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May 12, 2011 at 13:20 PM EDT
Economic Review - PPI, Oil CEO Grilling, Retail Sales, Jobless Claims etc.
Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.
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PPI Shows Inflation
The Producer Price Index (PPI) for April reflected the rising commodity prices that dominated the month, and some. Headline PPI, which includes energy and food price volatility, showed an increase of 0.8% in April, exceeding economists’ forecasts for an increase of 0.6%. The month-to-month rise also followed expensive increases of 0.7% in March and 1.6% in February. Core PPI, which excludes food and energy, still implied inflation as it rose 0.3%, which was more than economists’ expectations for an increase of 0.2%. This also followed an expensive March, where Core PPI increased another 0.3%.
The Easter-lifted month of April saw Retail Sales increase just 0.5%, less than economists’ forecasts for 0.6%. March sales, though, were revised higher to +0.9%, which also served to diminish April’s change against economists’ views. When excluding autos, retail sales increased 0.6%, matching the economists’ view, but still down from March’s revised 1.2% pace. We were correct Monday, when we said, “I’m not so sure folks, as we’re due for a disappointment here, even despite Easter. Gasoline prices have not shown mercy to Americans.”
Weekly Jobless Claims got better in the latest monthly check up, but it was like going from a fever of 103 to 101.5 degrees. New unemployment insurance filings amounted to 434K in the May 7 period, down from the revised prior week reading of 478 (up from 474K). The four-week moving average here exposes the troubling trend that those of us who follow the data well understand. The labor situation has been deteriorating, with the four-week moving average now solidly above the 400K psychological threshold, sitting at 436,750.
Business Trade Report
Today’s Business Trade data followed along the lines of the Wholesale Trade data reported earlier this week. After slipping to a pace below inventory build in February, sales burst forward in March by 2.2%. With Inventories rising 1.0% through the month, the inventory-to-sales ratio at 1.23 showed a healthier state. Economists were looking for just a 0.8% increase in March inventory, versus the 0.7% rise seen in February (revised from 0.5%).
Bloomberg Consumer Comfort Index
This is Bloomberg’s weekly measure of consumer sentiment. For the period through May 8, the index deteriorated to a measure of minus 46.9, down from the prior week’s -46.2. Bloomberg’s tally-takers attributed the drop to rising gasoline prices, as the Western region of the nation saw both the worst index reading and highest gas prices. This week’s index measure marked a six-period low.
Federal Reserve Chairman Ben Bernanke is testifying today before the Senate Banking Committee on Dodd-Frank reform implementation. The Fed Chairman is in good company, joined by FDIC Chair Sheila Bair, SEC Chair Mary Schapiro, CFTC Chair Gary Gensler, and Deputy Treasury Secretary Neal Wolin. Separately, Philadelphia Federal Reserve Bank President Charles Plosser made an early morning presentation on the economic outlook.
Oil CEOs Feeling Heat
A U.S. Congressional Panel is grilling the executive chiefs of the top five oil companies, including Exxon Mobil (NYSE: XOM), Chevron (NYSE: CVX), ConocoPhillips (NYSE: COP), and U.S. units of BP (NYSE: BP) and Royal Dutch Shell (NYSE: RDS-A, NYSE: RDS-B). Tax subsidies to these highly profitable companies are in question, as the American legislature readies to vote whether to remove them or not. The action would eliminate a bit less than $4 billion a year in tax breaks, but perhaps help save other programs in a tight budget environment. The Republican argument is that we need not hamper important American employers nor the shareholders of these firms. Democrats see no need for subsidies to an industry benefiting from rich oil prices.
Natural Gas Inventory
The EIA reported on Natural Gas inventory this morning. This week’s report covering the period ending May 6 showed a net increase of 70 Bcf, similar to the prior week’s increase. Natural gas inventory remained 37 Bcf below the five-year average. Natural gas futures contracts were up 0.9% at midday.
IEA Sees Demand Destruction
The IEA published its Monthly Oil Report, which according to some interpreters shows expectations for demand destruction.
As of midday, WTI Crude Oil Futures were up 0.4% to $98.60 per barrel. Gasoline RBOB Futures were down 1.6%. Gold was down $6 per troy ounce, to $1495.40, while silver was off $1.325, to $34.19 per ounce.
Corporate News Drivers
The corporate wire has Biomimetic Therapeutics’ (Nasdaq: BMTI) Augment bone graft treatment seeing review by the FDA. The EPS schedule highlights reports from CA Inc. (NYSE: CA), Kohl’s (NYSE: KSS), Nvidia (Nasdaq: NVDA), Nordstrom (NYSE: JWN), Precision Castparts (NYSE: PCP), American Pacific (Nasdaq: APFC), 21st Century (Nasdaq: TCHC), Andatee China Marine Fuel (Nasdaq: AMCF), Animal Health Int’l (Nasdaq: AHII), Arctic Cat (Nasdaq: ACAT), Arrowhead Research (Nasdaq: ARWR), Astea International (Nasdaq: ATEA), Atlas Energy (Nasdaq: ATLS), Bacterin (Nasdaq: BONE), Bitauto (Nasdaq: BITA), Black Box (Nasdaq: BBOX), Body Central (Nasdaq: BODY), Cache (Nasdaq: CACH), China Grentech (Nasdaq: GRRF), China Sky One Medical (Nasdaq: CSKI), China TransInfo (Nasdaq: CTFO), Cisco Systems (Nasdaq: CSCO), Symantec (Nasdaq: SYMC), Cimatron (Nasdaq: CIMT), ClearOne Communications (Nasdaq: CLRO), Cornerstone Therapeutics (Nasdaq: CRTX), Cosi (Nasdaq: COSI), Darling Int’l (NYSE: DAR), Dixie Group (Nasdaq: DXYN), Ediets.com (Nasdaq: DIET), Electromed (Nasdaq: ELMD), Eloyalty (Nasdaq: ELOY), eMagin (Nasdaq: EMAN), EMS Technologies (Nasdaq: ELMG), Energy Focus (Nasdaq: EFOI), Evergreen Solar (Nasdaq: ESLR), Evolution Petroleum (AMEX: EPM), Express 1 Expedited (AMEX: XPO), FleetCor Tech (NYSE: FLT), Fortegra Financial (NYSE: FRF), General Finance (Nasdaq: GFN), Giant Interactive (NYSE: GA), GTSI (Nasdaq: GTSI), Highpower International (Nasdaq: HPJ), Imperial Holdings (NYSE: IFT), Incredimail (Nasdaq: MAIL), Infusystem (Nasdaq: INFU), Interleukin (Nasdaq: ILIU), Ironwood Pharmaceuticals (Nasdaq: IRWD), Kemet (NYSE: KEM), Lifeway Foods (Nasdaq: LWAY), Lime Energy (Nasdaq: LIME), Management Network (Nasdaq: TMNG), MediaMind Tech (Nasdaq: MDMD), Medley Capital (NYSE: MCC), Merriman (Nasdaq: MERR), Noah Education (NYSE: NED), Oxigene (Nasdaq: OXGN), P&F Industries (Nasdaq: PFIN), Penn Millers (Nasdaq: PMIC), PostRock Energy (Nasdaq: PSTR), Prestige Brands (NYSE: PBH), Primus Guaranty (NYSE: PRS), PSS World Medical (Nasdaq: PSSI), Radio One (Nasdaq: ROIA), Seracare Life Sciences (Nasdaq: SRLS), Spark Networks (AMEX: LOV), Sparton (NYSE: SPA), Strategic Diagnostics (Nasdaq: SDIX), Tandy Brands (Nasdaq: TBAC), Tandy Leather (Nasdaq: TLF), Teekay (NYSE: TK), Teekay Tankers (NYSE: TNK), Tengion (Nasdaq: TNGN), TranS1 (Nasdaq: TSON), Treecom (Nasdaq: TREE), US Home Systems (Nasdaq: USHS), Verenium (Nasdaq: VRNM), Walker & Dunlop (NYSE: WD), Willdan Group (Nasdaq: WLDN) and Wireless Ronin (Nasdaq: RNIN).
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ANDATEE MARINE American Pacific Corp Arctic Cat, Inc. Astea International, Inc. BODY CENTRAL BP P.L.C. BioMimetic Therapeutics, Inc. Black Box Corp CHEVRON CORPORATION CONOCOPHILLIPS Cache, Inc. Cimatron Ltd Cisco Systems, Inc. Cornerstone Therapeutics, Inc. Cosi, Inc. DARLING INTERNATIONAL, Inc. Dixie Group, Inc. EVOLUTION PETROLEUM CORPORATION Exxon Mobil FLEETCOR TECHNOLOGIES, Inc. FORTEGRA FINANCIAL CORP. General Finance Corporation Giant Interactive Group, Inc. HIGHPOWER INTL IMPERIAL HOLDINGS, Inc. IRONWOOD PHARMA-A IncrediMail Ltd. KEMET CORPORATION KOHLS CORPORATION LIME ENERGY CO Lifeway Foods, Inc. MEDLEY CAPITAL CORPORATION MNGMNT NTWRK GRP NOAH EDUCATION HOLDINGS LTD NORDSTROM, Inc. Nvidia Corp P&F Industries POSTROCK ENRGY PRECISION CASTPARTS CORP. PRESTIGE BRANDS HOLDINGS, Inc. PSS World Medical, Inc. ROYAL DUTCH SHELL PLC CLASS A ROYAL DUTCH SHELL PLC CLASS B Radio One, Inc. SPARK NETWORKS, Inc. SPARTON CORPORATION Strategic Diagnostics, Inc. Symantec Corp TEEKAY CORPORATION TEEKAY TANKERS LTD Tandy Brands Accessories%2C Inc. Tandy Leather Factory, Inc. TranS1, Inc. Tree.com, Inc. VERENIUM WALKER & DUNLOP, Inc. Willdan Group, Inc.
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