Ed’s Daily Notes for July 16th   Leave a comment

We get the The National Association of Home Builders’ Housing Market Index at 10 am today. The description, from Bloomberg:

The National Association of Home Builders produces a housing market index based on a survey in which respondents from this organization are asked to rate the general economy and housing market conditions. The housing market index is a weighted average of separate diffusion indexes: present sales of new homes, sale of new homes expected in the next six months, and traffic of prospective buyers in new homes.

Even more interesting:

NAHB housing market index for June was up a very sharp 8 points to 52. The monthly point gain was the largest since the 2002 recovery with the index level above 50 for the first time since the 2006 boom years. A plus 50 reading indicates that home builders, as a group, are more optimistic than pessimistic. And above 50 were two of the report’s three components led by the six-month outlook, at a very upbeat 61, followed by the current sales component which was strong at 56. Bringing up the rear at 40 was the traffic component

I find it strange they can be so upbeat, when they still aren’t getting good traffic. Making sales is nice, but I would look at the lack of traffic as a bad sign for future sales prospects. I guess as bad as this report has been since the collapse (it didn’t break a 30 rating until 2012), the sales alone are viewed as a positive sign in a desperate industry.

More importantly, a good report here could be an indicator of Federal Reserve tapering on the horizon. Don’t be surprised if we get a market sell-off if this report is at or above a 50.

Bloomberg: Yahoo’s Mayer Impresses Investors More Than Advertisers

Yahoo reports earnings today:

Yahoo is projected to report sales, minus revenue passed on to partner sites, of $1.08 billion, in line with results from a year ago, according to the average of analysts’ estimates compiled by Bloomberg. First-quarter revenue was also little changed from a year earlier.

I see Yahoo as a work in progress, and it is still too soon to expect to see much, if any, progress. Yahoo was mismanaged for far too many years to expect any CEO to turn it around in one year. However, I would expect we should be seeing some kind of progress by next year. At the very least, we will have a much better idea of Yahoo’s direction by next year.

Financial Times: Bernanke faces grilling over bond buying

Big market news tomorrow:

Ben Bernanke’s power over markets will be put to the test this week when he gives what is likely to be his last monetary policy report to US Congress.

The Fed chairman testifies before the House Financial Services committee at 10am on Wednesday, and repeats the performance in front of the Senate Banking committee the next day, with markets still jittery about the central bank’s plan to gradually slow its $85bn-a-month in asset purchases.

Variety: Apple Baking New Ad-Skipping TV Service

Apple may be ready to revolutionize the TV business after all.

Following years of rumors of all sorts of newfangled products supposedly in development to take over the living rooms, there’s fresh scuttlebutt that Apple is in discussions to create a service that would allow viewers to engage in ad-skipping. The initial report comes courtesy of former Wall Street Journal reporter Jessica Lessin.

And here’s the grabber: Apple would supposedly pay the TV networks for the ad revenue they missed out on due to to the skipped commercials.

The particulars are few and far in between, but Apple CEO Tim Cook and senior veep Eddy Cue apparently made the rounds at the Allen & Co. conference in Sun Valley last week talking up the new technology to various entities in the TV business. How much consumers would pay for such a product is uknown.

Such a new technology would put a fresh spin on DVR, which has been a sore spot in the TV industry for the past decade. Few companies besides Apple would have pockets deep enough to compensate an entire industry for lost ad dollars.

While TV networks might not mind Apple chipping in to cover the cost of skipped ads, that’s a product that may not sit well with those on Madison Avenue who need the medium to promote their products to the tune of about $70 billion per year.

How much would consumers pay for it? I would peg it at about $9.99/month, about the cost of Netflix, where they can watch shows ad-free. Whether Apple can make money from iTV, at that price, with ad-skipping, remains to be seen…


Posted July 16, 2013 by edmcgon in Economy, Federal Reserve, News, Stocks

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