THE BASIS POINT

Fundamentals 7/14: Consumer Not Yet Buying It

June Producer Inflation
-Overall PPI Month/Month: -0.4%
-Core PPI Month/Month: +0.3%
-Overall PPI Year/Year: +7%
-Core PPI Year/Year: +2.4%
-Lower energy costs this month. This is also a time to remind that ‘Overall’ is a better macroeconomic indicator because it smooths out the volatility of energy and food prices.

June Retail Sales
-Overall Retail Sales Month/Month: +0.1%
-Retail Sales less autos Month/Month: +0.0%
-This dismal Retail Sales gain is indicative of flat GDP.

Initial Jobless Claims
– 405,000 for week ended July 9, down 22k from previous week
– 4-week Moving Average 423,250, down 3,750 from previous week
-While this number is better that the prior (initially 418,000 and revised to 427,000), there is a psychological barrier at 400,000. No one is going to celebrate for the jobs market until such time as the 4-week average gets under 400,000.

Business Inventories
-Inventories – Month/Month change +1.0 %
-We again have business at +1.0% getting ahead of the consumer at +0.1% in Retail Sales.
-Business spending for inventories will contract to make up the difference.
-Business inventories are the dollar amount (at cost) of inventories held by manufacturers, wholesalers, and retailers.

One final word on yesterday’s Treasury market: the market sold early (higher yields) as Bernanke indicated the possibility of QE3. A very successful reopening of the $21 billion 10-year Treasury auction brought yields down post-Bernanke.