Economic News

[Oldcoin]

ECONOMIC REPORT
PPI falls 0.6% in January on lower energy prices
Core rate rises 0.2%, meeting expectations

WASHINGTON (MarketWatch) -- U.S. wholesale prices fell in January because of sharply lower energy prices, while core prices increased modestly, the Labor Department reported Friday.

Wholesale prices fell 0.6% in January, after two sizable gains in November and December, as energy prices fell 4.6%.

The core producer price index -- which excludes food and energy prices -- rose 0.2% in January for the second consecutive month.

The drop in wholesale prices and the gain in the core rate were in line with the expectations of Wall Street economists surveyed by MarketWatch

http://www.marketwatch.com/news/sto...x?guid={26489DE7-AA1F-480F-A4D7-997DCE555BC7}

 

[Oldcoin]

Here is our economic calendar for next week. Not too many economic reports in line to be released, but we do have the CPI numbers released on Wednesday prior to the market opening. Also at 2:00 pm ET (after our trading is closed) the FOMC minutes will be released and will be the focus of the market along with the CPI numbers.

http://biz.yahoo.com/c/ec/200708.html

http://www.nasdaq.com/asp/econodayframe.asp?page=http://www.nasdaq.com/econoday/index.html

Who’s speaking next week?

Tues @ 3:25 pm et Susan Schmidt Bies Fed Res Gov, FMOC voting member
Wed and Fri S.F. Fed Pres Janet Yellen

We continue to have earnings reports this week with Home Depot, Alltel and Toll Bros. reporting.

http://www.briefing.com/Investor/Private/MarketAnalysis/Calendars/EarningsCalendarWeek2.htm

 

[Oldcoin]

ECONOMIC REPORT

CPI up 0.2% in January, more than expected
Core inflation rises 0.3% on biggest jump in medical care prices in 16 years

WASHINGTON (MarketWatch) - U.S. consumer prices increased 0.2% in January, led by large increases in food, medical care and tobacco prices, the Labor Department reported Wednesday.

Core inflation, which ignores movements in food and energy prices, rose 0.3% in January, the biggest increase since June.

The greater-than-expected consumer price index could lessen the odds that the Federal Reserve would cut interest rates. The core CPI is up 2.7% in the past year, a notch higher than the 2.6% year-on-year rate in November and December.

The CPI is up 2.1% in the past 12 months
.
Economists surveyed by MarketWatch were looking for a 0.1% gain on the CPI and for a 0.2% gain on the core CPI.

In December, the CPI rose 0.4%, while the core CPI was up 0.1%.
As expected energy prices declined, falling 1.5% after a 4.2% gain in December. Gasoline and natural gas prices fell 3%.

Food prices jumped 0.7%, the largest gain in nearly two years. Stormy weather in California destroyed some crops, helping to send vegetable prices up 1.9% and fruit prices up 1.5%. Dairy prices rose 1.3%.

Shelter prices rose 0.3%. Owners' equivalent rent, which represents nearly a fourth of the CPI, increased 0.2%, the smallest increase in a year. Rents rose 0.4%. Hotel fares increased 1.1%.
Medical care prices rose 0.8%, the most in 16 years. Prescription drug prices jumped 1.1%, also the biggest increase in 16 years after falling for three months in a row. Physician services prices rose 1.2%, the most in 26 years.

Apparel prices rose 0.3%

Transportation prices fell 0.8% on the drop in fuels. Airfares rose 2.1%, the most in more than two years. New car prices were unchanged.

Tobacco prices rose 3.1%, the biggest increase since mid-2002.

http://www.marketwatch.com/news/sto...25AF15F-02B6-4BC4-8FCF-902698F9B0E8}&dist=bnb

 

[Oldcoin]

Fed worried core inflation trend not set: minutes

http://news.yahoo.com/s/nm/20070221/bs_nm/usa_fed_minutes_dc_4

 

[Oldcoin]

This IIM white paper provides the following: 1). A neutral assessment of the U.S. economic health, 2). An analysis of the long-term consequences of current policy decisions 3). The emerging economic, social and geopolitical threats to the U.S. financial prosperity 4). Risk mitigation strategies 5). Management best practices

http://iim-edu.org/u.s.economyrisks/

I tried to do some research on Med Yones, author of the above article, but couldn’t find out what the motive behind the paper was i.e. political.

 

[Oldcoin]

ECONOMIC PREVIEW
Manufacturing data under the microscope

http://www.marketwatch.com/news/story/manufacturing-data-under-microscope/story.aspx?guid={BF05DF5A-84F0-4CBC-918B-E9F27F3750A8}&siteid=myyahoo&dist=myyahoo

Oldcoin,
I took your URL above and had it reprocessed at: http://tinyurl.com/
Here is your MarketWatch reference ----> http://tinyurl.com/35xtel
Rgds.. ..Spaf

 

[Oldcoin]

The economic calendar for next week is much busier than last weeks. Starting off the week on Feb 27 we have existing home sales and new home sales on the 28th. I’ve heard rumblings during my internet wandering that we may be surprised by the numbers and not pleasantly. The scenario goes like this, homes that were reported sold in January fell through because of problems in the sub-prime lending market and difficulties that people are having qualifying for loans. Here is the link to the story in the Chicago Tribune. http://www.chicagotribune.com/business/chi-0702230167feb23,1,6953385.story?ctrack=1&cset=true It’s not all gloom and doom though, he does have some positive statements about the housing market. So we’ll see how the numbers play out.

Also on tap are GDP, Chicago PMI and Initial Claims, Oh yeah on March 1 Auto and Truck Sales.

http://biz.yahoo.com/c/ec/200709.html

http://www.nasdaq.com/asp/econodayframe.asp?page=http://www.nasdaq.com/econoday/index.html

It’s also a big week for who’s speaking. Bernake will be speaking on Wednesday and Friday. I think Friday’s is a late talk so it should have no impact on Friday’s market. Also we have Susan Bies and Richard Fischer talking on Tuesday. On Wednesday Timothy Geithner (FOMC voting member) speaks and Thursday Henry Paulson will talk on trade. Finally on Friday William Poole another FOMC voting member will talk, but in Chile.

Anyone of these could be market movers….up or down. With the lack of hawkish statements over the past couple of weeks I’m thinking it will be more of the same.

Finally, we have earnings reports for next week.

http://www.briefing.com/Investor/Private/MarketAnalysis/Calendars/EarningsCalendarWeek3.htm

A number of companies are reporting, Thor Industries, Novastar Financial (NFI) who just made statements last week regarding it’s sub-prime loans. (Learned that in the Bear Cave). A bunch of retailers Target, Nordstrom, Aeropostal. Also Martha Stewart reports, MSO was recommended by the Motley Fool a while back.

 

[Oldcoin]

Greenspan: Recession 'possible' by end of year

http://www.usatoday.com/money/economy/2007-02-26-greenspan_x.htm?csp=34

Well, I didn't have Greenspud on my who's talking list....

 

[Rod]

Greenspan: Recession 'possible' by end of year

http://www.usatoday.com/money/economy/2007-02-26-greenspan_x.htm?csp=34

Well, I didn't have Greenspud on my who's talking list....

I'm sure WS won't like this, because they still listen to him.

Thanx for the link!

 

[Oldcoin]

Well the market got hit with bad news today, but it didn’t come from the source I was expecting. We had a short discussion regarding the Shanghai Index and its potential impact on the Asian market in another tread. The real market mover today was the Durable Orders. The Market was expecting a decrease of 3% and when it came in at 7.8% well we all knew what happened. Still some pain is not a bad thing. Even upbeat Consumer Confidence and Existing Home Sales couldn’t stop the hemorrhaging. Housing prices have dropped by over 8% on average so the increase in sales would make sense. I’m hoping this will negate what was described above as a housing glut in inventories.

Tomorrow we have GDP and Chain Deflator Preliminary numbers. These are for the 4th quarter of 2006 and might come in at acceptable levels. The Chicago PMI might be a different story. While it only rates a B on the importance list the market might be fixated on it for further indications of the current condition of the economy.

You would expect a bounce tomorrow with the drop today, but investors might be skittish after the action today. We also have Benakel talking tomorrow.

 

[Oldcoin]

It seems that Bernakel has soothed the markets today, but the Chicago PMI came in at 47.9 the market was expecting 50. While this is not a significant report by market standards it is an indicator for tomorrows’ NAPM ISM Index which rates an A- on the importance scale. This a.m. when the Chicago PMI numbers came in it was interesting that one of the talking heads said that many of the sectors in the report were up and he could not understand why the numbers came in so low. Here is a quote from http://www.nasdaq.com

“A spike in inventories was especially bad news, rising to 54.5 vs. 41.9. Given the decline in orders, the reading suggests that supply managers have not been able to liquidate stocks in the face of slowing demand. Other readings included a rise in prices paid, 63.2 vs. 54.9, which probably won't cause much concern given the downturn in overall activity.

Financial markets showed no significant reaction to the report, but it will be interesting to see if the inventory reading is repeated in the coming ISM manufacturing and non-manufacturing reports. Inventory overhang may yet be an important risk should economic growth begin to slow significantly.”

So if the numbers carryover from the Chicago PMI to the ISM Index it would be negative for the market.

 

[Oldcoin]

Heebner Says `Huge' Subprime-Loan Defaults to Slow U.S. Economy

By Danielle Kost

Feb. 28 (Bloomberg) -- Kenneth Heebner, the manager of the top performing real estate fund over the past 10 years, said the increase in the number of high-risk mortgages going bad will reduce U.S. economic growth.

``We have a trillion dollars of subprime mortgages and we're going to have huge defaults,'' Heebner, 66, said in a telephone interview today from his office in Boston. ``If you're looking at the housing market, it's not the darkest before dawn, it's the darkest before pitch black,'' Heebner said.

http://www.bloomberg.com/apps/news?01087&sid=aa8T7UpFqkIs&refer=home

I've been learning about the sub-prime market since it was talked about in the Bear Cave thread. I've been meaning to post some links and info on the subject but.....well you know work kinda got in the way. So I'll try to get something together on this on the weekend.

 

[Oldcoin]

CORRECT: U.S. Feb. ISM manufacturing index 52.3%

By Greg Robb
Last Update: 10:27 AM ET Mar 1, 2007

WASHINGTON (MarketWatch) - The nation's manufacturers increased production in February, the Institute for Supply Management reported Thursday. The ISM index rose to 52.3% in February from 49.3% in January, which was the lowest level in almost three years. The rise was unexpected. The consensus forecast of estimates collected by MarketWatch was for the index to rise to 50.0%. Readings above 50 indicate expansion, while readings below indicate contraction. The index has averaged 50.7% over the past four months. New orders rose to 54.9% in February from 50.3% in January. Inventories rebounded to 44.6% from 39.9 in the previous month, which was the lowest level since 1984. The employment index rose to 51.1% from 49.5%. The price index rose to 59.0% from 53.0%. (This is an update to correct four-month average.)

This seems like pretty good news today for the economy. I was expecting a lower reading because of the Chicago numbers yesterday. So….maybe Bernakel has it right. Let’s hope so.

 

[Oldcoin]

The risk in subprime
During the boom, lenders gave homeowners loans they couldn't afford. Now they're feeling the consequences.

By Ellen Florian Kratz, Fortune writer

www.money.cnn.com/2007/02/28/magazines/fortune/subprime.fortune/index

 

[Oldcoin]

Here is our calendars for next week. While not a lot of reports due out, the market may be looking at a few to determine the direction of the U.S. Economy in the short term. On Monday we have the ISM Services report. Last weeks ISM Manufacturing report which had good numbers couldn’t reverse the market direction. Maybe some good numbers on Monday will help. The big item for next week should be the Fed’s Beige Book. I don’t have expectations that they will discuss cutting rates, expect more of the same verbiage from the Fed that we’ve gotten all along. Hopefully no real hawkish statements. At the end of the week we get the jobs report.

http://biz.yahoo.com/c/ec/200710.html

http://www.nasdaq.com/asp/econodayframe.asp?page=http://www.nasdaq.com/econoday/index.html

So who’s speaking this week? I tried to find out if Greenspud was doing anything, but I couldn’t get his calendar through Google. I noticed that later in the week he stated that the Recession was not probable, but the market continued its downward charge anyway. Kevin Warsh and Michael Moskow both FOMC voting members will be talking on Monday and Wednesday and some Federal Reserve Bank Presidents will be talking throughout the week.

Ah earnings,

http://www.briefing.com/Investor/Private/MarketAnalysis/Calendars/EarningsCalendarWeek4.htm

Of note is the Boston Beer Company reporting during trading hours on Tuesday, with all the people at the Monkey Bar they should see a boost in sales.

 

[Warrenlm]

Bloomberg is reporting on Greenspan again this morning. Is this the tipping point?

SINGAPORE (Reuters) - Former Federal Reserve chairman Alan Greenspan was quoted as seeing a "one-third probability" of recession in the United States this year, according to an interview with Bloomberg.
"We are in the sixth year of a recovery; imbalances can emerge as a result," Bloomberg quoted Greenspan as saying.
"Ten-year recoveries have been part of a much broader global phenomenon," Greenspan said in the interview.
He said the historically normal business cycle was much shorter and was likely to be this time, the news agency said.

Greenspan's outlook contrasts with the views of his successor Ben Bernanke, who told Congress last week that the economy may strengthen this year. Bernanke's assessment helped steady stocks markets after a plunge the day before, Bloomberg said.

 

[Oldcoin]

U.S. Q4 productivity revised lower, labor costs revised up

By Greg Robb
Last Update: 8:30 AM ET Mar 6, 2007

WASHINGTON (MarketWatch) - Productivity growth in the U.S. nonfarm business sector was much weaker in the fourth quarter than previously estimated. Productivity was revised to a 1.6% annual growth rate from the 3.0% estimate a month ago, the Labor Department said Tuesday. Economists surveyed by MarketWatch were expecting a revision to 1.4%, considering the downward revision to fourth-quarter gross domestic product. Unit labor costs - a gauge of wage push inflationary pressures - rose at a 6.6% annual pace in the quarter, revised higher from a 1.7% increase

Makes you wonder where they get the original numbers.......

 

[Oldcoin]

ECONOMIC REPORT
Factory orders fall at fastest pace since 2000
Orders for capital equipment fall 6.3%, most in three years

By Rex Nutting, MarketWatch
Last Update: 1:11 ET Mar 6, 2007

http://tinyurl.com/3y4xyf

 

[Oldcoin]

http://www.bloomberg.com/apps/news?pid=20601087&sid=aeBe4QIIlsTg&refer=home

Bernanke Says Fannie, Freddie Need to Reduce Assets (Update2)

March 6 (Bloomberg) -- Fannie Mae and Freddie Mac, the largest sources of money for U.S. home loans, should sell most of their $1.4 trillion in assets to refocus on homeownership among low-income Americans, Federal Reserve Chairman Ben S. Bernanke said.
The firms could destabilize financial markets should they fail to hedge their assets against risks like shifts in interest rates, Bernanke said in a speech to a meeting of the Independent Community Bankers of America in Honolulu today.

Bernanke didn't comment on the outlook for economic growth or interest rates in his speech. <--- What a shock!

 

[Oldcoin]

Global Central Bank Focus
Paul McCulley | March 2007


The Plankton Theory Meets Minsky

http://www.pimco.com/LeftNav/Featured+Market+Commentary/FF/2007/GCBF-+March+2007.htm

Watching the on-going meltdown in the sub-prime mortgage market, which is triggering a sharp tightening of underwriting standards to these dicey credits, I was reminded of prescient writings by two serious thinkers: Bill Gross and Hyman Minsky. Both narratives go back a long ways, with something that Bill wrote in August 19801 – 27 years ago! – particularly poignant: