The Weekly Market Snapshot from Frazier Allen
September 9, 2010
Market Commentary by Scott J. Brown, Ph.D., Chief Economist
Scott J. Brown Ph.D., Chief Economist Raymond James Investment Services
After what has seemed like a long string of disappointing economic data releases, reports turned more mixed this week – consistent with a near-term slow patch in economic growth, but not a double dip. The stock market embraced the positive reports and ignored the bad (for the most part).
The August Employment Report was not a great report, but it was good relative to expectations. Nonfarm payrolls fell by 54,000, reflecting a decline of 114,000 in temporary census workers. Figures for June and July were revised a net 133,000 higher. Private-sector payrolls rose by 67,000 (vs. expectations of about 40,000), while figures for June and July were revised a net 66,000 higher: July’s revised figure showed a gain of 107,000 (compared to a rise of 71,000 reported a month ago) and June’s figure was revised to show a gain of 61,000 (compared to an earlier-reported gain of 31,000). August temp-help payrolls rose by 17,000 following virtually no gain in July. The unemployment rate edged up to 9.6% – from 9.5% in July – reflecting a pickup in labor force participation (a result of the extension of unemployment insurance benefits). [Read more]
The Weekly Market Snapshot from Frazier Allen
August 28, 2010
Market Commentary by Scott J. Brown, Ph.D., Chief Economist
Scott J. Brown Ph.D., Chief Economist Raymond James Investment Services
The July figures on new and existing home sales each fell well short of expectations, and durable goods orders came in much weaker than anticipated. Real gross domestic product (GDP) rose at a 1.6% annual rate in the second estimate for second quarter of 2010 (compared to +2.4% in the advance estimate and a median forecast of +1.4%).
Growth in the second quarter was stronger than it appears, however. Imports, which have a negative sign in the GDP calculation, surged at a 32.4% annual rate, subtracting 4.5 percentage points from overall growth. Domestic Final Sales (GDP less inventories and net exports) – a better measure of underlying domestic demand – rose at a 4.3% annual rate (vs. +4.1% in the advance estimate). That indicates relative strength. But so what? The GDP revisions tell us nothing about the current pace of growth or where we’ll be in the next few quarters – and that is what matters for the overall financial market outlook. [Read more]
The Weekly Market Snapshot from Frazier Allen
August 21, 2010
Market Commentary by Scott J. Brown, Ph.D., Chief Economist
Scott J. Brown Ph.D., Chief Economist Raymond James Investment Services
There were several surprises in the economic data reports, mostly to the downside. The market took some comfort earlier in the week as the Producer Price Index (PPI) seemed to suggest that deflation was less likely to be a problem and that manufacturing output was strong in July. However, the core PPI (reported up 0.3%) was boosted by what is likely to have been a seasonal adjustment quirk in light motor trucks. Industrial production was boosted partly by a 9.9% jump in motor vehicle production, which reflected fewer-than-usual summer plant closings (prior to seasonal adjustment, auto output fell 20.3% in July).
On Thursday, the stock market was rattled by a further increase in initial claims for unemployment insurance benefits (which may or may not be distorted) and by a surprisingly weak Philadelphia Federal Reserve Index (-7.7, compared to expectations of +7.0). [Read more]
The Weekly Market Snapshot from Frazier Allen
August 14, 2010
Market Commentary by Scott J. Brown, Ph.D., Chief Economist
Scott J. Brown Ph.D., Chief Economist Raymond James Investment Services
The Federal Open Market Committee (FOMC) left short-term interest rates unchanged and repeated that “economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” In its assessment of the economic outlook, the FOMC noted that “the pace of economic recovery is likely to be more modest in the near term than had been anticipated.”
More importantly, the FOMC voted to keep the level of its securities holdings constant by reinvesting principal payments from agency debt and agency mortgage-backed securities in long-term Treasury securities. By itself, this isn’t a huge move, but it is an important signal that the Fed could do more later on. [Read more]
The Weekly Market Snapshot from Frazier Allen
July 28, 2010
Market Commentary by Scott J. Brown, Ph.D., Chief Economist
- Scott J. Brown Ph.D., Chief Economist Raymond James Investment Services
In addition to the mostly positive corporate earnings reports this week, the focus fell on Federal Reserve Chairman Ben Bernanke’s monetary policy testimony – before the Senate Banking Committee on Wednesday and in front of the House Financial Services Committee on Thursday. While he didn’t offer anything new in support of the economy, he assured the legislators the Fed remains “prepared to take further policy actions as needed.”
In prepared remarks, Bernanke said the economy is “proceeding at a moderate pace.” On the positive side, he noted that business and household demand is rising, but that housing and commercial construction are weak – and that continuing job market weakness is holding back consumer demand. It will require “a significant amount of time” to recoup the 8.5 million jobs lost in 2008 and 2009, he said, citing the latest Fed projections that show reducing unemployment “is now expected to be somewhat slower than we previously projected.” Unemployment may stand between 7% and 7.5% at the end of 2012, he said.
The Weekly Market Snapshot from Frazier Allen
June 12, 2010
Market Commentary by Scott J. Brown, Ph.D., Chief Economist for Raymond James Investment Services
Scott J. Brown Ph.D., Chief Economist Raymond James Investment Services
The economic data were generally soft, consistent with a lackluster-to-moderate pace of economic growth. The Federal Reserve’s Beige Book noted that “economic activity continued to improve since the last report,” although most Fed districts described the pace of growth as “modest.” Retail sales were much weaker than anticipated, falling by 1.2% in May, down 1.1% excluding autos. Weakness was concentrated in building materials, which could reflect the acceleration in March and April (due to the pending expiration of the homebuyer tax credit). Ex-autos, building materials and gasoline, sales edged up 0.1% following a 0.2% decline in April.
The stock market mood remained negative, with plenty of intraday volatility. However, Chinese export data suggested that the European debt crisis has not had a major impact on foreign trade. Global equity markets improved on that news and short-covering may have exaggerated the impact in the United States. The disappointing retail sales figures dampened the mood again on Friday. [Read more]
