Posts filed under “Think Tank”
April CPI was flat but core CPI was up .3%, .2% more than expected and its the 1st .3% reading since July ’08. Y/o/Y CPI fell .7% after falling .4% in Mar and its the biggest drop since ’55 but with the recent rise in energy and food prices, that trend will reverse. The y/o/y core gain was 1.9%, the most since Nov ’08. The main factors leading to the upside surprise in the core # was a .4% gain in vehicle prices, a .4% gain in medical care and a 2.6% gain in other goods and services, made up of personal care and tobacco (prices rose 9.3% after an 11% gain in March due to higher taxes). Owners equivalent rent, 24% of the headline # and 31% of the core, rose .1%. Actual rent rose .2%. May NY Fed survey was -4.6, better than forecasts of -12 and an improvement from the April # of -14.7. New Orders though fell but after a sharp gain in Apr. Employment rose more to the best level since Dec. Prices Paid rose but those Received fell to a new low.
April Industrial Production fell .5%, .1% better than expected but March was revised down by .2%. A 1.4% gain in the output of auto’s and parts was more than offset by a drop in machinery, computer/electronics, and mining. Due to the complete shutdown of Chrysler over the past 4 weeks and some GM plants, the gain in auto production will reverse. Utility output rose .4%. Looking forward with IP is whether the huge inventory destocking that’s been seen over the past 2 quarters will be followed by an increase in production to replenish those inventories. Capacity Utilization fell to 69.1% from 69.4%, the lowest since at least 1967 but was .3% higher than expected. Some argue that this output gap will keep a lid on inflation for a while but the inflation we’ll see will be commodity inflation driven globally not by just how utilized US factories are.
March foreign long term purchases of US assets totaled $55.8b, about $23b more than expected and its the biggest inflow since Sept ’08. Likely due in part to the March Fed decision to start buying US Treasuries, the net purchases of Treasuries rose $55.3b up from $21.5 in Feb and its the biggest one month increase since April ’08. Foreigners sold a net $15.6b of Govt agency bonds, bought $3.5b of corporate bonds and $13.2b of US stocks. Because the data is somewhat dated and influenced by the Fed announcement, the $ is still higher but little changed in response.
Location, location, location doesn’t only apply to buying the right house or piece of real estate, it also means being near the few countries in the world that are showing growth. March Japanese core Machinery Orders fell 1.3% m/o/m, better than forecasts of a drop of 4.6% and foreign orders rose by a record 46.4%…Read More
Good Evening: U.S. stocks persistently drifted higher today after 3 straight down days. The economic and earnings news was mostly of the offsetting variety, thus helping to hold prices in a fairly narrow range as volatility continued to ebb. Since yields on everything from Treasurys, to corporate bonds, to credit cards were the subject of…Read More
Chrysler, GM and the New Industrial Policy
May 14, 2009
IRA Releases Preliminary Q1 2009 Bank Stress Ratings and Index Results
Bruce Minton & John Stewart
The Fat Years and the Lean
International Publishers (1940)
The response to our release of the preliminary Q1 2009 results for the IRA Bank Stress Index has been excellent. We appreciate the user feedback and the media attention. Bottom line is that the jump in the Stress Index, from 1.8 at year-end 2008 to 5.7 at the end of Q1, suggests a year-end 2009 loss rate peak for commercial and residential exposures. Click here to learn more.
To us, the use of the enhanced FDIC data distribution technology illustrates how better public access to financial disclosure and automated distillation can improve timeliness and relevance, thereby encourage debate and dialog among and between analysts, and in turn drive better asset allocation choices by investors. Our census of the US banking industry also shows that, more often than not, politicians prevaricate when speaking about the soundness of large financial institutions – who are their clients, after all.
In the most recent comment in IRA’s Advisory Service, we talk about bank valuation in the age of “Industrial Policy” reborn, reflecting the clear shift away from the interests of private investors visible in the White House’s handling of the Chrysler bankruptcy and in prospect with the impending failure of General Motors (NYSE:GM) and GMAC.
In the cases of both companies, several sources tell the IRA, Obama Administration officials have threatened professional advisers with various official sanctions if they do not go along with the new political agenda of giving control of GM and Chrysler to the UAW. The unions have taken a disproportionate share of the economic output from the Big Three automakers for decades, measured by salary and benefits, but now Washington will give the UAW the rest, leaving creditors disenfranchised by the arbitrary action of the Executive Branch?
Category: Think Tank
> Many market-watchers claim that U.S. economic statistics are increasingly being revised downward in subsequent periods, suggesting that the figures initially being reported by Washington are “puffed up,” so to speak, most likely for political purposes. Well, I went back and had a look at the differences between the reported and revised data for various…Read More
Category: Think Tank
Initial Claims totaled 637k, 27k more than expected and up from a revised 605k last week and Continuing Claims rose 202k from last week and was 160k higher than expected. The Labor Dept is blaming the auto industry for the jump in initial claims as it was those auto producing states that saw the biggest…Read More
In addition to the heated debate over whether the global economy is experiencing a bottoming process or is just an inventory head fake, the other discussion is whether the policies of the Fed and other central banks will eventually lead to a period of high inflation. Inflation will be a process not an event so…Read More
Kevin Lane is one of the founding partners of Fusion Analytics, and is the firm’s director of Quantitative Research. He is the main architect for developing their proprietary stock selection models and trading algorithms. Prior to joining Fusion Analytics, Mr. Lane enjoyed success as the Chief Market Strategist for several sell side institutional brokerage firms….Read More
April Retail Sales were weaker than expected, falling .4% headline and .5% ex auto’s vs the consensus of flat and up .2%. Also, March was revised lower both headline and ex auto’s. Sales ex auto’s and gasoline fell .3%. Sales fell in furniture, electronics, food/beverages, department stores, and online. Gains were seen in restaurants/bars, sporting…Read More