After giving back 3 years of monetary suppression in 6 trading days, Italian yields are lower today. The 2 yr yield is down by 7 bps as is the 10 yr yield. Italy certainly has its own political dynamic and a debt to GDP ratio of 130% at the same time the new regime wants to bust out the deficit. But, the dramatic reaction in its bonds, the 3rd largest bond market in …
Throw out those condoms in China
The response in China and elsewhere in Asia to the Mnuchin time out in the 'trade war' was actually pretty mixed. The H share index closed unchanged while the A share index in Shanghai was higher by .6% as was the Hang Seng. Australia, the China proxy, was flat on the day and the Nikkei saw no change too. I remain hopeful that a deal satisfactory to both sides will …
Succinct Summation of the Week’s Events – 5/18
Positives Core retail sales in April (taking out auto's, gasoline and building materials) rose .4% m/o/m as expected while March was revised up by one tenth. Sales just ex autos and gasoline were as expected including a March revision. The y/o/y growth rate of core sales was 3.9%, a bit above the 5 yr average of 3.5% but still below the 5% gains in the two …
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Inflation/Italy
With inflation pressures building in some key places stated here many times, such as in commodities and trucking, the question is how companies will deal with it in terms of absorbing it via a cut in profit margins, cutting costs or will they try to pass it on. This is what Deere said today in their earnings press release: "we are experiencing higher raw material and …
Some morning news
In the weekly AAII individual investor sentiment index the Bears have basically disappeared again. They fell by 5 pts w/o/w to 20.6 and that is the least since January 4th. Bulls rose 3.2 pts to 36.7 and that's a 3 week high. The balance are Neutral. From a contrarian standpoint, the bulls do not want to see a dearth of bears. Italian bonds are under pressure …
IP Data
Industrial production in April was a bit better than expected with its .7% m/o/m gain vs the estimate of up .6%. Also, March was revised up two tenths. The manufacturing component though was as forecasted so the upside gain came from higher utility output and mining (oil and gas helped). Auto production fell after the sharp rise in the two prior months. Bottom …
Housing
Housing starts in April totaled 1.287mm, 23k less than expected but that was mostly offset by an upward revision of 17k to the March figure to 1.336mm. Single family starts were little changed in April and really have been pretty flat over the past 4 months at around 890-900k. Thus, multi family has been the main driver of the month to month volatility and they’ve …
All The News That’s Fit To Email
I've spoken for a while about rising trucking costs and what that will eventually mean for consumer prices on every single item that gets trucked. At least on the former it is becoming obvious everywhere and many companies talked about it on their recent earnings conference calls. In yesterday's Case Freight Index report it was titled "Volume Strong, Pricing Even …
Retail sales and mfr’g
Core retail sales in April (taking out auto's, gasoline and building materials) rose .4% m/o/m as expected while March was revised up by one tenth. Sales just ex autos and gasoline were as expected including a March revision. Sales rose a .1% m/o/m for auto's and are up 3.6% y/o/y. Building materials were up by .4% after dropping by 1% in March. Sales jumped by …
Yields/Data
After the very sharp selloff in the 2 yr BTP in Italy that took the yield from -.27% to -.10% yesterday, it is little changed today at -.11%. While rates are still negative, the one day move seen yesterday should be a wake up that risk happens fast in a market that has been man handled by the ECB and when they remind us that things are soon to be changing. The rise …
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.