Daily Archives: March 13, 2008 @ 2:56 pm (Thursday)

Reuters: Business sales up in January

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Note the negative initial spin on inventories versus the falling stock sales ratio at the end.

Business inventories, sales up in January

by Lisa Lambert

WASHINGTON (Reuters) – U.S. business inventories rose by a larger-than-expected 0.8 percent in January, the biggest gain since 2006, while sales experienced their largest increase in nearly a year, a government report showed on Thursday.

Inventories exceeded Wall Street’s expectations of a 0.5 percent gain, and stood at a seasonally adjusted $1.46 trillion the Commerce Department said. The January gain was the biggest since June 2006, when inventories also rose 0.8 percent.

January business sales rose 1.5 percent to $1.16 trillion, the biggest gain since 1.6 percent in March 2007.

The stock-to-sales ratio, which measures how long it would take to empty inventories at the current pace, dropped to 1.25 months’ worth from 1.26 months’ in December. It matched the record low set in November.

The department also reported that retail inventories rose 0.4 percent in January, after remaining unchanged in December, to $507.73 billion. Sales that month increased 0.5 percent to $343.94 billion.

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2008-03-13 US Economic Releases

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2008-03-13 Import Price Index MoM

Import Price Index MoM (Feb)

Survey 0.8%
Actual 0.2%
Prior 1.7%
Revised 1.6%

2008-03-13 Import Price Index YoY

Import Price Index YoY (Feb)

Survey n/a
Actual 13.6%
Prior 13.7%
Revised 13.8%

2008-03-13 Import Prices Ex Petroleum YoY

Import Prices Ex Petroleum YoY

Survey n/a
Actual 4.5%
Prior 3.6%
Revised n/a

2008-03-13 Exports MoM

Exports MoM (Feb)

Survey n/a
Actual 0.9%
Prior 1.2%
Revised n/a

2008-03-13 Exports YoY

Exports YoY (Feb)

Survey n/a
Actual 6.8%
Prior 6.7%
Revised n/a

Inflation ripping via the ‘weak dollar’ channel.

Note: non-petroleum imports up 0.6%.

2008-03-13 Advance Retail Sales

Advance Retail Sales (Feb)

Survey 0.2%
Actual -0.6%
Prior 0.3%
Revised 0.4%

2008-03-13 Retail Sales Less Autos

Retail Sales Less Autos (Feb)

Survey 0.2%
Actual -0.2%
Prior 0.3%
Revised 0.5%

Retail sales soft, but not in collapse. That’s what an export economy looks like: domestic sales soft, while exports pick up the slack and support GDP, real terms of trade, and standards of living deteriorate.

2008-03-13 Initial Jobless Claims

Initial Jobless Claims (Mar 8)

Survey 357K
Actual 353K
Prior 351K
Revised 353K

Leveling off – nowhere near recession levels yet.

Would need to be 400K+.

2008-03-13 Continuing Claims since 1980

Continuing Claims (Mar 1)

Survey 2835K
Actual 2835K
Prior 2831K
Revised 2828K

Moving a bit higher, but still far below recession levels.

2008-03-13 Business Inventories

Business Inventories (Jan)

Survey 0.5%
Actual 0.8%
Prior 0.6%
Revised 0.7%

Up some, but still much lower than prior to other recessions.

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Comments on 8:30 numbers

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Retail sales weak today, but exports up over 16% earlier this week, and jobless claims now settling in around 350,000 – far from recession levels. That’s what export economies look like.

Meanwhile, non oil import prices up 0.6%, and export prices up 0.9%.

US GDP growth may be hovering around zero, but no collapse yet.

Meanwhile, Bush/Bernanke/Paulson engineered USD collapse/inflation/export boom is underway and accelerating.

It was like yelling fire in a crowded theater.

The world was happily accumulating over $700 billion per year in financial assets, and had a total of over $2 trillion, when our leadership yelled ‘fire’ and caused a reverse stampede.

Imports are real benefits and exports are real costs, and now we’re paying the price.

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Dow Jones: No mof intervention

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The MOF would have bought USD long ago if Paulson hadn’t gone around branding any CB a ‘currency manipulator’ and an international outlaw.

The USD is in freefall and is now the major source of inflation.

And maybe the Fed as seen the connection?

MOF Frets Over Yen, But No Hint Of Intervention

by Takeshi Takeuchi

(Dow Jones) Japanese currency authorities expressed alarm about the dollar’s fall close to the Y100-mark for the first time since 1995 but didn’t offer any clues about whether or when they might take any countermeasures.

Finance Minister Fukushiro Nukaga and his vice minister on currency affairs, Naoyuki Shinohara, separately voiced caution after the dollar fell to Y100.19 in the mid-day Tokyo session.

Nukaga said it is “a shared perception among the G7 (Group of Seven industrialized countries) that excessive exchange rate moves are undesirable,” while Shinohara also noted “excessive foreign exchange moves are undesirable.”

The two point men for Japan’s currency policy also said they will “continue closely watching foreign exchange markets,” a code phrase that shows their displeasure about current dollar/yen moves.

Neither of them, however, commented on whether they are considering taking countermeasures against the dollar’s rapid fall against the yen.

But Shinohara repeated the word “excessive” a few times in exchanges with reporters, suggesting the ministry’s level of caution has been at least raised in response to the imminent possibility of the dollar’s break below the Y100-mark.

In the past, finance ministry officials usually stepped up their currency rhetoric in stages before intervening. Their remarks on yen strength often changed from “rapid” to “a bit sharp” to “brutal,” while they also threatened “appropriate action” as an advance warning before intervening.

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Bloomberg: Budget deficit to rise in Italy

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Countercyclical budget deficit growth could bring on a national credit crisis in the Eurozone that makes the current US situation look like child’s play.

This is their vulnerability that came with the Maastricht Treaty and has yet to be tested.

Italy Halves Growth Forecast, Sees Deficit Rising

by Flavia Krause-Jackson

(Bloomberg) The Italian government cut its 2008 economic growth forecast by more than half, as slumping confidence and rising prices threaten to brake expansion to the slowest among the 15 nations that share the euro.

The $2.2 trillion economy, Europe’s fourth-biggest, will grow 0.6 percent this year, the Rome-based Finance Ministry said today in a statement. That’s down from a forecast of 1.5 percent in December and would be the weakest rate of growth since 2005.

Italy may be the first and only country in the euro region to enter a recession this year and may have contracted in the fourth quarter, according to Morgan Stanley economist Vladimir Pillonca. Growth is slowing just as rising food and energy prices are fueling inflation and sapping consumer and business confidence.

“If you add to the mix an international situation that is now weaker than expected, this creates a real mess in a country where productivity was already declining,” said Luigi Speranza, an economist at NP Paribas SA in London.

Italy’s budget deficit will rise to 2.4 percent of gross domestic product, more than the 2.2 percent formerly predicted though still under the European Union ceiling of 3 percent. The shortfall narrowed last year to 1.9 percent of gross domestic product, the least since 2000, the Rome-based national statistics office said Feb. 29. That’s about half the 2006 deficit of 3.4 percent.

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Associated Press: Forclosures FALL 4% in February

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Note the fact that foreclosures went down a tad in February versus January is buried at the end of the article.

Number of US homes facing foreclosure jumps nearly 60 percent in February

by Alex Veiga

(AP) Nearly 60 percent more U.S. homes faced foreclosure in February than in the same month last year, with Nevada, California and Florida showing the highest foreclosure rates, a research firm said Wednesday.

AP

A total of 223,651 homes across the nation received at least one notice from lenders last month related to overdue payments, up 59.8 percent from 139,922 a year earlier, according to Irvine, Calif.-based RealtyTrac.

Nearly half of the homes on the most recent list had slipped into default for the first time.

Nevada had the nation’s highest foreclosure rate, with one in every 165 households receiving at least one foreclosure-related notice. It had 6,167 properties facing foreclosure, a 68 percent increase from a year earlier and up 1 percent from January, RealtyTrac said.

Most of the troubled properties were located in California, Florida, Texas, Michigan and Ohio — states where home prices have plunged as the housing boom went bust.

The overall U.S. foreclosure rate last month was one filing for every 557 homes.

February’s total represents a 4 percent dip from January, but the decline was just a seasonal blip, said Rick Sharga, RealtyTrac’s vice president of marketing.

“We seem to be settling in at a new plateau in terms of monthly activity, but it’s a much higher plateau than we were at a year ago,” he said.

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Re: fed’s action

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>
>     On Wed, Mar 12, 2008 at 8:40 PM, Davidson, Paul wrote
>
>     Warren:
>
>     Don’t you think it was a strange open market operation —
>     where the Fed was moving Treasuries from their balance
>     sheets to private balance sheets (even temporarily) —
>     while accepting as collateral the highest grade mortgage
>     backed securities? Usually open market operations involve
>     Treasuries going one way and bank deposits (not
>     collateral) going the other way.
>
>

Hi Paul,

It was a ‘securities lending operation’ and was probably done that way to be in compliance with existing Fed regulations regarding interaction with the dealer community.

The Fed probably already had authority to lend securities to the primary dealers from their portfolio, and either get cash in return or other securities rated AAA or better (govt, agency, etc). So they offered to loan their tsy secs and accepted the dealer’s securities as collateral for the transaction.

Note that the dealers remain as beneficial owner of the securities pledged to the Fed in return for the tsy secs, and so the Fed is not assuming that risk. The dealers do get tsy secs which they can then in turn use as collateral for loans in the market place at much lower rates than loans vs the collateral they gave the Fed.

So the end result is the dealers get to borrow at the lower rates.

No ‘money’ is added to the system by the Fed. The Fed just sets rates as is always the case.

However, this is not to say they didn’t have other reasons for doing it this way. They continue to display a very limited knowledge of monetary operations and it’s not always clear why they do what they do.

Best to Louise!

Warren

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