Five Things You Need to Know for Tuesday
What you need to know (and what it means).
Five things you need to know to stay ahead of the pack on Wall Street.
1. Retail Sales and the Current Account
Retail sales for February came in down 1.3% for February versus expectations of a 0.8% decrease, while the Current Account balance came in at -$224.9 billion versus expectations of -$218 billion.
- The retail sales headline number was the biggest decline in six months.
- Excluding auto sales, retail sales were down 0.4%, the largest drop since April 2004.
- Excluding both autos and gasoline, retail sales were down 0.3%.
- The Current Account, which is the broadest measure of U.S. trade reached a record deficit of $224.9 billion.
- The current-account balance combines trade of goods and services, transfer payments, and investment income. About 90% of the deficit is accounted for by the balance in goods and services.
- While U.S. trade of goods was at a deficit, services trade was at a surplus.
- But services did decline from a surplus of $15.9 billion to $15.1 billion.
- Foreigners purchased $106.4 billion U.S. corporate and agency bonds during the fourth quarter, down from the $135.1 billion in the third quarter.
- Foreigners bought $70.1 billion U.S. Treasury securities during the quarter, up from $40.8 billion purchased in the prior three months.
- Foreigners bought a net $39.0 billion in U.S. stocks, compared with net purchases of $33.9 billion in the third quarter.
- Direct foreign investment totaled $30.6 billion, compared to $48.4 billion in the third quarter.
- For a chart of Total Retail Sales, annualized and adjusted, click here. Chart courtesy Ron Griess - The Chart Store
2. Goldman "Sacks" the Whisper Number
Goldman Sachs (GS) this morning reported earnings, the first among a couple of large investment banks scheduled to report this week.
- Goldman Sachs (GS) reported EPS of $5.41 vs. $3.29 consensus on revenues of $10.34 billion vs. $7.32 billion consensus.
- GS raised its quarterly dividend 40% to $0.35 from $0.25.
- Net revenue in the trading and principal-investments division were $6.88 billion, 57% higher than the first quarter of 2005 and 68% higher than the fourth quarter of 2005.
- The company's fixed-income, currency and commodities unit reported revenue of $3.75 billion, a 50% increase
- The "whisper number" to beat was "officially" $3.79, but as we noted on the Buzz and Banter yesterday afternoon, some desks were looking for a number as high as $4.
- Lehman (LEH) reports on Wednesday, Bear Stearns (BSC) reports Thursday.
- Ahead of the open shares of GS are trading approximately 3.5% higher.
- GS makes up 2.71% of the iShares Financial Services ETF (IYG), 1.84% of the iShares Financial Sector ETF (IYF), and 8.35% in the Amex Broker/Dealer Index (XBD).
3. Ten-Year Treasury Noted
According to Minyanville Professor Bennet Sedacca, 10-year Treasury Notes are once again at an important level.
- According to Prof. Sedacca, long-term resistance for the 10s going back to 1994 is around 5.25% or so. "Could that be the terminal spot once we have a slight correction?"
- The other wild card, according to Prof. Sedacca is commercials are very, very long 30-year bonds - record long in fact.
- "They sense either this cycle low OR a deflationary scare," he posits.
- This morning bonds are slightly higher, so far, with yields near 4.75% for the 10-year, 4.74% for the 30-year, and 4.75% for the five-year.
Today's Yield Curve picture: 5's____________10's_________________________30's
4. Bush Fights for Poll Position
If you could be President during a record housing boom and expansion, during a three-year rally in stocks (despite a war), and during period of unemployment reportedly below 5%, that would be a good deal, right? Wrong.
5. Word of the Day Panglossian - (pn-gls-n, -glôs-, png-) adj. - Blindly or naively optimistic.
5. Word of the Day
Panglossian - (pn-gls-n, -glôs-, png-) adj. - Blindly or naively optimistic.
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