Wednesday, July 31, 2013

It's The Economy Stupid: Market Close

The stock market erased an earlier rally after the Federal Reserve refrained from indicating when it will reduce the pace of stimulus and data showed the economy grew more than projected in the second quarter.   The S&P 500 dropped less than 1 point to 1,685.75.  The benchmark gauge gained 4.95 percent for July, the biggest monthly advance since January. The Dow dropped 21.05 points, or 0.14 percent, to 15499.54.

 

The Fed repeated the pledge it has used since September that it will continue the purchases until the U.S. labor market outlook has improved substantially. Policy makers left unchanged their commitment to hold the target interest rate near zero as long as the jobless rate remains above 6.5 percent and the outlook for inflation over one to two years doesn’t exceed 2.5 percent.

 

 

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

225-342-0013

jbroussard@treasury.state.la.us

 

It's The Econoomy Stupid: GDP

 

The economy in the U.S. grew more than economists projected in the second quarter reflecting an unexpected pickup in inventory building as consumer spending cooled.  Growth in the previous three months was revised down.  Gross domestic product, the value of all goods and services produced, rose at a 1.7 percent annualized rate in the second quarter of the year, after a 1.1 percent gain the first quarter.  The median forecast of 85 economists surveyed by Bloomberg called for a 1 percent advance for the second quarter.  Consumer spending, the biggest part of the economy, climbed 1.8 percent after increasing 2.3 percent.  Job gains and rising home prices are shoring up Americans’ confidence and lifting automobile sales and production, making it likely the U.S. will pick up once government spending cuts and tax increases pose less of a restraint. The report also showed inflation is falling further below the Federal Reserve’s goal as officials wrap up a two-day meeting today to determine whether to trim monthly bond purchases aimed at spurring growth.

 

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

225-342-0013

jbroussard@treasury.state.la.us

 

Tuesday, July 30, 2013

It's The Economy Stupid: National Crab Cake Day

Baltimore was founded today in 1729. The city's greatest claim to culinary fame is that it is the birthplace of the crab cake. The nearby Chesapeake Bay is home to the same species of blue crab that we eat here in Louisiana. Where we made stuffed crabs with ours, they made crab cakes with theirs.  In honor of the birthday of Baltimore, this is National Crab Cake Day.

 

 

S&P/Case-Shiller 20 cities index rose 12.17% YoY in May vs est. up 12.4% (range 10%-13%).

  * Biggest increase since March 2006

  * S&P/Case-Shiller unadjusted rose 2.4% MoM

  * All regions gain YoY, led by San Francisco, up 24.48%, Las Vegas, up 23.27%

  * New York gains least, up 3.29% YoY, followed by Cleveland, up 3.42%

 

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

225-342-0013

jbroussard@treasury.state.la.us

 

Friday, July 26, 2013

It's The Economy Stupid: Makret Close

The market rallied at the close to finish positive on the day.  The Dow was down 150 points this morning and finished up 3.22 points at 15558.83.  The S&P 500 also rallied at the close to finish at 1691.65, up 1.40 points.  Update on corporate earnings reporting season.  Corporate revenue growth has been spotty, but in general their earnings have exceeded expectations.

 

 

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

225-342-0013

jbroussard@treasury.state.la.us

 

Thursday, July 25, 2013

It's The Economy Stupid: Jobless & Durable Goods

 

JOBLESS CLAIMS

More Americans filed for unemployment benefits last week as annual auto-plant shutdowns continued to affect data.  Jobless claims rose slightly  by  7,000 to 343,000 in the week ended July 20 from a revised 336,000 the prior period.  The median forecast of 49 economists surveyed by Bloomberg projected 340,000. The retooling at carmakers and school closings typical during this time of year continued to influence the figures last week, a spokesman said as the data were released.  Beyond the swings, the job market is improving as firings slow and payroll gains pick up, raising the odds that consumer spending will accelerate in the second half of the year. Fewer dismissals would lay the foundation for larger gains in hiring as the peak of the drag from government budget cuts passes.

 

DURABLE AND CAPITAL GOODS

Orders for U.S. durable goods rose more than forecast in June, showing a pickup in demand that will help propel manufacturing and the economy in the second half of the year.  Bookings for goods meant to last at least three years increased 4.2 percent after a revised 5.2 percent gain in May that was bigger than initially reported.  However, take out transportation and the durable goods numbers were unchanged.  The median forecast of 79 economists surveyed by Bloomberg called for a 1.4 percent advance.  Unfilled orders for big-ticket goods rose the most since December 2007.  Gains in residential real estate and motor vehicle sales are making up for weakness in overseas markets.  A pickup in business investment amid lean inventories would provide a further boost to manufacturing at the same time the effects from federal budget cuts diminish.  The unfilled orders numbers could be a sign of a choke point in the economy.  In a sign industrial production will be sustained, the backlog of orders to factories jumped 2.1 percent in June, the most since the end of 2007. Unfilled orders for non-military capital goods excluding transportation equipment climbed 1.7 percent last month after a 1.2 percent increase.

 

 

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

225-342-0013

jbroussard@treasury.state.la.us

 

Wednesday, July 24, 2013

It's The Economy Stupid: Market Close

The Motor City Meltdown goes forward.  For now.  The legal wrangling is probably going to last for years.  We sure are going to learn a lot about municipal creditor hierarchy.  And today in 1701 Antoine Laumet de La Mothe, sieur de Cadillac founded Fort Pontchartrain du D├ętroit, at what is now known as the City of Detroit.  But I digress.

 

The stock market and Treasuries fell as housing and manufacturing data fueled speculation the Federal Reserve may reduce its asset-buying this year as investors weighed earnings reports.

 

The S&P 500 Index fell 0.4 percent to 1,685.95 at 4 p.m. in New York, after climbing to within 2 points of the 1,700 level. The Dow Jones Index dropped 25 points to 15542.  The yield on 10-year Treasuries jumped eight basis points to 2.58 percent. The Stoxx Europe 600 Index rallied 0.6 percent to an almost eight-week high. Crude Oil tumbled over 1 percent, Nat Gas down 1 over 1 percent and gold lost 1.1 percent.

 

New U.S. home sales rose more than forecast in June to the highest level in five years. Manufacturing indexes based on surveys of purchasing managers rose in the U.S. and Germany this month, London-based Markit Economics said today, while preliminary data showed China’s manufacturing contracted more than economists estimated.

 

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

225-342-0013

jbroussard@treasury.state.la.us

 

Thursday, July 18, 2013

It's The Economy Stupid: Market Close

Up, up, and AWAY!  The market was up again.  Another record day.

 

Stocks rose, sending the S&P 500 Index to another record, amid better-than-forecast earnings and data on jobless claims that raised optimism in the economy.  The S&P 500 added 0.5 percent to 1,689.38. The Stoxx Europe 600 Index rallied 0.9 percent to the highest level on a closing basis since May.   Russia’s Micex index sank 1.1 percent, the most in four Weeks.   The MSCI Emerging Markets Index fell 0.3 percent for the first drop in eight days, snapping the longest winning streak since January.  Benchmark indexes in South Korea and Taiwan dropped at least 0.6 percent, while India’s Sensex index advanced 0.9 percent.   The Shanghai Composite Index slid 1.1 percent and has lost 2.1 percent in two days. The IMF said yesterday China’s economic growth may trail forecasts.

 

 

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

225-342-0013

jbroussard@treasury.state.la.us

 

It's The Economy Stupid: Jobless Claims

 

Lower Jobless Claims.  Let’s repeat that.  There are LESS people applying for Jobless Claims.  The 334 thousand announced today was a 2 Month low for Initial Jobless Claims.  There were some seasonal adjustments due to the 4th of July Holiday, but still this is good news for the economy.   The four-week moving average, a less volatile measure than the weekly figures, fell to 346,000 last week from 351,250.

 

The number of people continuing to receive jobless benefits climbed by 91,000 to 3.11 million in the week ended July 6, the most in five months. That caused the unemployment rate among people eligible for benefits to rise to 2.4 percent, the highest since early April, from 2.3 percent.  The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.  Those who’ve used up their traditional benefits and are now collecting emergency and extended payments fell by about 24,200 to 1.64 million in the week ended June 29.

 

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

225-342-0013

jbroussard@treasury.state.la.us

 

Wednesday, July 17, 2013

It's The Economy Stupid: Market Close

Market’s UP!  Must have liked what Bernanke said…

 

Stocks rose, after the Standard & Poor’s 500 Index snapped an eight-day rally yesterday, as Federal Reserve Chairman Ben S. Bernanke said the central bank’s asset purchases are not on a preset course.  The S&P 500 rose 0.3 percent to 1,680.81 at 4 p.m. in New  York, after falling from a record high yesterday.

 

Apparently the market liked hearing that the Fed is not going to create an arbitrary definition of when and how the QE program is going to end.  Bernanke said the central bank’s bond purchases “are by no means on a preset course” and could be reduced more quickly or expanded as economic conditions warrant.   “We’re going to be responding to the data,” Bernanke said today to the House Financial Services Committee, “If the data are stronger than we expect, we’ll move more quickly” to reduce purchases. If data “don’t meet the kinds of expectations we have about where the economy’s going, then we would delay that process or potentially increase purchases for a time.”   Central bank stimulus has helped fuel a surge in stocks worldwide, with the benchmark U.S. index jumping 148 percent from its March 2009 low.  Fed policy makers have been debating

the timing and pace of any cuts in the central bank’s $85 billion in monthly bond purchases.  Bernanke has said any reduction will be tied to sustained improvement in the labor  market or an increase in inflation.

 

 

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

225-342-0013

jbroussard@treasury.state.la.us

 

It's The Economy Stupid: All About Housing

MBA Mortgage Applications were down last week, -2.6%.  Let’s put some positive spin on that.  It was an improvement over the previous week, which was down by -4.0%.  See there…take a negative and make it a positive.  It’s a glass half full kind of thing. 

 

Housing Starts – Economists kind of missed the mark here.  Housing Starts were 836 thousand, well below economists estimate of 960 thousand.  Housing Starts Month over Month were down by -9.9%, so far below economists estimate of up 5.0% that one has to ask, “What the hell were they looking at?”   

 

Building Permits – Building Permits were at 911 thousand, below economists estimate of 1 million.  And the Month over Month number was, well, bad.  Building Permits MoM% was down by -7.5%.  Economists estimated the month over month number at a positive 1.5%.

 

The one thing we can all agree on is that economists are always wrong.  Sometimes spectacularly so.

 

 

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

225-342-0013

jbroussard@treasury.state.la.us

 

Tuesday, July 16, 2013

It's The Economy Stupid: Market Close

U.S. stocks fell, halting the longest rally in the Standard & Poor’s 500 Index since January, as Coca-Cola Co.’s profit dropped and a Federal Reserve official called for cuts to stimulus.   The S&P 500 fell 0.4 percent to 1,676.24 at 4 p.m. in New York. The index had risen eight straight sessions to close at a record yesterday.

 

Hawkish comments from Kansas City Fed President Esther George as to the timing of adjustments to the Fed’s bond purchases put additional pressure on the market ahead of Fed Chairman Ben Bernanke’s testimony to Congress tomorrow.  George said the U.S. was on the “right path” for economic recovery and that cuts in the pace of stimulus are “appropriate.” George, speaking on Fox Business Network, also said inflation appears to be “moderate” and the benchmark interest rate should not be held too low for too long.   Bernanke will deliver his semi-annual monetary policy report to Congress this week, starting tomorrow at the House Financial Services

Committee.

 

 

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

225-342-0013

jbroussard@treasury.state.la.us

 

It's The Economy Stupid: CPI. Inflation???

Economic Event

Period

Economic Survey

Actual Reported

Original Prior

Revised Prior

Consumer Price Index MoM

JUN

0.3%

0.5%

0.1%

 

CPI Ex Food & Energy MoM

JUN

0.2%

0.2%

0.2%

 

Consumer Price Index YoY

JUN

1.6%

1.8%

1.4%

 

CPI Ex Food & Energy YoY

JUN

1.6%

1.6%

1.7%

 

CPI Core Index SA

JUN

223.597

233.643

233.267

 

Consumer Price Index NSA

JUN

223.431

233.504

232.945

 

Industrial Production

JUN

0.3%

0.3%

0.0%

0.0%

Capacity Utilization

JUN

77.7%

77.8%

77.6%

77.7%

Manufacturing Production

JUN

0.2%

0.3%

0.1%

0.2%

 

CPI surprised on the upside, exceeding economists’ estimates.  But that’s not to say inflation is raging.  Far from it.  CPI is at a 1.8% annual rate.  1.6% ex food & energy.  Inflation ain’t our problem.

 

Industrial Production, Capacity Utilization, and Manufacturing Production were all pretty much in line with economists’ expectations. 

 

This morning’s releases produced yawns for all the way around.  Gonna need some dark roast to get going this morning.

 

 

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

225-342-0013

jbroussard@treasury.state.la.us

 

Monday, July 15, 2013

It's The Economy Stupid: Market Close

 

Stocks were up!  That gave the S&P 500 its longest winning streak since January, as better-than-estimated manufacturing data and Citigroup Inc. earnings overshadowed disappointing retail sales.

 

The Dow Jones and S&P 500 actually set new record highs, even though it didn’t really feel like a record kind of day.

     

Description

Ticker

Last

Change

% Chg Today

% Chg 1Year

STOCK MARKETS

 

 

 

 

 

Dow Jones Industrial Average

INDU Index

15484.260

19.9600

0.1291

21.1877

S&P 500 Index

SPX Index

1682.500

2.3100

0.1375

23.9969

NASDAQ 100 Index

NDX Index

3079.851

0.7770

0.0252

19.1446

NASDAQ Composite Index

CCMP Index

3607.492

7.4120

0.2059

24.0340

Russell 3000 Index

RAY Index

1003.600

1.9500

0.1947

25.3043

Russell 1000 Index (Large Cap)

RIY Index

933.830

1.4400

0.1544

24.8970

Russell 2000 Index (Small Cap)

RTY Index

1043.300

6.7800

0.6541

30.2513

Wilshire 5000 Total Market

W5000 Index

17843.960

46.9200

0.2636

25.4708

TREASURIES

% Yield

 

 

 

 

3 Month Treasury

0.0253

 

-0.0100

-33.3333

 

6 Month Treasury

0.0659

 

-0.0050

-7.6923

 

2 Year Treasury

0.3309

100.086

0.0156

0.0156

 

5 Year Treasury

1.3799

99.977

0.1875

0.1879

 

10 Year Treasury

2.5428

93.156

0.3438

0.3704

 

30 Year Treasury

3.5977

86.859

0.4688

0.5426

 

ENERGY

 

 

 

 

 

Crude Oil, Brent Index

Brent Crude

109.080

0.2700

0.2481

10.3623

Crude Oil, Louisiana Lt. Sweet

LA Lt Sweet

112.020

1.1200

1.0099

7.4000

Natural Gas, Henry Hub Index

Nat Gas

3.670

0.0260

0.7135

0.8789

PRECIOUS METALS

 

 

 

 

 

Spot Gold $/oz

GOLD

1285.110

-0.5900

-0.0459

-19.1659

Spot Silver $/oz

SILVER

19.975

0.0388

0.1946

-26.8728

CURRENCIES

 

 

 

 

 

Euro

EUR Curncy

0.766

0.0002

0.0261

-6.0744

Japanese Yen

JPY Curncy

99.750

0.5300

0.5342

-20.9424

British Pound

GBP Curncy

0.662

0.0003

0.0453

3.5335

Swiss Franc

CHF Curncy

0.948

0.0016

0.1690

3.2275

Canadian Dollar

CAD Curncy

1.042

0.0026

0.2501

-2.6008

Chinese Renminbi

CNY Curncy

6.138

0.0003

0.0049

3.9428

FOREIGN INDICIES

 

 

 

 

 

FTSE 100 INDEX

UK

6586.110

41.1700

0.6290

16.2365

CAC 40 INDEX

FRANCE

3878.580

23.4900

0.6093

21.9369

DAX INDEX

GERMANY

8234.810

22.0400

0.2684

25.5862

NIKKEI 225 INDEX

JAPAN

14506.250

33.6700

0.2326

66.2775

HANG SENG INDEX

HONG KONG

21303.310

26.0300

0.1223

11.4112

SHANGHAI COMP INDEX

CHINA

2059.390

19.9040

0.9759

-4.1232

 

 

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury

225-342-0013

jbroussard@treasury.state.la.us