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U.S. Producer prices see largest increase in April in over a year

By Inflation Watch

We are keeping a close eye on indicators that might point to a rise in inflationary pressures. Is the outperformance of Real Assets YTD indicating this?

U.S. producer prices saw their largest increase in over a year last month, hinting at some inflation pressures at the wholesale level.

The Labor Department said its seasonally adjusted producer price index (PPI) for final demand advanced 0.6% in April, marking the biggest rise since September 2012. It was the second consecutive month that metric advanced. In March, the index increased 0.5%.

The Department of Labor’s PPI measures a change in selling prices received by domestic producers. The price index for foods reported the largest increase last month, while energy and transportation and warehousing prices also rose.

 

Sell in May?

By General

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Statistically it’s true that on average, over the long term, May through September has been comparatively weak. That’s because the months of May and September have been weak. June, July and August, on average, have been good months. However, any given year can prove to be an exception to the long-term averages.

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(Source: Standard and Poor’s, data through May 1, 2014. The Leuthold Group, with permission)

India Inflation Watch

By Inflation Watch

Consumer Inflation rose in April to 8.59%. The elevated inflation levels could pressure on the central bank to keep interest rates at current levels despite pressure from Indian industry to bring them down.

The RBI wants to see consumer inflation ease to 8% by January 2015 and 6% in the following year.

The country’s wholesale price index likely rose 5.80% in April from a year earlier, according to a poll of 12 economists by The Wall Street Journal. The index increased 5.70% in March, which was its fastest rise in three months. The government is scheduled to announce the rate on Thursday.

Food prices rose during the month as vegetable and fruit supplies from a bumper crop earlier in the year dried up. Lower fuel prices helped offset some of the higher food prices, economists said. Indian fuel retailers lowered gasoline prices twice in April.

For the rest of this year economists and weather watchers are worried that below-normal rains during the June through September monsoon season could trigger inflation again.

(Source: Wall Street Journal)

Our Favorite Donald Rumsfeld Quote

China’s Inflation Slows More Than Estimated

By Inflation Watch

Consumer inflation in China moderated to an 18-month low and the decline in factory-gate prices persisted, giving the government more scope to loosen policies if a growth slowdown deepens.

The consumer price index rose 1.8 percent from a year earlier in April, the National Bureau of Statistics said today in Beijing. That compares with the median estimate of 2.1 percent in a Bloomberg News survey and a 2.4 percent gain in March. The producer-price index fell 2 percent, the 26th straight decline, after a 2.3 percent drop the previous month.

Today’s data add to signs that domestic demand remains muted, with falling commodity prices exacerbating overcapacity in industries including steel and cement. The lack of inflationary pressure will allow the People’s Bank of China to relax monetary policy to support the economy if Premier Li Keqiang’s full-year goal of about 7.5 percent is threatened.

(Source: Bloomberg)

AAII Investor Sentiment Survey-Wk ending 5/7/2014

By Investor Sentiment

 

The AAII Investor Sentiment Survey measures the percentage of individual investors who are bullish, bearish, and neutral on the stock market for the next six months; individuals are polled from the ranks of the AAII membership on a weekly basis. Only one vote per member is accepted in each weekly voting period.

Survey Results

Sentiment Survey
ResultsWeek ending 5/7/2014   Data represents what direction members feel the stock market will be in the next 6    months.
Bullish  28.3%
down 1.4
Neutral  43.0%
up 2.2
Bearish  28.7%
down 0.8
Note: Numbers may not add up to 100% because of rounding.


Change from last week:
 Bullish: -1.4
Neutral: +2.2
Bearish: -0.8

Long-Term Average:
 Bullish: 39.0%
Neutral: 30.5%
Bearish: 30.5%
Here is what Jon Najarian had to say about this high 43% Neutral position:

It’s the highest level of neutrality in more than 10 years.

It takes quite a bit to convince individual investors to not have an opinion about the market but that’s what the last two months have managed to do. “The market is just grinding,” says optionMONSTER’s Jon Najarian in the attached clip. “It’s been very easy to be in the wrong individual stocks.”

Case in point for Najarian is Twitter (TWTR) which he started buying on the way down, defying his own discipline and incurring a loss prior to a much-needed bounce (which came in shortly after this segment was taped). “The people that can’t decide, the ‘meh’ crowd, that’s probably been the right decision.”

As for the market as a whole history suggests a sharp move follows peaks in neutral sentiment. Going back to 2005 AAII neutral sentiment has pushed to 38 on 4 distinct prior occasions (August 2013, December 2011, November 2010 and December 2011). Looking at the S&P 500 (^GSPC) a month later showed greater than 4% moves each time over the subsequent 30 days.

Unfortunately for traders the back-test doesn’t give a clear sign. Three of the 1-month moves were up with one sharp drop. Still it’s a safe bet that American investors aren’t going to stay neutral for long. Look for Mr. Market to knock people into the bullish or bearish camps in short order.

(Source: AAII, Yahoo Finance)

Launch of “Endowment Index”

By Endowment Index™

Financial Products News #2014 – 29
NASDAQ OMX Announces Launch of the Endowment Index Effective May 19, 2014

Markets Impacted:

  • All Markets

Data Feeds Impacted:

  • NASDAQ OMX Global Index Data Service (GIDS 2.0)
  • NASDAQ Global Index Watch (GIW)

Contact Information:

What you need to know:

Effective Monday, May 19, 2014, NASDAQ OMX will begin disseminating the Endowment IndexTM(Symbol: ENDOW) on the NASDAQ OMX Global Index Data ServiceSM (GIDS 2.0).


What is the new Index?

The Endowment IndexTM is an objective benchmark for investors who implement a three dimensional portfolio that incorporates alternative investments.  This investable index is used for portfolio comparison, investment analysis, research and benchmarking purposes by fiduciaries such as trustees, portfolio managers, consultants and advisors to endowments, foundations, trusts, DB/DC plans, pension plans and individual investors.  The Endowment IndexTM has been co-created by Endowment Wealth Management, Inc. and ETF Model Solutions, LLC.

How is the Index disseminated?

Effective Monday, May 19, 2014, data recipients will receive real-time index information from the proprietary GIDS 2.0 data feed with the following attributes:

Instrument ID Instrument Name Currency Frequency FP Type Brand
ENDOW Endowment Index USD 1S I CI

 

In addition to the real-time tick messages, NASDAQ OMX will support the following directory messages on GIDS 2.0:

  • Equities Summary (Message Type F): Disseminated at the end of the U.S. and European trading session to relay the summary of the current trading day’s activity for an equity index.
  • Index Directory (Message Type R): Disseminated at the start of each day to relay basic index information.

Will the components and weightings data be made available?

Yes. For access and more information on the Endowment  on NASDAQ Global Index Watch (GIW), please contact NASDAQ OMX Global Data Sales.

Where can I find additional information?

For questions about NASDAQ OMX Index products, please contact NASDAQ OMX Global Indexes at +1 301 978 8284.


Subscribe to Email Alerts:
NASDAQ OMX is offering customers the ability to self select news delivery across various NASDAQ OMX markets. Create and maintain a profile for updating alert preferences and contact information. Visit the enrollment form on the NASDAQ Trader website and sign up today! Please note that if you choose to unsubscribe from an email list, you may no longer receive potentially critical emails from the NASDAQ Stock Market regarding NASDAQ’s trading and data products, regulatory issues or marketplace initiatives.

About the NASDAQ OMX Group:

The NASDAQ OMX Group, Inc. is the world’s largest exchange company. It delivers trading, exchange technology and public company services across six continents, with more than 3,600 listed companies. NASDAQ OMX offers multiple capital raising solutions to companies around the globe, including its U.S. listings market, NASDAQ OMX Nordic, NASDAQ OMX Baltic, NASDAQ OMX First North, and the U.S. 144A sector. The company offers trading across multiple asset classes including equities, derivatives, debt, commodities, structured products and exchange-traded funds. NASDAQ OMX technology supports the operations of over 70 exchanges, clearing organizations and central securities depositories in more than 50 countries. NASDAQ OMX Nordic and NASDAQ OMX Baltic are not legal entities but describe the common offering from NASDAQ OMX exchanges in Helsinki, Copenhagen, Stockholm, Iceland, Tallinn, Riga, and Vilnius. For more information about NASDAQ OMX, visit www.nasdaqomx.com.

US Dollar Index-DXY

By Inflation Watch

US Dollar Index

Is the US dollar headed for a fall despite positive economic data recently?

Stronger than expected non-farm payrolls and a surging composite PMI data were not enough to send real interest rates higher. Treasury yields have fallen due to Ukrainian tensions and weaker than expected PMI data from China. The net effect of these developments has been a weaker US dollar, which looks to be in danger of falling to its lowest levels in two years on a trade-weighted basis.

1Q-2014 US GDP Growth Estimate

By Uncategorized

1Q-2014 US GDP Growth Estimate

The Commerce Department reported that the gross domestic product (GDP) only advanced at a 0.1 percent annualized rate in the first three months of the year. According to the Wall Street Journal, economists on average were anticipating at least 1.1 percent growth. While this proved to be one of the weakest quarters for economic growth in the last five years, there were some bright spots in the report, such as total consumer spending rising by 3 percent. Most of the drag was a result of a 2.1 percent decline from business investment spending, which is being attributed to poor weather conditions. While weak business spending could prove to be temporary, the most concerning part of the report was that U.S. exports declined by 7.6 percent, the largest decline since the recession. This portion of the report should be met with some concern considering weakness in other economies around the world could end up being a rather large deterrent to U.S. economic growth, just as domestic consumption is starting to show some durability.

(Source: Wall Street Journal)

 

 

EWM Monthly Market Commentary: April 2014

By Uncategorized

Domestic equity markets were a study in contrasts in April, with significant divergence among various segments of the market. The key story of the month was the continued rotation in leadership within market capitalizations as well as growth-value dimensions. In addition, Internet-related growth stocks suffered declines as investors assessed whether those companies would live up to their high current valuations. Geopolitical tensions remained at the forefront of investors’ minds, with Russia continuing its saber-rattling in regards to Ukraine. Economic data began to thaw with the weather, posting slightly better results than during the first three months of the year. Employment gains in April were 288,000, the fastest growth in almost two years, and far exceeding analyst expectations. In addition, the unemployment rate dropped to 6.3% from 6.7%.

With this as a backdrop, stocks posted mixed results. The S&P 500 rose +0.7% for the month, and the Dow Jones Industrials gained +0.9%. However, the tech-heavy Nasdaq Composite Index again lost ground, declining -2.0%. The divergence between the Russell 1000 Index of large cap stocks and Russell 2000 Index of small cap stocks increased during the month, with returns of +0.5% and -3.9%, respectively. Value stocks extended their outperformance relative to  growth stocks. In terms of sector performance, energy was the strongest performer on a relative basis, gaining +5.2%, while financials were the poorest performers, posting a decline of -1.5%.

International equity markets also posted mixed results in April. The MSCI World ex-U.S. Index gained +1.4% for the month. Emerging markets also held their own again last month, advancing lightly, yet underperforming developed markets. Analysts remain concerned about the growth prospects in  emerging economies, which may remain subdued as the Federal Reserve continues to taper its quantitative easing program. The MSCI Emerging Markets Index gained +0.4% for the month. The MSCI EAFE Index, which measures developed markets performance, generated slightly better performance, returning +1.5% for the month, as the Russia-Ukraine tensions remained elevated but not yet escalating. Regionally, Latin America and Europe were the best performers on a relative basis, with the MSCI EM Latin  America Index and the MSCI Europe Index gaining +2.8% and +2.6%, respectively. Eastern Europe and Japan were among the poorest performers, with results of -4.5% and -2.6%, respectively.

Fixed-income markets were almost all high in April, with economic data remaining somewhat soft coming out of the severe winter. The Fed continued its pace of tapering of its asset purchase program during the month, reducing purchases by an additional $10 billion. In this environment, the benchmark 10-year U.S. Treasury yield ended the month at 2.65%, down slightly from the 2.72% the level of March 31st. Broad-based fixed-income indices posted returns in April, with the Barclays U.S. Aggregate Bond Index advancing +0.8% for the month. Global fixed-income markets were also higher, with the Barclays Global Aggregate ex-U.S. Index returning +1.3% for the month. Intermediate-term corporate bonds were also strong, as the Barclays U.S. Corporate 5-10 Year Index generated a gain of +1.2%. The Barclays U.S. Corporate High Yield Index posted a gain of +0.6% for the month. Municipals continued their recent robust performance, advancing +1.2%.