Markets & Outlook: Conflicted Indicators

I had occasion to head up to Tyler, Texas Monday to meet up with visiting Howard Hill and lead him back to what we jokingly call Deliverance Country here in the outback.  And while I was there I loaded up the car with supplies because we don’t like to shop and it’s 15-miles just to find a gas station around here…

What struck me was how busy the town was.  There were wall-to-wall people everywhere I looked.  Parking lots of shopping areas were full, or darned near.  The Barnes and Noble was busy, Northern Tool had a steady flow of people going through.  But most telling was (to me) where people were hanging around at the Brookshire’s grocery.

They didn’t appear to have any restraints on spending and although there were some good deals on meats, on the high end they had some prime beef which was was staked $22.95 a pound.

OK, far from scientific, but it’s definitely not the kind of consumer behavior that I would have expected, especially given the strength of the online retailers in Monday’s retail sales report.

Yet there are signs that the “End is Near” financially.  One of these is the Baltic Dry shipping index which was down to 989 yesterday and this morning stands at    

imageThese are the kinds of levels that we would expect to see when the country was running into a major recession.

However, as you can see in the chart to the right (if you have a big screen, anyway) the Census data on business inventories has continued to crep up in recent months, including the report out Monday.

Maybe people are shopping out of habit, but not actually buying much…that’s one possibility, I suppose.  And some hints may be had in other data that this may be the case…take the….

Consumer Price Data

Although the market seems (at least for a while) to be ignoring my outlook for a drop in the S&P to 1,750 levels, the strong rally Monday might be a “buy the rumor, sell the news” event looking ahead to consumer price data:

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent in March on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today.

Over the last 12 months, the all items index increased 1.5 percent before seasonal adjustment. Increases in the shelter and food indexes accounted for most of the seasonally adjusted all items increase.

The food index increased 0.4 percent in March, with several major grocery store food groups increasing notably.

The energy index, in contrast, declined slightly in March as decreases in the gasoline and fuel oil indexes more than offset increases in the indexes for electricity and natural gas.

The index for all items less food and energy also rose 0.2 percent in March.

Besides the 0.3 percent increase in the shelter index, the indexes for medical care, for apparel, for used cars and trucks, and for airline fares also increased.

The indexes for household furnishings and operations and for recreation both declined in March. The all items index increased 1.5 percent over the last 12 months; this compares to a 1.1 percent increase for the 12 months ending February.

The index for all items less food and energy has increased 1.7 percent over the last 12 months, as has the food index. The energy index has risen slightly over the span, advancing 0.4 percent.

The biggest increase of anything, year on year, was Natural Gas which is up 16.4% compared with year ago levels.  Biggest decrease:  gasoline.  Healthcare up 2.4% for the year.

Also out this morning is the Empire State Manufacturing data, which came in flat:

The new orders index fell below zero to -2.8, pointing to a slight decline in orders, and the shipments index was little changed at 3.2. The unfilled orders index remained negative at -13.3, and the inventories index dropped ten points to -3.1. The prices paid index held steady at 22.5, indicating continued moderate input price increases, and the prices received index rose to 10.2, pointing to a pickup in selling price increases.

The Russian stock market dropped more than 1% after a key bond sale was canceled and that, in turn, followed a conversation between Vlad Putin and Barrack Obama that (feign surprise, please) didn’t resolve anything.

Gotta keep an eye on the alarmists/cheerleading/mind-bending financial press:  The Russian market is only down 2.57% from highs of last week.  The US market – in comparison – is down 2% itself, and before yesterday’s running of the bulls, the US was down 3.1% in the same period.

If you’re getting the idea that the financial press is desperate to either “find the news or make something up…” give yourself a gold star for the day.  It’s sad, but true:  A lot of the financial press doesn’t know shit from Shinola…so be careful who you listen to.

More after this…


Gold Crashing?

It was down $36 dollars when I looked earlier.

Curious, but not unexpected, since with no inflation in sight yet, about the only real buyers are China and Chinese companies.  The World Gold Council report on China’s role in gold is of interest here.

Speaking of value storage, we note that Bitcoin is back up knocking on the door of $500 again.

Waiting for Russia to Move

With the mobgov in Kiev (we won’t recognize it until elections are held in May, although we seem to be the only ones clear that seizing government and appointing your buddies does not a legit government make) starting an anti-terror operation (read: anti-Russian moves), we figure the next move might be Russia stepping in on “humanitarian grounds.”

Apparently, a good number of people in Ukraine share our skepticism of the US/EU/Western-backed coup.

Still, you wouldn’t know it from the Western headlines which only go so far as to admit the Kiev gov is running out of options.  The getting their “gas kicked” part will be next.

If you fancy yourself world leader material, your homework assignment for today is to pretend you are Vlad Putin.  Do you go in with “humanitarian aid” and simply backjack the hack, or do you shut of Europe’s gas feeds first, before the EU has time to figure out workarounds?

Or, do you just figure screw it…when the Russian military exercises are over in a week, do you just head for Berlin, and figure WTF?

No bonus points for first use of nukes but that is Russian .mil doctrine.

Sub: Zero

No, we’re not talking the high-end kitchen appliances here (although it might be more interesting).  We’re just updating you on the results of the hunt for  MH370 wreckage which is part of the global maudlin mindset (GMM)…

Cold Snap

As long as we’re talking sub-zero, big cold snap in north Texas and into Oklahoma this morning has been making headlines.  Headlines now, higher food prices down the road, I reckon.

…Record minimum temperature set at Oklahoma City…

The low temperature at will Rogers Airport in Oklahoma City this morning has been 28 degrees. This breaks the daily record minimum temperature for January 15th. The previous record was 30 degrees… set in 1928.

Weather records for Oklahoma City date back to November of 1890.

All kinds of other warnings about cold on the Weather Service site.  Did I leave a spring around here somewhere?

Marathon Bombing Memorial

Look for lots of rerun  footage in the nightly news this evening after Veep Joe and governor Patrick of Massachusetts hold forth at the Boston Bombing memorial.

Chilean Wildfires

15 are dead as a series of wildfires has raged in the area around Valparaiso..,..I can hardly wait for the climate change peddlers to pin this one on “climate change.”

Written in the Stars

I didn’t get up early enough to take pictures of the “blood moon” which has been so widely hyped this year.

I just hope you won’t be too disappointed when the world doesn’t end today and you find another column here on Thursday…