Share the Wealth – March 16, 2018

Registered Investment Adviser Caleb Lawrence

After opening with decent gains, the major averages struggled to hold their early advances on mixed news. Since Monday the Standard and Poors 500 Index has fallen 39 points or 1.4% while the NASDAQ has slipped 102 points or 1.4% as well.

The Treasury International Capital Flows or TIC report came out after the close yesterday. Foreign investors made net purchases totaling 62.1 billion in January. Solid demand was seen for equities and agency bonds. Treasury note, and bond demand was positive for the first time in 3-months, corporate bonds sold off slightly.

Construction activity wobbled again in February after building starts slipped 7% to 1.236 million units annualized on a 26.1% drop in multi-family starts, this erased all of the previous months gain and then some. Permits fell 5.7% to 1.298 million units annualized. Again, a large drop in multi-family permits was the culprit and it nearly erased the large jump seen the previous month. So far real estate and construction has held up despite sharply higher interest rates, but both sectors are struggling.

Industrial Production advanced 1.1% in February, capacity utilization increased to 78.1% on large gains in auto and mining activity, utilities production posted a notable decline for the month.

Share the Wealth – March 15, 2018

Registered Investment Adviser Caleb Lawrence

Another unsteady day for the major averages as early gains give way to small losses into the final hour.  The latest Silicon Valley flame out goes to Elizabeth Holmes and her startup Theranos as she and her technology were shown to be frauds.  Following charges by the SEC or Securities and Exchange Commission.  Once again despite 7+ figure losses, and blatant fraud, the technology never worked as advertised, nobody goes to jail, as the SEC doesn’t pursue criminal charges, but does refer them to the DOJ or Department of Justice, at times.

Import price growth moderated somewhat in February with a .4% gain, the year ago rate climbed to 3.5% driven by energy prices and a declining currency.  Export prices advanced .2% and 3.3% on a year ago basis.

The Philadelphia Fed regional manufacturing survey slipped 3.5 points to 22.3 in March, the details were unremarkable.  The New York or Empire State manufacturing survey jumped 9.4 points to 22.5 in March, the details of this report were also unremarkable.

Bitcoin and the other crypto currencies continue to struggle with Bitcoin looking to test $8,000 again.  Once again when the fundamentals don’t support the thesis, and the history of the item is one of fraud, theft, and other shenanigans its good to keep your guard up.

Share the Wealth – March 14, 2018

Registered Investment Adviser Caleb Lawrence

 Disappointing economic data, more trade war rhetoric and rising geo-political tensions sent the major averages into the final hour with small losses.

The Mortgage Bankers Association reports that mortgage activity increased .9% last week as refis fell 2.2% and purchase apps gained 3.4%. The 30-year contract rate for a jumbo loan slipped fractionally to 4.55%.

Retail sales fell for a 3rd month in February slipping .1% and missing expectations of a .4% gain substantially. Retail sales have dropped .3% in the last 3-months establishing a trend that doesn’t speak well of the future given that some 70% of total economic activity comes from consumer spending. Notable declines were seen in gasoline, autos, and furniture.

The Producer Price Index or PPI gained .2% in February pushing the annualized rate to 2.9% on a big jump in intermediate unprocessed goods. Still energy prices remain the primary driver of the various inflation measuring metrics of late. Despite sharply rising supply and growing questions about demand, energy prices have held so far. Should they decrease materially they’ll most likely take inflation with them.

Share the Wealth – March 13, 2018

Registered Investment Adviser Caleb Lawrence 

The major averages failed to hold their early gains once again entering the final hour with modest losses on little news, though another significant White House staffer hits the highway, this time Secretary of State Rex Tillerson.

The February Consumer Price Index or CPI advanced .2%, the year ago rate increased to 2.3% even with a much slower rate of advance for energy, goods, and food prices. Despite relentless media chatter about high and rising inflation it remains hard to come by using the various inflation measuring metrics. In fact, Central Banks the world over unable to muster what is perceived as the appropriate level of inflation, and in fact terrified of deflation seek to alter the storyline. If they stopped blowing a series of inherently deflationary credit bubbles that would be a great place to start, but apparently, they seem to think that hedonic adjustments or just plain refocusing the narrative on something else is a better strategy. So much for the ounce of prevention is worth a pound of cure idea. As this close the barn door after the horse has bolted approach smacks of the disingenuous at best claim that destabilizing asset bubbles can’t be seen in advance, followed by the mea culpa of clean up the mess after the fact using huge taxpayer funded bailouts of the leading corporate culprits. Effectively socializing losses at taxpayer expense, whilst everyone stands around and says, “I didn’t know” and hits the reset button. I hope to god it’s different this time as the debt and valuation levels suggest that the price to be paid will be far higher than the Dot-Com or Great Financial Crises.

This is Caleb Lawrence Registered Investment Adviser Scotts Valley Drive and Willis Road in the Scotts Valley Plaza, Suite 202 or call me toll free at 888-RICH PIG / 888-742-4744.

You can catch me on the radio at noon each business day as well on California’s central coast. KPIG 107.5 FM in the Monterey Bay or KPYG 94.9 FM in San Luis Obispo.

Advisory services offered through Caleb Lawrence Registered Investment Adviser Inc.