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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: CalculatedRisk who wrote (8519)	6/30/2004 1:06:38 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Sears says sales were slow in June CHICAGO (CBS.MW) -- Sears Roebuck Chief Executive Alan Lacy said on a conference call Wednesday that June sales were lower than expected. Without giving specifics, Lacy said that like other retailers, he's seeing "softer than expected topline results in June." However, he added that he's observing "several encouraging trends across the retail business," including low single-digit gains in transactions. Shares of Sears (S) were off 1.1 percent, or 43 cents, to $37.83. Earlier Sears said it was buying 54 stores from Kmart and seven from Wal-Mart.

To: CalculatedRisk who wrote (8519)	6/30/2004 1:16:54 PM
From: mishedlo	Respond to of 116555

UPDATE 4-Oil up from 2-month low, Saudi says price fair [This is interesting - price is fair - wast a "fair" price $20-25 then raised to $25-$30. Fair price seems to have risen by $10-$15 has it not? - mish] LONDON, June 30 (Reuters) - Oil prices rebounded on Wednesday as top world oil exporter Saudi Arabia, which has boosted supply to cool prices, said it believed the market had now fallen to a fair value. U.S. light crude <CLc1> gained 54 cents to $36.20 a barrel, while London Brent <LCOc1> was up 61 cents at $33.72 a barrel. U.S. crude has fallen about $6, or 15 percent, from early June's peak at $42.45 a barrel as higher output from the OPEC cartel, especially Saudi Arabia has helped replenish crude inventories. Saudi Arabia has been producing 9.1 million barrels per day (bpd) since the start of June, well above its official OPEC production quota. "I believe the current prices are fair and there is no reason to take any measures either to decrease or increase the production," Saudi Oil Minister Ali al-Naimi told reporters in Riyadh. Gains accelerated after the U.S. government reported a small 500,000 barrels fall in commercial crude stocks last week. U.S. crude stocks had increased in 17 of the previous 21 weeks and analysts had expected another two million barrel rise. A big draw in crude stocks in Cushing, Oklahoma, the delivery point for the NYMEX light crude contract, strengthened the report's bullish impact. Cushing crude stocks fell 1.9 million barrels to 11.8 million barrels, and are down almost 30 percent since registering 16.5 million barrels four weeks ago, the EIA said. "We had a big draw again in Cushing and that was striking. That makes this report more bullish than the headlines," said Katherine Spector, head of energy research at JP Morgan bank. Chinese efforts to slow runaway economic growth have helped pull oil prices lower in recent weeks, while in Iraq, this week's handover of power has fed optimism of a slowdown in repeated sabotage attacks that have restricted Iraqi oil exports. Iraq's infrastructure security chief cautioned on Tuesday that sabotage against the country's oil installations would continue unless neighbouring nations cooperate in stopping infiltration of foreigners. Sabotage attacks on pipelines, which have stopped oil exports several times this year, have kept shipments well below the 2.2 million barrel daily volume before the war. Analysts warn a major attack on oil facilities could quickly push prices back up again as the higher Saudi supply has reduced the world's spare production capacity. Expectations that the U.S. Federal Reserve will on Wednesday decide to raise interest rates, for the first time in four years, provoked fears of a slowdown in global growth. "By keeping rates at record lows for such a long time, the Fed encouraged rapid credit growth in both the U.S. and abroad. It is almost inevitable that as rates rise, problems will emerge," said Washington D.C.-based analysts PFC Energy. fxstreet.com

To: CalculatedRisk who wrote (8519)	6/30/2004 1:52:31 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

U.S. auto sales set to weather rate hike Wednesday, June 30, 2004 5:34:14 PM SAN FRANCISCO (AFX) -- An interest rate hike seems to be a foregone conclusion at this point, but that doesn't mean auto sales, fueled by years of cheap financing, are careening toward a cliff In a briefing with reporters earlier this week, GM's director of market and industry analysis Paul Ballew said the world's top car and truck maker can comfortably handle a 50-basis point hike in short-term interest rates "We can manage through it," he said. But he declined to comment on what GM would do with its zero percent down financing program if the Fed raised short term rates even higher. Shares of GM moved slightly lower Wednesday ahead of the Fed announcement, off 26 cents at $46.56 Though maintaining these programs will cost more in a rising rate environment, Jesse Toprak, Edmunds.com's director of pricing and market analysis, doesn't foresee any of the major manufacturers changing their approach. "Overall, we're not going to see a dramatic effect unless we start to see interest rates move up more than 100 basis points," he said But even a moderate increase would shift buying patterns. "We should see a steady revival of leasing as consumers are probably going to do a bit less financing," Toprak added Leasing has declined dramatically in the past few years from 25 percent of new vehicle sales at the end of the 1990's to around 14 percent currently, according to Edmunds.com Scott Sprinzen, credit analyst at Standard & Poor's, wasn't nearly as sanguine with his outlook. He predicted a Fed rate hike, along with other factors, would hurt auto manufacturers' profits and have an "adverse effect on sales mix." "We believe rising interest rates, declining off-lease volumes, and the lengthening of consumer auto loan terms will all dampen the recovery," he said Standard & Poor's said it expects rates will continue to inch higher and also foresees a tapering off of gasoline prices. But the ratings agency maintained that there's increased risk that comes into play should either one rise substantially Rod Lache, an analyst at Deutsche Bank, was even more bearish, maintaining his "sell" rating on number two U.S. carmaker Ford "We continue to believe that this time, rising interest rates may hit the industry harder than commonly perceived," he told clients in a note. Consumers shop for cars and trucks based on what they can afford, Lache explained. Hence, manufacturers have been able to sell higher priced models like SUVs despite the tough economic climate Much like banks, GM and Ford will also be on guard for any impact on their vital lending operations. With their auto operations' bottom line under pressure quarter after quarter, Wall Street will scrutinize their finance operations as much as any activity down on the dealer's lot Before the Fed's announcement scheduled for 2:15 p.m. Eastern, Ford , Honda and Toyota all traded slightly lower fxstreet.com