April 5th, 2010 14:36:02 GMT

MNI US Retail Trade Weekly Index 59.2 Through April 3 vs 63.8


–Indications Soften But March Gain Likely

By Mark Pender

NEW YORK (MNI) – MNI’s U.S. retail trade index fell back more than
4-1/2 points in the April 3 period to 59.2, a reading still well above
50 to indicate significant year-on-year growth and still pointing to a
gain for March retail sales, according to Market News International’s
weekly survey released Monday.

There was wide easing in sales indications as total sales slowed by
1.2 percentage points to a year-on-year +3.1% with same-store sales
slowing nine-tenths to +1.4%. Income held firm at +25%.

The sales dip is against the sample’s targets for March which are
+5% for total sales and +2% for same-store sales. Sample size in the
latest period is 121 chains consisting of 93,000 retail locations.

Indications for the March ex-auto, ex-gas category, though much
stronger earlier in the month, still point to a third straight
month-to-month gain. Any weakness here appears almost certainly to be
offset by sharp strength in both motor vehicles and gasoline.

Both new and used auto dealerships are very positive though there
are indications of wide price concessions in the month and seasonal
adjustments will pull back gains.

Unit sales of new autos, posted Thursday, show a nearly 15%
adjusted month-to-month rise. New car sales make up about 70% of the
motor vehicle component and about 12% of total sales.

Indications on the gasoline component, which makes up 10% of total
sales, eased at month end as prices and demand leveled. And the
component, compared with February, will get much less of a boost from
the seasonal adjustment. But the year-on-year look shows a roughly 40%
rise in price, little change in demand, and little change in adjustment
which combined point to a big month-to-month gain for the component.

Early indications for April in general are positive. Though this
year’s Easter, one week earlier than last year, pulled sales into March,
the Commerce Department’s seasonal adjustments for April look very
favorable and may more than make up the difference.

A run of chain stores will post their March numbers on Thursday.
Drug-store chain Walgreens (WAG) morning report was positive, and look
for home-furnishing chain Bed Bath & Beyond (BBBY) and discount chain
Family Dollar Stores (FDO) later in the day.

Editor’s Note: MNI compiles its retail trade index based on a
weekly sample of company news and data.

** Market News International New York Newsroom: 212-669-6430 **


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April 5th, 2010 14:26:04 GMT

GBP/USD: Range-bound or ready for breakout?


I’m not sure either, but the catalyst for a topside breakout is clearly there.

We’ve bottomed twice in the 1.4780/00 region and are nearing the top of the recent ranges but need a sustained break of 1.5380 to trigger my favorite pattern, the double-bottom.

As mentioned above, the catalyst is clear: Sentiment toward the pound is rock-bottom and a hung-parliament had been priced into the market. Recent data suggests the UK economy is crawling out of recession while the latest opinion polls show the Tories winning a small but clear majority.

These could combine to give the pound the momentum it needs to break out to the topside. The measured move objective for a topside breakout is toward the 1.59 level.

4-5 gbp


April 5th, 2010 14:07:52 GMT

Treasury yields firmer after data


2-year note yields are up to 1.15%. 10-year notes are at 3.97%.

These are dollar supportive and will likely widen interest rate differentials in favor of the buck when European markets return to full strength on Tuesday.

The market is struggling whether to trade the reflation trade or buy dollars outright. Probably the easiest thing to due is to buy USD/JPY which should benefit from both trends. It has bounced to 94.48.

EUR/USD is a bit conflicted, trading now at 1.3519.

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April 5th, 2010 14:05:07 GMT

US Tsy,OMB Create New Office to Streamline Govt Fin Management


WASHINGTON (MNI) – The Obama administration Monday announced the
creation of a new office intended to “improve and streamline financial
management across the U.S. government,” according to a joint statement
from Treasury and the White House Office of Management and Budget.

The Office of Financial Innovation and Transformation will be
located in Treasury and will work with OMB to reduce cost, streamline
processes and provide better transparency of financial information,
which could lead to hundreds of millions in savings, the statement said.

Creation of the FIT office responds to the budget’s call for cost
reductions. One example is moving to automated payments rather than
paper invoices which cost $750 million annually, which would reduce
costs $40 million a year.

“It is time to stop the increasing cost of financial operations and
systems in the government today,” OMB Controller Danny Werfel said in
the statement. “The Treasury Department’s new office will play a
critical role by initiating common, simpler, and lower-cost solutions
for basic financial management activities, such as accounts payable and

The budget provides $17 million for the FIT.

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,MGU$$$,MFU$$$]

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April 5th, 2010 14:05:06 GMT

EIA Off’l: Data Change To Not Impact NatGas Production Trend


–EIA Changing EIA-914 Sampling and Estimation To Be More Current

By Brai Odion-Esene

WASHINGTON (MNI) – The Energy Information Administration is making
some improvements to how it collects data on monthly natural gas
production, an official told Market News International Monday, but the
changes will not affect the trend in natural gas output which will focus
on timing in order to become more current and frequent.

The EIA’s Gary Long, who oversees the monthly gas production data
– known as the 914 report — stressed that the changes the EIA is
making will not change the trends in the natural gas production. “It may
shift the magnitude up or down a little bit but I don’t anticipate any
changes in trend,” he said.

The changes the EIA is making will not affect past data, Long said,
since nothing in the past will be revised immediately. “Our normal
schedule for those kind of revisions is once a year and usually in the
late fall sometime.”

The EIA will be changing the methodology both for the estimation
and the sampling processes, he said. “The changes relate to timing, both
in the frequency and more current — closer to now.”

Long said this will not affect the weekly natural gas report
published by the EIA on Thursday.

A story in the Wall Street Journal Monday said the EIA is making
these changes due to a problem it discovered in the way it collects data
from U.S. natural gas producers — it surveys only large producers and
so does not reflect the swings in production from smaller producers.

Asked if the monthly data would have been different if the EIA had
included smaller natural has producers, Long said, “No, its always been
a cut-off sample and it will continue to be a cut-off sample.”

He continued, “Basically at the lower 48 level we have about 90%
coverage. The difference in the sampling will be rather than going back
a year or two years and using annual average production to pick the
sample, we are going back a few months and looking at monthly production
to adjust our sample every month instead of every year.”

This will make the data more current, Long said, “and hopefully
that means more accurate.”

The decision to make the change now to the 914 sampling and
estimation process is the cumulation of a review conducted by the EIA
last year. “We saw some estimates in Texas that we thought maybe weren’t
quite right so we initiated a review process and basically what we are
seeing now is the result of that review process.”

The EIA looked at the sampling as well as the estimation
methodology and decided the current process was not responsive to
changes in the industry, Long said, mostly due to rapid increases in
shale production.

“That led to looking at timing issues and moving both the sampling
and estimation processes closer to now and more frequently updating
those … to catch changes in the industry sooner rather than later.”

So will such reviews be conducted more regularly? The EIA would
like to engage in continuous improvement, he said, although, “We are
always limited by resources.”

Asked if the changes in the collection of monthly natural gas
production data might be matched on the crude oil side, Long said that
while he is not involved in that area, “It’s possible … if we ever see
something that is maybe not working the way it ought to, we are going to
look at it.”

** Market News International Washington Bureau: 202-371-2121 **


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April 5th, 2010 13:50:08 GMT

1.3540 next resistance; weird day


The SNB buys EUR/CHF and EUR/USD rises while the cross doesn’t move a pip…Strange days indeed.

Commodities are on the rise this morning while US equities are up modestly. Looks like it is the reflation trades turn in the sun after the dollar had its day on Friday.

1.3540 is next resistance for EUR/USD.

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April 5th, 2010 13:35:29 GMT

MNI US Capital Goods Weekly Index 42.5 Thru April 2 vs 39.3


By Mark Pender

NEW YORK (MNI) – MNI’s U.S. capital goods index rose more than
three points in the April 2 period to a cycle-best 42.5, indicating
easing rates of year-on-year contraction and pointing strongly to
month-on-month and quarter-to-quarter expansion for the industrial
sector, according to Market News International’s weekly survey released

The last time the index was 40 or better was in November 2008,
during the Great Contraction, when in two weeks the index fell nearly 10
points from 50.6 to bring five years of plus-50 readings to an end.

The warning period ahead of the first-quarter earnings season has
been very quiet. What pre-announcements there have been, have not been
warnings at all rather companies have been increasing guidance.

Income is at a cycle-best +21% with diffusion deep as roughly half
the sample, numbering 113 in the latest period, reporting significant
income gains.

Strength in the sample has been centered squarely in electronics, a
sector especially sensitive to Asian demand.

Chip-tool maker Aehr Test Systems (AEHR) reports two new orders
from Japanese chip makers. The company’s February quarter marked the end
of a deep streak of losses.

Chip-machinery maker Applied Materials (AMAT) raised sales
estimates for its fiscal October year, calling for year-on-year growth
of 60% compared to prior guidance for 50%.

Specialty metals maker Allegheny (ATI) sees 2010 as the transition
year to a resumption of full-year industrial growth beginning in 2011.
The company points to the importance of successful test flights underway
for the Boeing 787 and of deep-water prospects in the Gulf of Mexico.

The great weakness of the U.S. industrial sector is non-residential
construction both public and private, a weakness that reflects slack
industrial capacity, thinned workforces, tight credit, and delays in
stimulus funding.

Fabrications-maker Worthington (WOR) warns that non-residential
construction still has to bottom, while lighting maker Acuity Brands
(AYI) continues to see a full-year decline for the sector. Acuity Brands
is holding prices firm where it can but is discounting when it has to.

Backlogs at electrical-equipment maker AZZ Inc. (AZZ) continue to
decline reflecting weak new orders and which belies what it describes as
solid quotation activity, activity that normally would point to a rise
in backlogs.

AZZ also announced the acquisition of North American Galvanizing &
Coatings (NGA) for $125 million in cash. The sample’s merger &
acquisition activity has been quiet so far this year.

The March jobs report released Friday showed gains for key capital
goods areas including computers, communications equipment, machinery and
fabrications. But one would never have guessed gains for the group by
reading news out of the sector which have been showing a run of small
job cuts and little news of new hires.

A wave of big-cap companies are taking non-cash charges for changes
to retiree drug coverage. Typical is specialty-metals maker Carpenter
(CRS) which, with annual sales of $1.4 billion, is taking a $5.9 million
first-quarter charge.

Editor’s Note: MNI compiles its capital goods index based on a
weekly sample of company news and data.

** Market News International New York Newsroom: 212-669-6430 **


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