NEW YORK, NY
Just a couple days after the big jobs report, there is a bevy of worrisome economic reports out today that all hint at a disappointing Friday morning. I'm not sure how much we should rely on these reports; although they are credible, there isn't always a direct correlation with employment data gathered by the Bureau of Labor Statistics.
- Challenger, Gray & Christmas
- ADP
- ISM Services
The Institute for Supply Management's services index came in at a reading of 46.4 versus consensus of 48.2, and disappointed investors closed out a few positions and have decided to cool their heels. The report could have come in line or maybe even beaten the expert assumptions if input prices hadn't dropped to 41.3 from 53.7. New orders were just about unchanged, but the employment segment dipped to a reading of 41.5 from 43.3. It's exciting to see the economy rebound, but it's frustrating to continue to see it stall on the doorstep of expansion. Still, I don't think that there is any sense of panic in the air, plus there are other signs that suggest the worst is over.
On the earnings front, mortgage insurer Radian Group (RDN) posted earnings that significantly beat the consensus estimate. Moreover, management sounded extremely bullish on the economy. This is a company that was sinking fast and desperately looking for ways to raise money. The share price for Radian is up 50.0% today, but came into the session trading at less than 20.0% of book value. The same situation with American International Group (AIG); up 38.0% the stock was trading at less than 10.0% of book value, although nobody is really sure what book value is. It doesn't hurt that there is a 17.0% short position in AIG ... a few bodies are being taken out on their shields today.
Factory orders came in better than expected, +0.4 versus consensus of -0.8. Mortgage applications edged higher (both purchases and refinancing), and petroleum inventory data was mixed.
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