Today, three pieces of economic data were released:  Initial Claims, Philly Fed, and Leading Indicators. 

Initial claims for the week ending April 14, were down 1,000 to 232,000 from the prior week.  The four- week moving average, a better gauge, increased 1,250 to 231,250.  The advance seasonally adjusted insured unemployment rate was unchanged for the week ending April 7 at 1.3%. 

Continuing claims were 1,863,000, a decrease of 15,000 from the previous week's revised level, up 7,000 from 1,871,000 to 1,878,000. The 4-week moving average was 1,858,750, an increase of 6,750 from the previous week's revised average, up by 1,750 from 1,850,250 to 1,852,000.

The Philadelphia Fed Index increased from 22.3 in March to 23.2 in April.  Prices Paid index, what manufactures pay, increased again to 56.4 from 42.6. This was the highest reading since March 2011.  The Prices Received Index, manufacturers’ own prices, increased to 47.9 from 40.7, and is the highest level since May 2008.  

Price increases for purchased inputs were reported by 59% of respondents, up significantly from 44% in the prior month.  Yesterday’s Beige Book mentioned pricing pressure in construction related materials such as steel, lumber, drywall and concrete.  Pricing pressures from rising fuel costs and a tight labor market, specifically in high-skill positions, were also mentioned in the Beige Book report.  Manufactures indicated they have for the most part been able to pass rising costs onto customer.  

Highlights include:

• The New Orders Index dropped from 35.7 to 18.4
• The Number of Employees Index rose from 25.6 to 27.1
• The diffusion index for future general business activity decreased from 47.9 to 40.7
• Over half of the firms indicated plans to increase capital spending this year

The numbers suggest continued growth in the manufacturing sector as respondents to the survey remain positive about manufacturing activity over the next six months. 

These increases in Prices Paid and Prices Received are showing signs of potential inflation pressures building. The 10-Year Treasury yield is on the rise today as it prices in inflation concerns.  The yield is at 2.93% up 6 basis points from yesterday’s close of 2.87%. Rising yields and a widening yield curve are lending support to financial stocks today.               

The Conference Board Leading Economic Index (LEI) continued its upward trajectory in March, up 0.3%, after going up 0.7% in February, and 0.8% in January, signaling that U.S. growth remains solid. For the six-months ending March 2018, LEI growth of 4.3% was higher than the prior six months’ growth of 1.9%. A key standout however was the labor market component.

According to Ataman Ozyildirim, Director of Business Cycles and Growth Research at The Conference Board, “The strengths among the components of the leading index have been very widespread over the last six months. However, labor market components made negative contributions in March and bear watching in the near future.”

• The Conference Board Coincident Economic Index® (CEI) for the U.S. + 0.2% in March to 103.4 after +0.4% in February, and -0.1% in January.
• The Conference Board Lagging Economic Index® (LAG) for the U.S. + 0.1% in March to 104.5, following a +0.3% in February and +0.3% in January.

The ten components of The Conference Board Leading Economic Index® for the U.S. include:

• Average weekly hours, manufacturing
• Average weekly initial claims for unemployment insurance
• Manufacturers’ new orders, consumer goods and materials
• ISM® Index of New Orders Manufacturers' new orders, nondefense capital goods excluding aircraft orders
• Building permits, new private housing units
• Stock prices, 500 common stocks
• Leading Credit Index™
• Interest rate spread, 10-year Treasury bonds less federal funds
• Average consumer expectations for business conditions

At midday, the major indices remain in the red.  Overall, there is no panic, just lots of angst. Decliners outpace advancers 1974/859 on the NYSE and 1565/1085 on the Nasdaq.  Energy, Financials, and Telecom are strong today, while Consumer Staples, Materials, Real Estate and Technology lag. Earnings disappointments from Procter and Gamble (PG), Philip Morris (PM) and a downgrade of Clorox (CLX) are a drag on Consumer Staples.   

Rumors are circulating that Russia might nationalize Rusal, the world’s second largest aluminum company by primary production.  Alcoa (AA) is pairing its gains on this news, after reporting positive earnings and issuing upbeat guidance.  Aluminum prices reversed today after trading above $2700 overnight they are currently down 4% at $2433.  Aluminum has been on a tear, this month it is up over 30%, hitting a seven year high.