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M Notes:  Mon, 4-12 Thumbnail

M Notes: Mon, 4-12




Weekly Close:
4-9-2021
+ (-)%
Dow33,801+648+2.0%
S&P4,129+109+2.7%
Nasdaq13,900+420+3.1%
10-year1.66-0.04-2.4%


LAST WEEK:

Markets:  The upward move continued last week.  

The S&P roller coaster:  up a lot, down, up, up, and solidly up.  

Factory orders:  In January they came in at +2.6%.   Expectations for the February number were -0.5%.  The number came in at -0.8%.

Fed – part one:   During Fed Chair Powell’s 60 Minutes interview (aired last night) he said last year people all around the world voluntarily shut down significant parts of their economies simultaneously.  It’s never happened before.  Powell credited Congress for their actions.  He was surprised at how quickly the U.S. economy came back.  

Fed – part two:  Correspondent Scott Pelley phrased a couple of questions that got my attention.  Q:  Do you see anything in the economy that’s “flashing red”?  A: No.   Q: Can the United States spend Trillions on Covid relief and Trillions more on Infrastructure and Social programs without setting a match to inflation?  A: We’re not responsible for fiscal policy.  We’re reluctant to offer advice to Congress.  We can service the debt we have.  We can service the debt we’re issuing and that will remain the case for the foreseeable future.  But we’ll have to return to a sustainable path.  The time to do that is when the economy is strong and we’re fully recovered, people are working, and taxes are rolling in.  The time to do that is not now.    Yikes.

Inflation:  The YOY Wholesale number in February came in at 2.8%.  The March number was expected to move up to 3.8%, but the actual number came in last week at 4.2%.  In three months, the Wholesale number has moved from 0.8% up to 4.2%.  At some point that will have to move the Consumer number higher as well as the PCE (the metric the Fed watches).  Where are you experiencing inflation the most?  At the pump.  Energy prices were up about 6% in March.  

ISM:  Last week the Manufacturing index surprised, coming in at 64.7.  Over 50 signals expansion.  This week the Services index was expected to come in at 58.6m, but also surprised coming in at 63.7.  

Jobless claims:  The number was higher than expected, coming in at 744,000.   

Motor Vehicle Sales:  I forgot to include the updated number last week.   The February number was 15.7 million.   Expectations for March were for 16.4 million.  The actual number came in at 17.7 million.  The key is to stay above 15 million.  

Trade Deficit:  The February number came in at one of the highest on record:   $71 billion.  YOY exports are down 10%, while imports are up 5%.  Prior to this report, for the last 13 months we’ve had a petroleum surplus.  In February we imported more oil than we exported.  Is this a one-off, or the beginning of a new trend?  

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THIS WEEK:

Focus of the week:    Markets are down a touch today as I write this.  The week’s focus will likely come on Tuesday morning when we get the update on the CPI (consumer inflation).  With the increase on wholesale inflation, as I said above, it has to flow to the consumer side eventually.  Expectations are for 2.5%, up from 1.7%.  

Indicator focus:  CPI (Tue); the Fed Beige Book (Wed); retail sales, industrial production, jobless claims (Thu), and housing starts (Fri).