Equity futures are weak this morning after China raised their reserve requirements (by 50bps) for the 4th time in the past two months to stem rising inflation. Retail sales for December were below consensus, rising 0.6% vs. expectations of a 0.7% increase. Ex-autos retail sales were 0.5% vs. 0.6% expectations. CPI came in above consensus at 0.5% (expectations 0.4%), but the Core CPI (you know, the one that excludes most of the items Americans purchase on a daily basis) rose in line at 0.1%. Industrial production rose 0.8% vs. 0.4% expectations, with the primary strength coming from energy production. Capacity utilization was roughly in line at 76% vs. expectations of 75.5%.
Intel posted a strong quarter last night, raising guidance after a weaker than expected Q3 report. They raised sales estimates for 2011 to 10% on server strength. They also addressed criticism about their loss of share in the consumer space by discussing their efforts in mobile and tablet computing. JP Morgan also reported better than expected numbers after cutting provisions for future credit card and real estate loan losses. It appears the bank is poised to increase lending as loan demand increased slightly.
Spain sold 5 year bonds yesterday with a face value of 3 billion euro in an auction that was two times oversubscribed. The yield was 4.59%, 100bps higher than a year ago. In a nod to German concerns, ECB President Trichet warned that the bank is ready to raise interest rates before summer to brake inflation.
The Economist noted that Western developed countries are now having to deal with soaring raw material and commodity prices without the associated economic boom. “This combination of still-subdued activity and high raw material prices illustrates a wider truth: that America is no longer the price-setter for these products. Now it is Asia.”
Prices of agricultural commodities (corn, wheat and soybeans) soared after the Department of Agriculture reduced its forecasts of this year’s inventories. Prices of corn and soybeans jumped to their highest level since July 2008 as corn production is at a 15 year low. “Where’s Beaks!??” (a bonus for anyone who gets that one)
Both Asian and European markets were weak last night .
Have a great weekend
Ned
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The Author
- Ned Brines
- Ned presently manages money for Andell Inc, the family office of one of North America’s dynastic families. He also is the founder and CIO of Montelena Asset Management, a California based RIA. Prior to founding MAM, Ned was the manager of the Provident Investment Counsel Small Cap fund. He began his money management career in 1994 at Roger Engemann & Associates where he managed the Aggressive Growth Fund, Focus Growth Fund, and Private Client business. Before entering money management, Ned spent six years as an investment banker, focusing on mergers and acquisitions and corporate restructuring. He has an MBA from the University of Southern California, a BS in Physiology from San Diego State University, and has achieved the Chartered Financial Analyst designation. He is a member of Beta Gamma Sigma, a national honor society, and Beta Theta Pi. He is a frequent speaker and lecturer in the financial community, serves on numerous non-profit boards, and has extensive media experience in television, print and radio. He presently lives in California with his wife and three children.
Recent Speaking Engagment
I will be speaking at the Crossroads Lecture Series March 11, 2011 in Orcas Island, WA. Click here to view a link to the lecture series: http://orcascrossroads.org/
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