Market Observations, ECB, Consumer Spending, Factory Orders, Core PCE, Chicago PMI, Initial Claims
In our top story tonight, the leader of al-Qaida in Iraq, Abu Musab al-Zarqawi, is STILL dead and someone else has taken his place.
The ECB stayed true to form by holding their rate at 3%, but signaled a .25 bps raise to come at the October meeting. The ECB has raised at every other meeting this year.
Initial Claims -2K @ 316K
Inside the number: continuing claims an increase of 13.5K to 2.48M, the highest since February. The number of long term unemployed continues to be a problem that reflects sluggish job growth.
August Chicago PMI 57.1 vs prior 57.9
Inside the number: production DOWN 61.7% vs prior 64.1%; new orders DOWN 59.6% vs prior 60%.
Employment UP 55.1% vs prior 50.5% resulting in decreasing backlogs 44.1% vs prior 48.2%. Prices paid DOWN 75.2% vs prior 86.8%. Things are slowing down.
July Factory Orders -0.6% vs prior +1.5% Full Report
Inside the number: Durable goods orders -2.5%; durable goods shipments -1.3%, transportation goods -6.7%. Orders for ships & boats -57%, orders for civilian aircraft -10.6%.
Core capital goods orders +1.6%; shipments +1.7% and stripping out a 10.1% drop in transportation, factory orders were UP +1.1%.
However, a peak under the sheets shows that nondurable goods orders were +1.6% mainly on oil & chemicals.
July Personal Income & Spending & Core PCE Full Report
Inside the number: Personal income +0.5%, Nominal consumer spending +0.8%, real spending +0.5%. However real spending on nondurable goods and services +0.4%.
July Core PCE +0.1% vs prior +0.2%, in the past year, core prices +2.4%, the biggest gain in 11 years.
A large increase in transportation sales boosted durable goods spending. Stripping out transportation shows that this months big gain is short lived and consumer spending is slowing DOWN.
Reading between the lines: Core PCE shows prices up and consumer spending slowing as the last of the 05-06 autos got shoved out the door cheap.
Factory orders confirms this with a large decline in transportation orders and shipments; and a non durables increase based on oil & chemicals.
Bad News: These are the effects of the automotive industry emasculation and the McJobs home "ownership" economy.
As the housing sector and money shuffling economy goes South, there is no durable economic base to fall back on and the situation could get very ugly.
Good News: In these uncertain and nebulous times, the US dollar and bonds are still the haven of choice for those who know how their bread really gets buttered.
Safety, rate of return and the global economic stimulus that American consumers provide has kept em coming over the last 4 months as the 10 year yield has fallen 50 basis points to 4.73.
The RUT touched 725 intraday, look for 730-740 as a cap. The "dog" days are over & nothing significant happens until Tues 5th when vacation ends. We are up in Aug. which is traditionally a bad month for the stock market.
Sept is supossed to be worse and what will happen with the year end Santa rally? We still look to around 09/11 & 10/11 as inflection points in this choppy sideways, flagwaving pattern.
Keep it tween da ditches, we take it day by day and keep our eyes peeled to the sky, because it could be a name brand that pancakes us. Just my opinion, I could be wrong, this is The Nattering Naybob and your NOT!!!
The ECB stayed true to form by holding their rate at 3%, but signaled a .25 bps raise to come at the October meeting. The ECB has raised at every other meeting this year.
Initial Claims -2K @ 316K
Inside the number: continuing claims an increase of 13.5K to 2.48M, the highest since February. The number of long term unemployed continues to be a problem that reflects sluggish job growth.
August Chicago PMI 57.1 vs prior 57.9
Inside the number: production DOWN 61.7% vs prior 64.1%; new orders DOWN 59.6% vs prior 60%.
Employment UP 55.1% vs prior 50.5% resulting in decreasing backlogs 44.1% vs prior 48.2%. Prices paid DOWN 75.2% vs prior 86.8%. Things are slowing down.
July Factory Orders -0.6% vs prior +1.5% Full Report
Inside the number: Durable goods orders -2.5%; durable goods shipments -1.3%, transportation goods -6.7%. Orders for ships & boats -57%, orders for civilian aircraft -10.6%.
Core capital goods orders +1.6%; shipments +1.7% and stripping out a 10.1% drop in transportation, factory orders were UP +1.1%.
However, a peak under the sheets shows that nondurable goods orders were +1.6% mainly on oil & chemicals.
July Personal Income & Spending & Core PCE Full Report
Inside the number: Personal income +0.5%, Nominal consumer spending +0.8%, real spending +0.5%. However real spending on nondurable goods and services +0.4%.
July Core PCE +0.1% vs prior +0.2%, in the past year, core prices +2.4%, the biggest gain in 11 years.
A large increase in transportation sales boosted durable goods spending. Stripping out transportation shows that this months big gain is short lived and consumer spending is slowing DOWN.
Reading between the lines: Core PCE shows prices up and consumer spending slowing as the last of the 05-06 autos got shoved out the door cheap.
Factory orders confirms this with a large decline in transportation orders and shipments; and a non durables increase based on oil & chemicals.
Bad News: These are the effects of the automotive industry emasculation and the McJobs home "ownership" economy.
As the housing sector and money shuffling economy goes South, there is no durable economic base to fall back on and the situation could get very ugly.
Good News: In these uncertain and nebulous times, the US dollar and bonds are still the haven of choice for those who know how their bread really gets buttered.
Safety, rate of return and the global economic stimulus that American consumers provide has kept em coming over the last 4 months as the 10 year yield has fallen 50 basis points to 4.73.
The RUT touched 725 intraday, look for 730-740 as a cap. The "dog" days are over & nothing significant happens until Tues 5th when vacation ends. We are up in Aug. which is traditionally a bad month for the stock market.
Sept is supossed to be worse and what will happen with the year end Santa rally? We still look to around 09/11 & 10/11 as inflection points in this choppy sideways, flagwaving pattern.
Keep it tween da ditches, we take it day by day and keep our eyes peeled to the sky, because it could be a name brand that pancakes us. Just my opinion, I could be wrong, this is The Nattering Naybob and your NOT!!!
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