The major indices are all in the green and at session highs.  Energy, Financials, Industrials and Materials are especially strong. The laggards today are Consumer Discretionary and Staples, Telecom and Utilities as investor rotate out of safe havens.  Advancers outpace decliners 1556/1268 on the NYSE and 1519/1233 on the Nasdaq. 

There were several economic reports released today.  Mortgage applications for the week ending May 4 decreased 0.4% from the prior week.  The Refinance index decreased 1% from the previous week to its lowest level since October 2008.  Refinancing represented 36.3% of total applications, the lowest level since September 2008, and down from 36.5% in previous week.  The Purchase Index decreased 0.2% from the prior week. Interest rates for both the 15-year and 30-year fixed rate mortgages declined slightly.

Oil has been on a tear of late and WTI is up another 3.16% to $71.24.  The U.S. pulling out of the Iran Nuclear deal has added fuel to rising prices.  The latest report from the Energy Information Administration (EIA) showed U.S. crude oil production climbed to 10.7 million barrels per day, another high.  Inventory however for both oil and gas declined by 2.2 million barrels for the week ending May 4.

EIA Petroleum Inventories	Actual	Expected
Crude Oil	-2.2 million	-0.7 million
Gasoline	-2.2 million	-0.5 million
Distillates	-3.8 million	-1.4 million

PPI

The Producer Price Index for final demand increased 0.1% in April.  This was below consensus of 0.2% and below March (0.3%) and February (0.2%).  For the 12 months ending in April, the index rose by 2.6% compared to 3.0% in March.

Core PPI, ex food and energy, rose 0.1% in April.  This was below consensus of 0.2%, and below the 0.3% in the previous month.  For the 12 months ended in April, the index rose 2.5% slightly below 2.7% in March. 

Key takeaways on final demand services:

•          Prices for transportation and warehousing services rose 0.6%
•          Trade services (changes in margins received by wholesalers and retailers) rose 0.2%
•          The index less the above two components declined 0.1%

Final demand for foods:

•          Fresh and dry vegetables declined 17.8%
•          Fresh eggs declined 22.9%
•          Beef and veal increased 6%

Key takeaway on product details:

•          The index for machinery, equipment, parts, and supplies wholesaling climbed 0.9%
•          Prices for traveler accommodation services fell 3.2%

Final demand energy:

•          Liquefied petroleum gas rose 4%
•          Home heating oil and distillates rose 4.7%
•          Residential natural gas declined 0.5%
•          Gasoline decline 0.4%
•          No. 2 diesel fuel rose 1.8%

Bottom line, although prices subsided month over month they are only slightly below the Feds 3.0% target on a year over year basis.  The monthly decline is not enough to alter the Feds view on inflation.

Wholesale Inventory

Wholesale inventories for March increased 0.3% below the estimate for 0.5%, and down from February’s revised 0.9% increase.  Wholesale sales were up 0.3% as well from February’s revised 1.1%. 

• Durable goods increased 0.3% with gains in most categories, except computers (-1.5%), professional equipment (-.7%) and automotive (-0.2). 
• Nondurable inventories were 0.4% lower led by a decline in drug inventories (-2.2%) and alcohol inventories (1.4%). 
• The inventory-to-sales ratio was relatively flat at 1.26 in March, but was below the 1.28 ratio observed a year ago
• Year over year inventories were up 5.5% and total sales were up 7.3%.
• On a year-over-year basis, total inventories were up 5.5% while total sales were up 7.3%

 

Comments

Mr Charles.........We always love you and love to listen......you walk like KING in Fox Business News........Great Job Sir. Thank You Sir. Ketan KETAN on 5/9/2018 2:03:54 PM

Thanks so much Ketan. CP Charles Payne on 5/9/2018 2:27:38 PM

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