NEW$ & VIEW$ (14 MARCH 2013)

Strong retail sales. Strong housing. Strong dollar. Weak Europe. Weak China electricity consumption. Strong sentiment.

Smile  Consumers Open Wallets, Save Less

Retail sales rose 1.1% to a seasonally adjusted $421.4 billion, the Commerce Department said Wednesday. January’s increase was revised up to 0.2% from a 0.1% earlier estimate.

So-called core sales, which exclude autos, gasoline and building materials, and which many economists consider a better gauge of spending trends, increased 0.4%.

Whichever way you look at the stats, one has to be impressed by the resilience of the U.S. consumer. Core sales rose 0.4% in February, following gains of 0.3% and ).6% in the two previous  months. This is a +5.3% annualized rate over the last 3 months! And they keep buying new cars. (Chart and table from Haver Analytics)

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HOUSING WATCH

Home Repossessions Drop 29% to Lowest in U.S. Since 2007

Banks took 45,038 properties from delinquent borrowers in February, an 11 percent decrease from the previous month and the fewest since September 2007, the Irvine, California-based data provider said today in a report. Forty-one states had drops in completed foreclosures from February 2012, led by declines of 78 percent in Oregon and 69 percent in Massachusetts.

Zillow Forecast: January Case-Shiller Composite-20 Will Be Up 8% Year-Over-Year

 

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The Almighty Dollar Is Back

The dollar is powering higher against other major currencies after months of decline, driven by the relative health of the U.S. economy.

The WSJ Dollar Index, a gauge of the dollar’s exchange rate against seven of the world’s most heavily traded currencies, is up almost 5% this year and hit its highest level since July 2010 on Monday.

(…) But the stronger dollar is starting to show up in corporate earnings, as companies find overseas profits are worth less when translated into U.S. currency. Tourists are seeing their cash stretch a little further on vacation abroad, while U.S. destinations may see fewer British and Japanese visitors with the pound and yen in steep decline.

Firing Up a Stronger Dollar The reversal of America’s steady decline of oil-and-gas production due to the shale boom is giving the Fed chairman, and the U.S. economy, important room for maneuvering.

[image]Altogether, Citi estimates reduced energy-import dependence and cheaper gas could squeeze the current-account deficit by 2.4 percentage points of GDP by 2020. All else equal, that would take 2012′s deficit of 3.6% down to 1.2%, which would be the lowest since 1997. (…)

BofA Merrill Lynch estimates the U.S. paid just $76 billion for its natural gas in 2012, a full $140 billion less than in 2008—a saving bigger than the payroll-tax cuts of 2011. And unlike the latter, this benefit looks set to stay for a while.

Cheaper energy does Mr. Bernanke a favor by helping to keep a lid on inflation—the great fear, as yet unfounded, arising from the Fed’s policy of quantitative easing. And the extra money in consumers’ pockets, both from fuel savings and the jobs associated with rising domestic energy production, aids in the economic healing process from the last recession. (…)

BofA estimates the European Union’s natural-gas bill in 2012 equated to 1.3% of GDP against 0.5% for the U.S. Already, firms ranging from Austrian steelmaker Voestalpine to French utility EDF have announced plans to try to tap into cheaper U.S. natural gas to offset the competitive disadvantages of high energy costs at home. These are likely to rise as the euro weakens against the dollar, in which the majority of international energy trade is priced. (…)

U.S. Oil Output Rises to Highest Level Since July 1992

(…) Output climbed 66,000 barrels a day, or 0.9 percent, to 7.159 million in the seven days ended March 8, the Energy Information Administration said today, extending a gain of more than 1.13 million barrels a day last year, according to data from the Energy Information Administration, a division of the Energy Department. (…)

Production could increase to as much as 7.7 million barrels a day by the end of the year, Lipow said.

Domestic crude output will average 7.31 million barrels a day in 2013 and 7.88 million in 2014, the EIA forecast yesterday in its Short-Term Energy Outlook.

The U.S. met 84 percent of its own energy needs in the first 11 months of last year, on pace to be the highest level since 1991, EIA data show.

Lightning  Euro-Zone Employment Hits Seven-Year Low

The number of people holding down jobs in the euro zone fell to its lowest in nearly seven years in the final three months of 2012, official figures showed, a stark illustration of the economic and social price of the bloc’s fiscal crisis

Employment in the 17 countries that use the euro fell 0.3% in the fourth quarter from the third, to 145.7 million in seasonally adjusted terms, the European Union’s statistics agency Eurostat said on Thursday.

The number of people with jobs fell 2% from the previous quarter in Portugal, 1.4% in Spain, 1.3% in Cyprus and 0.4% in Italy.

Smile with tongue out  Germany defies calls for stimulus

Plan to cut spending and balance budget revealed

Germany has ignored calls from its eurozone partners for more economic stimulus by tabling plans to cut spending and balance its budget ahead of schedule on the eve of an EU summit dedicated to growth.

Wolfgang Schäuble, German finance minister, said on Wednesday that his budget for 2014, involving spending cuts of more than €5bn to trim the total below €300bn, was “a strong signal for Europe”.

Indeed! Nobody sings John Lennon in Europe:

Oh I get by with a little help from my friends,
Mmm,I get high with a little help from my friends,
Mmm, I’m gonna try with a little help from my friends.

Volkswagen to boost China production to offset weak Europe

Volkswagen , Europe’s biggest carmaker, will step up production in fast-growing emerging markets like China to offset deteriorating demand closer to home, it said on Thursday.

SNB Keeps Up Franc Defense as Euro Crisis Risks Persist

The Swiss central bank pledged to keep up its defense of the franc cap after almost doubling its currency holdings to shield the country from the fallout caused by the euro zone’s crisis.

Surprised smile  China’s power consumption drops in February China’s electricity consumption dropped 12.5 percent year on year in February, the National Energy Administration said on Thursday.

Pointing up  ISI calculates that Jan + Feb consumption grew 5.5%. Consumption rose 5.5% for all of 2012, down from 11.7% in 2011.

SENTIMENT WATCH

 

Stocks firm as traders eye S&P record
US economic data underpin bullish mood
 

(…) the Dow is riding a nine-day winning streak, its longest since 1996, according to WSJ Market Data Group. The blue-chip index has risen every day this month, although over the past two days it has waffled between small gains and losses before finishing with a combined eight-point gain. (WSJ)

European Stocks Rise to 2008 High as Treasuries Decline

 

Ninja  U.S. Probes Metals Pricing by Banks

The Commodity Futures Trading Commission is scrutinizing whether the daily setting of gold and silver prices in London is open to manipulation.

The inquiry comes as regulators expand their review of global financial benchmarks in the wake of an interest-rate rigging scandal. Three large banks have agreed to pay a total of $2.5 billion in penalties over alleged manipulation of the London interbank offered rate, or Libor, and more than a dozen financial firms are still under investigation.

 
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