Finance Matters

Posts Tagged ‘CPI’

Tuesday continues a busy earnings week, while data streams out of Asia and Europe. Nonetheless it will be a relatively quiet day, as Coca-Cola and Walt Disney report. There are no major economic reports scheduled for release in the U.S., although December consumer credit will be announced.

Here’s what you need to know.

• The U.K. starts the day off early with retail sales at 7:01 p.m. EST on Monday evening. Sales are seen declining 0.8 percent in January, after a 2.2 percent gain the month before. 
• Philippine CPI will be announced at 8:00 p.m. EST, with expectations for the index to show 0.5 percent increases in December.
• Czech unemployment is out at 3:00 a.m. EST, with economists polled by Bloomberg expecting the jobless rate to jump 50 basis points to 9.1 percent for January.
• At the same time, industrial production for both Hungary and Denmark will be announced.  Output is seen expanding by 9.3 percent year-on-year in Hungary, while Denmark sees 0.3 percent growth sequentially for December. Also at 3:00 a.m. EST, Taiwan will announce total exports for January. Exports are seen falling 17.0 percent from year ago levels.
• Industrial production continues to roll out over the next several hours in Europe. At 4:00 a.m. EST Norway is expected to announce production grew by a slower rate than in November, at 0.1 percent. Estimates are not yet available for Portugal production, which last grew by 0.5 percent.
• Europe’s largest economy, Germany, will announce industrial production at 6:00 a.m. EST. The country is expected to see a reversal in production, with no growth in December after a 0.6 percent contraction in November.
• At 8:30 a.m. EST, North American gets into the fray when Canada announces new building permits. Permits are expected to increase 1.0 percent in December, after a 3.6 percent decline in November. 
• U.S. announcements start at 10:00 a.m. EST., with JOLTs Job Openings and economic sentiment. Job openings are seen expanding to 3.25 million from 3.16 million. Meanwhile, optimism as measured by Investor’s Business Daily is seen jumping to 48.6 from 47.5. A level below 50 indicates pessimism. 
• Federal Reserve chairman Ben Bernanke will testify at 10:00 a.m. EST on the state of the economy. Find coverage of his testimony live on Money Game. 
• Last on the agenda is consumer credit in the U.S. at 3:00 p.m. EST. Economists polled by Bloomberg see credit expanding by $7 billion, a decline from last month’s surprise $20.3 billion jump. 

U.S. corporates reporting quarterly results on Tuesday include names like Coca-Cola and Walt Disney. Below, a roundup of tomorrow’s big announcers.

Coca-Cola (KO): $0.77
AGCO (AGCO): $1.33
Western Union (WU): $0.40
CBRE Group (CBG): $0.44
Walt Disney (DIS): $0.71
DuPont Fabros Technology (DFT): $0.37
OpenTable (OPEN): $0.30
Panera Bread (PNRA): $1.42
Ralcorp Holdings (RAH): $1.35
Hartford Financial Services Group (HIG): $0.60

Consensus estimates provided by Bloomberg. 

Please follow Money Game on Twitter and Facebook.

Join the conversation about this story »

See Also:

• Here Are The Key Market Moving Events For Monday, February 6, 2012
• Here Are The Key Market Moving Events For Wednesday, February 1, 2012
• Here Are The Key Market Moving Events For Friday, February 3, 2012

Chinese leadership may get some more breathing room for further fiscal and monetary stimulus, following the release of some cool inflation data.

Dow Jones reports that November CPI came in at +4.2% vs. +4.4% expected.

Markets should probably like the news.

Please follow Money Game on Twitter and Facebook.

Join the conversation about this story »

See Also:

• Nomura: These Issues Should Keep You Up At Night In 2012
• Deutsche Bank: The Renminbi Will Be The World’s Next Major Reserve Currency
• TIMBER! Home Prices Are Crashing In China’s Most Famous Ghost City

Monthly data for October released in the last week was excellent. In stark contrast to ECRI’s continued recession call, the Index of Leading Indicators was up 0.9, primarily as a result of the surge in housing permits, which rose to their highest level (ex-housing credit) in 3 years. Starts also remained steady at over 600,000. PPI fell -0.3% and the CPI fell -0.1%. The YoY CPI also fell -0.2% to 3.6%, the first YoY evidence from the recent decline in gasoline prices. Industrial production rose by a strong 0.7. Real sales also rose strongly, up 0.5%, and with the decline in inflation, real retail sales were up 0.6%. The Empire State and Philly manufacturing reports for November were also both positive.

The high frequency weekly indicators generally were positive again, but with a likely error in a housing report, and a disconcerting decline in tax withholding.

Starting with jobs, the BLS reported that Initial jobless claims fell 2,000 to 388,000. Only 3 weeks in the last 3 years have been lower. The four week average declined to 396,750. The four week average remains close to its best reading in over 3 years. This is a short leading indicator and bodes well for the next payrolls report.

The American Staffing Association Index remained at 91 last week. In the last couple of months, this series has resumed a slight upward trajectory, but remains lower YoY. 

Disconcertingly, however, Tax withholding was significantly down from last year’s levels. Adjusting +1.07% due to the 2011 tax compromise, the Daily Treasury Statement showed that for the first 12 reporting days of November, $84.2 B was collected vs. $91.5 a year ago, a decline of -7.3 B. More importantly, for the last 20 days, $129.1 B was collected vs. $132.7 a year ago, a decline of $3.6 B or 2.7%. I use the 20 day metric precisely because there is a definite pattern to deposits by day of the week, but this is the steepest 4 week loss all year. This will have to be closely watched in the next several weeks.

The MBA weekly report may have had errors. The Mortgage Bankers’ Association reported that seasonally adjusted purchase mortgage applications decreased -14.8% last week. On a YoY basis, purchase applications were down -9.5%. This would be very bad, but it is completely at odds with the report of the same data atMortgage News Daily, which showed a -2.2% decline w/w and a -5.1% decline YoY, which is firmly within the range that purchase mortgage applications have been in since May 2010. I am inclined to believe that Mortgage News Daily was reporting the correct numbers. Refinancing fell -12.2% w/w. Refinancing has been very volatile and affected by small changes in interest rates.

Meanwhile, YoY weekly median asking house prices from 54 metropolitan areas at Housing Tracker showed that the asking prices declined -0.5% YoY. Once again, this is a new “best” YoY reading in 4 1/2 years. The areas with YoY% increases in price remained at 19, meaning that one third of all metropolitan areas in this survey now have YoY positive changes in asking prices. The areas with double-digit YoY% declines decreased to only 1 — Chicago.

Retail same store sales remained positive as they have been all year. The ICSC reported that same store sales for the week of November 5 increased 3.1% YoY, and 0.3% week over week. Shoppertrak reported that YoY sales rose 3.6% YoY and were up 6.5% week over week.

The American Association of Railroads reported that total carloads increased 2.0% YoY, up about 13,700 carloads YoY to 544,600. Intermodal traffic (a proxy for imports and exports) was up 11,100 carloads, or 5.2% YoY. The remaining baseline plus cyclical traffic increased 1500 carloads or 0.5% YoY. Total rail traffic has rebounded in the last 6 weeks month after having been soft during the summer.

Weekly BAA commercial bond rates rose .01% to 5.12%. Contrarily, yields on 10 year treasury bonds fell .02% to 2.05%. This is a very minor episode of increasing spreads in contrary directions. If it were to continue and amplify, it would represent significant weakness.

Money supply continues to stabilize after its Euro crisis induced tsunami. M1 increased 0.1% last week, and is down -1.1% month over month. remains up 19.3% YoY, so Real M1 remains up 15.7%. M2 increased 0.5% w/w. It remained up 0.1% m/m, and 9.8% YoY, so Real M2 was up 6.2%. The YoY increase in both M1 and M2 remains very high.

Finally, the Oil choke collar remains engaged, as Oil closed at $97.41 a barrel on Friday. This is back above the recession-trigger level calculated by analyst Steve Kopits. Gas at the pump increased $.02 to $3.44 a gallon. Measured this way, we probably are about $.15 above the 2008 recession trigger level. Gasoline usage is once again off substantially, down -3.7% YoY, at 8625 M gallons vs. 8952 M a year ago. The 4 week moving average is off -5.7%. This appears more and more to be evidence that consumers have permanently altered their gasoline usage habits towards more conservation.

The stark difference in forecasts between the Conference Board LEI and the ECRI index sets up a real world test of these two reports. Most significantly, as far as we know ECRI does not make use of the yield curve, but the yield curve is an important component of the LEI. All of the monthly data reported this week shows an economy briskly expanding and poised to continue. The weekly data was more tepid, but generally positive with the very significant exceptions of the price of Oil and tax withholding. Since WTI and Brent Oil are converging, and retail gasoline prices so far are not reflecting any surge, this may not be as bad news as it initially seemed. The next few weeks will tell if the poor tax withholding in the last 4 weeks was noise or not.

Have a nice weekend.

Please follow Money Game on Twitter and Facebook.

Join the conversation about this story »

See Also:

• 5 Big Risks To The Global Economy
• Attention Could Shift Back This Week To Important Economic Data
• Two Big Risks Still Facing The Economy

A big report from Société Générale gives “broadly below consensus” GDP targets for just about every country.

SocGen projects 0% GDP growth for the eurozone next year versus 0.7% consensus.. For the U.S. SocGen projects 1.4% growth versus 2.1% consensus in 2012. SocGen is also below consensus in China, projecting 8.1% growth in 2012, followed by 7.7% growth, slowing to 7.5% in the medium term.

This chart sums up SocGen’s world view: Bearish with more and bigger black swans than white swans.

Please follow Money Game on Twitter and Facebook.

Join the conversation about this story »

See Also:

• SocGen Explains How Income Inequality Is A Growth Killer
• October CPI Comes In Tame
• Another Strong Number: October Industrial Production Just Had Its Biggest Jump In July

In a recent presentation for Morgan Stanley, economist Vincent Reinhart looked at 15 financial crises since WWII to see how the US “recovery” stacks up.

Among the crises: Japan in the early 90s, the East Asian crisis of 1997, as well as ones in Argentina and Mexico.

Anyway, the answer, the US is definitely falling short.

Here’s a look at how we stand against the averages.

Please follow Money Game on Twitter and Facebook.

Join the conversation about this story »

See Also:

• Joe LaVorgna: Europe Doesn’t Matter To The US Economy
• 9 Things You MUST Know If You’re Going To Be Investing These Days
• China’s CPI Cools To 5.5% And Food Prices Slow To 11.9%