Today's Coffee - Gouging the Consumer
Our daily "Wake Up Call" report will resume publishing tomorrow. "Today's Morning Coffee" has been engineered to provide a value-added guide to international trade, economic data, commodity market, geopolitical activity and stock specific news. The copy that follows includes economic, commodity and geopolitical news sections only.
ECONOMIC DATA & ANALYSIS
The problem with most of the economic views I've seen expressed today and generally, is that they often consider data in isolation or aggregate them all together, and ignore the impacts of some on others and lags and leads. For instance, I read today how manufacturing strength should offset housing weakness and consumer spending softness. This is seriously flawed. The consumer is a key pillar that holds so much in place. Neither occurs in isolation, and to say that manufacturing will offset the consumer is just irresponsible and without thought.
You see, first the consumer cracks, and then later, manufacturing starts to show the impact of less consumer spending. They do not both have to occur at the same time. Manufacturing strength is certainly benefiting partly from sales globally, but as the American consumer lightens spending, it's a contagious disease that has global repercussions. Even if it was not, U.S. manufacturers rely more on American consumers than rest of world buyers, for the most part. So, what the views should express is that current GDP should reflect both consumer softness and manufacturing strength, but consumer weakness threatens future GDP and manufacturing health.
New housing permits were horrible, but must have been somewhat impacted by April weather conditions. So, why weren't starts impacted, I would ask. Well, the experience I have from working with my father in my youth tells me that if you are a struggling home builder, you're working through weather now-a-days.
COMMODITY MARKETS
The weekly Petroleum Status Report showed a greater build than was expected for both oil and gasoline, as we stated it would in our weekly copy, "The Greek's Week Ahead." Oil prices are declining, with WTI Crude futures down approximately 1.36%, also as we anticipated for the short term. However, gasoline RBOB futures are up about 1.0%, going against our wishes! Natural gas has also been on a tear of late, and we suspect it has a lot to do with expectations for an extending summer season. It's already 84 degrees Fahrenheit here in New York City in the middle of May. Heat will likely start summer activities early and extend them for a longer period. This means Americans are likely to drive more, as much of the nation makes regular trips to local beaches and recreation facilities.
An extended summer season, due to warming trends, is likely to intensify the draw of gasoline and natural gas (for electricity/air conditioner usage). This is a topic we have discussed before and represents another secular trend portending to pressure energy prices over the long-term. I doubt the market sees this yet, but it may explain the strength in natural gas and some of the strength in gasoline of late.
GEOPOLITICAL CONCERNS
Is it just me or are the Nigerian rebels become quite the nuisance.? I wonder how long these interferences have to continue before the Nigerian government or even our own government move to strengthen the defenses of oil facilities in the area, and/or even initiate offensive against the rebels. It certainly seems like an issue worth tackling. How much of an effort is necessary to stop a paramilitary organization that operates in speedboats.? Considering the supply/demand tightness of the energy markets, it makes sense to pressure Nigeria into taking real action.
If you would like to advertise something at the end of one of my articles, contact me at ads @ wallstreetgreek.com. (disclosure)
ECONOMIC DATA & ANALYSIS
The problem with most of the economic views I've seen expressed today and generally, is that they often consider data in isolation or aggregate them all together, and ignore the impacts of some on others and lags and leads. For instance, I read today how manufacturing strength should offset housing weakness and consumer spending softness. This is seriously flawed. The consumer is a key pillar that holds so much in place. Neither occurs in isolation, and to say that manufacturing will offset the consumer is just irresponsible and without thought.
You see, first the consumer cracks, and then later, manufacturing starts to show the impact of less consumer spending. They do not both have to occur at the same time. Manufacturing strength is certainly benefiting partly from sales globally, but as the American consumer lightens spending, it's a contagious disease that has global repercussions. Even if it was not, U.S. manufacturers rely more on American consumers than rest of world buyers, for the most part. So, what the views should express is that current GDP should reflect both consumer softness and manufacturing strength, but consumer weakness threatens future GDP and manufacturing health.
New housing permits were horrible, but must have been somewhat impacted by April weather conditions. So, why weren't starts impacted, I would ask. Well, the experience I have from working with my father in my youth tells me that if you are a struggling home builder, you're working through weather now-a-days.
COMMODITY MARKETS
The weekly Petroleum Status Report showed a greater build than was expected for both oil and gasoline, as we stated it would in our weekly copy, "The Greek's Week Ahead." Oil prices are declining, with WTI Crude futures down approximately 1.36%, also as we anticipated for the short term. However, gasoline RBOB futures are up about 1.0%, going against our wishes! Natural gas has also been on a tear of late, and we suspect it has a lot to do with expectations for an extending summer season. It's already 84 degrees Fahrenheit here in New York City in the middle of May. Heat will likely start summer activities early and extend them for a longer period. This means Americans are likely to drive more, as much of the nation makes regular trips to local beaches and recreation facilities.
An extended summer season, due to warming trends, is likely to intensify the draw of gasoline and natural gas (for electricity/air conditioner usage). This is a topic we have discussed before and represents another secular trend portending to pressure energy prices over the long-term. I doubt the market sees this yet, but it may explain the strength in natural gas and some of the strength in gasoline of late.
GEOPOLITICAL CONCERNS
Is it just me or are the Nigerian rebels become quite the nuisance.? I wonder how long these interferences have to continue before the Nigerian government or even our own government move to strengthen the defenses of oil facilities in the area, and/or even initiate offensive against the rebels. It certainly seems like an issue worth tackling. How much of an effort is necessary to stop a paramilitary organization that operates in speedboats.? Considering the supply/demand tightness of the energy markets, it makes sense to pressure Nigeria into taking real action.
If you would like to advertise something at the end of one of my articles, contact me at ads @ wallstreetgreek.com. (disclosure)
posted by The Greek | 5:25 PM
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