Thursday, July 31, 2008

Shimmering from the desert haze of Nevada like a latter-day El Dorado, Las Vegas is the most dynamic, spectacular city on earth. At the start of the twentieth century, it didn't even exist; at the start of the twenty-first, it's home to well over one million people, with enough newcomers arriving to need a new school every month.

Las Vegas is not like other cities. No city in history has so explicitly valued the needs of visitors above those of its own population. All its growth has been fueled by tourism, but the tourists haven't spoiled the "real" city; there is no real city. Las Vegas doesn't have fascinating little-known neighborhoods, and it's not a place where visitors can go off the beaten track to have more authentic experiences. Instead, the whole thing is completely self-referential; the reason Las Vegas boasts the vast majority of the world's largest hotels is that around thirty-seven million tourists each year come to see the hotels themselves.

The telephone area code for all phone numbers in the text, unless otherwise indicated, is 702.
Each of these monsters is much more than a mere hotel, and more too than the casino that invariably lies at its core. They're extraordinary places, self-contained fantasylands of high camp and genuine excitement that can stretch as much as a mile from end to end. Each holds its own flamboyant permutation of showrooms and swimming pools, luxurious guest quarters and restaurants, high-tech rides and attractions.

The casinos want you to gamble, and they'll do almost anything to lure you in; thus the huge moving walkways that pluck you from the Strip sidewalk, almost against your will, and sweep you into places like Caesars Palace. Once you're inside, on the other hand, the last thing they want is for you to leave. Whatever you came in for, you won't be able to do it without crisscrossing the casino floor innumerable times; as for finding your way out, that can be virtually impossible. The action keeps going day and night, and in this windowless – and clock-free – environment you rapidly lose track of which is which.

"Little emphasis is placed on the gambling clubs No cheap and easily parodied slogans have been adopted to publicize Las Vegas, no attempt has been made to introduce pseudo-romantic architectural themes or to give artificial glamour or gaiety."– WPA Guidebook to Nevada, 1940

Las Vegas never dares to rest on its laurels, so the basic concept of the Strip casino has been endlessly refined since the Western-themed resorts and ranches of the 1940s. In the 1950s and 1960s, when most visitors arrived by car, the casinos presented themselves as lush tropical oases at the end of the long desert drive. Once air travel took over, Las Vegas opted for Disneyesque fantasy, a process that started in the late 1960s with Caesars Palace and culminated with Excalibur and Luxor in the early 1990s.

These days, after six decades of capitalism run riot, the Strip is locked into a hyperactive craving for thrills and glamour. First-time visitors tend to expect Las Vegas to be a repository of kitsch, but the casino owners are far too canny to be sentimental about the old days. Yes, there are a few Elvis impersonators around, but what characterizes the city far more is its endless quest for novelty. Long before they lose their sparkle, yesterday's showpieces are blasted into rubble, to make way for ever more extravagant replacements. The Disney model has now been discarded in favor of more adult themes, and Las Vegas demands nothing less than entire cities. Replicas of New York, Paris, Monte Carlo and Venice now jostle for space on the Strip.

The customer is king in Las Vegas. What the visitor wants, the city provides. If you come in search of the cheapest destination in America, you'll enjoy paying rock-bottom rates for accommodation and hunting out the best buffet bargains. If it's style and opulence you're after, by contrast, you can dine in the finest restaurants, shop in the most chic stores, and watch world-class entertainment; it'll cost you, but not as much as it would anywhere else. The same guidelines apply to gambling. The Strip giants cater to those who want sophisticated high-roller heavens, where tuxedoed James Bond lookalikes toss insouciant bankrolls onto the roulette tables. Others prefer their casinos to be sinful and seedy, inhabited by hard-bitten heavy-smoking low-lifes; there is no shortage of that type of joint either, especially downtown.

On the face of it, the city is supremely democratic. However you may be dressed, however affluent or otherwise you may appear, you'll be welcomed in its stores, restaurants, and above all its casinos. The one thing you almost certainly won't get, however, is the last laugh; all that seductive deference comes at a price. It would be nice to imagine that perhaps half of your fellow visitors are skilful gamblers, raking in the profits at the tables, while the other half are losing, but the bottom line is that almost nobody's winning. In the words of Steve Wynn, who built Bellagio and the Mirage, "The only way to make money in a casino is to own one"; according to the latest figures, 85 percent of visitors gamble, and they lose an average of $665 each. On top of that, most swiftly come to see that virtually any other activity works out cheaper than gambling, so end up spending their money on all sorts of other things as well. What's so clever about Las Vegas is that it makes absolutely certain that you have such a good time that you don't mind losing a bit of money along the way; that's why they don't even call it "gambling" anymore, but "gaming."

Finally, while Las Vegas has certainly cleaned up its act since the early days of Mob domination, there's little truth in the notion that it's become a family destination. In fact, for kids, it's doesn't begin to compare to somewhere like Orlando. Several casinos have added theme parks or fun rides to fill those odd nongambling moments, but only ten percent of visitors bring children, and the crowds that cluster around the exploding volcanoes and pirate battles along the Strip remain almost exclusively adult.

Monday, July 28, 2008

Economic Calendar for week July 28th - August 1st 2008

PLEASE NOTE - All times GMT not BST. BST is +1 Hr

Monday July 28th:

UK - Tentaive - Nationwide House Prices M/M.
GE - 06:00 - Consumer Confidence.
US - 16.00 - FOMC Member Mishkin Speaks.

Tuesday July 29th:

GE - Tentative - Prelim CPI M/M.
UK - 08:30 - Mortgage Approvals.
UK - 08:30 - Net Lending to Individuals M/M.
UK - 10:00 - CBI Distributive Trades Realised.
US - 13:00 - S&P/CaseSchiller HPI Composite-20.
US - 14:00 - Consumer Confidence Index.

Wednesday July 30th:

GE - 06:00 - German Retail Sales M/M.
EU - 09:00 - Consumer Confidence.
US - 12:15 - ADP Nonfarm Employment Change.
US - 14:35 - Crude Oil Inventories.
UK - 23:01 - GfK Consumer Confidence.

Thursday July 31st:

GE - 07:55 - Unemployment Change.
EU - 09:00 - CPI Flash Estimate Y/Y.
US - 12:30 - Advance GDP Q/Q.
US - 12:30 - Advance GDP Price Index Q/Q.
US - 12:30 - Employment Cost Index.
US - 13:45 - Unemployment Claims.
US - 13:45 - Chicago Business Barometer.

Friday August 1st:

EU - 08:00 - Manufacturing PMI.
UK - 08:30 - Manufacturing PMI.
US - 12:30 - Nonfarm Employment Change.
US - 12:30 - Unemployment Rate.
US - 12:30 - Average Hourly Earnings M/M.
US - 14:00 - ISM Manufacturing Index.
US - 14:00 - ISM Manufacturing Prices.
US - 14:00 - Construction Spending M/M.

EU - Europe wide
FR - France
UK - United Kingdom
US - United States
GE - Germany


The week ahead.

Markets endured a volatile week, finishing largely flat despite dramatic 2.5%+ falls on Thursday. In the UK, banking stocks managed to build on the shift in sentiment from last week, but US financials endured further bad news, with Wachovia bank posting a record loss. The beleaguered bank produced an eye watering loss of $8.9 billion for the quarter, slashed its dividend and announced thousands of job cuts. Fannie Mae and Freddie Mac reversed the gains from last week on fears of complications in the proposed bail out. There were mixed results from major US companies, with tech firms such as Amazon impressing and online DVD retailer Netflix continuing its good run of earnings reports. Apples disappointing figures caused some consternation early in the week, but the Ipod manufacturer wasnt beaten down for long. After opening the day down over $10, Apple recovered the opening losses and more, as sales of the new iphone look to be taking off.
Lower energy prices certainly helped ease the pressure on global markets last week. However, this easing has to be taken in the context of slowing demand from the US and China. Oil closed the week around $125, some $20 below its peak just few weeks ago. Natural gas has fallen even further than oil. Gas has dropped from above 13.50 to 9.737 in July alone, representing a huge 28% collapse. Other commodities have also fallen back in dramatic fashion with Corn and Wheat down at least 40% from their peak prices. Gold has dropped, but less than other commodities, falling 7% coming with $10 of $1000. These falls will be welcomed by governments and central bankers alike, but the real test for global economies, will be the lagging effect of spiraling wage demands.
At the centre of the storm, the US economy is also showing sides of further weakness, not recovery as many hoped at the beginning of this week. US initial jobless claims came in worse than expected and 95% of US metro areas experienced year on year increases in foreclosure activity. It is little wonder they are so bad with the average 30 year fixed mortgage in the US now at its highest level since 2002, despite the dramatic rate cuts from the fed earlier this year. Oil is hovering around the $125 mark, but that will be little comfort to Ford who registered an $8.7bn loss, as consumers shun their gas guzzling SUV heavy catalogue of vehicles. The buying from last week is looking increasingly like a suckers rally as traders realise that the worst may not be behind us, and may in fact may appear very soon in the future.
Next weeks first economic announcement of note is the US consumer Confidence Index. As has been the case with many announcements recently, it will be a question of how bad the figures are rather than how good. Wednesday brings US ADP Nonfarm Employment Change figures, followed by US GDP numbers on Thursday. The First Friday of the new month is always the heaviest with the arrival of US Non Farm Payroll figures.
With US Mortgage applications dropping 6.2% again recently, and profit warnings from Toyota and Ford, the US economy may not be out of the waters just yet. However, the Non Farm Payroll figure, or at least the reaction to them, has the potential to spring a surprise in either direction in the short term. Therefore a volatility trade may be the better option over the coming days. An Up or Down trade returns a profit if either of two levels are hit during the specified time period. An Up or Down trade on the Dow Jones (Wall Street) with the levels set as 11000 and 12000 could return 32% over the next 11 days.

Saturday, July 19, 2008

Stocks turn mixed after disappointing tech results offset report from Citigroup

Wall Street closed out an impressive week with a mixed performance Friday after disappointing high-tech earnings punctured some of investors' enthusiasm over better-than-expected bank earnings reports. But the major indexes still ended the week with big gains, the result of rising optimism about the troubled financial sector.

The market was clearly pleased when Citigroup Inc., while reporting a second-quarter loss Friday morning, beat analysts' forecasts and joined Wells Fargo & Co. and JPMorgan Chase & Co. in delivering stronger results than the market anticipated. But investors who ecstatically sent the Dow Jones industrials soaring by more than 480 points over Wednesday and Thursday were brought back down to earth by results from Google Inc., Microsoft Corp. and Advanced Micro Devices Inc.

Google's results were lower than expected, the result of the weakening economy hurting advertising revenue, while Microsoft missed forecasts by a penny. Also, AMD's chief executive stepped down after the chip maker posted a wider-than-expected loss.

Still, the market that has hungered for good news about financial companies after a year-long credit crisis got it from Citi. The banking company reported a $2.5 billion second-quarter loss due to write-downs tied to deteriorating credit markets. The results surpassed projections, and helped to mitigate some of the market's concerns following a big loss from Merrill Lynch & Co. reported late Thursday.

It was a good sign to some analysts that the market didn't sell off sharply after two straight days of hefty gains.

"If you look at the fundamentals, not a lot of changed in the fundamentals, but you had the financial crisis come to a head," said Philip Dow, managing director of equity strategy at RBC Dain Rauscher. "This was a pivotal week that we just went through, one that perhaps marked a bottom for the financial crisis. That doesn't mean we're about to have a bull market, but maybe a break in the pronounced selling that's been going on."

More banks are among the companies reporting next week: Wachovia Corp., Washington Mutual Inc. and Bank of America Corp. And hundreds of other big corporations will also be releasing results, keeping the market on edge as investors try to determine whether an economic rebound might be in the offing.

The Dow rose 49.91, or 0.44 percent, to 11,496.57, adding on to a 483-point gain Wednesday and Thursday.

Broader stock indicators were mixed. The Standard & Poor's 500 index rose 0.36, or 0.03 percent, to 1,260.68, and the technology-focused Nasdaq composite index dropped 29.52, or 1.28 percent, to 2,282.78.

For the week, the Dow rose 3.57 percent, the Nasdaq increased 1.95 percent, and the S&P rose 1.71 percent.

Bond prices fell Friday. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 4.09 percent from Thursday's 4.00 percent.

The dollar was mixed against other major currencies, while gold prices fell.

Meanwhile, oil prices retreated after rising earlier in the session. A barrel of light, sweet crude fell 41 cents to settle at $128.88 on the New York Mercantile Exchange.

Oil's huge pullback this week -- dropping about $16 over three days -- also fed Wall Street's big rally. Stock investors have been worried that consumers forced to pay more for necessities including fuel and food will continue to cut back on their discretionary spending, something that would further hurt a struggling economy.

While the week on Wall Street showed that a market long pummeled by bad economic news can quickly turn around, there have been many times over the past year when a huge gain quickly evaporated at the first sign of trouble. So while many investors felt that it was safe to lay down some bets this week, everyone on the street is mindful that there can be further steep losses ahead.

"Considering the strength we had in the past few days, the market is handling itself quite nice and trying to hold on to the gains," said Peter Cardillo, chief market economist at New York-based brokerage house Avalon Partners. "Investors are also positioning ahead of a barrage of earnings and economic reports due next week."

Certainly, it was a week of extremes -- the Dow had its biggest two-day percentage gain since October 2002 but it also, on Tuesday, had its first close below 11,000 in two years. And until investors get a more steady stream of good economic and corporate news, such extremes may well continue.

Google fell $52.12, or 9.8 percent, to $481.32 after it posted disappointing results late Thursday. Microsoft dropped $1.66, or 6 percent, to $25.86, while AMD fell 65 cents, or 12.3 percent, to $4.65.

Financial stocks were mixed. Merrill rose 18 cents to $30.91, after its wider-than-expected loss, while Citi added $1.38, or 7.7 percent, to $19.35 after its better-than-anticipated loss.

Honeywell International Inc. fell 20 cents to $50.66 after it reported second-quarter earnings rose 18 percent and surpassed forecasts. The aerospace company also boosted its 2008 forecast.

Mattel Inc. surged $2.38, or 13 percent, to $20.66 after the toymaker said its reported profit was cut in half, but still beat Wall Street expectations.

Israeli drugmaker Teva Pharmaceutical Industries Ltd. said Thursday it will buy rival generic drug company Barr Pharmaceuticals Inc. for more than $7 billion, in a move to expand its presence in U.S. and Eastern European markets. Teva rose $1.82, or 4.4 percent, to $42.87, while Barr shot up $6.26, or 11 percent, to $63.43.

The Russell 2000 index of smaller companies fell 3.55, or 0.51 percent, to 693.08.

Advancing issues outnumbered decliners by about 8 to 7 on the New York Stock Exchange, where consolidated volume came to 5.49 billion shares, down from an unusually heavy 7.17 billion on Thursday.

Overseas, Japan's Nikkei stock average fell 0.65 percent. Britain's FTSE 100 rose 1.70 percent, Germany's DAX index added 1.78 percent, and France's CAC-40 rose 1.74 percent.

The Dow Jones industrial average ended the week up 396.03, or 3.57 percent, at 11,496.57. The Standard & Poor's 500 index finished up 21.19, or 1.71 percent, at 1,260.68. The Nasdaq composite index ended the week up 43.70, or 1.95 percent, at 2,282.78.

The Russell 2000 index finished the week up 18.13, or 2.69 percent, at 693.08.

The Dow Jones Wilshire 5000 Composite Index -- a free-float weighted index that measures 5,000 U.S. based companies -- ended Friday at 12,850.50, up 215.07 points, or 1.70 percent, for the week. A year ago, the index was at 15,695.74.

New York Stock Exchange: http://www.nyse.com

Nasdaq Stock Market: http://www.nasdaq.com