Financial Review

Friday, April 18, 2014 – Yes, We Have No Avocados

Yes, We Have No Avocados by Sinclair Noe The markets are closed today in observance of Good Friday. No economic reports today. Let’s take a look at next week’s economic calendar. On Wednesday, we’ll get reports on new and existing home sales. New home sales are expected to be up slightly, while existing home sales are expected to post a decline for the third consecutive month. Higher mortgage rates and rising prices have pushed some potential buyers out of the market. The average rate on a 30-year fixed mortgage is up almost a full percentage point from its recent low one year ago. The softness in home prices in the first quarter has also hurt homeowners struggling with negative equity. The pool of underwater borrowers peaked at 12.8 million, or 29% of all properties with a mortgage, in the second quarter of 2012. Rising prices have lifted millions back above water. As of the first quarter of this year, some 9.1 million homes (or 17% of homes with mortgages) were “seriously” underwater, owing at least 25% more than property’s estimated market value. Next Friday, we’ll see the Consumer sentiment index, which has been showing a lack of enthusiasm reflecting the weak pace of hiring and meager pay raises for most households, which in turn results in sluggish consumer spending. Thursday, we’ll get a report on durable goods orders. If economic growth is finding traction, you would expect to see businesses spending more on equipment, which should show up in the …

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Financial Review

Thursday, April 17, 2014 – The Growth Industry for the Next 20 Years

The Growth Industry for the Next 20 Years by Sinclair Noe DOW – 16 = 16,408SPX + 2 = 1864NAS + 9 = 409510 YR YLD + .08 = 2.72%OIL + .83 = 104.59GOLD – 7.60 = 1295.60SILV + .02 = 19.75 Stocks ended a holiday-shortened week with mixed results. Stock markets will be closed tomorrow in observance of Good Friday. The S&P 500 had its best week since last July. For the week, the Dow rose 2.4%, the S&P 500 added 2.7% and the Nasdaq advanced 2.4%. With less than one-fifth of S&P 500 companies having reported results so far, about 63% have topped earnings expectations and 52% have topped revenue expectations. Of course that’s part of the dance between corporations and analysts, but it does move stock prices. For example, Goldman Sachs reported an 11% drop in quarterly profit and revenue fell 8%, but the results were better than estimates and share price was higher on the day.  Among the other earnings related movers today, Google, IBM, Mattel, and United Health were down on poor earnings news, while Morgan Stanley, GE and Pepsi moved higher. The number of Americans filing new claims for unemployment benefits rose less than expected in the latest week and came near pre-recession levels. The Labor Department also reports weekly earnings of the typical full-time worker rose 3% in the first quarter compared to a year earlier, the fastest pace since 2008. Median earnings came in at $796, that’s the point where half of …

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Friday, April 04, 2014 – The March Jobs Report

The March Jobs Reportby Sinclair Noe DOW – 159 = 16,412SPX – 23 = 1865NAS – 110 = 4127 (-2.6%)10 YR YLD – .06 = 2.73%OIL + .77 = 101.06GOLD + 15.50 = 1303.30SILV + .14 = 20.06 Today is a jobs report Friday. Let’s get geeky. The Labor Department reported nonfarm payrolls increased by 192,000 jobs last month after rising by 197,000 in February (that’s revised from 175,000). The prior 2 months were revised to show 37,000 more jobs than previously estimated; the revisions indicate that the bad winter weather was not a huge problem for the labor market; it did have an effect but not huge, and we certainly shouldn’t hear any more weather related excuses. The unemployment rate was unchanged at 6.7% as more people were looking for jobs. The consensus estimate was 200,000 jobs, so the figures were a little below expectations. Private employment rose to 116.09 million, finally moving beyond the previous high of 115.98 million recorded at the very start of the recession in January 2008.Total employment is just a little below the pre-financial crisis days; we still have about 437,000 fewer jobs than the peak in 2008, but private employment is now above the peak by 110,000 and at a new all-time high; the difference is that more than a half million government jobs have been cut during that time; also, the population and the labor force has grown over the past 6 years, so the unemployment rate remains fairly high. And the …

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Thursday, April 03, 2014 – Tomorrow, Tomorrow, It’s Only a Day Away

Tomorrow, Tomorrow, It’s Only a Day Away by Sinclair Noe DOW – 0.45 = 16,572SPX – 2 = 1888NAS – 38 = 423710 YR YLD – .01 = 2.79%OIL + .73 = 100.35GOLD – 3.10 = 1287.80SILV – .16 = 19.92 Forget about today; at least in terms of Wall Street trading. Tomorrow is more important. The first Friday of each month is always a big day because of the monthly jobs report; tomorrow, maybe more than most. The consensus estimates called for 200,000 net new jobs in March and the unemployment rate is expected to drop to 6.6% from 6.7%. Then there is the whisper number. Many people believe the harsh winter weather has held back hiring, like a balloon trapped under water by a thin sheet of ice, and when the ice melts, as it did in March, the balloon will jump out of the water like a salmon swimming upstream. Weather sensitive industries such as retail, construction and manufacturing might be especially strong performers. A March jobs report that shows a broad increase in hiring across most or all industries would show the economy is recovering and everything, including the Fed, is on track. A disappointing number, though, would bolster the case of the increasingly famished Wall Street bears that bad weather alone is not the source of weak economic growth so far in 2014. And if the number comes in right at expectations, we’ll have to go to the tiebreakers. We will look at the number …

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Wednesday, April 02, 2014 – Speak Your Mind by Blowing Your Wad

Speak Your Mind by Blowing Your Wadby Sinclair Noe DOW + 40 = 16,573SPX + 5 = 1890NAS + 8 = 427610 YR YLD + .04 = 2.80%OIL – 33 = 99.29GOLD + 10.10 = 1290.90SILV + .22 = 20.08 The S&P 500 closed at another record high. The Commerce Department reported that orders to US factories rose 1.6% in February, the most in five months. January’s durable goods orders were revised to show a larger drop of 1.0% instead of the previously reported decline of 0.7%. Yesterday, the Institute for Supply Management said its manufacturing index rose in March. A private survey showed that US companies stepped up their hiring in March. Payroll processer ADP said private employers added 191,000 jobs. ADP also revised February’s job creation up to 153,000 from the 139,000 figure reported earlier. The report comes ahead of the government’s monthly jobs report, scheduled to be released on Friday; the over-under number for Friday is 200,000 net new jobs. We know the Federal Reserve will be watching the jobs report. St. Louis Fed President James Bullard speaking to reporters at his branch of the central bank, said a formal rate rise is “still a considerable distance away.” Federal Reserve Bank of Atlanta President Dennis Lockhart said today: “Based on my working medium-term outlook, I see the latter half of 2015 as the likely time frame for the first move to higher rates,” but if the economy doesn’t grow as he current expects, Lockhart thinks, “a later …

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Thursday, March 27, 2013 – Certain Assumptions

Certain Assumptions by Sinclair Noe DOW – 4 = 16,246SPX – 3 = 1849NAS – 22 = 415110 YR YLD – .03 = 2.67%OIL + 1.02 = 101.28GOLD – 14.10 = 1292.70SILV – .05 = 19.79 Stocks fell for the fourth time in 5 sessions. This year’s first quarter, which ends Monday, isn’t nearly as bullish as last year, when the benchmark Standard and Poor’s 500 stock index soared 10% in the first three months of the year on its way to a 29% gain. The broad market is unchanged in 2014.  The losing sectors today included banks and biotech. The Nasdaq Biotechnology Index, up 304% in the last five years, has fallen 11% since the end of February, while the Russell 2000 gauge of smaller companies has slipped 2.7% after rallying more than 230%. If you really want a great investment, it’s hard to beat collecting $7,250 for every $1 you spend. That’s the benefit Boeing will reap from a ramped-up lobbying push in Washington state that ended with a massive $8.7 billion tax subsidy. A new analysis of lobbying data shows the tax break came as part of a deal to keep production of a new jet, the 777X, in the Seattle area. Lobbying data is notoriously difficult to parse because matching individual dollars to specific legislative priorities is often impossible. It’s plausible that the company could have achieved the same result with a single phone call, given how terrified state officials were that the company might ship …

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Tuesday, March 25, 2014 – Want to Buy a Cookie?

Want to Buy a Cookie? by Sinclair Noe DOW + 91 = 16,367SPX + 8 = 1865NAS + 7 = 423410 YR YLD un 2.73%OIL – .39 = 99.21GOLD + 2.10 = 1312.70SILV + .07 = 20.10 According to the S&P/Case-Shiller home price report, the home price index covering 10 major US cities increased 13.5% in the year ended in January. The 20-city price index advanced 13.2% for the year. Month to month, the 20-city index dropped 0.1%; the drop is not just weather related; from December to January, prices fell in 12 of the 20 cities Case-Shiller tracks. Taking a look at a few cities: LA was down 0.3% for the month but up 18.9% for the past year, San Diego was up 0.6% for the month and 19.4% for the year, Phoenix was down 0.3% for the month but up 13.8% for the year, San Francisco was up 0.5% for January and 23.1% for the year, the hot spot was Las Vegas up 1.1% for the month and 24.9% for the year, to lead the nation. The Commerce Department reports new home sales dropped 3.3% from January to February to a seasonally adjusted rate of 440,000. Sales fell in all regions except the Midwest, where they jumped 36.7%. Sales dropped 15.9% month to month in the West. The national median price for a new home was $261,800 last month, up from $260,800 in January. Compared with February 2013, the median price fell 1.2%. At the current sales pace …

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Monday, March 24, 2014 – Dance With the Devil

Dance With the Devil by Sinclair Noe DOW – 26 = 16,276SPX – 9 = 1857NAS – 50 = 422610 YR YLD – .02 = 2.73%OIL – .15 = 99.45GOLD – 25.10 = 1310.60SILV – .34 = 20.03 Manufacturing activity slowed in March after nearing a four-year high last month, but the rate of growth and the pace of hiring remained strong. The flash Markit US Manufacturing Purchasing Managers Index dropped to 55.5 from 57.1 in February. China’s manufacturing engine contracted in the first quarter of 2014, according to the flash Markit/HSBC Purchasing Managers’ Index. This week’s economic calendar includes the Case Shiller home index, FHFA home prices, and new home sales reports tomorrow; plus the March consumer confidence index; Wednesday includes the February durable goods orders; Thursday brings another revision to fourth quarter GDP, and Friday’s reports include the consumer sentiment report, consumer spending, and an update on personal spending. Ukrainian troops and their families are evacuating from Crimea, as Kiev effectively acknowledged defeat by Russian forces who stormed one of the last of their remaining bases on the peninsula. President Obama is in Europe to kick off a week-long visit that includes a G-7 meeting. He called for European allies to adopt tougher sanctions against Russia, saying Moscow’s actions must have costs. Mohamed El-Erian, the former co-chief at Pimco says markets have “brushed aside” concerns about Iran, Iraq, North Korea and Syria, to say nothing of rising tensions in Turkey and Venezuela. With Ukraine, the market had a …

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Friday, March 21, 2014 – Friday Wrap-up

Friday Wrap-up by Sinclair Noe DOW – 28 = 16,302SPX – 5 = 1866NAS – 42 = 427610 YR YLD – .02 = 2.75%OIL + .69 = 99.59GOLD + 6.20 = 1335.70SILV un = 20.38 The S&P 500 briefly climbed to a record high of 1,883.97, just over its previous record of 1,883.57. We hit resistance and didn’t break through. For the week, the Dow is up 1.8%, the S&P is up 1.6% and the Nasdaq is up 0.9%. The European Union has added a few more sanctions against Russia, adding 12 names to their list of Russians and Ukrainians facing asset freezes and travel bans. One EU commissioner said the goal is not sanctions, the goal is to get Putin to the negotiating table. The EU doesn’t want anything to rattle their already weak financial situation. In Europe they consider the Spanish “recovery” to be one of their success stories. GDP is projected at 1% growth, double last year’s 0.5% pace, and youth unemployment is still 55%; and this is considered good news. Spain, and several other EU nations are in no condition to fight a sanctions battle with Russia. A separate order signed by President Obama yesterday expanded sanctions and authorized potential future penalties. Yesterday’s sanction expansion included Bank Rossiya, not one of the largest Russian banks, but it starts to pull the financial sector into the equation. The EU cancelled a summit in Russia planned for June. US bankers are now considering whether they participate in a …

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Wednesday, March 19, 2014 – Behind the Curtain of the Mysterious Central Bankers

Behind the Curtain of the Mysterious Central Bankers by Sinclair Noe DOW – 114 = 16,222SPX – 11 = 1860NAS – 25 = 430710 YR YLD + .09 = 2.77%OIL + .67 = 100.37GOLD – 24.90 = 1331.60SILV – .20 = 20.71 Sometimes the stock market is a grand mystery, a riddle wrapped in a mystery inside an enigma. Sometimes the stock market is simple. Wall Street loves it when the Federal Reserve is throwing bags of money out of the helicopter that hovers over Wall Street. The traders get a little nervous when it looks like the free money might stop raining down on them. That doesn’t mean the Fed is stopping throwing money at Wall Street, just that traders are nervous. Today, the Fed FOMC wrapped up a two day meeting; they issued a statement; then Chairwoman Janet Yellen delivered a prepared statement; then she answered questions. The Fed statement indicated the Fed could and likely would continue with its low interest rate policy even after they reach their goals of full employment and 2% inflation. The central bank proceeded with its well-telegraphed reductions to its massive bond-buying stimulus, announcing it would cut its monthly purchases of Treasuries and mortgage-backed securities to $55 billion from $65 billion per month. I will now attempt to translate the Fed statement from Fedspeak to English. The statement said: the labor market is getting better but unemployment is still too high, household and business spending is decent but the housing market is …

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Tuesday, March 18, 2014 – Food and Oil

Food and Oil by Sinclair Noe DOW + 88 = 16,336SPX + 13 = 1872NAS + 53 = 433310 YR YLD – .02 = 2.68%OIL + 1.62 = 99.70GOLD – 12.00 = 1356.50SILV – .38 = 20.92 Let’s start with some economic news. The National Association of Home Builders housing market index increased to 47 in March, up from 46 in February. A reading below 50 means more builders view conditions as poor rather than good. Fewer homes are being started in early 2014 than at the end of 2013. Housing starts came in just slightly below economists’ expectations of 910,000 at 907,000. Separately, a quarterly survey by the Business Roundtable found US chief executive officers somewhat more positive about the economy, including plans for hiring and capital spending over the next six months; they expect gross domestic product to advance 2.4% this year. The forecast is a slight upgrade from an expectation of 2.2% in the previous survey but still less than robust. The Consumer Price Index, or CPI, increased a seasonally adjusted 0.1% in February, matching the increase in January. According to the Labor Department report, the increase was mainly due to higher prices for food. Energy prices decreased 0.5%. Over the last 12 months, the CPI is up 1.1%. Costs for meats, poultry, fish, dairy and eggs drove the gains. Most notably, beef and veal prices surged. Prices for beef saw their biggest monthly change in February since November 2003; that was when fears of mad-cow disease …

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Monday, March 17, 2014 – Empty Chambers and the Tools in the Toolbox

Empty Chambers and the Tools in the Toolbox by Sinclair Noe DOW + 181 = 16,247SPX + 17 = 1858NAS + 34 = 427910 YR YLD + .05 = 2.70%OIL- .90 = 97.99GOLD – 14.50 = 1368.50SILV – .27 = 21.29 Russia held a referendum vote on taking Crimea from Ukraine. Crimean voters approved the takeover with 98% voting in favor; the 2% of voters who opposed the take-over are probably on a slow train to Siberia. Global financial markets ignored the annexation, and they went up in what was described as a “relief rally”.  Stock markets in the US, Europe, and even Russia all moved higher. The United States and European Union countries imposed a new round of sanctions on 11 Russian and Ukrainian political figures, freezing assets and banning visas for Russians deemed responsible for interfering in Ukrainian sovereignty. The order means that any assets owned by the targeted Russians in the United States will be frozen and Americans will not be allowed to do business with them. Few Americans are truly concerned about Ukraine, nor should they be. The United States has no real national interests there, and whether Crimea becomes part of Russia is irrelevant to broader US national security issues. That doesn’t mean we shouldn’t pay attention; annexation of Crimea by Russia, and especially a further push by Moscow into Ukraine, would poison US-Russian relations for many, many years to come, and it will make cooperating with Russia on Syria, Iran and Afghanistan much more …

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Friday, March 14, 2014 – The Circle of Life

The Circle of Life by Sinclair Noe DOW – 43 = 16,065SPX – 5 = 1841NAS – 15 = 424510 YR YLD – .01 = 2.64%OIL + .81 = 99.01 GOLD + 10.90 = 1383.00SILV + .29 = 21.56 In economic news, the early-March consumer sentiment index fell to 79.9. That’s down from a final February reading of 81.6 but the latest number is within the range of numbers posted since November. A separate report from the Labor Department shows the producer price index dropped o.1% last month. The PPI measures inflation at the wholesale level. Final demand for goods rose 0.4% in February. Final demand for services dropped 0.3%. Producer prices excluding volatile food and energy costs fell 0.2%. In the 12 months through February, producer prices increased 0.9%, the smallest one-year gain since May 2013. Inflation is not a concern. The economy is still too sluggish to generate inflation. There are two big news stories of the day: Flight 370 and Ukraine. We don’t know anything about either. A total absence of actual information about the missing Malaysian flight is not in any way hindering 24 hour news coverage of the story. Facts have given way to fantastic fantasizing about everything from terrorism to hidden island airstrips to alien abductions. The news networks have been gathering tons of erroneous and conflicting reports which they immediately pass to their viewers. They must think we’re all morons. Secretary of State John Kerry and his Russian counterpart Sergei Lavrov wrapped up …

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Wednesday, March 12, 2014 – The Next 25 Years

The Next 25 Years by Sinclair Noe DOW – 11 = 16,340SPX + 0.57 = 1868NAS + 16 = 432310 YR YLD – .04 = 2.72%OIL – 1.96 = 98.07GOLD + 17.70 = 1368.20SILV + .43 = 21.42 Let’s run through some of the economic and business news and then we’ll get to today’s anniversary. Stocks were flat. People are still trying to make heads or tails of this mixed up world. The situation in Ukraine is not improving. The EU agreed a framework for its first sanctions on Russia since the Cold War. Protesters battled soldiers in the streets of Caracas, Venezuela; two more protesters were shot; dozens were injured. Riot police clashed with demonstrators in several Turkish cities for a second day as mourners buried a teenager wounded in protests last summer. The Senate Banking Committee announced an agreement on legislation to wind down the government-owned mortgage financiers Fannie Mae and Freddie Mac. Share price cratered. Herbalife says the Federal Trade Commission has opened an inquiry into the company. The FTC confirms the inquiry, but not the nature of the inquiry. Share price cratered. Copper prices dropped to the lowest level in almost 4 years; this goes back to China, and is a canary in the coal mine for industrial demand. China is one of the metal’s biggest customers and there has been recent poor trade data out of China. Two Chinese solar companies have defaulted in the past week. The general risk from here is that this …

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Friday, March 07, 2014 – Jobs Report Friday and Aiming Higher

Jobs Report Friday and Aiming Higher by Sinclair Noe DOW + 30 = 16,452SPX + 1 = 1878NAS – 15 = 433610 YR YLD + .05 = 2.79%OIL + 1.00 = 102.56GOLD – 9.50 = 1341.90SILV – .51 = 21.03 This is a jobs report Friday. Here’s what you need to know. The economy added 175,000 net new jobs in February; this topped estimates of 150,000. The unemployment rate moved higher to 6.7%, up from 6.6% in January. After two months of very bad jobs reports, we returned to just below average levels of 189,000 per month; not a great showing but not ugly. The December and January reports were revised higher by 25,000 jobs. So why did the unemployment rate go up? The labor pool got bigger; more people were looking for work. The ranks of the short-term unemployed declined by 61,000 to 2.3 million, while the ranks of the  long-term unemployed jumped by 200,000 to 3.85 million, and the labor participation rate held steady at 63%, just above the generational low of 62.8% in December. That seems to be a discrepancy, but the unemployment rate is based on a separate survey of households from the one that tracks hiring by employers, and the household survey showed an increase of 264,000 in the labor force. The participation rate is still well below the range of 66% to 67% where it had been for the past 20 years or so. The unemployment rate went up slightly because that 264,000 gain …

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Thursday, March 06, 2014 – Energy as Arsenal

Energy as Arsenal by Sinclair Noe DOW + 61 = 16,421SPX + 3 = 1877NAS – 5 = 435210 YR YLD + 4 = 2.74%OIL + .45 = 101.90GOLD + 13.60 = 1351.40SILV + .28 = 21.54 The Standard & Poor’s 500 index closed at another all-time high. The number of people who filed for unemployment benefits last week fell more than expected. That’s a sign fewer workers are being laid off. Tomorrow we have the monthly jobs report and we’ll see. Does a string of weak economic data in recent months represent a genuine slowdown in US economic growth, or is it just weather-related noise? The February jobs report might not provide much clarity because the reference week for the household survey coincided with a mid-February storm that dumped ice and snow (again) on much of the eastern US. Federal funding for extended unemployment benefits expired at the end of December, so we’ll be watching the jobs data to see what happens to people who have been out of work for more than six months. Of course, the jobs number is hugely important because it supposedly plays into Federal Reserve monetary policy. Fed officials have signaled they’re on track to trim the central bank’s bond-buying program in $10 billion increments this year. The jobs report probably would need to very ugly to change their minds. Of course, the past two months of jobs numbers have been ugly but that was dismissed as weather related. Maybe the February report will …

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Tuesday, March 04, 2014 – Everybody Clap Your Hands

Everybody Clap Your Hands by Sinclair Noe DOW + 227 = 16,395SPX + 28 = 1873NAS + 74 = 435110 YR YLD + .08 = 2.69%OIL – 1.57 = 103.35GOLD – 15.90 = 1335.40SILV – .27 = 21.24 Ukraine has not exploded. The situation has not escalated, nor has it de-escalated. Apparently Russia and the West have both figured out that conflict has the potential for mutually assured destruction, not along the lines of the old nuclear Cold War, but potentially painful for both sides; and so today, everything is on hold. Vlad Putin said he sees no immediate need to invade Ukraine; the Obama administration is trying to put together $1 billion in loan guarantees. Secretary of State John Kerry visited Kiev and there is still talk of sanctions if things don’t de-escalate. Putin says sanctions would be cause for retaliation. The Ukrainian military has shown remarkable restraint, adopting a Gandhi-like non-violence stance in the face of overwhelming firepower. And for the moment, there is a standoff but not a truce. That could change tomorrow. A story in Politico today says the Russians no longer respect or fear Western leaders. Why? “Russia thinks the West is no longer a crusading alliance. Russia thinks the West is now all about the money.” Quite so. More specifically, “Putin’s henchmen know this personally. Russia’s rulers have been buying up Europe for years. They have mansions and luxury flats from London’s West End to France’s Cote d’Azure. Their children are safe at British …

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Monday, March 03, 2013 – Carry On

Carry Onby Sinclair Noe DOW – 153 = 16,168SPX – 13 = 1845NAS – 30 = 427710 YR YLD – .05 = 2.60%OIL + 2.20 = 104.79GOLD + 21.70 = 1351.30SILV + .18 = 21.51 Manufacturing expanded at a faster pace than projected in February. The Institute for Supply Management’s (ISM) manufacturing index rose to 53.2 from 51.3 in January. A reading above 50 indicates expansion in manufacturing activity. Consumer spending in the US climbed more than forecast in January, reflecting the biggest increase in services in over 12 years. Household purchases rose 0.4%, after a 0.1% gain the prior month. Disposable income, or the money left over after taxes, rose 0.3% after adjusting for inflation. It dropped 0.2% in the prior month and was up 2.8% from January 2013. The saving rate was 4.3% in January, unchanged from the prior month. Wages and salaries increased 0.2% after dropping 0.1% in December. The big economic report this week will be the monthly jobs report on Friday. Faster than you can say “the Russians are coming”, they invaded Ukraine. Moscow now has operational control of the Crimean Peninsula, with about 6,000 airborne and ground troops. Russia has military bases on the Red Sea, but the troops have gone off base. The Russians have just taken over without any real fighting; indeed, many Crimeans are sympathetic to Russia. Ukraine has a large Russian ethnic minority, which it inherited mainly as the result of Soviet policies, including a re-drawing of the inner map …

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Thursday, February 20, 2014 – Searching for Inflation

Searching for Inflationby Sinclair Noe DOW + 92 = 16,133SPX + 11 = 1839NAS + 29 = 426710 YR YLD + .02 = 2.75%OIL + .02 = 102.86GOLD + 12.10 = 1324.00SILV + .29 = 21.92 The Conference Board’s Leading Economic Indicators rose 0.3% in January following no change in December. Over the six months through January, the LEI rose 3.1%. The LEI tracks 10 indicators designed to signal business cycle peaks and troughs. In the most recent report, 5 of the 10 indicators were positive, including a drop in jobless claims and a pickup in factory orders; on the negative side, declines in building permits and hours worked. Meanwhile, the Conference Board’s index of coincident indicators, a gauge of current economic activity, rose 0.1 percent for a second month. Overall, the leading indicators point to moderate expansion once the nation gets past inclement weather, with the caveat that consumer demand needs to pick up. No surprises in that report. The Consumer Price Index rose 0.1% in January after a 0.2% gain in December. The CPI measures prices at the retail level. The core rate, excluding food and energy prices, also rose 0.1%. Over the past 12 months, consumer prices were up 1.5%, and the core CPI was up 1.6%. Energy costs increased 0.6% from a month earlier and were up 2.1% over the past 12 months. Food costs rose 0.1%. Gains in the cost of hotel rooms, medical care and rents were mostly offset by declining costs for new …

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Friday, February 14, 2014 – Cold, Cold, Cold

Cold, Cold, Cold by Sinclair Noe DOW + 126 = 16,154SPX + 8 = 1838NAS + 3 = 424410 YR YLD + .01 = 2.74%OIL – .05 = 100.30GOLD + 16.30 = 1320.10SILV + 1.02 = 21.61 The cold weather back East has left its frozen footprints all over a variety of economic reports from payrolls to new home sales to retail sales. Estimating the extent of the weather effect is a guess at best, and it is possible that consumer spending might have slowed even with more pleasant weather. The best guesses from economists are that the snow, ice and bitter cold this winter will shave about 0.3 percentage point from economic growth; that works out to about $47 billion in lost productivity and about 76,000 jobs. Other estimates suggest fourth quarter GDP could be revised from 3.2% to as low as 2.2%(so maybe – $15 bln). Fortunately, a revision in GDP does not mean you have to write a refund check; whatever you made or lost in the fourth quarter is unchanged. Schools closed, traffic non-existent, or massive traffic pile-ups, businesses closed, thousands of flights cancelled, electricity outages, the Great Lakes are 75% frozen over; it’s all a big frozen, expensive mess. The most recent storms, the ones going on right now in the East, could cost $20 to 40 billion. The Federal Reserve reported this morning that manufacturing output fell 0.8% in January; they blamed the severe weather. At the same time, utility use jumped 4.1% last …

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