U.S. Leading index posts second small increase in a row

The Conference Board announced that their U.S. Leading index increased by 0.1% in April.  The leading index increased for the second month in a row after declining 5 months in a row.  Stock prices, the interest rate spread, and housing permits made large positive contributions that offset large declines in average weekly hours and consumer expectations.

Here are charts of 5 of the 10 components:

The interest spread made another positive contribution to the Leading Index, but as mentioned in last month's post, the spread normally widens during a recession.

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Monday, May 19, 2008

photo by rattodisabina

 

 

Quote for the day:

 

Let men be wise by instinct if they can, but when this fails be wise by good advice.

 

- Sophocles, Antigone

 

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In the news:

 

Microsoft said it is pursing an "an alternative that would involve a transaction with Yahoo but not an acquisition of all of Yahoo," although it left open the possibility of an acquisition down the road.

 

Amazon.com shares are up 6% on news that Goldman Sachs upgraded the stock to buy from neutral, and added the firm to its conviction buy list due to strong revenue growth prospects.

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New home construction for April is down over 30% from last year

The U.S. Census Bureau and the HUD Department announced the new homes construction stats for April 2008 today. Building permits were at a seasonally adjusted annual rate of 978,000 (1 units were at 646,000) which was 4.9% over the previous month, but 34.3% below April 2007. Housing starts were at a seasonally adjusted annual rate of 1,032,000 (1 units were at 692,000) which was 8.2% over the previous month, but 30.6% below April 2007. However, single-family starts were down 1.7% from the previous month. Housing completions were at a seasonally adjusted annual rate of 1,000,000 (1 units were at 792,000) which was 16.0% below the previous month, and 34.9% below April 2007.

Rather than focus on the if construction is up or down, the focus should be on if there is a healthy amount of new construction. Before this current housing slowdown, about 98.1% of permits turned into starts (from 1997-2006), and 94.6% of permits were completed. Currently about 73% of new home construction is built for sale. The other homes are being built to be rented out or for owner use. In March 2008, 1 unit homes were selling at an annual pace of 526,000. Assuming typical completion and built for sale percentages, the permits issued will result in 80,000 less homes built than are currently being sold a year. The number of starts would result in 39,000 less homes built than are being sold. The number of completions are 52,000 more than are being sold a year. There is currently 11.0 months supply of new homes. Over 6 months supply indicates oversupply. As mentioned in this post, there are currently about 2 million excess homes in America. New home construction is now inline with sales, however this is not helping to reduce the oversupply of homes.

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Friday, May 16, 2008

photo by [ApertureJunkie]


Quote for the day:

There is no present or future, only the past, happening over and over again, now.

- Eugene O'Neill, A Moon for the Misbegotten

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In the news:

Confidence among U.S. consumers fell in May to 59.5 down from 62.6 in April in the University of Michigan's preliminary index of consumer sentiment. This is the lowest reading since 1980.

Crude oil rose above $127 a barrel for the first time after Goldman Sachs Group Inc. raised its forecast for the second half of this year to $141 a barrel. China may increase fuel imports to generate power after a May 12 earthquake.

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Sales Tax collection declines at a slower pace

The decline in Sales and use tax collection has slowed in the last couple of months. Using a weighted composite for the four largest states (California, Texas, New York, and Florida, real growth slowed from an annual decline rate of -1.64% in February to -0.91% in March. Texas grew at a rate of 5.27% in April after adjustments for inflation which is down from the hot pace of 8.37% it averaged for 2007. New York, moving in the opposite direction, came in at 1.63% in March after averaging -3.51% for 2007. California is rapidly improving with a decline of 1.67% in April, an improvement from its low reached in February of -5.54%. California declined on average of -2.03% in 2007. Florida continued its fall, declining -7.45% in March, its lowest point since 2000. Florida averaged a decline of -2.70% in 2007.

The improvements in the sales tax mirror the recent economic indicators showing a lukewarm economy, but not one that is in a deep recession.

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Thursday, May 15, 2008

photo by a DELL


Quote for the day:

The nice decade is behind us.

- Mervyn King, Governor of the Bank of England

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In the news:

Initial weekly unemployment claims rose to 371,000 from 365,000 for the prior week. Economists had forecast 370,000. The four-week moving average of initial claims, fell to 365,750 from 366,750 in the prior week.

CBS has reached a deal to buy CNet for $1.8 billion in cash, or $11.50 a share, which is at a 45% premium.

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CPI for April rises less than expected

Today, the Bureau of Labor Statistics released the Consumer Price Index (CPI) figures for April. Before seasonal adjustments, the Consumer Price Index for All Urban Consumers (CPI-U) increased by 0.61% over March 2008 and by 3.94% compared to April 2007 and core CPI-U (less food and energy) increased by 0.09% over March 2008 and by 2.26% over April 2007. With seasonal adjustments, CPI increased by 0.21% over March 2008 and by 3.88% compared to April 2007 and core CPI-U (less food and energy) increased by 0.10% over March 2008 and by 2.27% over April 2007. Economists had forecast that CPI would rise by 0.3% and core CPI would rise by 0.2%.

Inflation continues to be one of two tales. Core inflation looks to be contained whereas inflation including food and energy prices remains high.

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Wednesday, May 14, 2008

photo by James Jordan


Quote for the day:

To have great poets, there must be great audiences, too.

- Walt Whitman, Notes Left Over

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In the news:

Freddie Mac reported a first quarter loss of $151 million or 66 cents a share compared to a $2.5 billion loss in the fourth quarter. Analysts had expected a loss of $1.57 a share. Freddie Mac benefited from an accounting change that reduced losses on credit guarantees. Overall credit-related expenses were $1.45 billion versus $262 million a year earlier.

U.S. foreclosure filings reached a record high in April of 243,353, rising almost 65% over the previous year and 4% over the previous month.

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Retail Sales for April was stronger than expected

The U.S. Census Bureau announced today that U.S. retail and food services sales figures for April 2008. Seasonally adjusted, retail sales were down 0.19% from last month (economists had expected a 0.3% drop) and were up 2.0% from a year prior. Adjusted for inflation, retail sales were down 1.47% from a year ago.
Taking out auto sales, retail sales were up 0.45% from last month (economists had expected a 0.1% gain) and up 4.49% from a year prior. Adjusted for inflation, retail sales excluding autos were up 0.90% from the previous year. Year over Year, retail sales would have been 0.7% less if not for new seasonal adjustments that were made back to January 2002.

Compared to a year ago, the biggest gainers are gasoline stations which is up 16.3% and Grocery Stores, up 6.1%. Auto sales has shown the biggest decline at 8.0%.

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Tuesday, May 13, 2008

photo by papalars


Quote for the day:

Many people suffer more in anticipation than they do under the actual blows of misfortune that fall upon them.

- Eleanor Roosevelt

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In the news:

Federal Reserve Chairman Ben Bernanke said financial markets have improved but remain far from normal and the central bank will increase its auctions of cash to banks as needed.

Wal-Mart's net income increased 6.9 percent to $3.02 billion, or 76 cents a share beating estimates by 1 cent. Walmart said sales at stores open at least a year may be unchanged in the three months through July.

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