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Weekly Economic Updates
Recession Continues!
April 14, 2008
Last week’s economic news and several Federal Reserve speakers confirmed that the first half of 2008 was likely to see recessionary conditions in the economy. The old saying is that if it walks like a duck and talks like a duck, it probably is a duck! Warren Buffett said that by any common sense definition the economy is in a recession.
Last week consumer confidence declined due to a weak job market, high gasoline prices, slumping house prices, declining stocks, tighter credit conditions, and financial market turmoil. Pending home sales fell and unemployment claims remained at a multi-year high on a 4-week moving average basis. March chain store sales fell and consumers are buying less gasoline than they were a year ago. And if all the above is not enough, March import prices soared to 14.8% on an annual basis. In this environment, it is no wonder that financial market trends remain: lower short term interest rates (more Fed rate are cuts coming), lower bond yields (recessions eventually lower inflation which is why the Fed created this one with prior rate increases), and lower stocks ( where have all the profits gone?). The seeds of the next expansion are being sown by lower short rates and the coming Federal rebate checks, but it will take awhile!
Week ending April 11, 2008
INDICATOR |
PERIOD |
BN SURVEY |
ACTUAL |
PRIOR |
REVISED |
Consumer Credit |
FEB |
$5.9B |
$5.2B |
$6.9B |
$10.3B |
Pending Home Sales MoM |
FEB |
-1.0% |
-1.9% |
0.0% |
0.3% |
IBD/TIPP Economic Optimism |
APR |
41.5 |
39.2 |
42.5 |
-- |
Minutes of March 18 FOMC Meeting |
Fed Officials Saw Contraction in First Half as ‘Likely’ |
||||
ABC Consumer Confidence |
APR 6 |
-- |
-34 |
-33 |
-- |
MBA Mortgage Applications |
APR 4 |
-- |
5.4% |
-28.7% |
-- |
Wholesale Inventories |
FEB |
0.5% |
1.1% |
0.8% |
1.3% |
Trade Balance |
FEB |
-$57.5B |
-$62.3B |
-58.2B |
-$59.0B |
Initial Jobless Claims |
APR 5 |
383K |
357K |
407K |
410K |
Continuing Claims |
MAR 29 |
2935K |
2940K |
2937K |
-- |
ICSC Chain Store Sales YoY |
MAR |
0.9% |
-0.5% |
1.9% |
-- |
Monthly Budget Statement |
MAR |
-$70.0B |
-$48.1B |
-$96.3B |
-- |
Import Price Index (MoM) |
MAR |
2.0% |
2.8% |
0.2% |
-- |
Import Price Index (YoY) |
MAR |
13.7% |
14.8% |
13.6% |
13.4% |
U. of Michigan Confidence |
APR P |
69.0 |
63.2 |
69.5 |
-- |
Technical Notes |
Close April 11, 2008 |
Change From |
Sentiment |
30 day |
Comment |
Stocks: Dow Jones Industrial Avg. |
12325.42 |
-284.00 pts |
49 |
-2% |
Neutral Sentiment |
Bonds: U.S. 30Yr. Treas. Yield |
4.30% |
-0.01% |
70 |
+3% |
High Sentiment |
B = Billions M = Millions K = Thousands F = Final r = Revised Pts = Points
SENTIMENT |
Below 30 indicates investors have sold bonds or stocks and market is ready to gain. Fear is great, investors are crying and they should be buying. |
Above 70 indicates investors have bought bonds or stocks and are in love with them. They may be ready to fall and investors are probably yelling, but they should be selling. |
30-DAY RATE OF CHANGE |
A 5% gain in the price of an investment from 30 days ago suggests that it is overbought and ready to fall. A 5% loss from 30 days ago suggests the market is ready for price gains. |
This Economic Update is brought to you courtesy of the International Bank of Miami. For additional information please contact John Burford, Vice President & Investment Portfolio Manager at 305.459.8376 or E-mail John.Burford@tibom.com
Principal/Consultant
Ralph Egües, Jr.
