GOOD NEWS IS BAD NEWS?
Jobless Claims At Lowest Level in Nearly Seven Years
The trend of lower jobless claims continued this week as first time initial claims dropped by 32K to 300K, which is the lowest level in nearly seven years (May 2007).
With this week’s decline, the four-week moving average moved down from 321K down to 316.25K, inching ever so closely to the post-recession low of 314.75K from last September. It has now been 28 straight weeks since that last post-recession low was made, so a new low would be a welcome relief.
Thomson Reuters Same Store Sales Review
Next Monday, we get March retail sales which everybody expects to prove that winter was cold but spring has arrived. TR offers a preview:
The Thomson Reuters Same Store Sales Index registered a 2.2% comp for March, beating its 1.4% final estimate. Including the Drug Store sector, SSS growth rises to 2.7%, above its final estimate of 2.1%. 56% of the retailers beat their estimates. Several retailers blamed the shift of the Easter holiday for slow March sales.
Therefore, it’s important to note that due to the calendar shift of the Easter holiday, March and April comps should be evaluated together in order to compare the spring season accordingly. Currently, the 2014 Easter average is expected to come in at 3.3% (Mar’14 2.2% SSS Act. and Apr’14 4.3% SSS Est). The 3.3% average is weaker than last year’s 3.5% Easter average, suggesting a slowdown in consumer spending from a year-ago.
The late Easter will require us to wait another month before we know what’s really happening. Weekly chain store sales rose 1.9% MoM in March but are only up 0.9% YoY because of Easter. Sales rose again in the first week of April but the YoY change dropped to +0.7%.
U.S. HOUSING- FLORIDA
The Florida market is slowing like everywhere else. Raymond James blames the weather up North (!):
Florida existing home sales were up 1.5% y/y in February, decelerating from January’s 10.2% y/y increase. Sequentially, re-sales jumped 5.5% from January to 15,826 sales, well below the typical ~10% seasonal bump normally witnessed in February. We suspect the effects of recent price increases, coupled with winter weather that may have impeded out-of-state buyers’ ability to sell their existing homes, were likely factors in the deceleration.
Watching the brutal winter north of Jacksonville, FL., and based on the heavy traffic this year in South Florida, my sense is that the polar vortex actually made many people suddenly decide to move here. Many buyers seemed quite anxious to buy:
That said, according to February data from RealtyTrac, all-cash transactions in Miami, Tampa, and Orlando were 71.3%, 65.9%, and 62.3% of all existing homes sold, sweeping the top three spots among U.S. metros, respectively.
That said, prices have gone up spectacularly in South Florida in the past year. Add that equally frozen Canadians got a cold shower as the loony lost much altitude during 2013, that Russians may be rethinking coming to the U.S.A. and that Brazil is slower and still slowing and you got the recipe for a cooler market.
Why Meat Prices Are Going To Continue Soaring For The Foreseeable Future
The average price of USDA choice-grade beef has soared to $5.28 a pound, and the average price of a pound of bacon has skyrocketed to $5.46. Unfortunately for those that like to eat meat, this is just the beginning of the price increases. Due to an absolutely crippling drought that won’t let go of the western half of the country, the total size of the U.S. cattle herd has shrunk for seven years in a row, and it is now the smallest that is has been since 1951. But back in 1951, we had less than half the number of mouths to feed. And a devastating pig virus that has never been seen in the United States before has already killed up to 6 million pigs in this country and continues to spread like wildfire. What all of this means is that the supply of meat is going to be tight for the foreseeable future even as demand for meat continues to go up. This is going to result in much higher prices, and so food is going to put a much larger dent in American family budgets in the months and years to come.
One year ago, the average price of USDA choice-grade beef was $4.91. Now it is up to $5.28, and the Los Angeles Times says that we should not expect prices to come down “any time soon”…
Auto Sales Slow in China China’s fervor to buy cars is showing signs of cooling along with the broader economy, as sales growth in March slowed compared with the first two months of the year.
Auto makers sold 1.71 million passenger vehicles last month, up 7.9% from a year earlier, the China Association of Automobile Manufacturers said Friday. This represents a slowdown from the 11% year-to-year rise in the January-to-February period.
CAAM said total automobile sales including both passenger and commercial vehicles grew 6.6% to 2.17 million vehicles in March.
China’s passenger car market grew 16% last year.
China failed bond auction raises concerns Stakes raised for Beijing as it tries to rein in debt levels
The Chinese government was unable to sell all the bonds offered at an auction on Friday, its first such failure in nearly a year amid concerns about slowing growth in the world’s second-largest economy.
The failed bond auction raises the stakes for Beijing as it tries to rein in debt levels, illustrating that even the state will have to pay a higher cost for funding as banks focus more on investment risks and demand improved yields. (…)
Last year’s failure was a precursor to a cash crunch that roiled global markets when Chinese money market rates spiked to double-digits.
Bond traders said the situation was different this time, with liquidity conditions healthier and the central bank determined to avoid a repeat of the cash crunch. But with market rates climbing in recent weeks and traders expecting the tightening to continue, banks demanded a higher yield from the finance ministry. (…)
IEA Trims Oil Demand Growth Forecast The energy watchdog highlights “elevated” oil-market risks and trims its demand increase forecast this year following Russia’s annexation of Crimea, but also warns of lower oil production.
In its closely watched monthly report, the Paris-based energy watchdog lowered its 2014 forecast for Russian oil demand by 55,000 barrels a day to total 3.5 million barrels a day following the country’s annexation of Crimea last month and subsequent downgrades of the World Bank and International Monetary Fund’s views of the country’s growth.
Further economic sanctions and pressure on Russia’s economy could cut its oil demand by a further 150,000 barrels a day this year, the IEA said.
The IEA’s overall forecast for the increase in oil demand this year was cut by 100,000 barrels a day to 1.3 million barrels a day.
The IEA also lowered its expectations for the increase in oil supply from outside the Organization of the Petroleum Exporting Countries in 2014 by 250,000 barrels a day to 1.5 million barrels a day, largely as a result of declining production at old oil fields in Russia and a pessimistic outlook on hopes for the giant Kashagan oil field in Kazakhstan.
The Kashagan project has been beset by problems and isn’t producing oil after a short-lived startup in 2013. The IEA said it expects production to come back in the second quarter of 2015 at the earliest.
The revision to its non-OPEC supply forecast saw the IEA increase its expectation of the demand for OPEC’s oil this year by 300,000 barrels a day, even as the oil-producing group’s output fell to its lowest in five months in March.
According to the IEA, Saudi Arabian oil production fell 285,000 barrels a day to 9.57 million barrels a day last month, its lowest level in almost a year, as refinery maintenance reduced demand from customers.
Iraq’s production fell 340,000 barrels a day from historic highs last month as a wave of attacks on the important Kirkuk-Ceyhan pipeline curtailed exports from the north of the country, and infrastructure constraints hampered trade from the southern port of Basra.
Output from Libya remained constrained amid a months long political standoff with rebels that have held its eastern ports and prevented oil exports.
The IEA said the steep drop in OPEC’s production last month would likely be short-lived, however, as Libya seems to be making progress toward reopening its eastern ports and Iranian oil output and exports are also creeping up.
According to the IEA, oil imports from Iran are well above their 2013 level and hit their highest since June 2012 in February. Iran’s oil production was 2.8 million barrels a day in March, down slightly from the previous month, but still an increase of 100,000 barrels a day from the 2.7 million barrels a day it pumped on average last year.
Overall, the IEA warned many issues could still hamper global oil supply.
“Security risks continue to hover over the [Middle East and North Africa] region, and how long Iran can keep testing international oil sanctions is unclear,” the IEA said.
IEA says Iran exports more than allowed
Iran is likely to have exported oil at higher levels than allowed under western sanctions in March for a fifth straight month, according to the developed world’s energy watchdog.
The International Energy Agency said in its monthly report that Iran had exported 1.65m barrels of oil per day in February and probably close to that level again in March.
“Preliminary data for March show imports from Iran [to OECD and non-OECD countries] declined to 1.05m b/d but that figure will probably be revised upwards closer to February levels on receipt of more complete data,” the report said.
Under the interim deal agreed in November with world powers on its nuclear programme, Iranian oil exports are supposed to average 1m b/d over the six months to July 20 but shipments have consistently topped that level. (…)
In Friday’s report, however, the IEA said that far from facing a supply glut, Opec would have to raise production from March levels of 29.62m b/d in order to balance the market in the second half of the year.
Mr Halff said the “call” on Opec – the amount members must pump to meet global demand – would be about 30.55m b/d in the third and fourth quarter of 2014 because of weaker supply growth in the rest of the world. (…)
JPMorgan Profit Falls 19% Amid Decline in Trading, Mortgage Revenue
Putin threatens to cut off Ukraine gas Move would imperil Europe supply, Putin warns in letter
Bullish Sentiment Drops to Lowest Levels Since February
