Filed under: International markets, Starbucks (SBUX), Newsletters, Stocks to Buy

“I’ve spotted an excellent opportunity to cash in on the turnaround of one of America’s most visible companies — Starbucks (NASDAQ: SBUX),” says Jim Stanton.

The quantitative analyst and contributing editor to Xcelerated Profits Report explains, “I’ve had my eye on a number of retail stocks for some time now, looking for signs of a potential turnaround, and Starbucks is now high on my list.”

“One of the main reasons for the slide in SBUX shares from its high of $40 in November 2006 was the overly aggressive expansion plan.

“And as food and dairy prices have soared, this has led to higher operating costs. In turn, this forced Starbucks to raise prices, just as consumers were struggling from the housing slump and soaring inflation.

“And as competition from the likes of McDonalds and Dunkin Donuts has turned up the heat, Starbucks has suffered charges related to closing out unprofitable stores. But Starbucks is tackling the problems.

Continue reading Turnaround time for Starbucks (SBUX)?

Permalink | Email this | Comments

Via [bloggingstocks]

Share This

The California housing market is facing a major calamity. In April of 2007 California reached a peak median price of $597,640 only to see those gains erased in the following year. By June of 2008, the median price in California is hovering at $368,250, a drop of 38.38% with no signs of slowing […]
Related Posts:
■How Many People Overpaid for Their Home in Los Angeles County? Trying to get a Raw Number of Households Underwater.
■Real Homes of Genius: Today we Salute you Santa Monica. 929 Square Feet for $969,000. And You Thought the Bubble was Over.
■Predicting the Housing Future: Los Angeles and Orange Counties. Using the Case-Shiller Index to Find a Bottom.
■Of Bubbles Past. Need a Map for Housing? Ask a Housing Perma-Bull and They’ll See the World Through Colored Glasses!
■Southern California Housing Numbers Exposed: The Bottom Falls out of the Housing Market, Again.

The California housing market is facing a major calamity. In April of 2007 California reached a peak median price of $597,640 only to see those gains erased in the following year. By June of 2008, the median price in California is hovering at $368,250, a drop of 38.38% with no signs of slowing down. This is data gathered from the California Association of Realtors. Seeing a statewide drop of nearly 40% in one year may be a tempting incentive for people to jump back in the market. I’ve recently gotten many e-mails about people asking about a market bottom and whether they should be buying today.

This bottom psychology has also taken hold on Wall Street. There seems to be a new campaign of getting people to jump back in with both fists with the idea that things are hitting a price bottom. This is a mistake. Just because something has become radically “cheaper” in relation to a peak price does not make it worth the current price. There has to be some underlying economic valuation that justifies the price. After all, the recent job report saw unemployment spike up to 5.7% and we also saw our 7th month of continued job losses:

Clearly there will be no second half recovery. In fact, here in California the Governor just signed an order to reduce the wages of 200,000 state employees to the minimum wage and laid off thousands of part-time employees. Do you think this is good for the California housing market? Who will be the future buyers of these homes? When we examine the data we realize that prices have further to come down. I’ll give you five reasons why prices will continue to fall in California:

(1) - State Budget Crisis means higher taxes and spending cuts (a combination of both).

(2) - $300 Billion in Pay Option ARMs set to recast in the state.

(3) - Declining price momentum - 3 measures show prices crashing

(4) - Market psychology. Why buy today when prices will be cheaper tomorrow?

(5) - Real estate prices do not always go up.

The combination of these factors is going to stunt any supposed recovery for the California real estate market. Yet for all the negative news on the economy and housing there will be a housing bottom at a certain point in time. When will housing actually hit a bottom? Some think we are already there. For those that are actually putting their money where their mouth is, there is the real estate futures market. And their bet is that housing for Los Angeles and Orange Counties will not hit a bottom until May of 2011.

For those of you really impatient to get into the market, it does seem that there will be a bottom forming as of the fall of 2009. I went ahead and took the available futures contracts on the Chicago Mercantile Exchange (CME) which are based on the Case-Shiller Index and constructed a chart adding the actual Case-Shiller data and the futures contracts:

What is fascinating by the chart is that most people that are betting on the futures markets do not see a bottom for the Los Angeles index which also includes Orange County until May of 2011. Yet the more fascinating trend is that some are actually betting on a minor summer bounce in 2009. Are people betting on a suckers rally? Maybe.

The index itself isn’t necessarily looking at price but looks at a single home through time in relation to the base year of 2000. So given the bottom number of 152 in May of 2011, the last time the Case-Shiller Index faced that number for LA was in May of 2003.

I’ve collected data for Los Angeles dating back until 2000 so we can then see what the actual median price of a home was at that point in time. According to DataQuick the median price of a Los Angeles County home in May of 2003 was $313,000. Is this far fetched? Not necessarily given that the median price of Los Angeles County is:

CAR data (June 2008): $396,560

DataQuick (June 2008): $415,000

Let us use the $313,000 bottom price and look at the current DataQuick price since it is data from the same measure. The current price of $415,000 would have to drop an additional 24.5% to reach the bottom price of $313,000. If we are to apply this same drop rate for Orange County we get the following:

Orange County Media Price

DataQuick (June 2008): $495,000
Bottom median price: $495,000 and 24.5% correction = $373,725

The rate of decline in price is a fair assessment since Orange County is actually out pacing Los Angeles County in the rate of sales declining and the rate in price change is nearly identical:

June 2008 data

Los Angeles County drop in sales year over year: 25.1%

Orange County drop in sales year over year: 26.9%

LA County year over year median price drop: 23.9%

OC year over year median price drop: 23.3%

Now my assessment is that we will see major abrupt movements to the downside once the pay option ARMs start recasting in fall and winter of this year. These loans are viciously toxic and will prove to be more destructive than people can imagine. If we are to take a look at the WaMu folder and look at recast dates here in California, we get a sampling of what is to come:

That right there is $26.3 billion of the overall $300 billion in loans that will start recasting. In addition, the state unemployment rate is already at 6.9% and given that the Governator just fired thousands of part-time workers, that number will jump. The way employment data is calculated, part-time workers are factored into the overall employment rate even if they are seeking full-time employment and are underemployed. This will bring them onto the books quickly. Now why is this going to prove to be more destructive? Take a look at the recent employment data released on August 1^st:

The only three sectors that saw job growth last month were government, health services, and leisure and hospitality (barely here). Clearly in California job growth via the government won’t be happening with the job cuts and also the Governor has put out hiring freezes. Lesirue and hospitality? Who will be spending when most sectors are contracting?
With this as the backdrop for Los Angeles and Orange Counties, there is no reason to believe that the market will reach a bottom anytime soon. I haven’t seen many articles attempt to pick a bottom but here you have it with actual price points. My guess is even after hitting a bottom, we may see a lost decade similar to Japan where prices simply move sideways for years. Given how our current government is trying to prop up institutions that should collapse, we are going to divert resources to organizations that clearly have mismanaged their own balance sheets. Money that can go elsewhere to improve the overall ability of our society to be competitive in research, infrastructure, and science. This money will now be spent on propping Fannie Mae and Freddie Mac and giving tax breaks for people to buy homes.

Should you buy a home today in Los Angeles County or Orange County? Look at the data above and tell me what you think.

Did You Enjoy The Post? Subscribe to Dr. Housing Bubble’s Blog to get updated housing commentary, analysis, and information

Post from: Dr. Housing Bubble Blog

A Lost Decade of Housing Equity: Los Angeles and Orange County will hit a Housing Price Bottom in May 2011 seeing May 2003 Prices.

Share This

Related Posts:
■How Many People Overpaid for Their Home in Los Angeles County? Trying to get a Raw Number of Households Underwater.
■Real Homes of Genius: Today we Salute you Santa Monica. 929 Square Feet for $969,000. And You Thought the Bubble was Over.
■Predicting the Housing Future: Los Angeles and Orange Counties. Using the Case-Shiller Index to Find a Bottom.
■Of Bubbles Past. Need a Map for Housing? Ask a Housing Perma-Bull and They’ll See the World Through Colored Glasses!
■Southern California Housing Numbers Exposed: The Bottom Falls out of the Housing Market, Again.

Via [DrHousingBubble]

Share This

The New York Post is reporting that a large sovereign wealth fund is angling to buy up US property on the cheap.  With a weak dollar and REO piling up, these foreign funds are looking for 50-cents on the dollar discounts in American residential and multi-family property.

Sovereign wealth funds are well-known for their high-profile purchase of American assets like the Chrysler Building in NY, but now they’re expanding to pick-up foreclosed properties at a huge discount.

With large-scale property acquisition Americans will be saddled with the debt of their excess while the property asset resides in the portfolio of a foreign state.  We’ve outsourced everything - we might as well start outsourcing our property as well.

From the New York Post:

There’s a new land grab starting in America.

Foreign money, which up to now has focused its attention on investing in iconic commercial real estate - like Barneys New York and the Chrysler Building - is now moving to scoop up tens of thousands of discounted foreclosed homes across the country.

One sovereign fund, said to have earmarked $29 billion to purchase foreclosed residential real estate, recently hired a West Coast mortgage broker and is starting to search for bargains, The Post has learned.

The search, which is being carried out, in part, by Field Check Group mortgage consultant Mark Hanson, who was retained by the broker, Steve Iversen, is concentrating on single- and multi-family REO (real estate owned) homes, or homes that have already been taken over by the mortgagee.

Neither Iversen nor Hanson would disclose the name of the client, but sources told The Post it’s a sovereign fund.

Share This

Source [blownmortgage]

Share This

Banks have dialed up the lending requirements in the face of the nearly half-trillion dollars lost in the mortgage mess to-date. The Federal Reserve reported that banks and lending institutions have tightened credit standards across all loan-types as losses mount and liquidity remains a key issue.

This should be seen as good news of course. Common sense lending disappeared for a long time, and now it seems like we’re making our way back to some place of balance. Of course, we’re sure to over-correct in the process; but we’re certainly not there yet.

From Bloomberg:

Most “domestic institutions reported having tightened their lending standards and terms on all major loan categories over the previous three months,” the Fed said today in its quarterly Senior Loan Officer Survey.

Banks may be reluctant to lend against housing collateral that is falling in value. Home prices in 20 U.S. metropolitan areas dropped 15.8 percent in May, the biggest decline since record keeping began in 2001, according to the S&P Case-Shiller Home-Price Index.

The economy is also faltering. The unemployment rate has moved up 1 percentage point during the past 12 months to 5.7 percent, while delinquencies on home loans to borrowers with weak or limited credit histories rose to 18.8 percent in the first quarter from 13.8 percent a year earlier.

“Large majorities of domestic respondents reported having tightened their lending standards on prime, nontraditional, and subprime residential mortgages over the previous three months,” the Fed said.

Of the 32 banks that originate non-traditional mortgage loans, about 85 percent reported tighter lending standards, up from 75 percent in the prior survey, the Fed said.

About 65 percent of domestic banks indicated they had tightened their lending standards on credit card loans over the previous three months, up “notably” from about 30 percent in the April survey, the Fed said.

Share This

Source [blownmortgage]

Share This

Filed under: Before the bell, Earnings reports, Analyst reports, Analyst upgrades and downgrades, Deals, Google (GOOG), Apple Inc (AAPL), Motorola (MOT), XM Satellite Radio (XMSR), Sirius Satellite Radio (SIRI), Market matters, Verizon Communications (VZ), Amgen Inc (AMGN), iPhone, Economic data, Kraft Foods’A’ (KFT), Unilever ADR (UL), Lehman Br Holdings (LEH)

U.S. stock futures were lower early Monday as investors concerns over the banking sector grew. Federal regulator seized two more banks, 1st National Bank of Nevada and First Heritage Bank, which were scheduled to reopen on Monday as Mutual of Omaha Bank branches. The Senate also passed a major housing bill over the weekend, and this could actually give a boost to mortgage lenders like Fannie (NYSE: FNM). Meanwhile, oil prices rebounded as European markets declined. As of 8:00 a.m., it seems Wall Street would start weak.

Reporting earnings today are Kraft Foods (NYSE: KFT) - Kraft reported 58 cents earnings per share excluding items, beating estimates of 50 cents; Verizon Communications (NYSE: VZ) - Verizon reported earnings of 67 cents per share, excluding items, beating estimates by 2 cents; and after the close of trading, Amgen (NASDAQ: AMGN).

Amgen (NASDAQ: AMGN) stock is jumping over 17% in premarket trading after announcing late Friday its experimental osteoporosis drug, denosumab, significantly reduced the risk of bone fracture in post-menopausal women in a large trial. Rodman & Renshaw and Jefferies & Co both upgraded Amgen to Market Outperform and to Buy respectively.

Unilever NV (NYSE: UL) will sell its North American laundry detergents business to private equity investor Vestar Capital Partners for $1.45 billion (euro924 million). Unilever said the sale consistent with its strategy of divesting non-core businesses and concentrating on a few core ones.

Motorola Inc. (NYSE: MOT) will reorganize its home and networks mobility unit — its second largest — by splitting it into three separate businesses. This could facilitate future sales should Motorola tries to divest any business units.

Private equity firm Kohlberg Kravis Roberts & Co. will go public on the New York Stock Exchange through a takeover of its Amsterdam-listed investment fund KKR Private Equity Investors LP. The original plan for a $1.25 billion initial public offering didn’t pan out due to credit market turmoil.

Sirius Satellite Radio Inc. (NASDAQ: SIRI) shares are gaining over 1.5% in premarket after announcing preliminary results. It said it expects its adjusted loss during the second quarter to narrow to $24 million from $79 million as revenue rose 25% to $283 million. Sirius said it’s planning to sell $375 million of its own stock and up to $65 million more from time to time. Only a few days ago the FCC has finally approved the merger of Sirius with XM Satellite Radio Holdings Inc. (NASDAQ: XMSR), in which Sirius would take over XM.

Ryanair Holdings (NASDAQ: RYAAY) dropped as much as 26% after it reported a surprising 85% drop in first-quarter profit on Monday, citing the high cost of fuel and recessionary fears. It also warned it could post its first-ever annual loss.

According to The Wall Street Journal, the Securities and Exchange Commission is probing four rumors regarding Lehman Brothers (NYSE: LEH).

Could Cuil be the search engine that threatens Google Inc. (NASDAQ: GOOG)? Cuil Inc. is a startup founded by engineers from Google and other tech giants. Cuil is said to cover three times as many Web pages as Google and aims to deliver better results than other major search engines. The site’s results page resembles an online magazine.

The USA Today says Apple Inc. (NASDAQ: AAPL) is “experiencing serious Microsoft-type growing pains with its launch of the new iPhone that went on sale two weeks ago.” The problems it lists include not enough supply to satisfy demand and a longer procedure to activate the phone.

Share This