Tuesday, August 17, 2010

Economic data released today, Aug. 17th (Update)

The beginning of economic data for the week was released this morning. First up was Housing Starts for July. They came in at 546K. Expectations were for 555K. The prior month was revised down to 537K from 549K. Building Permits for July came in at 565K. Expectations were for 573K. The previous month was revised down to 583K from 586K. While these numbers are lower than expected, it wasn't off by a lot so the market will look at these as good news.

The PPI number came in at +0.2%. The market expected +0.2%, so that was in line with expectations. The Core PPI came in at +0.3% for July. The market expected +0.1%, so this was higher than expected.

Industrial Production came in at +1.0%. The market expected +0.8%, again better than expected.

This has set up the market to rise as the Dow Futures now are +65 going into the open. Now we wait for the Initial Jobless Claims for Thursday and Continuing Claims. The Initial Jobless Claims will be the most important going into Friday's Option Expiration for August.

WallMart had better than expected earnings form oversees growth. That set the market up for a rise earlier. It is clear China is still dragging some of the world economies to a better than expected Q3 GDP number no matter what the final result would be. But if they slow down the world is screwed as is China as expectations have been building with the Chinese population of an ever growing improved condition in their lives. It's hard to get off that drug, once someone has had the initial taste as the Chinese will certainly find out some day. It is their only concern about destabilization within its borders.

UPDATE: 7:45am PST

Capacity Utilization data came in at 74.8%. This was exactly what was expected. It is an uptick from the prior month reading of 74.1%, so it is in the right direction. But Factories need to get to a minimum of 85% to be generating lots of jobs and we have a long way to go to get there. Here is a historical perspective on the data.

Average 1972-2009 79.2%
From 1988-1989 high 85.2%
From 1990-1991 low 78.7%
From 1994-1995 high 85.1%
From 2008-2009 low 68.2%
July 2009 69.1%

Now this is the progression for 2010
Feb. 72.4%
Mar. 72.8%
Apr. 73.1%
May 74.1%
Jun. 74.1%
Jul. 74.8%

So the data is definitely improving and going in the right direction for a recovery but at this rate it would take several years to get back up to 85%, assuming we don't have a setback.

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