Daily Download: Financial and Stock Investing for 1-15-10

Good morning, investors and traders! You are reading the Daily Download (”Daily DL”), which includes summaries and links to the day’s selected economic and stock investing news. The Daily DL is maintained by Chain Bridge Investing (“CB”), which is a financial blog at www.chainbridgeinvesting.com. Chain Bridge Investing is constantly improving and adding new financial and investing content to the website. Please let us know if you have any suggestions at the following email address: .

General News & Headlines Summary

News items not covered below are as follows: (1) Movie Gallery Inc., owner of Hollywood Video, expects to begin closing nearly 1,000 stores as it struggles to maintain its operations with roughly $600 million dollars of debt; (2) the U.S. Justice Department opened an antitrust investigation against Monsanto and its business practices regarding its Roundup Ready soybean; (3) Shiseido, a Japanese cosmetics company, announced that it has agreed to buy Bare Escentuals,a mineral make-up company, for $1.7 billion; and (4) Intel reported a 28% increase in revenue from a year earlier and a near 10-fold increase in profit, as computer sales rebounded and the company predicts that its gross margin in 2010 will be roughly 61%.

Upcoming Economic Data for the Day (all times EST)

8:30 AM       Consumer Price Index

8:30 AM       Empire State Mfg Survey

9:15 AM        Industrial Production

9:55 AM        Consumer Sentiment

Initial Public Offerings (”IPOs”) for the Week of January 11- 15, 2010

Data from the WSJ Market Data Group

For Daily Market Performance Data, Please Visit the Daily Market Sheet

News

Chinese Property Prices Spike – Financial Times

Summary: According to China’s National Development and Reform Commission, housing prices in China increased 7.8% in December from a month earlier, representing the quickest increase in nearly 18 months.   When one considers the rise in housing prices along with the doubling of new loans issued in 2009 compared to 2008, many analysts and some developers believe that China’s housing  market is now in a bubble.  At present, roughly 20% of all loans issued by Chinese banks are for the real estate sector.  Consequently, the Chinese government has begun to: (1) implement policies to limit speculative investments in real estate; (2) order the local governments to increase the supply of affordable housing; (3) require a 40% down payment on mortgages for everyone except first-time home buyers; and (4) force banks to limit credit to property developers.  Despite these efforts, there are some who believe that the bubble has already formed and the government’s actions are too late.

CB: When housing prices are discussed in China, CB wonders if the housing price increases result are occurring throughout China or primarily in selected markets. 

In a Surprise, Retail Sales Fell in December – The New York Times

Summary: According to the Commerce Department, retail sales for the month of December dropped .3% from November, but increased 5.4% from the year earlier.  The decrease in retail sales in December was primarily due to a weak labor market and constrained consumer spending.   Furthermore, total sales for the full year of 2009 decreased 6.2% from 2008 sales.   The following components of  retail sales stand out: (1) gasoline stations increased sales 1% from November and increased sales 33.6% from a year earlier, representing the largest year-over-year increase of the components; (2) building material & garden equipment stores decreased sales.4% from November and decreased sales 5.8% from a year earlier, representing the largest year-over-year decrease of the components; (3) sporting goods, hobby, book and music stores increased sales 1.6% from November and increased sales 4.6% from the year earlier, representing the largest monthly gain of the components; and (4) electronics and appliance stores decreased sales 2.6% from November and  decreased sales .4% from a year earlier, representing the largest monthly decrease of the components.  Furthermore, department store sales decreased 1.2% from a year earlier.

CB: First, in the article, the author compares the 1.2% year-over-year decrease in department store sales to the 2.9% increase in retailers’ sales reported by Thomson Reuters for the same period.  The article  reconciles the differences in numbers by stating that the Thomson Reuters figures represent did not represent smaller retailers – which is true.  However, the two are not comparable since the Thomson Reuters metric measures same-store sales, sales at stores that have been open for at least 12 months, where as the Commerce Department figure represents all sales not just same-store sales.  Thus, the two measures both tell different stories and should not be compared.  For more brief thoughts on retail please visit the Daily DL for 1-8-10.

Related Reading: Advance Monthly Sales for Retail and Food Services – Commerce Department, Holiday Spending Beats Prior Year’s – The Wall Street Journal

Rio Tinto’s Iron-Ore Output Tops Its Forecast – The Wall Street Journal

Summary: Rio Tinto announced that its 2009 iron-ore production increased to 171.5 million metric tons from 153.4 million tons in 2008, an increase of 12%.   This increase in production was primarily fueled by increased demand from China.  At present, many analysts view the surging spot-market prices along with the increase in demand for iron ore to bode well for the current contract price negotiations for 2010.  Analysts believe that the new contract prices may be 20% to 30% higher  than last year’s contract price.

Money-Fund Assets Decline – The Wall Street Journal

Summary: The following figures are reported weekly by the Investment Company Institute regarding the flow of  money amongst various funds for the week ended January 6 (”this week”):

(1)  Mutual funds witnessed net inflows for the 43nd consecutive week, with total inflows estimated at $10.6 billion during this week and roughly $427 billion for the entire streak.

(2)  The stock funds experienced inflows of $2.0 billion this week, compared to outflows of $982 million in the prior week.  U.S. stock funds had $742 million of outflows this week, while foreign funds had $2.8 billion of inflows.

(3)  Bond funds had estimated inflows of $7.7 billion this week, an increase from the $4.2 billion inflows from the prior week.

(4)  Money-market funds saw their assets decrease by $21.67 billion for this week leaving a total of $3.29 trillion of total assets in money funds.

More Links of Note

4 Pros: Investing in the Next Decade – Fortune

The Best Bets in the Oil Patch – SmartMoney

Why Deflation Remains the Greater Risk – PragCap

Must Read Thoughts from Kyle Bass – PragCap

Curb Your Enthusiasm – Raymond James

Hedge Fund 2009 Performance Numbers – MarketFolly

A Contrarian View of China – ZeroHedge

China: Chronicle of a Death Foretold? – Fortress

Chain Bridge Investing (“we” or “CBI”) states at the outset that the opinions, judgments and derivation of thinking in this writing are solely Chain Bridge Investing’s. It is imperative that any judgment or valuation you take from information dispersed by CBI be examined within the context of your portfolio investment and overall objectives. To that end we urge you to contact your investment advisor or portfolio manager to insure that the information or suggestions proposed by CBI conforms to your needs and financial strategy.

Post Footer automatically generated by Add Post Footer Plugin for wordpress.

Tagged with Bare Escentuals, Chinese Banks, Chinese Property Prices, Commerce Department, Department Stores, Fund Flows, Hollywood Video, Intel, Money Flows, Monsanto, Movie Gallery, National Development and Reform Commission, Retail Sales, Rio Tinto, Round Ready Soybean, Shiseido, U.S. Justice Department