Succinct Summations week ending June 14, 2013.


1. Retail sales rose 0.6% in May v expectations of +0.4% (helped by autos +1.8%).
2. Households healing as Debt/Disposable Income declined to the lowest levels since 2003 (112%).
3. S&P 500 logged 2nd best day of the year Thursday thanks to late push from FOMC scribe Hilsenrath.
4. U.S. weekly jobless claims declined for 2nd straight week, coming in at 334k v expectations of 346k.
5. Fed. Gov. Bullard said U.S. inflation surprised to the downside (duh, re: Gold)
6. NFIB small business optimism hits 1-year high, rising to 94.4 in May
7. U.S. MBA’s mortgage application index rose 5% last week.
8. Construction output in the U.K. improved to -1.1% y/o/y from -7.2% in March.
9. S&P revised U.S. sovereign credit outlook to stable from negative (who really cares what S&P says?)


1. Volatility has returned; 10 of last 11 sessions have seen 100+ point moves in the Dow
2. Markets driven by speculation of Fed’s next move; whipsaw action is here
3. The Dow Jones saw its’ first 3-day losing streak of the year.
4. Industrial production in May came in flat v expectations of a 0.2% rise.
5. U of Michigan Consumer confidence fell to 82.7 in June from 84.5 in May.
6. Capacity utilization fell to 77.6% v expectations of 77.8%
7. Furniture sales fell for 5th consecutive month, surprising given strength in housing market.
8. PPI increased 0.5% m/o/m in May (inflation remains modest, increasing at +1.7% y/o/y).
9. Household debt/disposable income ratio is 112%!

Category: Markets

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5 Responses to “Succinct Summation of Week’s Events (June 14, 2013)”

  1. Petey Wheatstraw says:

    “7. Furniture sales fell for 5th consecutive month, surprising given strength in housing market.”

    The banks want houses, not furniture. The furniture is either in storage (put there by the owners), or at Goodwill (put there by the banks).

  2. RW says:

    I’m a fan of Tim Duy’s Fed Watch and believe his insights into Fed activity are among the best but, pace Tim in this instance, I am none-the-less increasingly convinced that central bank ‘tapering’ is not going to happen next quarter or the quarter after that nor any quarter until fiscal policy makers reject deficit hawkery and do so fairly substantively.

    Why Bernanke was right to speak out on fiscal policy

    …it is really important that central banks, like the Fed, make it publicly clear the difficulties that fiscal tightening is causing them in meeting their mandate. Either this is because they are, quite rightly, uncertain about the impact of QE, or they are aware that the more fiscal tightening there is, the more inflation will have to go above 2% to counteract its impact.

    Ironic, eh?

  3. RW says:

    The only danger from inflation was from deficit scolds driving central bankers crazy.

    The real killer is zero growth (a central bank’s inability to do much about that at the zero boundary in the absence of accompanying fiscal stimulus is becoming established fact). Courtesy of Ken Houghton

    Let us agree that the risk-free rate r should be the growth rate i plus inflation expectations (pi^e).

    (pi^e) cannot be more than 2.5%, and that’s for those of you who are dumb enough to think the Fed would allow anything over 2.0% without Richard Fisher’s Depends smelling like…well, anyway…

    So the market is now saying that i is around a basis point or two, compounded average over the next ten years.

    By my math, that means (1) another Lost Decade and (2) a 10-year rate around (let’s be generous) between 2.02% and 2.27%.

    Bloomberg has the 10-year Treasury as I type at 2.199%.

    Sounds as if the market knows its Fed. And the Prospects for Growth.


  4. Adding in this week’s economic data releases, TRI gauges baseline Real GDP is running at a 2.2% pace in June (Q2) … the 26th consecutive monthly increase. My measure of Structural GDP suggests the economy would be -3.0% today w/o the influence of the 0.7 trillion deficit.

    The Price/Income ratio norm suggests US Existing Homes are 4% ($6k) overpriced but still 19% below the 2006 annual record. New Homes are 12% ($28k) above trend and 4% above the 2007 record.

    macro outlook charts:

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