Absolutely nothing on the US economic docket today means stocks will fluctuate based on liesflow out of Europe, and Greece. Since today's 13th consecutive protest in Athens is expected to commence at around noon, it should be in full swing by the time NYSE circuit breakers are turned off around 2:30 pm EDT.
Analysts expects today's Jobless claims to decline from last week's soon to be upwardly revised 434,000 to 420,000. We believe that there is a risk the number will be worse than expected due to ongoing layoffs in the auto sector as the "Japan" effect refuses to go away. If this does not happen, rain, flooding, drought, snow and UV lamp exposure will be blamed, not necessarily in that order. But not the economy. Never the economy. We also get existing home sales and the Philly Fed index.
ADP, the non-manufacturing ISM, and the first policy speech from the new president of the San Francisco Fed. Also a bunch of other non-dissenting yet hawkish, and extremely hypocritical Fed presidents are speaking elsewhere warning how dangerous the printer's policy is even as they vote for its with every FOMC meeting.
Yesterday it was the Dallas Fed confirming our assumption that the US economy in Q2 has hit stalled speed. Today, it is the Richmond Fed which plunged compared to expectations and the March print of 20, instead dropping to 10, and indicative of a major slowdown in the manufacturing sector. From the index: "In April, the seasonally adjusted composite index of manufacturing activity – our broadest measure of manufacturing – fell ten points to 10 from March’s reading of 20. Among the index’s components, shipments decreased seventeen points to 6, new orders dropped ten points to finish at 10, and the jobs index eased two points to 14....All broad indicators – including shipments, new orders and employment – continued to grow but at a rate below March’s pace. Other indicators were mixed. Fifth District contacts reported that capacity utilization continued to grow more slowly, while backlogs turned slightly negative. Vendor delivery times edged higher and raw materials inventories grew at a somewhat higher rate." Now "Below March's pace" means trending Q2 GDP is now at or below 2%. But that's fine: somehow the economy will really hockeystick in Q3. And if not, there is QE3, 4 and 5. And the kicker, as usual, Prices Paid jumped as Prices Received plunged: which is always bullish for (collapsing) margins. Elsewhere the CON board called 7 Wall Street CEOs w
And following the continuing plunge in new homes for sale reported earlier, we get the second validation of the theory that the Q2 GDP is about to get the rug pulled from underneath it. The April Dallas manufacturing number came precisely at the borderline we expected earlier would mean an outright downgrade of Q2 economic data by Goldman, or 10.5%. Of note: The production index, a key measure of state manufacturing conditions, moved down from 24 to 8, suggesting slower growth in output." We thing the proper word is "plunged." This is as expected considering our long held assumption that the Japanese economic collapse is already impacting the US. In addition to production, other indicators that saw a collapse were volume of shipments, down 10.9 and the average employee workweeks, which tumbled by over 13. But at least Bernanke is getting his hyperinflation wet dream on: average wages increased by 4. Probably the most important index: prices paid, barely budged, printing at 56.6 compared to 57.2 last month. We are confident that Hatzius will have some very unpleasant words when commenting on this latest contractionary data point. As for the respondents, they confirmed that the bulk of the broader inflation is about to hit, as manufacturers can no longer internalize plunging margins. To wit: "From a cost
standpoint, commodity prices continue to increase, negatively impacting
material and delivery costs. As a result, we are in the process of
taking a price increase to the market, which should occur in May" and "Our sales are up,
but our cost of goods sold and the cost of diesel are keeping our
margins at record lows" and, FTW: "Rapidly increasing costs and fuel costs have
shocked the consumer away from any nonmandatory spending." Pretty much says it all.
New home sales expected to rebound from record lows. Dallas Fed at 10:30 should confirm the Q2 economic contraction (expect Goldman to downgrade Q2 GDP if Dallas Fed comes under 10). After a one day absence, POMO is back, though today all Primary Dealer proceeds will likely go to fund margin calls.
Homebuilder sentiment and a few speeches from Fed officials. In general week to be quiet as market begins holiday wind-down.
A bunch of big deficit numbers today (trade and budget, the latter expected to confirm that the Treasury is in desperate need of cutting spending), and even more Fed speeches signifying nothing but attempting to confuse even more. Most importantly, the Fed will announce the latest POMO schedule at 2:00PM EST.
Some stunning remarks from Dallas Fed's Dick Fisher: " Our duty is most distinctly not to monetize?or even
be perceived as monetizing?the debt of fiscally imprudent government.
Throughout the history of nations, monetizing the budgetary excesses of
governments has proven to be a direct path to economic perdition.
Having already peeked inside that door, I feel strongly that we must
now shut it, lock it and throw away the key." Well, thanks Dick. You are only $2.6 trillion dollars late.
A quiet data calendar to close the week, as eyes are now focused away from Europe and on the hill. Futures are up, commodities are surging, as the dollar destruction continues. There is no POMO.
The only thing that matters today is the NFP number at 8:30 am. Goldman sees 175,000 and 8.9%, consensus is 190,000, ranging from 150,000 to 295,000. NY Fed's Bill "Go Eat iPad" Dudley will speak at the E-3 summit in Puerto Rico. Expect more culinary advice on how to best cook one's deflationary plastic appliances. Also today we get the March ISM expected to come at 61.0, construction outlays, and the Dallas Fed.
Dallas Fed Big Miss, Prints at 11.5 On Expectations Of 18.4, Survey Respondent: "All Of Our Raw Material Costs Are At Record Highs"Submitted by Tyler Durden on 03/28/2011 09:41 -0500
The Dallas Fed diffusion index is out, coming at a disappointing 11.5 on expectations of 18.4, with the market completely ignoring it. After all good diffusion index data is to be bought even if it confirms surging inflation, and bad diffusion index data is to be avoided. And while the component data is pretty bad (projected wages and benefits 6 months ahead plunge by 12 points as do Capital Expenditures, as firms refuse to spend any more organic cash on growth, offset by expectations of lower input costs, which remains TBD), the true nuts and bolts of the index can be gleaned from the respondent surve, presented below, although the most relevant one is here: "Prices are high,
which makes for lower volume. The supply of cattle is limited. The cost
of grain for livestock is unusually high because of high corn prices,
partly attributable to ethanol subsidies. All of our raw material costs are at record highs. The cost of diesel also hurts us. A weak dollar is not good for us." No surprise there.
Today's Economic Data Docket - Savings Rate, PCE, Pending Home Sales, Dallas Fed, And Many Fed SpeechesSubmitted by Tyler Durden on 03/28/2011 06:36 -0500
Today's economic docket includes Personal Income and Spending (which is expected to show a jump in inflation) and the Savings Rate, core PCE, Pending Sales, the Dallas Fed, and a whole lot of dovish Fed speeches. These will be analyzed under a fine toothed comb to see if any of the more dovish members are starting to become as hawkish as their brethren from last week. In the meantime, Frost-Sack will monetize another $5.5-7.5 billion in 5 year debt.
Some irrelevant data again today (at this point the market will continue going up irrelevant of news, until it doesn't): final GDP, Fed speeches, Consumer sentiment and more.
Not much in economic releases today: several Fed speeches, and the usual POMO completion at 11:00 am.