Edge and Odds

The enemy of knowledge is not ignorance, it’s the illusion of knowledge (Stephen Hawking)

It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so (Mark Twain)

Edge and Odds

Invest with smart knowledge and objective odds

Month: March 2015

NEW$ & VIEW$ (24 MAR. 2015):

U.S. Consumer Prices Rise For First Time Since October U.S. consumer prices climbed for the first time in four months in February, potentially reassuring the Federal Reserve that the economic recovery is on track as it considers raising interest rates.

The consumer-price index, reflecting what Americans pay for everything from groceries to housing, rose 0.2% in February from the prior month, the Labor Department said Tuesday. That marked the first increase since October and the biggest rise since June.

Core prices, which exclude volatile food and energy costs, also rose 0.2% last month after increasing at the same pace in January. (…)

The climb in core prices was driven largely by higher housing costs. Shelter expenses—reflecting the cost of housing, including rent—climbed 0.2%, accounting for about two-thirds of the overall rise in core prices.

Prices for medical-care commodities increased 0.7% due largely to rising prices for prescription drugs. But prices for medical-care services dropped for the first time since 1975.

U.S. Existing-Home Sales Up 1.2% Sales of previously owned homes ticked up last month, but buyers are facing a dynamic of rising home prices and shrinking inventory that make homes less affordable.

Existing-home sales increased 1.2% last month from January to a seasonally adjusted annual rate of 4.88 million, the National Association of Realtors said Monday. Sales in February were up 4.7% from the same month a year earlier.

Total housing inventory at the end of February increased 1.6% from a month earlier, to 1.89 million existing homes available for sale. But the increase was small compared with the typical rise in inventory from January to February, which has averaged about 5.6% since 2000, Mr. Yun said. (Chart from Haver Analytics)

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New Signs of China Slowdown China’s economy is showing new signs of flagging, as an early indicator of factory activity this month fell to an 11-month low.

See CHINA FLASH MANUFACTURING AT 49.2 IN MARCH

A separate proxy measure of growth by Capital Economics—mixing electricity production, transport usage, and the like—is at its lowest since the 2003 SARS crisis. The proxy indicates growth on a year-over-year basis in the first quarter will dip below the government’s full-year target of 7%.

Some more signs:

The March NMI (75% Mfg; 25% Services) Survey also was no good. January-February electricity consumption rose 2.6% YoY vs +4.2% in December and +3.3% in November. The PBoC survey of urban households showed continued decline in buying intentions for housing.

Travelling day for me, hence this short post.

EUROZONE FLASH PMI JUMPS TO 54.1

Eurozone business activity grew at the fastest rate for almost four years in March. The Markit Eurozone PMI™ rose from 53.3 in February to 54.1 in March, according to the flash estimate based on an expected 85% of usual monthly replies, climbing for a fourth successive month to reach the highest since May 2011.
At 53.3, the average PMI reading for the first quarter was the highest since the second quarter of last year.

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The upturn in business activity was fuelled by new order growth likewise accelerating further to the highest since May 2011.

imageThe improvement was broad-based by sector. Growth of services business activity and new business both hit the highest since May 2011, accompanied by stronger rates of increase in both manufacturing output and new orders to the highest since May of last year. Growth of new orders for goods exports hit an eight-month peak.

Employment growth meanwhile picked up to the fastest since August 2011. Job creation in the service sector held steady at the near four-year high seen in February, while factory headcounts showed the largest monthly improvement since April last year.

Deflationary pressures eased during the month. Average prices charged for goods and services fell at the slowest rate since last July, the rate of decline easing in part due to the need for some firms to pass higher costs on to customers. Input prices showed the largest monthly increase since last July, boosted in part by higher US dollar-denominated import prices arising from the euro’s decline as well as higher staff costs.

imageManufacturing selling prices and input prices rose for the first time in seven months, albeit up only modestly in both cases. In the service sector, prices charged fell, but the rate of decline was the weakest for nine months as input costs showed the strongest monthly increase since last July.

By country, business activity growth accelerated to the highest for eight months in Germany, with new order growth hitting a nine-month record. German factory output rose at a markedly faster rate, reaching the highest for nearly a year and catching up with the strong pace of expansion seen in services, which hit a six-month high. Input costs meanwhile rose for the first time in four months, pushing up selling prices.

The French PMI surveys signalled an expansion of business activity for a second successive month, albeit with the rate of improvement moderating slightly from February’s 42-month high and running well below that seen in Germany. New order growth gathered pace, however, edging up to the highest since August 2011. Manufacturing continued to disappoint in France, with output falling for a tenth successive month, leaving the upturn dependent on a further rise in services activity.

Elsewhere across the region, business activity rose at the fastest rate since last July, with new order growth accelerating to the fastest since July 2007 and job creation the strongest seen since September 2007.

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