I’m going to focus here on the comments on prices within the just released Beige Book from the Fed where they said “Economic activity expanded modestly from January to mid February for most Federal Reserve Districts. Most businesses remain optimistic regarding the next 6-12 months as Covid vaccines become more widely distributed.” The words speak for themselves and …
US service sector, inflationary pressures building here too
The February ISM services index rose to 55.3 from 58.7 and that was below the estimate for no change. New orders fell a rather sharp 10 pts to just above 50 at 51.9. Backlogs though rose by 4.3 pts to 55.2. Inventories saw a big jump, by almost 10 pts to 58.9 and maybe that is why we saw a slowdown in new orders. Employment, post ADP and ahead of BLS Friday, fell 2.5 …
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ADP jobs report
ADP said a net 117k private sector jobs were created in February, almost half the estimate of 205k while January was revised up by 21k to 195k. Weighing on things was the reduction of 14k manufacturing jobs along with 3k construction jobs. The services sector added 131k with trade/transportation/utilities leading the way. Leisure/hospitality added 26k jobs vs 50k in …
Mike Tyson has some advice for central bankers
We've gotten some mixed comments from ECB members over the past few days with the Bank of France Governor a few days ago saying the ECB "can and must react against" a rise in yields that he doesn't feel warranted. Yesterday Executive Board member Fabio Panetta said "The steepening in the nominal GDP weighted yield curve we have been seeing is unwelcome and must be …
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Bubble finger pointing
We got an 'irrational exuberance' like utterance out of not a current Federal Reserve member or a developed world central banker but from Guo Shuqing who is head of the China Banking and Insurance Regulatory Commission. He's not talking about China though, he's talking about us. In a press conference he said "Financial markets are trading at high levels in Europe, the …
Mfr’g, the supply & cost pressures/5 yr breakeven
The February ISM manufacturing index rose to 60.8 from 58.7 which was two points more than anticipated and compares with 60.5 in December. As inventories remain lean at around 50 and customer inventories at just 32.5, New Orders rose 3.7 pts to 64.8 and Backlogs grew by 4.3 pts to 64. Export orders were up by 2.3 pts to 57.2 and Employment rose by 1.8 pts to 54.4 …
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A bunch of things
With a new interest rate regime now upon us with the markets quickly and aggressively asserting its independent stance on the state of things (inflation pressures and now three effective vaccines) we get to hear from a bunch of Fed members this week and we'll see if they try to fight this move, acknowledge it where it might change their thoughts or whether they just …
Succinct Summation of the Week’s Events – 2/26
Positives 1)Initial jobless claims fell to 730k from 841k last week (revised down by 20k) and that is down from 825k last week. This brings the 4 week average to 808k from 828k. Those getting PUA fell to 451k from 513k last week and vs 342k in the week prior. Continuing claims, delayed by a week, totaled 4.42mm from 4.52mm in the week prior. That was 40k less …
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Chicago Mfr’g/Consumer Confidence
The February Chicago manufacturing index fell to 59.5 from 63.8 and that was a bit below the estimate of 61. The six month average is 60.2. New orders and backlogs were higher m/o/m while inventories fell. Supplier deliveries remained elevated and rose further. Employment dropped while prices paid rose again. Again, manufacturing has led the recovery and we'll see to …
Inflation, income, spending/Trade deficit
The January PCE rose .3% m/o/m both headline and core. The headline rate was as expected but the core rate was above the estimate of an increase of one tenth. The y/o/y increase for both is 1.5%. Goods prices rose .5% y/o/y and positive for the 1st time since February 2020 and driven by a rise in durable goods. Services inflation held at 1.9% and has been pretty …
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Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.