There was no news yesterday at President Bush’s ranch in Crawford, Texas, but there was plenty of talk when the head of the world’s biggest oil-consuming country chatted with his counterpart from the world’s biggest supplier.
TURNING OVER ROCKS IN MR. MARKET’S GARDEN
Is the market efficient? Efficiency as in prices reflect all known and relevant market information. By those terms, prices are by definition efficient, which is another way of saying that neither hidden value nor veiled excess lurk in the shadows.
THE NEW NEW GOLDEN AGE OF OPEC
The House of Representatives has embraced the much-debated energy bill, or as it’s known formally in the hallowed halls of Congress, H.R. 6. But don’t hold your breath that this creation of politicians will provide delivery into the promised land of energy independence or affordable prices for oil and its byproducts. H.R. 6 is legislation, not divine intervention, and as legislation goes, it leaves more than a few things to be desired.
THE DECLINE & FALL OF JOBLESS CLAIMS
The Labor Department this morning delivered another wake-up call to the Federal Reserve regarding its still-negative real (inflation-adjusted) Fed funds rate. The buzzer sounded with the release of the weekly report on initial jobless claims, a widely followed number for gauging economic momentum, or lack thereof.
GREAT EXPECTATIONS
The bond market decided to err on the side of optimism again today—optimism, that is, from a bond trader’s perspective. Whatever you call it, there was a fair amount of it in and around trading of the benchmark 10-year Treasury Note, which now yields 4.20%, the lowest in more than two months.
TWO NUMBERS, ONE FATE
Gauging inflation is always a tricky business, but rarely more so than in the spring of 2005. Today’s report on producer prices from the Labor Department is merely the latest clue suggesting as much.
TO FIGHT OR NOT TO FIGHT?
Should equity investors fight the Fed?
Absolutely, writes Ed Yardeni last week in a report to clients. The chief investment strategist at Oak Associates is bullish and he isn’t going to let any central bank threat of higher interest rates stand in the way of optimism. “I continue to place my bets on the bull,” he asserts. And just to make sure no one misunderstands, he clarifies his view of the morrow in no uncertain terms: “There is no foreseeable reflation, stagflation, deflation, or recession in my outlook.” Take that, pessimists and nattering naybobs of negativism.
DON’T WORRY, BUY BONDS
The catalyst for today’s red ink on Wall Street is widely explained as IBM and its disappointing earnings report. Big Blue earnings per share in fact did surprise on the downside with 85 cents a share for this year’s first quarter, well below the roughly 90 cents that analysts were generally expecting.
HEY, JOE, WHERE YOU GOIN’ WITH THAT CREDIT CARD IN YOUR HAND?
Has the day of reckoning for the consumer begun? No, not quite. But the economic observers who’re warning that Joe Sixpack’s debts are set to cast disorder far and wide in the economy have another statistical release to dangle in the face of the optimists.
CONSUMPTION ECONOMICS
In the good old days of energy shocks, consumers cut back when prices jumped. But cutting back is no longer popular sport in the current bull market for oil.