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Schmohl Talk:  Weekly Bullets

October 22, 2012

Economic themes: housing, CPI, earnings, employment, Europe, Japan.

  • Housing: existing home sales fell 1.7% to a 4.75 million pace in September, inline with estimates, with the year-over-year median price down slightly from August, though still up 11.3%.  Median days on the market fell to 70, from 101 days a year ago.  Home sales are being greatly aided by low interest rates, though some consumers continue to struggle to obtain credit.  Housing starts increased in September to a 872k pace, above estimates of a 765k pace, up 34.8% from a year ago.  Permits increased to a 894k pace, above estimates of 810k, up 45.1% from a year ago. 
  • Consumer price index: increased 0.6% in September, above estimates of 0.5%, led by gasoline prices, and is up 2.0% year-over-year.  Excluding food and energy, the CPI was up 0.1% in September, below estimates of 0.2%.  Shelter, medical, apparel, and airline prices increased, though vehicles, personal care, furnishings, and operations fell. 
  • Earnings: with Q3 earnings season in full swing, 69% of S&P 500 companies that have reported have exceeded estimates, though sales of 59% of reported companies missed forecasts, implying that cost cutting measures are in full effect. 
  • Jobless claims: increased 46k to 388k for the week ended 10/13/2012, above estimates of 365k, though is attributed to seasonal adjustments.  The four-week average declined 29k to 3.276 million.
  • Europe: leaders met late last week to discuss how to proceed with Greece, Cyprus, and a banking union.  Spain tempered credit rating downgrade fears in the near-term, though a bailout continues to be anticipated.
  • Japan: exports declined 10.3% in September, as the island nation continues to recover from a deadly tsunami 1.5 years ago, and disagreements with China in the East China Sea.
  • Economic highlights for the week ahead:
    • Wednesday 10/24/2012: FOMC Meeting Announcement, New Home Sales.
    • Thursday 10/25/2012: Jobless Claims, Durable Goods, Pending Home Sales.
    • Friday 10/26/2012: GDP, Consumer Sentiment.

Municipal market themes: recovery, market themes, Fernley

  • Fitch: a weak housing market could slow the recovery of certain municipalities due to their dependence on property tax revenues.
  • BondBuyer Public Finance Conference: in a meeting of public finance professionals, many view a wave of municipal bankruptcies as highly unlikely, though investors should remain vigilant of their holdings.
  • Fernley, NV: the IRS is performing a routine examination of the City’s water/sewer general obligation bonds, to ensure compliance with federal requirements.


This report is prepared for informational purposes only. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument or service.  Market prices and other data may be obtained from outside sources and is not warranted as to completeness or accuracy. Any comments, statements and/or recommendations made herein are subject to change without notice, and may not necessarily reflect those of Alamo Capital.  Past performance does not guarantee future results.  Alamo Capital has no affiliation with any political party. Investing involves risk. Consult with a Financial Professional for additional information to determine the suitability of this or any other financial product or issue as it relates to your particular situation.

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