We know that the recovery is picking up steam. And we know this how?
Because the amount of goods coming in through the ports of Long Beach and Los Angeles has gone through the roof. Between them, up about 8 percent over year-ago numbers.
What this means is that China is not really falling off the edge of the Economic Earth. And it is just another reason I told Peoplenomics readers recently about a pretty interesting option play I’ve put of for next year: I think we could have one hell of a blow-off top (as in semi-parabolic market rise) over the balance of this year, into next, and possibly as high as 4000+ in the S&P before the whole house of cards collapses.
To be sure, the size of the rally could be debated. After all, the same week a year ago, the S&P closed 1,592.43. So tacking on 8% on top of that might argue we could still collapse in a heap down to the 1,720-1,740 range.
Still, if war is “good for economy” (and yes, it does stimulate things) then the decision to send Marines into Iraq ought to be just what Wall St. ordered.
But, of course, bigger international trade, the returning health of China, and the economic stimulus of war, are old school thinking and thus, out of vogue. Instead, we have in the place of common sense substituted things like the consumer price index.
Which gets us to the first hardcore data point of the day
“The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in May on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today.
Over the last 12 months, the all items index increased 2.1 percent before seasonal adjustment. The seasonally adjusted increase in the all items index, which was the largest since February 2013, was broad-based. The indexes for shelter, electricity, food, airline fares, and gasoline were among those that contributed.
The food index posted its largest increase since August 2011, with the index for food at home rising 0.7 percent. The increases in the electricity and gasoline indexes led to a 0.9 percent rise in the energy index. The index for all items less food and energy rose 0.3 percent in May, its largest increase since August 2011. Along with the indexes for shelter and airline fares, the medical care, apparel, and new vehicle indexes all increased in May.
The indexes for household furnishings and operations and for used cars and trucks declined. The all items index increased 2.1 percent over the last 12 months; this compares to a 2.0 percent increase for the 12 months ending April, and is the largest 12-month increase since October 2012.
The index for all items less food and energy has increased 2.0 percent over the last 12 months. The food index has advanced 2.5 percent over the span, its largest 12-month increase since June 2012.
What does this do to markets, you’re wondering? Well, earlier the price of oil was down, and since consumer prices remain somewhat stable, about the only thing the market should do right now is slowly creep up and start setting new highs going into late summer.
Prices wouldn’t be going up, however slowly, if there wasn’t some pricing power in the market and in a perverse kinda way, that could be bullish.
Well, except that in new housing figures out this morning, which seem to argue that housing has peaked early this year…
Privately-owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of 991,000. This is 6.4
percent (±0.8%) below the revised April rate of 1,059,000 and is 1.9 percent (±1.4%) below the May 2013 estimate of 1,010,000.
Single-family authorizations in May were at a rate of 619,000; this is 3.7 percent (±1.2%) above the revised April figure of 597,000.
Authorizations of units in buildings with five units or more were at a rate of 347,000 in May.
Privately-owned housing starts in May were at a seasonally adjusted annual rate of 1,001,000. This is 6.5 percent (±10.2%)* below the
revised April estimate of 1,071,000, but is 9.4 percent (±11.0%)* above the May 2013 rate of 915,000.
Single-family housing starts in May were at a rate of 625,000; this is 5.9 percent (±12.7%)* below the revised April figure of 664,000.
The May rate for units in buildings with five units or more was 366,000.
Privately-owned housing completions in May were at a seasonally adjusted annual rate of 897,000. This is 6.8 percent (±12.7%)* above
the revised April estimate of 840,000 and is 24.8 percent (±17.1%) above the May 2013 rate of 719,000.
Single-family housing completions in May were at a rate of 618,000; this is 2.1 percent (±11.4%)* above the revised April rate of
605,000. The May rate for units in buildings with five units or more was 269,000.
All eyes on the Fed next…the Dow is flat to down 20, digesting this morning’s statistical cornflakes.
“Tax-Jacking” Ramps Up
I don’t know if you saw the report yesterday about Medtronic agreeing to a merger with Covidien, but between the lines, if is a HUGE mutha of a story.
The essence of it is: After the merger, the corporate “home base” will move from the US to Ireland.
The CBS version of the story contains this key part:
“Although this is an inversion deal, it’s not about lowering tax rates,” Omar Ishrak, Medtronic’s chairman and chief executive, said in a telephone interview
But wait, we have to wonder, if it’s not about lowering taxes, why invert? The merged company could still make all its US investments and such…know what I’m saying?
I’ll just file this with my war stories that keep talking about peace keeping efforts and other logical non sequiturs. But the US has a serious Tax-Jacking problem and who is asleep at the switch again/still?
The congressoids, of course!
Sticking it to Bond Holders
My take on this? I think the main point is that bond holders get more than Fed rate yields why? Because of risk. But, as has been the case from economic time immemorial, the bond holders stomp their feet, drag out lawyers, press agents and all the like because what they really want is their yield and to have no risk. Is that crooked thinking? But that’s the bond business,(high rates and no risk) and that’s how bondholders want things. Or they will go a-lawyering.
Like a U.,S. court order can be applied to a country? What are people smoking, these days?
The drama is not over yet, though, so look for another edition of Mutual of Ben Dover, shortly.
More after this
(Notice the shape of the Amazon “football?” Wrong shape…or is it? We get into that in this morning’s Coping Section, so be sure and read it.)
Well, no, war lite doesn’t often work. I’m thinking ever but it’s early to make such rash comments.
Our long-range predictive data off the www.nostracodeus.com website still hints at things looking dicey on war fronts by this time next week.
While it’s read by some as an encouraging sign that president Obama is sending 275 troops to protect the American Embassy in Baghdad, after saying troops would not return), the onslaught of the jihadists is not going to be stopped by 275 US forces.
So we really need to be thinking about how many, how quickly, and what will happen in that June 22-24 period. That will be here, soon enough.
Meantime, you might want to catch the Live Lewis discussion on Ground Zero tonight because he’s promised to get into the really interesting angle to this jihadist move.
You see, it’s all about ISIS (and somewhere Osiris, I suppose) and what goes on down at the archetype level of people “programmed at the archetype” levels., if I can keep my ears open that long. Seduction by extreme dominance may have you looking for your Stockholm Syndrome notes, so bring them along, too.
It was touched on last night by host Clyde (and caller David, who’s a seriously bright fellow) so it should make for good listening.
I mean, if you want to figure out why the Baghdad defenders have their wits scared out of them with the ISIS labeling.
Meantime, back on the mundane side of things, the usual stories about how efforts to defend Baghdad are being stepped up. Yada, yada, yada…
Chinese Terrorism Solution
Another sign that an economic recovery is getting legs is when things like art start making big upward moves. Or this stamp which just might set a record when it goes on the block today.
Check the Mail
…if you drive a GM product..
Why, that’s not even a fraction of the fun of Publisher’s Clearing House, is it?