Wednesday, October 31, 2012

Chicago PMI Remained Below 50

According to this morning's release of October Chicago PMI, the index edged up 0.2, but remained below 50.0 and missed the Street's expectation of 51.0.  This appears to support the possible disappointment in tomorrow's ISM manufacturing report that we are expecting (discussed on 10/29).  In terms of other important economic data coming out this week, the BLS recently confirmed that it will release the Oct. employment report as scheduled, on Friday 11/2.

Monday, October 29, 2012

Our October ISM & NFP Projections

With the markets closed today and possibly tomorrow (Tuesday, 10/30), we thought to provide our estimates for some of the very important economic indicators to be released later this week - ISM manufacturing (Oct.), ISM services (Oct.), and state of employment (Oct.).
With some relevant data on regional manufacturing activities released earlier this month, we expect overall ISM manufacturing index (to be released on Thursday, 11/1) to come in at 50.0, a decline from 51.5 in Sept.  The consensus currently stands at 51.5.  In addition, we have projected ISM services index of 51.0, lower than last month's 55.1.
Based on our research and some estimates such as the ADP employment report (which is due out on Thursday, 11/1), we have projected a 75K increase in NFP for Oct. indicating a slowdown in hiring as change in NFP during Sept. was 114K.  The consensus for Oct. stands at 125K. 
We note that although the state of employment report is scheduled to be released this Friday, according to the Wall Street Journal, the Labor Dept. may delay it due to the current "weather emergency", the storm and hurricane Sandy, in the East Coast.  We certainly hope and wish for everyone's well-being and safety.

Saturday, October 27, 2012

QE Policies Are Not Helping the Economy

It is good to see that some of our views is in-line with the very well-respected financial professionals out there.  Below is the link to an article related to what the hedge-fund manager, David Einhorn, said about the Fed's monetary easing policies at the Buttonwood Gathering last week.

Friday, October 26, 2012

Q3 GDP Surprised on the Upside, but ...

Q3 annualized real GDP growth came in at 2.02%, above the 1.9% consensus, and certainly above our 1.5% estimate.
At first, we thought that the upcoming Presidential election may have 'impacted' the number.  Then we asked ourselves to stop throwing those conspiracy theories around.  Finally, after looking at the report, we concluded that conspiracy theory or not, the federal government consumption expenditures saved the Q3 GDP figure from disappointing Wall Street.
Let's put it this way, of the 2.02% GDP growth rate, more than 72bps were contributed by federal government consumption; the first positive contribution since Q2 of last year.  Those 72bps represent a 9.6% annualized growth rate!  Of those 72bps, 65bps, or 90.2%, were on national defense; and that represented a 13.0% growth rate!  In addition, although government consumption on the state and local level continued to decline, it did so at a lower rate; from -1.0% in Q2 and -2.0% last year, to only -0.1%.
PCE represented 142bps of that 2.02% growth rate, which is positive but not very bullish, in our opinion.  Last year, PCE in Q3 represented over 90% of the GDP growth rate.  That figure is merely 70% for this year's Q3.  We must note that both goods and services contributed positively to the Q3 GDP growth.
In terms of net exports, the decline of 1.6% in exports was the first decline since Q1 2009.  This was driven by a significant 3.5% decline in exports of goods, the first decline since Q2 2009.  The 3.1% increase in exports of services partially offset the very disappointing goods exports.  Imports also declined; however, as usual, that decline contributed positively to the overall GDP growth rate.
In summary, while the headline GDP number was slightly better than the Street expected, we recommend not getting too excited about it as too much of it was driven by government consumption.  By the way, this is BEA's initial GDP growth rate estimate.  We expect this figure to be revised down the next time it is released, which will be approximately one month from now.

Update ...

It is currently 12:16 AM (PT) on Friday morning and we thought to provide an update.  Overall, the equity market has dropped approx. 3.3% since the last time we posted (10/17/12).  Economic data has been very mixed as it appears that some of the latest housing data hasn't been indicating a robust recovery, as many were hoping. 
In addition, some widely followed companies have reported disappointing September quarter earnings.  Facebook (FB) was not one of them as it beat both on the top and bottom line.  It shot up 18%+ the day after earnings, closing at $23.23.  On Thursday, it gave some of it back and ended the day at $22.56.  We still value FB at $23/sh, as we have all along since the Company's much hyped IPO.
Although some big names such as AAPL and AMZN reported disappointing earnings on Thursday, it appears that much of the disappointments had been priced in.  Whether those companies will keep declining as they have since late Sept. and early Oct., remains to be seen.  We actually think that some of Friday's macro data would either put those stocks' downward trend into a higher gear, or they would help ease it a bit.  The Q3 annualized real GDP growth is one such economic data.  The Street is expecting 1.9%, while we're projecting only 1.5%, as mentioned on 10/9/12.  If the GDP print is better than expected, we'd probably see some short covering in those names and others. 
Lastly, the University of Michigan's consumer sentiment survey for October is also due out on Friday.  Economists have estimated no change in that index.  We note that we will also be cheering on the University of Michigan's football team on Saturday as they play Nebraska.

Wednesday, October 17, 2012

Better-than-expected Building Permits & Housing Starts

Housing data keeps improving, but then again, it is all in the eye of the beholder.  Both building permits and starts in September blew away the Street's estimates.
Permits came in at an annualized rate of 894K, up from the downwardly revised 801K in August, and significantly above the 810K consensus.
  • From the previous month, total permits went up 11.6%, driven mostly by MDUs of 5+, which went up nearly 23%.  Permits for single-family homes inched up 6.7% m/m.  Regionally, the Midwest led the way with a 19.5% increase.
  • Permits increased 45.1% from last year; again, driven by the 5+ MDUs, which nearly doubled.  Single-family homes permits were up 27.3%.  In terms of Y/Y change, the West was the leader with a 56.8% increase from Sept. '11. 
Housing starts came in at an annualized rate of 872K, up from August's upwardly revised 758K, and above the 765K consensus. 
  • From August, housing starts were up 15.0%, driven by a 25% increase in 5+ MDUs.  Regionally, the West led the way with a 20.1% m/m increase, while the Northeast experienced a 5.1% decline.
  • On a Y/Y basis, housing starts were up nearly 35%.  Surprisingly, this was driven by the 42.9% increase in single-family home starts.  All regions experienced growth from the prior year, with the Midwest leading the way with a 47.4% increase.
While these numbers are much better than expected, we continue to believe that if these starts are completed, they will boost inventory too much which then will put pressure on overall prices.  In addition, such great numbers do not necessarily mean that the builders are seeing so much of an increase in demand.  They could just be taking advantage of continuing lower construction costs.  We note that the latest MBA data does indicate an increase in purchase applications, but at a declining rate. 

Tuesday, October 16, 2012

Economic News Update ...

Industrial production and capacity utilization for September were in-line with the Street's expectations, but slightly below ours. 
  • Industrial production index edged up 40bps to 97.0 in September.  Although the consensus was an increase of only 20bps, the end result was in-line with expectations as the August number was revised down by 20bps.  We note the index remained below 2007 level.
  • Production of consumer goods was unchanged from August as the continuing decline in durables (led by automotive products) was offset by slight turnaround in non-energy nondurables (led by clothing, foods & tobacco). 
  • There were also turnarounds in production of business, and defense & space equipment. 
  • The increase in capacity utilization to 78.3% from August's downwardly revised 78.0% did support the slight improvement we saw in the September NFP.  However, as indicated in this morning's industrial production & capacity utilization report, capacity utilization remains 2% below its long-run average, which is good news and bad news.  The good news is that there may not yet be time for fears of too much inflation.  However, the bad news is that during stable economic growth periods capacity utilization has been between 80.0% and 85.0%, and we are currently far from those levels. 
Headline CPI came in slightly above the Street's expectations.  September CPI increased 0.6% from August, higher than the 0.5% consensus.  Most of the increase was driven by higher gasoline prices.  Core CPI m/m change was only 0.1%, less than the Street's 0.2% estimate.  However, we note that the Y/Y changes for both headline and core CPI were 2.0% in September. 
Surprisingly, there was no upside surprise in the NAHB housing market index.  It came in at 41.0, in-line with expectations.  However, this was the highest level since Jun '06!  In addition, the index increased for the seventh straight month.  While the traffic component of this index continued to increase, its current and future sales measures remained unchanged.  As usual, the homebuilders are blaming "overly tight credit conditions".  The homebuilders' ETF, XHB, is up only 0.3%, trailing the overall equity market.   
S&P 500, which we continue to view as overvalued, is loving the better than expected economic news.  It is up 0.75% at 1451.  And VIX continues to give back last week's gain; down 3.3%.

Monday, October 15, 2012

September Retail Sales, NY Fed Mfr. Survey, & more ...

Details regarding September's retail sales report and October's NY Fed manufacturing survey results are provided below.  We have also included our forecast for the September industrial production and capacity utilization numbers, which are due out tomorrow morning.
Retail Sales (September) 
  • The initial retail sales report for September came in better than most analysts expected; a 1.1% sequential increase versus the analysts' 0.7% estimate. 
  • Excluding auto and gasoline sales, retail sales grew 0.9%, significantly better than the 0.5% consensus.
  • Based on the data provided by the Dept. of Commerce, the 4.5% growth in sales of electronics and appliances appear to have been the driver behind the better than expected retail numbers.  We could assume that at least the initial sales of Apple's (AAPL) iPhone5 could be partially responsible for this growth. 
  • Such good numbers could be too good and too early.  They could negatively impact sales during Christmas season, given that overall wage growth remains stagnant. 
  • Auto and parts sales went up 1.3%, while sales at gasoline stations increased 2.5%
  • We note that the August figures were revised higher.  Overall retail sales were bumped up 40bps to 1.3%.  Excluding autos and gasoline, that figure was revised higher by 20bps to 0.3%. 

Empire State Mfr. Survey (October)
While the September retail sales surprised on the upside, NY Fed's manufacturing survey for October was disappointing.  The overall index came in at -6.16, an improvement from September, but below the -3.0 consensus.
  • New orders sub-index remained negative at -8.97, but yet better than the prior month's -14.03.  This figure has been below zero for four consecutive months, after being in positive territory for seven months in a row. 
  • Not surprisingly, without much improvement in new orders, the shipment sub-index also dipped into negative territory; -6.40 in Oct., from 2.75 in Sept.
  • Downward trend in the employees sub-index continued for the third straight month as that figure came in at -1.08, certainly a worsening from September's 4.26.  Given that the workweek number also deteriorated, we do not expect much improvement in next month's Empire State Mfr. employees sub-index. 
  • The inventories sub-index was -2.15, down from prior month's 0.00.  Initially, we thought we might see some inventory replenishment next month; however, the forward-looking inventory sub-index proved us wrong.  That figure remained pretty much unchanged at -4.30. 
  • Most of the survey's forward-looking indicators show that optimism is slowly declining.  The general business conditions fwd index declined to 19.42, from 27.22 in September.  Fwd new orders sub-index dipped to 15.05, from 17.02. 
  • It appears that more manufacturers are expecting an increase in prices that they pay and in prices that they receive during the next six months. 
  • No change is expected in the number of employees during the next six months.  However, average workweek will likely decline further as that fwd sub-index came in at -11.83, a significant decline from prior month's 2.13.
  • Many more manufacturers are also expecting less CapEx during the next six months.  Lastly, the fwd technology spending sub-index was pretty much unchanged at 7.53.

Other possible market moving economic indicators are due out tomorrow, including the September CPI for which the consensus is 0.5% (core CPI consensus is 0.2%) and NAHB's housing market index (consensus is 41.0).  September industrial production and capacity utilization, for which we have our own models, will also be released tomorrow.  We expect the industrial production index to come in at 97.5, approx. 70bps higher than the prior month's 96.8.  The consensus is 97.0.  In addition, we have projected a capacity utilization rate of 78.8%, up from August's 78.2%, and above the 78.3% consensus. 
Housing starts and permits stats are due out on Wednesday morning.  The market expects 765K and 810K for starts and permits, respectively.  Initial jobless claims from last week will be released on Thursday.  The consensus is 365K, a significant increase from the prior week's surprisingly low 339K.  Although we do not usually project the initial jobless claims, we do expect Thursday's number to be higher than the consensus as not only will the upward revision trend of this economic indicator continue, but we also note that the applicable seasonal factor is less than the prior week's.  In other words, the 26K increase in initial claims that economists are looking for require only an increase of 10K in the non-seasonally adjusted initial claims number.  Philly Fed's manufacturing survey will also be released on Thursday.  The Street expects that index to move slightly into positive territory, 0.5.  Lastly, September existing home sales numbers are due out on Friday morning.  The consensus is 4.75mil.

Thursday, October 11, 2012

Some Thoughts on Latest Initial Jobless Claims

First, we'd like to apologize for this late post as we were having technical difficulties uploading charts, thanks to Google (GOOG).  Of course, the stock is up 1% and is one of our favorite companies.  We'll let this one issue pass.

Now, let's discuss initial jobless claims, which came in significantly below expectations; 339K versus 370K.  In fact, the initial claims number was much lower than the lowest estimate of 362K out there.  The range of estimates was 362K - 375K.  The weekly report from BLS did not indicate anything abnormal in terms of certain states not reporting initial claims, etc.  However, in our opinion, the number itself was an outlier.
Initially, we thought that the pre-determined seasonal factor (SF) may have contributed to such a result.  Below is a chart showing the SF used by BLS for the first week of Oct. since 1980.  It is clear that BLS ups the SF every 5 - 6 years to 90 and above, then it slowly brings it back down to the low 80's or high 70's; and then that 'cycle' starts all over again.  Based on the data, the Presidential election appears not to be one of the drivers behind the 5-to-6-year increase in SF. 

 Source: BLS
We note that the higher the SF, the more favorable it is for the SA (seasonally adjusted) or headline initial claims.  Last week's SF of 96.4 was the second highest SF during the last 32 years.  The highest was 97.3, applied in 2006.  The average SF since 1980 is 86.3.  If that was applied to last week's NSA (non-seasonally adjusted) claims, the SA result would have been nearly 380K!  The median and average SF for the 'spike' years (as shown on the graph above) are 93.7 and 94.3, respectively.  With those SFs, last week's SA initial jobless claims would have come in at nearly 350K, below the consensus, but much higher than the official 339K. 
We also looked at the one week change in NSA versus SA for the first week of Oct. since 1980.  As displayed in the graph below, NSA and SA have moved pretty much in the same direction most of the time, except in 2001 and the current year.  The graph shows that while last week's NSA figure increased by nearly 26K, its corresponding SA number declined by 30K!  This supports the notion that last week's initial claims result is an anomaly. 

 Source: BLS
We are not saying that BLS employees responsible for gathering and massaging such data were on vacation.  Nor do we have any conspiracy theories to explain this.  We are simply saying that last week's initial claims number is an outlier.  We will see if we are correct or not during the next few weeks, where it is very likely that the numbers will be revised.  By the way, yes, the previous week's figure (last week of Sept.) was revised higher.  Now, that upward revision certainly wasn't 'abnormal'. 
The market's reaction to this news also hasn't been as much as many thought, especially after the recent downward trend that we have seen.  S&P 500 is up 0.4% at 1438.  This morning's news certainly prevented S&P 500 to go lower than its 1430 support level.  It remains below its linear regression level of 1440.  We note the index is still trading below 1447 10-day EMA.  VIX is losing some steam today, down nearly 4%. And the energy and financial sectors are doing well this morning, up 1.3% and 0.9%, respectively. Lastly, congrats to the Yankees and Rauuuuuuul!  Last night's victory was one for the ages ... in our opinion. 

Tuesday, October 9, 2012

GDP Estimate Update & AA's Q3 Earnings ...

Alcoa (AA) reported Q3 results and beat expectations both on the top and bottom-line.  Revenues of $5.83bil were much higher than the Street's $5.57bil estimate.  Better revenues from AA also positively impacted our Q3 GDP estimate.  We now expect real GDP annualized growth rate of 1.5% for Q3, up slightly from our initial estimate of 1.4%.  We note that this number remains below the 1.6% consensus but is slightly higher than Q2's 1.3%.
Below is an update on what AA expects from its end markets in 2012.
  • Slightly upped growth estimate in the automotive space in North America to 11% - 15%, from 10% - 14%.
  • North American heavy trucks & trailers lowered significantly to 2% - 4%, from 4% - 8%.  We note the Company lowered its assessment on this market in Q2 also.
  • Beverage can packaging market in North America was unchanged.  Sales growth projection remained between -1% and 0%.
  • 5% sales decline projection for the commercial building and construction market in North America was maintained.
  • For Europe, heavy trucks & trailers were lowered to decline of 8% - 11%, from decline of 3% - 8%.  In addition, beverage can packaging sales growth was lowered to 4% - 5%, from 5% - 7%.
  • AA's assessments certainly provided more evidence of the continuing slowdown of China's economy.  While there was a bright spot in China's automotive market, as AA increased it projection to 4% - 7% growth, from its previous wider range of 2% - 7%, the Company slashed its outlook on heavy trucks & trailers in China.  It now expects a decline between 18% and 21% in 2012, compared with its previous assessment of a 3% - 8% decline.  AA also lowered its outlook on beverage can packaging sales growth in China to 5% - 8%, from 15% - 20%. 

Monday, October 8, 2012

Q3 GDP Estimate & Our 12-Month Target for S&P 500

We thought to provide our initial estimate of annualized real GDP growth for Q3.  We currently project a GDP growth rate of 1.4%, below the 1.6% consensus, but slightly higher than Q2's 1.3%.  We note that the annualized and seasonally adjusted growth rate of Alcoa's (AA) revenues is one of the factors used in our model.  Our Q3 AA revenue assumption is based on the Street's $5.57bil estimate.  AA's results, which will be released tomorrow after the close, may force us to adjust our estimate.  While AA is no longer a bellwether for the equity market (as the market is no longer based on fundamentals), we believe its top-line does provide some color on current and future domestic and global economic growth. 
From a slightly more fundamental standpoint, we looked at the latest S&P 500 EPS estimate for CY '13.  Given the modest economic growth (without much acceleration expected during the next couple of years) we thought that trading at approx. 12.5x 2013 EPS, S&P 500 may be slightly overvalued.  To get a better idea, we got our hands on the experts' average annual growth rate of earnings for the next five years.  According to S&P, that figure currently stands at 10.83%.  We thought that given the current macro environment, a PEG of 1.0 might be appropriate for valuing the S&P 500.  Applying a P/E of 10.83 to the CY '13 EPS estimates gets us an S&P 500 target or valuation of 1247, approx. 14% less than where it closed at today. 
Although fundamentals are no longer driving the market as much as they used to or as much as they should, in our opinion, they do provide a better, or more realistic perspective on valuation, which will come in handy in the future.

Friday, October 5, 2012

September Employment Report & Its Revisions Made Everything Appear Better

The September employment report was certainly a surprising one, even though the NFP count came in only 1K higher than the Street's estimate.  The August number was revised up by 46K! Again, August's NFP, the figure that many believed pushed the Fed to implement QE3, was revised up by 46K, thanks to nice bump up in government jobs!  The number of government jobs added in August was revised up by 52K, which pushed it from -7K to +45K!  Conspiracy theorists please come out and make a statement; the time is now.  So, let's put it this way - change in NFP for the past two months was 256K, compared with our 241K estimate, and the Street's ever-conservative 210K.  With respect to various government economic data, which continue to be revised up or down significantly, our models' 'revision factors' need significant adjustments continuously.  One thing is certain; today's numbers will give President Obama a lift which he certainly needed after that embarrassing performance in the first election-2012 debate earlier this week.
  • September NFP came in at 114K, below our 145K estimate and slightly above the Street's 113K.  As a reminder, the August NFP was revised up by 46K.  By the way, the July number, which was revised down by 41K in the August employment report, was revised up by 41K in the September report!  We are trying to give conspiracy theorists more ammo. 
  • The official unemployment rate fell to 7.8%. 
  • Private NFP went up by 104K, which means that 10K of jobs added were in the government sector.  Unlike the rest of the Street, we had assumed an increase in government jobs.  However, what caught our eye was that a big chunk of the overall NFP upward revisions for July and August was in the government sector!  For July and August, the number of government jobs were revised up by 39K and 52K, respectively!
  • Although manufacturing declined by 16K (we had assumed a slight increase), construction and education & health services went up by 5K and 49K, respectively.
  • By the way, while the official unemployment rate dipped 30bps to 7.8%, the U-6 figure remained unchanged at 14.7%.
  • Given the endless number of revisions in this report, looking at the net changes is basically useless, in our opinion.  We are confident that this report will make the next Presidential debate even more interesting.  Some new words or phrases will likely be added to the Presidential debate drinking game.

S&P 500 is up 0.5% while VIX is down more than 5%.  Gold futures is down around $10.  By the way, congrats to the Yankees for winning the AL East, and we are hoping the Jets will at least show up for the Monday night game against those Texans.

Wednesday, October 3, 2012

September Services ISM Beats Expectations

September services ISM of 55.1 was above the Street's 53.5.  The employment sub-index actually declined 2.7 to 51.1 from the prior month, indicating we may have over-estimated growth of employment in services in our September NFP projection.  However, we will stick with our 145K NFP estimate.
  • While ISM services' new orders sub-index increased to 57.7 (from 53.7) and inventory declined, backlog of orders went below 50.0, indicating contraction. 
  • Prices increasing for the third consecutive month, combined with decline in backlog of orders, indicate inventory replenishment and/or increase in headcount may take a bit longer.  This also goes along with the ISM report's lower inventory sentiment sub-index.
Overall, while we still think Friday's employment report will beat expectations, the rally may be short-lived.  Then again, that is based on the assumption that markets are based on fundamental, which may no longer be true for a very very long time.

ADP September Employment Report

September ADP came in at 162K, significantly higher than the 140K consensus.  We will stick with our NFP net change estimate of 145K for September even after the ADP surprise to the upside.  The Street consensus for NFP is 113K.
  • While the number was better than expected, we note that it was accommodated by downward revisions to the July and August figures.  July was lowered by 17K and August by 12K.
  • Increases in manufacturing and construction jobs (4K and 10K, respectively) are pretty much in-line with our assumption for Friday's NFP count. 
  • The same can be said of the 144K jobs added in services, a nice chunk of which we believe will be categorized as temp services in Friday's NFP report.

Monday, October 1, 2012

Market Update & Our September NFP Estimate

The market remains uber-excited about the better than expected September Mfr. ISM which came out earlier this morning.  S&P500 is up 0.9%.  And VIX just got back in the red, down only .1%.  With respect to S&P's sector ETFs, while the more cyclical sectors, such as materials, energy, financials, and industrials, are up 1%+, we note that the less cyclical consumer staples is also up nearly 1% while consumer discretionary is actually trailing staples, up only 0.5%.
Assuming a September ADP change of 140K, which is the Street's estimate, we expect to see a net change of 145K non-farm jobs in Friday's September employment report.  Our estimate is at the high-end of the Street's 75K - 162K range and certainly above the 113K consensus.  Our higher projection is based on the assumption of NFP growth in construction, manufacturing, education & health services, and temporary help services, partially offset by some weakness in retail trade and leisure & hospitality.  Given the upcoming elections in November, we also expect a slightly higher NFP count on the government side of its so-called services.  The Street expects a decline of 17K in the government NFP count. 

Sell-Siders' Usual Underestimation Made Mfr. ISM a Positive 'Surprise'

We find it very interesting that the sell-side experts continue to under-estimate the disappointing modest economic growth in order to make anything look good.  The perfect example of that is the September manufacturing ISM report which was released at 10AM (ET) this morning.  The ISM index came in at 51.5, much higher than the 49.7 consensus.  Of course, as we had mentioned last week, we were a bit more realistic than the sell-siders whose main objectives are to bring back more retail investors and increase transaction volume on their end.  Our ISM estimate was 51.0.  By the way, the Street's estimate range was 48.0 - 50.6.  With such a surprise, the basis of which was again created by the phony sell-siders' estimates, S&P 500 is now up approx. 1%. 
Mfr. ISM (September)
  • September ISM index of 51.5 shows expansion after three consecutive months of contraction (below 50.0).  Again, our estimate and the Street's were 51.0 and 49.7, respectively.
  • Basically every sub-index, except for the producer's inventories, increased from the prior month.
  • While new orders inched up above 50.0, production remained at sub-50.0.  However, given the decline in inventories, combined with improvement in new orders, we will probably see production get over 50.0 this month.
  • We note that the increase in customers' inventories could limit the upside for October's ISM index.
  • In addition, while the imports sub-index did improve, it remained below 50.0 for the second consecutive month.  This could indicate that the increase in production and new orders could be driven more by inventory replenishment on the producers' end, rather than an increase in overall demand.  In other words, again, the upside for the next few months may be limited, making this positive 'surprise' short-lived. 
  • Lastly, the employment sub-index moved up nicely to 54.7 from 51.6.  This should push up the Street's estimate for NFP (due out this Friday), but again, those sell-siders do their best to create that positive 'surprise'.  We will post our NFP estimate later this morning.