December Publication Schedule

The Lehmann Letter (SM) Here’s a schedule for some of December’s most important data releases. This letter will pay special attention to employment, homes and autos, capacity utilization and consumer confidence. PUBLICATION SCHEDULE December 2010 Source(* below)Series Description.Day & Date Quarterly Data BLS……………Productivity………….…Wed, 1st BEA…International Transactions…Thurs, 16th BEA…………………GDP…………………Wed, 22nd BEA……………….Profits…………………Wed, 22nd Monthly Data ISM…Purchasing managers’ index……Wed, 1st BLS…………………….Employment………… Fri, 3rd BEA….New-vehicle sales…(Approximate).Mon, 6th Fed……Consumer credit…(Approximate).Tue, 7thCensus……………………Inventories…….. Tue, 14thBLS………………….Producer prices……. Tue, 14th BLS………………….Consumer prices.….. Wed, 15thFed……………..Industrial production…….Wed, 15thFed…………….Capacity utilization……….Wed, 15thCensus……….……..Housing starts……….Thu, 16thConf Bd……….Leading indicators……….Fri, 17th NAR………………Existing-home sales….Wed, 22nd Census…………..New-home sales………Thu, 23rd Census………….Capital goods………….. Thu, 23rd Conf Bd……….Consumer confidence….. Tue, 28th * Continue reading

Europe

The Lehmann Letter (SM) Today’s New York Times and Wall Street Journal carried stories on the Irish rescue package: http://www.nytimes.com/2010/11/29/business/global/29euro.html?_r=1&adxnnl=1&ref=todayspaper&adxnnlx=1291050008-QRoi5whNUa5kohAQgbrn0A http://online.wsj.com/article/SB10001424052748704700204575642270168946834.html?mod=ITP_pageone_0 Let’s hope that calm returns to world currency and sovereign-debt markets. Of almost equal importance, however, is the evidence that Europe has once again found its way through the thicket and bound itself together ever more firmly. Expressed fears that the Euro-zone would come apart have not materialized. Over the past 65 years Europe has transformed itself from the wreckage of World War II into a novel and forward-looking political entity. For centuries the European nations had been at Continue reading

Business Equipment Expenditures Look Rosy

The Lehmann Letter (SM) The Census Bureau reported some good news today regarding business investment: http://www.census.gov/manufacturing/m3/adv/pdf/durgd.pdf New orders for business equipment rose in October. But the chart provides an even stronger impression of recovery. October orders were $70.8 billion, a dramatic improvement from their $50+ billion low. New Orders for Business Equipment Click on chart to enlarge.) Recessions shaded If you use your mind’s eye to update the chart with the latest $70 billion reading, you can see that businesses are planning for a brighter future. That’s an important sign that businesses are willing to increase production. It offsets the Continue reading

Inflation: Bittersweet News

The Lehmann Letter (SM) Inflation remained low last month (2.4%) and low over the past year (1.2%) the Bureau of Labor Statistics announced today: http://stats.bls.gov/news.release/cpi.nr0.htm Consumer Prices (Click on chart to enlarge.) Recessions shaded Gasoline (9.5%) and fuel oil (14.5%) accounted for all of the inflationary pressure in the last 12 months. Inflation would have been negligible without them. Since imports account for most of our energy needs, this tells us that inflation is not a cause for concern within our domestic economy. That’s a function of demand’s slow growth at home. Here’s why. When demand grows rapidly and pulls Continue reading

Capacity Utilization

The Lehmann Letter (SM) This month’s letters are focused on the supply side: Production, costs and prices. The objective: To determine whether or not output is growing in a sustainable fashion and whether or not rising costs and prices threaten. (Recall that last month’s letters found demand’s bedrock indicators – real estate, motor vehicles and borrowing – to be weak and directionless.) Yesterday’s letter reported that manufacturers, wholesalers and retailers continued to rebuild inventories on the expectation of rising sales. That’s a good sign. This morning the Fed announced that capacity utilization remained flat in October: http://www.federalreserve.gov/releases/g17/Current/default.htm Capacity utilization hasn’t Continue reading

Inventories

The Lehmann Letter (SM) This morning the Census Bureau announced that September sales and inventories (stocks of goods on shelves) had increased for manufacturers as well as wholesalers and retailers: http://www.census.gov/mtis/www/data/pdf/mtis_current.pdf That’s good news on two grounds: 1. These businesses continue to show sales gains. 2. They also show sustained optimism as they rebuild their stocks of goods in anticipation of future sales growth. Inventories piled up on the shelves as sales slumped during the recession. That’s why the Inventory/Sales ratio rose precipitously. The ratio began to drop in 2009 when businesses slashed inventories to bring them in line with Continue reading

Profit Margins

The Lehmann Letter (SM) Yesterday’s letter said that rising commodity prices and inflation overseas would not boost inflation in the US. That’s because domestic borrowing, spending and demand remain weak. But rising commodity prices could nonetheless squeeze American firms’ profit margins. US businesses must compete in product markets even if – or especially if – demand for their output is weak. At the same time they must purchase inputs on the open market as the cost of those inputs rises. That means American corporations’ profit margins will be squeezed by the rising prices they must pay for materials and the Continue reading

Inflation

The Lehmann Letter © Today’s Wall Street Journal has a lead article on commodity prices and inflation: http://online.wsj.com/article/SB10001424052748704635704575604443663385672.html?mod=ITP_pageone_0 Investors are concerned that rising commodity prices will boost inflation throughout the economy. In the past soaring inflation squeezed profit margins and thereby generated a stock-market retreat. But today’s commodity-price surge may not lead to overall inflation and stock-market decline. In past business cycles, such as the inflationary surges in the early and late 1970s, booming demand here at home – driven by robust borrowing and spending – pulled prices upward. Commodity prices led the charge higher, but that was in response Continue reading

Supply-Side Indicators

The Lehmann Letter © Over the past couple of months this letter has focused on the demand-side data in an attempt to evaluate the forces that could pull us out of the economic ditch. Conclusion: It will be a long, slow haul. Consequently past editions of this letter concluded that growing profit margins rather than growing sales volume (earnings = margins X volume) had driven the recent stock market run-up and that slow sales-volume growth imperiled future stock-market gains. See today’s Wall Street Journal for a front-page article that takes a like-minded view: http://online.wsj.com/article/SB10001424052748704477904575586181999090898.html?mod=ITP_pageone_0 It reinforces a similar article in Continue reading