Course Monitoring

Durable Goods orders are up 2.2%, greater than the 1% increase expected, and larger than January’s reading of 1.3%.  Durable goods are the stuff we buy that should last longer than a year like cars, airplanes, and computers.  Because airplanes are in the mix, the data can be skewed somewhat if US Airways places an order for a new fleet.

St. Louis Fed President James Bullard commented yesterday that policymakers aren’t completely set on when to end QEIII, and that it could last into next year if the economic recovery moved off the anticipated track.

Housing is OK

Three weaker than expected housing reports hit the wire this morning. Nothing earth shattering but the  markets are highly focused on a continued housing recovery. All in all, housing is still OK, as you can see by this picture.  We also received a stronger than expected consumer confidence number–best in six years at 82.3.

Be Careful What you Say

Rates jumped a bit after the Fed’s monetary policy statement was released yesterday.  In the statement, Ms. Yellen indicated that the Fed will start hiking interest rates in April-May of 2015, sooner than the October-November timeframe that had previously been alluded to.

Fed Day

In a couple of hours when I
am eating more than my recommended caloric intake for the day, the Federal
Reserve will release it’s monthly (+/-) monetary statement.  Economists
across the country anticipate that the Fed will continue to taper
its Bond buying activities by another $10B to $55B per month, as well as
to rescind on the previously affirmed 6.5%-Unemployment-Rate-as-a-threshold-to-begin-to-raise-the-interest-rates
that they directly control.  The reason for the latter is because the
Unemployment Rate is no longer considered a true measure of
the labor participation rate in the US–hence the growing
interest in the Labor Participation Rate study.

I expect the Fed to keep their Cost of Funds rate at 0.25%.  If they
do NOT taper to $55B/mo, rates will come down…but don’t hold
your breath.

Pi Day

As I sit here and look at this picture while I contemplate what to write about on Pi Day, I look through the data released today and only one thing stands out: PPI.  The Producer Price Index (which is a gauge of measuring inflation at the wholesale level) released this morning shows a decline of -0.1%, less than the gain of +0.2% that was expected by the brains running Wall Street (who probably have the formula that is inscribed on this photo of an actual pie memorized).  That equates to a year-over-year decline of over 3% less, and is grounds for the Federal Reserve to keep printing money to buy bonds to keep rates low.  Now go eat some pie.

Foreclosure filings dropped by 10% in February, according to RealtyTrac, and are down 27% from this time last year.

Retail Sales rose 0.3%, marginally (as slim as you can get) above the 0.2% expected increase. Retail Sales is a massive contributor to economic growth because it make up about 1/3 of consumer spending in this country.

Weekly Jobless Claims fell by 9,000 to 315,000 new individuals filing for their first unemployment check last week.

Sideways we go

No domestic news out today, so we look abroad.  More reports that China’s exports are slowing down are capping stock prices and sending money over to bonds.  This keeps interest rates in place today, so we move sideways again, but as you can see from the chart here, pricing is in a downward trend (meaning higher interest rates) so don’t wait too long to lock.

Job Openings are Up

The cost of gasoline is down $0.20 from a month ago.  On seemingly unrelated news, Job Openings rose 1.5% during the same period.  This brings up two points: 1) Domino’s should look into better ways to expend the revenues saved by cheaper fuel and 2) I need a part time job.

Stocks are down and Bonds are flat at the moment.  The technical picture points toward higher rates in the future, but analysts are increasingly grumbling about stagnant growth, which lends itself (pun intended) to lower interest rates.  Fundamentals will win over technical al day long, but don’t hold your breath…

Weakness in China

Weak export numbers out of China are all we have to go off of today, pushing stocks a little lower and bonds a little higher.  On the flipside, US exports to China have increased 190% over the last eight years, growing from $42B in 2005 to $122B in 2013.

Speaking of billions of dollars, President Obama’s planned budget through September 30, 2015 calls for a $564B deficit.

The Jobs Report

The Bureau of Labor released their Jobs Report showing that 175,000 new jobs were created last month.  This is considerably higher than most analysts expected.  The data also showed that average earnings increased 0.4% last month and 2.2% from a year ago.  The Labor Participation Rate remained at 63.0%, while the much contested Unemployment Rate increased to 6.7%.

Economic growth is dependent on people spending money, and to spend money you need to have money.  And for most of us, that means that you need to earn money; like at a job where they pay you.  So the Jobs Report is a big deal.  Positive economic news like the creation of more jobs is exciting news, but isn’t so good of those of us who like low interest rates, which have now spent the last two months preparing for a move higher.