Five Things You Need to Know: The PPI; Retail Museums; Something Happened in April; Alan "Jimmy the Greek"span Lays 2-1 Odds Against U.S. Recession; You Want a Winner? You Got a Winner!
What you need to know (and what it means)!
Minyanville's daily Five Things You Need to Know to stay head of the pack on Wall Street:
1. The PPI
The Producer Price Index for finished goods rose 0.7% in April, according to the the Labor Department.
- The core PPI, which excludes food and energy, was flat for the second month in a row.
- Expectations were for an increase of 0.6% in the headline PPI and 0.2% increase in the core PPI.
- Year-over-year PPI came in at 3.2%, above expectations for a slight move lower to 3.1% year-over-year.
- The core PPI year-over-year rate was a more modest 1.5%, less than the 1.8% year-over-year rate that was expected.
- Prices of raw materials fell by 1.5%, while intermediate goods prices rose 0.9%.
- Courtesy of Ron Griess' TheChartStore.com are the two charts below. The first shows the PPI for crude foodstuffs and feedstuffs. The second shows the PPI for finished goods less energy. The second chart is closely related to today's Number Two and Number Three items. It suggests higher prices are beginning to edge nearer the consumer, which we argue will have no choice but to cut back their consumption in response.
PPI Crude Foodstuffs and Feedstuffs
PPI Finished Goods Less Energy
2. Retail Museums
U.S. retail sales fell 0.2% in April, far worse than even weather-downsized expectations for an increase of 0.4%. This makes them less retail stores than retail museums; lots of cool stuff to look at but nothing you'd really be capable of buying.
- The Commerce Department report showed automobile and parts sales fell 1.0% in April.
- Sales for all retailers excluding auto and parts dealers were flat.
- Excluding both auto and parts dealers and gasoline stations, all other retail sales fell 02% in April.
- Sales last month fell 2.3% at building materials and garden stores, the worst drop since a 5.1% decline in February 2003.
- According to the Financial Times, Ken Perkins, head of Retail Metrics, said 80% of the leading chain stores reporting same-store sales figures missed Wall Street forecasts.
- He described it as the worst performance he could remember.
- There's a reason he probably can't remember any worse retail performance.
- ICSC chain store sales fell 2.4% year-over-year in April, the worst monthly drop on record going back to the index's inception in 1970.
- Meanwhile, courtesy of Ron Griess' TheChartStore.com, the chart below paints a vivid picture of the spread of subprime-housing containment.
- Guess the only people buying building materials and garden equipment last year were those about to default on subprime loans.
Building Materials & Garden Equipment and Supplies Dealers Annualized Monthly
3. Something Happened in April
Yesterday on the Buzz and Banter, Minyanville Professor Scott Reamer took a closer look at Same Store Sales and uncovered a number of interesting nuggets.
- Taking a look at Same Store Sales 50 some odd retailers, here are the year-over-year growth rates in SSS from January to present, averaging all of them together:
- So it appears SOMETHING happened in April. Here are those same stats on a revenue adjusted basis:
- So it was broad based according to that revenue adjustment analysis as well.
- In fact, the strongest sector was Pharmacies.
- If you take out Pharmacies, the April comps were -6.85% vs -5.24% avg.
4. Alan "Jimmy the Greek"span Lays 2-1 Odds Against U.S. Recession
Former Federal Reserve chairman Alan Greenspan said he sees a 2-to-1 chance that the U.S. will avoid a recession even as the economy slows, Bloomberg reported.
- Former U.S. Federal Reserve Chairman Alan Greenspan said he still believed there was a one-third chance that the U.S. economy would slip into recession this year, echoing a statement made in March.
- Greenspan made the remarks at an investors' conference in Singapore.
- "There is no doubt there is a slowdown going on in the U.S.,'' Greenspan said via satellite from Washington.
- "We are clearly having troubles in the capital investment area, as well as potentially in the consumption area and obviously housing being a significant drag.''
- Meanwhile, Greenspan blamed the Japanese carry trade on patriotism. Seriously.
- "The yen carry trade is not an economic phenomenon, it is a cultural phenomenon. Why is it that the 10-year JGB (Japanese Government Bond) is yielding 1.6%, significantly less than anywhere else in the world?"
- Or maybe instead of patriotism Japanese investors are buying bonds simply due to risk aversion.
5. You Want a Winner? You Got a Winner!
So it turns out the anonymity-seeking former Fed Chairman is doing conference calls at night and laying odds on recessions. Nice!
Incredibly, Minyanville has obtained a full transcript of Alan "Jimmy the Greek"span's Singapore teleconference from last night... with Q&A. How do we do it? We don't know. We just do it.
Full Transcript of Alan "Jimmy the Greek"span's Singapore Teleconference
"What's up there sportsfans, this is Alan "Jimmy the Greek"span with your hot off the press, live in the flesh, always the best, no-prisoner-taking, mo-money-making, in-your-face shaking picks for Friday, May 11 2007! You want a winner? You got a winner.
"But first, let me break it down for you. The record. That's what you want to know... what's the record, AG? Whip out your bankroll, player, and calculate this hit rate: Since 1987 I am 17-3 in the big games! Seventeen and three!!! Put that on your abacus and prepare for steak and champagne, baby. Nobody has this kind of record on big games. Nobody!!! You want a winner? You got a winner!
"So let's get to my picks for the upcoming weekend. First up we got Phoenix at San Antonio. I am all over the Suns in game three. Forget the spread! Forget Tim Duncan! Smack it up, slap it down, peel five units and lay it down, baby!!! You want a winner? You got a winner.
"Next we're going to talk recession in the U.S. I was all over this in February putting my name on the line saying the U.S. will see a recession this year. That was a three unit pick and I am still on the recession tip. Smack it up, slap it down, peel five more units and lay it down, baby!!! The odds have gotten even better! That's right better! I'm raising the odds on no recession this year to 2-1. That's right! It is now two-to-one no recession. Book that bet. Take all the action you can. This is a five unit bet on top of the three units we laid down in February. You want a winner? You got a winner.
"So that's what Alan "Jimmy the Greek"span, the Maestro of prediction, the master of conviction, the chairman of nonfiction has got for you this weekend. What have you got for me?"
"Yo, this is Mike from Dallas. Love your picks Maestro. I took down three units on the Colts when you picked them in the Super Bowl, so you da man!"
"Back at ya, baby. What's your question for the Maestro?"
"Looking at the Chinese yuan for the second half of the year. Up? Down? Sideways? How you playin' it Maestro?"
"The Chinese yuan! Now we're talking a game for the real players, baby. The big hitters with the heavy bankrolls. You think China's gonna sit back and let the Treasury score on their export Dee? Three words: It Ain't Happening! Yuan stays the same this year. Smack it up, slap it down, peel two units and lay it down, baby!!! You want a winner? You got a winner. Who's next?
"Maestro, this is Timmy from Tampa, longtime fan, gotta give you some serious props for giving out that cold exacta in the Kentucky Derby, Street Sense to Hard Spun, I was all over that, AG!"
"Ain't nothing but a thing, Timmy. This is what I do. You want a winner? You got a winner. What's your question?"
"Asian contagion, AG. We taking the over or under on that?
"I love it! Timmy, you're a player! Let me break this down for you. Asia's on the 15 yard line, fourth and one with high savings and rising domestic consumption, down by four with 10 seconds to go. We ain't kicking field goals here, Timmy, you follow me? This is touchdown time! We're screen right to the near side and end zone dancing when the final gun sounds! Asian contagion? I feelin' some Asian persuasion. I'm talking Asian invasion! Smack it up, slap it down, peel four units and lay it down, baby!!! Asian contagion ain't happening! You want a winner? You got a winner."
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