"Economists are pessimists: they've predicted 8 of the last 3 depressions."
--Barry Asmus

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Friday, April 8, 2011

World News

European Union
Ivory Coast
United States
[1]  Along with the presidential heavy weapons emplacements and presidential mercenaries...
[2]  Head of the US Africa Command.
[3]  His margin of victory was 7582 votes.  Keep that in mind.

Thursday, April 7, 2011

World News! Now With 100% Less Spiders!

  • The European Central Bank, acting on fears of increasing inflation, has raised interest rates by 25 bps to 1.25%.  The ECB is specifically concerned that oil prices could boost inflation.  Far from being surprised, European financial markets are actually pricing in expectations that there will be at least two additional 25 bps increases this year.
Ivory Coast
The Whole Wide World

First Time Jobless Claims

It is that time of the week again, so grab your noisemakers and party hats and get ready for the First Time Jobless Claims!
Last week, as you no doubt recall, results were mixed.  The advance seasonally adjusted initial claims figure came in at 388,000, which was better than the revised prior week claims but worse than the initial prior week claims.  Also, it missed expectations by 8,000.  Unadjusted claims figures came in at 354,301 (an increase of 3,097).    The initial state program insured unemployment level was 3,714,000 (a decline of 7,000), and the total number of all people claiming benefits in all programs was 8,770,443 (an increase of 5,619).
Like I said, mixed.
This week, the Econoday-surveyed analysts are expecting a modest improvement, calling for first time jobless claims to fall to "only" 385,000 new claims.
Now, we turn to the US Department of Labor for the Unemployment Insurance Weekly Claims Report for the week ending 4/2/2011.  Right off the bat, we see that the initial claims figure for the week ending 3/28 has been adjusted upwards to 392,000 (an increase of 4000).  The report then celebrates the fact that the advance figure for seasonally adjusted initial claims for the week ending 4/2 comes in at 382,000, calling it a decrease of 10,000 from the previous week.  I see this as rather mixed - yes, it is a decrease from last week's initial claims, and it did beat expectations.  But, the claim of a 10,000 person decrease seems a little spurious since it's not a 10,000 decrease from the numbers everyone cared about last week.
Ah well, my opinion and $4.50 gets you a cup of coffee at Starbucks.
The unadjusted number of initial claims comes in at 350,667, a healthy decline of 3,634.  The initial state program insured unemployment level (and I really need to come up with something shorter to call that) was revised upwards to 3,732,000 for last week and then comes in at 3,723,000 for the week ending 4/2.  The report calls this a decline of 9000.  And the total number of people claiming benefits in all programs?  8,524,455.

Wednesday, April 6, 2011

FAO Food Price Index

The FAO is the Food and Agriculture Organization of the United Nations.  Amongst other duties, they track the monthly change in international prices of a basket of food commodities.  The overall index is the average of five commodity group price indices, weighted with the average export shares of each of the groups.  The indices are backward looking, with each month's release having data for the previous month.
The FAO Food Price Index rose 2.2% in February.  The Cereal Price Index was up 3.7% in February (mostly on maize prices), the Dairy Price Index was up 4%, the Oils/Fats Price Index was up "marginally", the Meat Price Index was up 2% (mostly on pig and sheep meat), and the Sugar Price Index fell marginally (although prices remain volatile).

What in the World?

Great Britain
Ivory Coast
  • Forces loyal to Alassane Ouattara, President-elect of the Ivory Coast, stormed the bunker where Laurent Gbagbo (who lost the election) has been resisting efforts to make him step down.  Gbagbo's spokesman has states that there is "no legal and judicial basis" for requiring the defeated president to leave office.  Cocoa prices rose slightly as the continuing civil war has dimmed hopes that the world's largest cocoa exporter will resume exports soon.
  • Spiders have begun taking to the trees to escape flooding and, because of the scale and duration of the flooding, the trees are literally cocooned in spider webs.  This has contributed to a decline in the expected malaria rate, which is a good thing, but still.... Trees.  Full of spiders.
United States

MBA Weekly Applications Survey

This survey, conducted by the Mortgage Bankers Association, tracks the weekly rate of change in applications for new mortgages and refinanced mortgages.  It's not a significant market mover in its own right, but it provides valuable clues to predict new home sales and existing home sales - and those are major market movers.
According to the MBA's press release, the Market Composite Index declined 2.0% for the week ending 4/1.  Most of the decline was driven by refinancing activity, as the Refinance Index declined 6.2% while the Purchase Index increased 6.7%.  Refinancing represented 61.2% of the week's mortgage activity (down from last week's 64.3%), and adjustable rate mortgage applications increased to 6.1% of total applications.  The average contract interest rate for 30-year fixed-rate mortgages increased 1 bps to 4.93%.
The takeaway here is that the overall number of home purchases (whether new or existing) increased last week, which is a harbinger of glad tidings for the economy.  Fewer people are attempting to refinance, though.

Tuesday, April 5, 2011

What's Happening in the World?

It's a light day for economic data, so let's have a look at the news to get a sense of what might be moving the markets.
  • The People's Bank of China has announced that it is raising benchmark one-year deposit rates by 25 bps to 3.25% and one-year lending rates by 25 bps to 6.31%, effective April 6.  Speculation is that Chinese inflation, which was at 4.9% in January and February, may have risen again (although actual data won't be available until April 15).
  • Transocean, the company that operated the Deepwater Horizon, has declared that, "in recognition of the Company's achievement of the objectives set at the beginning of 2010 relating to the Company's safety record," cash performance awards will be made to the Named Executive Officers.  This is composed of 25% of base salary for Mr. Newman ($275,000), 18.75% of base salary for Mr. Rosa ($93,750), 16.25% of base salary for Mr. Brown ($81,250), 18.75% of base salary for Mr. Bobillier ($81,562.50), 18.75% of base salary for Mr. Toma ($81,562.50), and 15% of base salary for Ms. Richard ($53,250).
United States
[1]  No word on defense spending, which represents 17.94% of President Obama's proposed 2012 budget.  If you look just at items labeled "national defense".  If you include "defense-related expenditures", it goes to between 27.6% and 37.9% of the budget.