week in al-Somood, an Arabic magazine published by the Taliban, revealed the setback after the tunnel, which was supposed to enter the wing of the prison housing political prisoners, veered off to the right, “reaching a village close to the prison”.
The problem was rectified after insurgents “downloaded the prison map from the internet” (emphasis mine- CC) and used “earth measurement tools” to dig 100m back to where they needed to be, according to a translation published on the website of Alex Strick van Linschoten, a researcher who studies the Taliban.