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Economic Blast: Mortgage Applications Drop, Job Cuts Decline

Author
Beth Gaston Moon (bgmoon@sir-inc.com)

10/3/2007 9:11:24 AM

Last month's reduction in the key interest rate is still failing to have a noticeable impact on the mortgage market. The U.S. Mortgage Bankers Association said its market index dropped 2.7% during the week to 636.7. Purchase activity was off 1.8%, while refinancing dropped 3.8%. Compared to a year ago, however, the total number of applications (for both new purchases and refinancing) edged up 0.4%, thanks to a large jump in government loans.

And from the labor market, Challenger Gray & Christmas reported a total of 71,739 job cuts during September, a 28.5% drop from September 2006. So far in 2007, there have been 587,594 layoffs announced, 8.1% lower than the first 9 months of 2006. About 37% of last month's layoffs came from the housing sector, which dismissed 26,465 of its employees. Job cuts from the mortgage industry accounted for about 82% of all job losses from the financial sector, or roughly 52,000 of 70,000 in the industry.

Finally, an indicator published by payrolls company Automatic Data Processing (ADP) indicated that the private jobs sector should add 58,000 positions in September, down from economists' earlier prediction of 100,000. All of this conjecture occurs ahead of the September nonfarm payrolls report, due at 8:30 a.m. on Friday.

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Around the Web in 80 Seconds with Citigroup, Microsoft, and ICU Medical

Author
Staff Writer

8/13/2007 9:56:36 AM

Straight from the annals of the web right to your computer, today's list of headlines and articles taking the Internet by storm includes comments on Citigroup (C), Microsoft (MSFT), and ICU Medical (ICUI).

Schaeffer's "Around the Web" is a feature designed with our readers in mind. We know that not everyone has the time in the morning to find and research every headline or major story flitting around the web, so we are doing the work for you. Below is a listing of breaking news stories from several of the leaders in online reporting - all providing their own viewpoints and unique takes on the issues at hand.

So, sit back, enjoy your morning coffee, and peruse all the web has to offer at your leisure. It's our way of providing convenience to Schaeffer's patrons. Remember, we read everything, so you don't have to.

New York Times

Wall Street Journal
Subscription Required

BusinessWeek

  • IBM's global hold: IBM's (IBM) business strategy of aggressive globalization is paying off, as reflected in the firm's strong second-quarter earnings report.

  • Bridge loans put banks in a bind: Major banks, such as Citigroup (C) and J.P. Morgan Chase (JPM), are in a tight spot after providing "bridge loans" to private-equity firms to help fuel the recent M&A mania on Wall Street – but now they're having difficulty selling those expensive stakes.

  • Markets: Keeping the bears at bay: Several cash injections by the Federal Reserve provided the stock market with much-needed liquidity last week, but only disclosure and transparency from affected firms will assuage investor anxiety.

MarketWatch

  • Dollar swap?: The European Central Bank on Monday injected another 47.5 billion euros ($65 billion) in loans into the banking system and is reportedly in talks with the U.S. Federal Reserve on a currency swap, so it can provide dollars to European banks struggling to meet money-market needs.

  • Rove resigns: Karl Rove, President Bush's longtime political adviser, told The Wall Street Journal in an interview published on Monday that he's going to resign on August 31 and return to Texas.

  • $16 billion paint deal: Dutch chemicals group Akzo Nobel (AKZOY) on Monday said it's agreed to buy U.K. rival Imperial Chemical Industries for 8 billion pounds ($16.2 billion) in cash after having its 2 previous offers knocked back.

CNN Money

  • Survey: Gas prices drop a dime: During the past 2 weeks, the average price for regular unleaded has dropped 10.72 cents to $2.78 per gallon. Gasoline was cheapest for St. Louis drivers and most expensive in Chicago.

  • The e-cigarette: Nicotine fix, without the toxins : A Chinese company has developed an electronic cigarette that delivers nicotine, looks and feels like a cigarette, but eliminates the smell and the carcinogens.

  • Can a 60-year-old drug cure obesity?: Betahistine, which has been used as a vertigo treatment since the 1940s, could treat obesity without side effects, as it reportedly stops cravings for food in general and fatty foods in particular.

CNN News

  • Karl Rove to quit at end of August: Karl Rove, President Bush's senior political adviser, will voluntarily step down from his White House post at the end of the month, senior administration officials said Monday.

  • Report: Toy company CEO kills self: The head of a Chinese toy manufacturing company at the center of a huge U.S. recall has committed suicide, a state-run newspaper said Monday.

  • Rescuers plan to drill third hole in search for Utah miners: A camera lowered into a collapsed coal mine revealed equipment but not the 6 missing miners Sunday, and officials planned to drill yet another hole in a desperate hope of finding signs of life nearly a week after a thunderous cave-in.

USA Today

  • Major attacks decline in Iraq: The number of truck bombs and other large al Qaeda-style attacks in Iraq have declined nearly 50% since the United States started increasing troop levels in Iraq about 6 months ago, according to the U.S. military command in Iraq.

  • Workers' pay raises won't be much in '08 : Workers hoping for big raises next year are in for disappointment. Employers will be holding the line on pay increases, following a trend of reining in compensation costs to stay competitive.

  • NASA considers spacewalk to fix gouge : NASA managers could decide as early as today whether astronauts will undertake a risky spacewalk to fix a deep gouge in space shuttle Endeavour's heat-shield tiles.

 
Commentary by WhatsTrading.com
 
MGM Resorts International (MGM) $10.24 +7.00%
9/8/2010 4:19:47 PM

MGM adds 67 cents to $10.23 and options volume is running 3X the average daily, with 47,000 calls and 12,000 puts traded so far. The top trade is a buyer of 10,000 January 2012 calls at the 17.5 line at $1.10 per contract at 13:55 on AMEX. Looks like they came back for more and bought another 10K at $1.10. More than 20,000 now traded. Sep 9, 10 and 11 calls are busy as well. Implied volatility in MGM is down 3.5 percent to 54 today after Soleil upgraded the stock to Buy from Hold.

Read more at WhatsTrading.com

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Micron Technology Inc (MU) $6.57 -2.60%
9/8/2010 1:59:49 PM

Bullish flow detected in Micron Technology (MU), with 28216 calls trading, or 2x the recent avg daily call volume in the name. Shares are off 17 cents to $6.58 and top trade is a block of 17,500 April 9 calls at 42 cents on ISE, which is an opening buyer, according to ISEE data. In fact, data shows that 25K calls have been bought to open on the chipmaker so far today. April 9s are most actives, with 25K traded. Implied volatility is up 4 percent to 55. No news on the stock. Shares are down about 42 percent since April 14 and today's call buyers might be anticipating a recovery over the next two quarters.

Read more at WhatsTrading.com

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JA Solar Holdings Company Ltd (JASO) $7.09 +9.41%
9/8/2010 10:19:49 AM

JA Solar (JASO) gapped at the open and is up 66 cents to $7.14 after the company announced new supply deals totaling 500 megawatts. Shares touched a new 52-week high and options volume is 2.5X the average daily, with 4,700 calls and 315 puts traded in the Chinese solar cell maker so far. Sep 7.5, Oct 7 and Dec 7 calls are the most actives.

Read more at WhatsTrading.com

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Corning Inc (GLW) $16.84 +0.18%
9/7/2010 3:19:51 PM

Corning (GLW) adds 9 cents to $16.90 and the Feb 15 - 19 strangle is bought at $1.82, 3600X on AMEX. Looks like an opening volatility play on the glass maker. Meanwhile, other investors are focused on the Sep 17 puts, with 8,550 traded vs. 5,823 in open interest. The top trade is 2937 at 52 cents on ISE, when bid-ask was 51 to 53 cents. It's not clear if it was buyer or seller initiated, but implied volatility is up 5 percent to 35.

Read more at WhatsTrading.com

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Oracle Corp (ORCL) $24.26 +5.85%
9/7/2010 2:19:51 PM

Oracle (ORCL) is seeing relative strength and increasing options activity on news Mark Hurd, a former H-P CEO, has joined the software maker as President and member of Board of Directors. Goldman also added ORCL to its Conviction Buy List today. Shares are up $1.34 to $24.26 and options volume is running 2X the average daily, with about 44K contracts traded (through 12:30 ET.) Sep 25 calls and Sep 24 puts are the most actives. 27K calls and 17K puts traded total. Implied volatility is up about 8 percent to 34.

Read more at WhatsTrading.com

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Netflix Inc (NFLX) $141.28 +2.02%
9/7/2010 1:19:51 PM

Netflix is up $2.80 to $141.28, a new 52-week high and option activity is 2x the daily average. Some 20,000 calls to 11,000 put have traded. And within that activity the trade is two way and looks to be more about risk reduction as spreads are accounting for the bulk of the volume in what looks like a roll; September $140/$145 calls have traded 3,300 contracts in what looks opening or possibly a roll up in strikes, while the October $145/$150 call spread has 2,100 at each strike in what looks like opening transactions. Also looks like someone is using the weekly options to create a calendar spread of selling the $140 weekly and buying the Sep $145 call for a $2.00 net debit 1,500 times.

Read more at WhatsTrading.com

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CBOE Volatility Index (.VIX) $23.69 +11.17%
9/7/2010 11:19:54 AM

CBOE Volatility Index (.VIX) is up 2.33 to 23.64 and moving to session highs, as the S&P 500 falls 10 points and heads towards morning lows. There doesn't seem to be a specific catalyst for the market slide over the past 10 minutes, but note that the financials - AXP, BAC, and JPM - are the biggest percentage losers in the Dow Jones Industrial Average. Shares of many financials are following European banks and the euro lower in morning trading Tuesday on renewed worries about the health of European banks. Energy-related names are also under pressure after crude oil lost $1.06 to $73.54 a barrel.

Read more at WhatsTrading.com

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CBOE Volatility Index (.VIX) $21.90 -5.56%
9/3/2010 3:20:00 PM

The top options trades so far today are in the CBOE Volatility Index (.VIX) after the Sep - Oct 25 put spread trades at 45 cents, 58000X. The same spread traded yesterday and the action looks like rolling from one month to the next. Open interest in the Oct 25 puts increased by 54,880 to 129,900 following yesterday action and if today's block of 58K adds to it, then the increasing interest is likely to make the contract the second biggest position in the VIX; behind the Sep 25 puts, which have 289K of open interest. VIX is down 1.33 to 21.86 today and has now suffered a four-day slide of about 20 percent. The large blocks of puts on the VIX might be hedges of VIX futures.

Read more at WhatsTrading.com

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Sprint Nextel Corporation (S) $4.39 +1.15%
9/3/2010 2:00:02 PM

Sprint Nextel (S) shares are up a nickel to $4.39 and have now added 12.5 percent since Monday. Some players might be worried that the gains won't last, as a block of 20K Sep 4 puts recently traded at the 4-cent ask price. It might be a closing trade. Meanwhile, 8,000 Jan 4 puts also changed hands, including 4000 at the 38-cent ask and 4,000 at 37 cents. The Jan 4 puts look opening and marked "tied", so possibly a protective put or volatility play. Implied volatility in Sprint is down 4 percent to 48.5 today, compared to a 52-week high and low of 87 and 46.5.

Read more at WhatsTrading.com

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Urban Outfitters (URBN) $32.98 +1.23%
9/3/2010 12:00:01 PM

Urban Outfitters (URBN) adds 42 cents to $33 and options volume is 3X the average daily, led by a Sep 33 - 34 call spread, 3300X on ISE. Looks like it was sold at 45 cents and is possibly rolling up in strikes after a three-day 8.7 percent gain in the share price. URBN saw relative strength and was one of the best gainers in the NASDAQ 100 yesterday. The company is due to present at a Goldman Sachs Retailing Conference on 9/14.

Read more at WhatsTrading.com

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