Share the Wealth – February 20, 2018

Registered Investment Adviser Caleb Lawrence 

The major averages struggled into the final hour mixed on little news As the Fed seems to have arrested the latest sharp market decline and recovered some of the lost ground once again. This will mark a 3rd time in the last 2.5 years.

With the latest Trump inspired tax cut in the books one would think that the Federal Reserve latest report on national finances would be newsworthy but apparently not. In addition to reducing revenue by about 150 billion per year it also increases spending by about the same amount, so the net deficit increases by some 300 billion per year. Highlights form the Federal Reserve report include a 1.16 Trillion Dollar deficit for fiscal 2017. Net costs are expected to increase 129 billion to 4.5 trillion. Tax and other revenues should gain 29.3 billion to 3.4 trillion. For the record costs are advancing at more than 4-times the rate of increase for revenues. The bottom line or Net Operating Cost difference is expected to jump 10% to 1.16 trillion. Despite all the talk of a “goldilocks economy” the “official national debt” has surpassed 20 trillion growing steadily during a period of supposedly healthy economic growth when it should have been falling thanks to rising tax revenues. Just another item to add to the list of things that just don’t matter along with the list of things we should be having a robust national discussion about, but don’t. Because the mainstream media doesn’t think its newsworthy.

Share the Wealth – February 16, 2018

Registered Investment Adviser Caleb Lawrence 

Another volatile session sends the major averages into the final hour with small losses on mixed data. Since Monday the Standard and Poors 500 Index is up 90 points or 3.4% while the NASDAQ has gained 241 points or 4.2%. The December Treasury International Capital Flows or TIC report showed net foreign purchases of 27.3 billion in December on strong equity and agency bond buying. Treasury issues sold off for a 3rd consecutive month, while corporates also saw some selling as well.

Housing starts increased 9.7% in January on a huge jump in multi-family construction. Permits gained 7.4% led by multi-family units. Strength was notable in the West and South.

Import prices increased 1% in January on higher oil prices and a rapidly falling Dollar despite higher interest rates. Energy prices continue to be the primary driver as they have been for a number of month’s now. Recent declines should put downward pressure on this and other price series beginning with the February data set next month.

E-Commerce sales continue their advance with a 3.2% gain in the 4th quarter of last year. That said the online sales total held steady at 9.1% of sales over all. Something to keep in mind when the talking heads announce that Amazon is crushing brick and mortar retail. The real problem with traditional retail is debt and high lease rates.

Share the Wealth – February 15, 2018

Registered Investment Adviser Caleb Lawrence 

The major averages opened higher on little news of significance and enter the final hour with modest gains following a brief trip into the red late morning. Bitcoin breaks $10,000 in early trade as it tries to recover its former glory.

The New York regional manufacturing index slipped 4.6 points in February to a still solid 13.1. An unremarkable report save for prices paid that surged 12.4 points to a very high 48.6.

The Philadelphia Fed regional index gained 3.6 points to 25.8 in February. New orders more than doubled to 24.5 and employment advanced. Prices paid surged 12.1 points to 45.

The Producer Price Index or PPI that largely measures wholesale price changes continues to advance with a .4% gain in January on large increase in energy prices. On a year ago basis this index slipped .1% to 2.6% energy prices should cause this series to moderate materially beginning next month with the February data set.

Industrial Production disappointed in January with a .1% decline after mining activity fell 1%, a second consecutive drop for this component.

Share the Wealth – February 14, 2018

Registered Investment Adviser Caleb Lawrence 

The major averages shrugged off their early losses to enter the final hour with modest gains on mixed data. The mainstream media is making much of today’s inflation data, after the CPI or Consumer Price Index beat expectations with a .5% gain in January. One month does not make a trend and the year ago rate was unchanged at +2.1% slightly above the Fed’s stated target of 2%, but below the long-term historical average of 3%. Once again, a large jump in energy prices led the advance. Given recent energy price data and this series should start to decline notably with next month’s release.

Mortgage activity fell 4.1% last week as per the Mortgage Bankers Association with refi’s slipping 1.9%, while purchase apps dropped 5.9%. the 30-year jumbo loan rate increased again hitting 4.55%

Retail sales missed expectations in January with a .3% decline on weakness in Motor Vehicles and Building Materials. Were it not for higher gasoline prices the drop would have been even larger.

Business Inventories advanced .4% in December, a second solid gain. All three of the sub-categories advanced with manufacturing and wholesale particularly strong.

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.