Succinct Summation of the Week's Events

Succinct Summation of the Week's Events:

Positives,

1)April CPI rose .3% both headline and core with the former one tenth less than expected and the latter as forecasted. Due to rounding though, the y/o/y gain of 3.4% was in line and vs 3.5% in March. The core rate y/o/y was higher by 3.6% vs 3.8% in the month before. The slow drip of inflation deceleration.

2)May PPI was about as expected when we include the downward revisions to March. The headline print of .5% m/o/m follows a one tenth drop in March. The same was seen with the core rate. Versus last year, headline PPI was higher by 2.2% and by 2.4% ex food and energy. 

3)The April NFIB small business optimism index rose 1.2 pts m/o/m to 89.7 and which compares with 89.4 in February and 89.9 in January. So, we continue to bounce along the bottom. For reference, the 50 yr average is 98. The bottom line from the NFIB, "Cost pressures remain the top issue for small business owners, including historically high levels of owners raising compensation to keep and attract employees. Overall, small business owners remain historically very pessimistic as they continue to navigate these challenges. Owners are dealing with a rising level of uncertainty but will continue to do what they do best - serve their customers."

4)Somewhat dated but foreigners got really bullish on US stocks and chased the rally in March (sometimes though their timing isn't very good) as the Treasury International flow data was released and revealed that foreigners bought a net $81.5b, the 2nd highest amount on record. As for their purchases of US notes and bonds, it totaled $42.2b vs $87.4b in February and $48.7b in January. Foreigners are still buying but their percentage ownership of Treasury marketable securities continues to shrink as we become more and more reliant on domestic buying. 

5)Mortgage rates fell again w/o/w which helped refi's rise 4.7% w/o/w but purchase applications fell by 1.7%. Those purchase apps are still hovering around 30 yr lows. 

6)From Walmart: "The momentum we see across the business is driven by growth in units sold and transaction counts, as well as market share gains, including general merchandise. These are not inflation driven results."

7)From Hapag-Lloyd: "We've seen recently a very steep increase in spot rates. It's a little bit difficult to understand where that spike comes from. We do see very strong demand over the last number of weeks, but the background of that is a bit unclear. Is that a short term spike or does it really have to do something with an early peak season or some restocking activities here or there?" Or, "And possibly with all the uncertainty that there is around the globe, some people pulling forward some orders, which is something that we highlighted as a possibility also when we did our earnings call six weeks ago."

8)From Cisco: "So from a macro perspective...we saw the quarter showed slight improvement as we moved through the quarter. So the end of the quarter was actually a little stronger than the beginning...we obviously believe that our customers now are on track with the inventory digestion that we talked about last quarter, so that's positive."

9)From Boot Barn: "To summarize, we have seen broad based sequential improvement across virtually all major merchandise departments, both stores and e-commerce channels and in all four regional geographies. This trajectory began as we progress from our 3rd quarter into the 4th quarter, then improved in April and again into May where we have seen positive same store sales in bulk channels on a m/o/m basis."

10)From Sphere Entertainment: "For the third quarter (of their fiscal yr), Sphere welcomed nearly 1 million guests to more than 270 events. This event volume once again far exceeded the world's busiest venues." 

11)China dramatically steps up its attempts to stem the distress in its residential real estate market by encouraging local governments (we'll see where money comes from) to buy unsold properties and further entice people to buy apartments via lower down payment requirements. We are hopefully nearing the end of this financial and economic mess. 

12)China's April CPI was up .3% y/o/y, up from .1% in March and vs the estimate of up .2%. Taking out food and energy prices saw core CPI up .7% y/o/y and actually has been pretty stable around these levels for a while now.

13)Chinese industrial production in April exceeded expectations. 

14)The German ZEW measuring expectations of the German economy rose to 47.1 from 42.9 and the Current Situation was less bad at -72.3 from -79.2. The ZEW said "Signs of an economic recovery are growing, bolstered by better assessments of the overall eurozone and of China as a key export market. The increased optimism is reflected in particular in the sharp rise in expectations for domestic consumption, followed by the construction and machinery sectors." 

15)My son is graduating college today. Wow, bittersweet and time flies but "Time Stands Still" sang Rush. "I'm not looking back but I want to look around me now. Time stands still. See more of the people and the places that surround me now. Freeze this moment a little bit longer, make each sensation a little bit stronger. Make each impression a little bit stronger, freeze this motion a little bit longer. The innocence slips away. The innocence slips away. Time stands still."

Negatives,

1)Initial jobless claims for the week ended May 11th remained elevated, relative to the multi month trend, at 222k, 2k more than expected and vs 232k in the week before. Smoothing this out has the 4 week average ticking up to 218k from 215k and that is the most since November 2023. Also of note, and not subject to the NY quirk last week, continuing claims rose to 1.794mm from 1.781mm, remaining near the highest since November 2021.