As you may or may not know, our e-mails and websites aren’t the only places you can read articles written by me and the other Tycoon Report editors (Dylan, Chris, Teeka and Jason). 

Our analysis and market commentaries can be found on Yahoo! Finance, Seeking Alpha, AOL’s Blogging Stocks, etc.  And most recently Teeka was interviewed on Fox Business News – so now you can even find your favorite Tycoon editors on national television!

Some may think this is a huge accomplishment, but the reality of the situation is that we’ve been in this business for years – we have over half a century of combined market experience, so it should be no surprise that other financial media outlets pick up our writing.

But I saw something today that amazed me!

I was browsing Reuters.com and noticed that they had a Tycoon Report headline on their site ... however, I didn’t recognize the title.  I figured it was an article I read very quickly last week and didn’t take note of the headline.  So I decided to click on it...

And once I saw who the author was, my jaw hit the floor!

Can you guess who it was?  Me, Dylan, Chris, Teeka or Jason?

If you guessed any one of those names you would’ve been COMPLETELY WRONG!

It wasn’t a Tycoon Report editor – it was a Tycoon Report READER:  Ethan Roberts!

If you’ve visited our web site and commented on our articles or read some of the Member Articles, you’ll definitely know who Ethan is.

He’s one of those dedicated Tycoon Report readers who had made it his mission to give back to the community and help educate other members.  His comments and his articles have gotten dozens and dozens of comments and positive feedback from the community.  He’s someone I’ve corresponded with personally, and quite frankly, I shouldn’t have been so surprised to find his writings on a global news organization’s web site.

So I’m going to keep today’s article short and sweet.

To Ethan:  Congratulations, my friend!  You’ve not only made a tremendous contribution to The Tycoon Report with your educational writing, but now it’s finally been recognized and shared with the rest of the world!

To other Tycoon Report readers:  Look at what Ethan has done and realize that you have the ability to do it, too!  Share your ideas, stories and lessons learned with the Tycoon Report community.

We make it a point to feature articles that really excite us, and, as you can see, we aren’t the only ones reading them.

If Reuters is taking the initiative to read Tycoon’s Member Articles, then you’d better believe other major media outlets are doing the same!

So get busy and start contributing – we’d love to hear what you have to say!

Links:

Below are the links to the article on our web site and on Reuters.  Please drop Ethan a line in the comments section of today's article and let him know what a great job he did!

Ethan's Article on The Tycoon Report Web Site

Ethan's Article on the Reuters Web Site

Click here to read more member articles.

And click here to try your hand at writing one.

Have a great week – and happy writing!




Wayne Mulligan
Chief Investment Officer
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Monday, November 5

10:00 - ISM Services (for October): Consensus 54.0

Big Picture: The services sector appears to have found its groove in the mid-50s after dipping from 14-month highs of 60.7 in June.  Household spending is finding its way to the largest engine in the economy, despite higher gas prices & market volatility.  New orders expected to claw higher, while inventories have bounced around but, nevertheless, enjoyed 12-month growth of around 53.0.  Prices paid shot back up last month, and may face further upward pressure.  Employment (seasonally adjusted) should show decent gains, as August's contraction of 47.9 tries get put in the rearview mirror.  Exports are underperforming despite the weak buck and a strong global economy.  This could be the month for a sizable surge.

Implications: The non-manufacturing ISM report is a national survey of purchasing managers which covers new orders, employment, inventories, supplier delivery times, prices, backlog orders, export orders, and import orders.  Diffusion indexes are produced for each of these categories, with a reading over 50% indicating expansion relative to the prior month, and a sub-50% reading indicating contraction.  The index should be far more indicative of the broader economy given its inclusion of service-producing as well as goods-producing sectors outside of manufacturing.  However, the short history of the index dates to only July 1997 and doesn't provide the insight of a longer period inclusive of varied economic climates.


Wednesday, November 7

8:30 - Productivity-Prel. (for Q3): Consensus 3.1%

Big Picture: Cyclical and structural productivity growth has softened, leaving a slower growth trend for the economy.  Meanwhile volatile compensation costs and slower productivity gains leave stronger unit labor costs -- the Fed's key read on labor-based inflation pressures.  The big picture is that trend productivity growth plus trend labor force growth equals potential GDP growth -- what some call the economy's longer term "speed limit".  Labor force growth runs near 1% annually.  If structural productivity growth is 2%, potential GDP growth is near 3%.  Over the long term, strong productivity growth is a win/win situation resulting in weak unit labor costs and the stronger wage growth allowed through the increased output produced.  Strong productivity comes with a cost to near term employment (labor) demand and benefits in lower inflationary pressures and a higher standard of living.  Current trends reflect a weakening in trend productivity and a resulting lift in inflation pressures.

Implications: Nonfarm productivity and costs provide measures of the productivity of workers and the costs associated with producing a unit of output.  During times of inflationary concern, the unit labor cost index in this report can move the market.  If productivity is falling, unit labor costs may be rising faster than hourly earnings and other labor cost measures.  Because productivity can be quite volatile from one quarter to the next and because the previously released GDP report will give a good indication of productivity growth, this report seldom has a significant impact on the market.

10:00 - Wholesale Inventories (for September): consensus 0.1%

Big Picture: Wholesaler inventories' growth of 4% yoy is running at a slower pace than the 7% annual growth in sales.  The inventory to sales ratio has held at a record low 1.11 months since May.  The early 2007 inventory drawdown was relatively quick and less of an interruption for the economy.  Longer term trends reflect comfort at those I/S lows as technology allows for continued improvement in just-in-time inventory management.  The smaller inventory swings from rebuilding and drawdowns leaves a steadier pace of domestic growth.

Implications: The wholesale trade report includes sales and inventory statistics from the second stage of the manufacturing process.  The sales figures say close to nothing about personal consumption and therefore do not move the market.  Wholesale inventories sometimes swing enough to change the aggregate inventory profile (aggregate inventory is the sum of inventory at the manufacturing, wholesale, and retail levels), which may affect the GDP outlook.  In that event they can elicit a small market reaction.  More often than not, however, this release goes unnoticed except by market economists.

15:00 - Consumer Credit (for September): Consensus $8.5B

Big Picture: Consumer credit includes household non-mortgage loans.  Tax cuts and cash out mortgage refinancing provided consumer funding in past years as 7% yoy income growth, equity and weakening home prices now provide the means outside of credit.  Credit cards (revolving credit) make up 37% of total consumer credit which stands at $2.5 trillion.  Nonrevolving credit helps finance auto purchases, tuition, vacations and other forms of consumer borrowing.  Annual growth of 4% has shown acceleration from the 3% yoy decade low of April 2006.  A decade high of 13% yoy growth was reached during the recession in April 2001.

Implications: This monthly measure of consumer debt is volatile and subject to massive revisions.  It is also released well after every other consumer spending indicator, including weekly chain store sales, auto sales, consumer confidence, retail sales, and personal consumption.  For these reasons, the market almost never reacts to the consumer credit report.


Thursday, November 8

8:30 - Initial Claims (for 11/03): Consensus NA

Big Picture: Weekly initial claims can be volatile, as the trends reflect some easing in the tight labor market.  Layoffs (seen in initial claims) remain subdued given the lean supply of available workers as hiring (seen in continued claims) has cooled as reflected in the 20-month high in the early September 4-week average and the slower growth in payrolls.  Claims provide a nearly real time read on layoffs and the labor market as the low 4.7% unemployment reflects the broader combined read of layoffs and hiring.  A level above 350K for claims is worrisome as a 375K level would signal a potential recession.  We're nowhere near there.

Implications: Initial jobless claims measure the number of filings for state jobless benefits.  This report provides a timely, but often misleading, indicator of the direction of the economy, with increases (decreases) in claims potential signalling slowing (accelerating) job growth.  On a week-to-week basis, claims are quite volatile, and many analysts, therefore, track a four-week moving average to get a better sense of the underlying trend.  It typically takes a sustained move of at least 30K in claims to signal a meaningful change in job growth.


Friday, November 9

8:30 - Export Prices-ex. Ag (for October): Consensus NA, Import Prices-ex. Oil (for October): Consensus NA

Big Picture: Core import and export prices remain contained.  The movement in the volatile petroleum import prices and surging agricultural export prices provide the swing.  The strong 23% yoy rise in agricultural export prices reflect the increased demand for grains that are now being increasingly used as alternative fuels.  Petroleum import prices are 20% higher than a year ago.

Implications: Though not a market-moving release, export/import prices are a useful indication of inflation pressures created by changes in foreign exchange rates.  For example, when the dollar is strong, import prices tend to be under downward pressure.  If an item in Japan costs 500 yen and the exchange rate is 100 yen to the dollar, the US$ price is $5.  If the dollar then strengthens to Y120, the US$ price falls to $4.17.  Because US exports must compete with foreign goods, there is also downward pressure on export prices when the dollar is strong.  Economists typically look at import prices excluding oil and export prices excluding agricultural.  In each case, the category in question is excluded because prices for those items are volatile and the swings are unrelated to foreign exchange rates.  Oil prices tend to swing in response to OPEC decisions, and agricultural prices are often affected by weather, neither of which say much about long-term trends in traded goods prices.

8:30 - Trade Balance (for September): Consensus -$58.5B

Big Picture: A rebound is expected after August's smallest deficit since January.  Q3 GDP puts the deficit near $59.7 bln; a lower deficit than that could leave a GDP revision above 4%.  Imports improve, given the 5% rise in petrol import prices, and exports are expected to show a gain about half the size of imports.  Foreign aircraft sales declined in September.  Weak dollar and global growth provide the improved outlook despite high imported energy prices.  Exports are running at a 13% yoy gain, imports at an unimpressive 3% yoy.

Implications: The trade report is most widely watched for trends in the overall trade balance.  But trends in both exports and imports of goods and services bear watching as well.  The export data in particular are important to watch for indications that a strengthening competitive position at home and/or strengthening economies overseas are boosting U.S. growth.  Imports provide an indication of domestic demand, but given the severe lag of this report relative to other consumption indicators, it is not particularly valuable for this purpose.  The volatility in the monthly trade balance can play an important role in GDP forecasts.  Net exports are a relatively volatile component of GDP, and the trade report provides the only early clues to the net export performance each quarter.

10:00 - Michigan Sentiment-prel (for November): Consensus 80.0

Big Picture: Another decline is expected, given the severe plunge in the confidence index, high energy prices, and the softer economic outlook.  Positives of Fed easing and a strong labor market are being washed out.  Both components expected to decline, leaving an -11% drop since July, -17% drop since January's two-year high.  One-year inflation expectations expected to hold above 3%.  Five-year expectations will be a bit lower.

Implications: The Michigan index is almost identical to the Conference Board Consumer Confidence index, though there are two monthly releases, a preliminary and final reading.  Like the Conference Board index, it has two subindexes -- expectations and current conditions.  The expectations index is a component of the Conference Board's Leading Indicators index.


Source:  www.Briefing.com