Succinct Summation of Week’s Events:

Positives:

1) ECB backs up Mario Draghi’s words with action and European and US markets celebrate (Asian markets mixed). Forgotten though is that the ECB balance sheet has shrunk by 1T euros over the past two years of which 500b euros of LTRO money has been paid back over the past year. Adding 400b of targeted LTRO’s just refills some of the tank.

2) US companies add a net 217k to their payrolls in May, in line with expectations and 4th month in a row above 200k. Unemployment rate steady at 6.3%, the lowest since September ’08. Earnings grow .2% after no change in April with hours worked unchanged.

3) S&P 500 rises to fresh record high.

4) ISM services index in May rose 1.1 pts to 56.3, a touch above estimates and the best level since August; ISM manufacturing index rose to 55.4 from 54.9 in April;

5) Unemployment 4 week average = 310k, the lowest since ‘07.

6) Vehicle sales in May totaled 16.7mm, the most since February ’07 and well above the estimate of 16.1mm.

7) China’s PMI services index improved to 55.5 from 54.8, a 6 month high. The manufacturing index ticks up to 50.8 from 50.4.

8) Japan’s services PMI rises almost 3 pts in May but remains below 50 at 49.3. The manufacturing index is left at 49.9.

10) German exports advance by 3% m/o/m in April, better than the estimate of up 1.3%.

Negatives:

1) Investors Intelligence said Bulls rose to 62.2, the 2nd highest on record and is now above the 60.8 seen in August 1987 and 62.0 in October ’07. The record was 62.9 in December ’04, 1 ½ years into that bull market but we’ll likely exceed that next week after the ECB move. Bears remain at a lowly 17.4.

2) US Initial Jobless Claims totaled 312k, 2k more than expected and last week was revised up by 4k to 304k.

3) The April trade deficit was $47.2b, well above expectations of $40.8b, it’s the highest since March ’12 and up from a revised $44.2b in March (a negative for Q2 GDP ~0.4%)

4) Coincident with the downward Q1 revision to GDP, nonfarm productivity was revised to a decline of 3.2% vs the initial print of down 1.7%. That was about in line with expectations and it brings unit labor costs up to 5.7% annualized in Q1 vs 4.2% first reported.

5) A one year low in the average 30 yr mortgage rate to 4.26% from 4.31% again did nothing to lift mortgage applications. Purchases fell 3.6% w/o/w, down for a 4th straight week and refi’s were lower by 2.9%, down for a 2nd week

6) The EU PMI services index was revised slightly lower to 53.2 from the initial report of 53.5 but it is up from 53.1 in April and at the highest level since June ’11.

7) While the ECB is easing again, the BoE is dealing with nationwide home prices which have now exceeded its 2007 peak on a nominal basis as they rose 11.1% y/o/y in May, above the estimate of 10.9%.

8) China’s HSBC PMI index was revised slightly lower to 49.4 from 49.7 initially but up at a 4 month high and vs 48.1 in April. The services index falls by .7 pts to 50.7.

9) Regular wages in Japan fall another .2% y/o/y in April but thanks to overtime and bonuses, overall cash earnings rise .9% but lower by 3.1% on a REAL basis.

10) German industrial production rose .2% in April, half expectations and March revised slightly lower.

 

Peter Boockvar
Managing Director
Chief Market Analyst

The Lindsey Group LLC
11320 Random Hills Road
Suite 650
Fairfax, VA 22030
Main:  703-621-1170
Direct: 973-251-2063
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E:  peter@thelindseygroup.com
www.thelindseygroup.com

Category: Markets

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6 Responses to “Succinct Summation of Week’s Events 6.6.14”

  1. 4whatitsworth says:

    Our business had a great week it felt like the old days. We are all a little puzzled this came out of nowhere suddenly the economy feels like it has a pulse again now lets see if it has any staying power.

  2. chartist says:

    Add this tidbit to the bull camp – the EEM, emerging market index, broke to the upside out of a multi-year symmetrical triangle…I had been keeping an eye on this chart and mentioned here months ago that I expected a downside move. Wrong….This triangle is 17 points wide so, with the breakout around $43, it would seem $60 is the target…Not sure which emerging market is the lead sled dog here but some folks like India.

  3. chartist says:

    I work for a tier one auto parts manufacturer and labor is getting seriously tight in the Midwest….We are having to take in former employees who quit us 6 months ago, for various reasons, because we have to keep the machines running. I have said it here more than once, that if you need a start, with nothing more than your labor to offer, come to the mid west as the auto companies are humming along.

  4. CD4P says:

    So, by Larry Summers’ logic, there was no need for FASB 157… Sheesh.

    http://www.calculatedriskblog.com/2014/06/larry-summers-on-house-of-debt.html

  5. VennData says:

    Bullishness correlates to what?

    Investors have been bearish since Obama was first elected and sold off huge after his reelection.

    To finally get a little bullish after six bearish years is only natural as the marginal ideologue has to admit they were wrong and stop fighting the data.

    The seething mass of Republicans can’t wake from their Fox News induced nightmare. There is your relentless floor of bearishness.

    Which is why this can only be called the Obama Rally.

  6. [...] A look back at the economic week that was.  (Bonddad Blog, Big Picture) [...]

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