Economic Week In Review

• Retail Sales came in +.2%, better than the unchanged number they were expecting. Given that most of this increase came from sales at gas stations, I’m not really sure how you can put a positive spin on it. Business Inventories came in as expected at .6%. Many were hoping to see these shrink as it would indicate consumers are doing more buying.(Monday)

• Producer Price Index the markets were excited without food and energy it only rose .2%, with food and energy it rose by a stellar 1.1%, but really folks, I think it’s time we start looking at the entire picture. Housing Market Index was unchanged at 20, which would point to some stabilization in the housing market.(Tuesday)

• Consumer Price Index came in as expected. Housing Starts both starts and permits weakened, starts, down 11.9% for the month and down 36.5% year over year, posted one of their weakest readings since the 1991 recession. Building Permits, fell 5.8%. Industrial Productionwas slightly higher than expected.(Wednesday)

• Jobless Claims, came in at 372,000, a bleak reading for the overall economy as job strength will be a key component to a recovery. Leading Indicators came in at .1% giving rise to the notion that the economy is just flat and not in a recession. Given the overall picture I’m not sure I would agree with this assessment. I think it’s a very subjective picture depending on where you live or how you have been personally impacted by $4 per gallon gas, job losses, foreclosures etc. (Thursday)

• Bonds…2 year 2.13%, 5 yr. 2.89% and the 10 yr. 3.70%, quite a bit higher than last week.
• Crude oil finished at $116.75 per barrel.

Great gains for stocks this week following a spate of dismal earnings reports from financial institutions. Citigroup announced a $5.1 billion dollar loss and is cutting 9,000 more jobs, but because this was not as bad as some analysts were predicting, the market rallied. Google and Caterpillar announced profitable earnings, which also boosted the market. Remember the market tries to predict what is going to happen and I think people are looking towards a recovery later this year. So far for the 1st quarter, 58% of the 100 companies in the S&P 500 reporting earnings have come in above analysts expectations.

But despite this rosy picture I have to believe that the rising cost of gasoline, which impacts just about everything, will start to rear it’s ugly head in 2nd quarter earnings.

Next week will focus on Existing Home Sales, New Home Sales and Durable Goods Orders.

The Economic Week Ahead:

• (Monday)

• Exisiting Home Sales, State Street Investor Confidence Index, Bank of Canada Announcement(Tuesday)

• (Wednesday)

• Jobless Claims, Durable Goods Orders, New Homes Sales, Help Wanted Index(Thursday)

• Consumer Sentiment(Friday)

Have a great weekend!

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