March 14, 2010: Economic/Market Week in Review
Posted by Larry Doyle on March 14, 2010 9:31 AM |
No rest for the weary given the slew of developments on Wall Street, in Washington, and around the world. That said, are the markets getting tired or are they preparing to receive another jolt of government caffeine?
Welcome to our Sense on Cents Week in Review where I provide a streamlined recap of the major economic data and news, along with month-to-date market returns.
Overall, we did not receive a lot of economic news this week but what we did receive was decidedly mixed (although that is not exactly how it was presented). Let’s navigate.
1. Jobless Claims: remained stubbornly high at 460k jobs. Congress extended unemployment benefits until year end as the long-term unemployed remain at extremely high levels. This structural unemployment receives little media attention, but is THE critical issue in our economy.
2. Retail Sales: the manner in which this report was presented truly defines the heavy spin with which economic data is presented. I do not intentionally look to present material in a negative light . . . I am an optimist by nature. That said, I like the truth.
Overall retail sales for the past month increased .3% against a consensus expectation of -.2%. A positive correct? Well, the analysts forgot to highlight that the previous month’s numbers were revised from a +.5 to +.1. That game again.
In an indication of how much auto demand has been pulled forward, the retail sales data excluding autos increased by .8%. This number is good, but let’s look at it in the full context — not the heavily parsed manner presented by analysts and Washington pundits.
3. Consumer Sentiment: on the same day that retail sales data was presented as a turning point in our economy, analysts failed to point out that overall Consumer Sentiment declined from the previous month’s reading of 73.6 to 72.5. Consensus expectation had this figure projected to rise to 74.0.
Let’s move along to MARKET DATA. The stats provided are the week’s close (March 12th), February close, and the percentage change.
$/Yen: 90.49 vs 88.93, +1.75%
Euro/Dollar: 1.3769 vs 1.3622, +1.1%
U.S. Dollar Index: 79.77 vs 80.35, -.7%
Commentary: the overall U.S. Dollar Index slipped slightly on the week as the Euro improved given increased optimism that the Greek fiscal disaster will not cause an incipient meltdown in the Euro. That said, the embedded debt in Greece is not going away; it is merely being covered and backstopped for the time being. Can you say ‘continued economic drag?’ Who’s next in the Euro-zone to look for a bailout?
Oil: $81.08/barrel vs $79.61, +1.8%
Gold: $1101.5/oz. vs $1118.4, -1.5%
Copper: $3.391 vs $3.350, +1.2%
DJ-UBS Commodity Index: 132.44 vs 133.83, -1.0%
Commentary: commodities, in general, declined on the week by 1-2% . This price action is interesting in that commodities are not trading in sync with equities. The overall DJ-UBS Commodity Index is down approximately 4% on the year, with oil and gold close to flat on the year. Where is the economic engine to drive these prices higher? Where are those fearful of increased inflation putting their money? Have commodities been pumped up in price more by speculators looking for a trade as opposed to end users utilizing the commodities for true industrial and economic purposes?
DJIA: 10, 625 vs 10,325 +2.9%
Nasdaq: 2368 vs 2238,+5.8%
S&P 500: 1150 vs 1104, +4.2%
MSCI Emerging Mkt Index: 993 vs 936, +6.1%
DJ Global ex U.S.: 202 vs 191.9, +5.2%
Commentary: the equity markets, in general, had another positive week (up anywhere from .5 to 3%) led by emerging markets. Don’t fight the tape, but don’t get lulled to sleep either. Overall volumes are declining. A few stocks in the S&P 500 traded heavy volume and led that index higher. Which stocks are those? Two government wards, Citigroup and AIG. Call me suspect.
I am still looking for consistently positive economic news to justify the price action, but the markets seem to accept a lack of disastrous news along with a mixed bag of economic data to take the easy money provided by the Fed and put it to work. Expect more easy money, given the likelihood that President Obama’s likely nominee to be the number 2 at the Fed will be Janet Yellen, a dyed in the wool dove in terms of monetary policy.
2yr Treasury: .96% vs .82%, +14 basis points or -.14% (rates up, bond prices down)
10yr Treasury: 3.70% vs 3.62%, +8 basis points or +.08%
COY (High Yield): 6.75 vs 6.88 -1.9%
FMY (Mortgage): 18.18 vs 18.48, -1.6%
ITE (Government): 57.62 vs 57.88, –0.4%
NXR (Municipal): 14.27 vs 14.21, -.1%
Commentary: interest rates inched higher again led by the front end of the curve, but overall they remain well within the ranges we have seen this year. Debt levels globally and here at home for our government and our municipalities remain exceptionally high.
The roller coaster continues. The January declines — both in the markets and along our economic landscape — were met by a nice upswing in February. The upward trend for equities continues for the first two weeks of March.
What are we to make of it? Well, I hope you are strapped in for a long ride filled with ongoing fits and starts, twists and turns, ups and downs on both Wall Street and Washington — but more importantly Main Street.
I will do my best to point out both the pitfalls and potential positives along the way. Please help our collective effort by sharing news and developments from your own corners of the world. Together, we can all most effectively navigate the economic landscape.
In regard to my ongoing pursuit of truth, transparency, and integrity on our economic landscape, please join me tonight (8-9pm ET) as No Quarter Radio’s Sense on Cents with Larry Doyle Welcomes Back The Daily Bail. We will discuss the pending healthcare legislation, financial regulatory reform, the Lehman Bros. release, and so much more. You will not want to miss it.
Have a great day and weekend.