Volume 5 Number 6info.blimling.com/rs/blimling/images/Key_Indicators...KEY INDICATORS February 11, 2013 - 3 - 3 US EQUITIES FINANCIAL • The S&P500 closed higher for the sixth consecutive

February 11, 2013Volume 5 Number 6

February 11, 2013 - 2 -KEY INDICATORS 2

• …appear to be sorting through multiple items, some auguring for the good, others not.

• Less is More: The Wall Street Journal and The New York Times look at lighter offerings in the restaurant space. The former: People are placing fewer orders for french fries and sugary drinks at restaurants, giving a boost to establishments that sell more low-calorie items, according to a study... An analysis of 21 fast-food and sit-down restaurant chains between 2006 and 2011 found that lower-calorie food and beverages fueled the chains' growth. http://on.wsj.com/11rbu2U The latter:Driven by pressures like consumer demand and looming federal regulations that will require them to post calorie counts on menus, restaurant chains around the country are adding more nutritious choices and shrinking portion sizes. The smaller portions, which are not necessarily cheaper, are the first step toward reversing the practice of piling more food on a plate than anyone needs in a single meal, a trend that began nearly three decades ago. http://nyti.ms/XpiDZl

• Less is Less: The end of the payroll tax holiday has hit some folks hard, as The New York Times reports: Jack Andrews and his wife no longer enjoy what they call date night, their once-a-month outing to the movies and a steak dinner at Logan’s Roadhouse in Augusta, Ga. In Harlem, Eddie Phillips’s life insurance payment will have to wait a few more weeks. And Jessica Price is buying cheaper food near her home in Orlando, Fla., even though she worries it may not be as healthy. Like millions of other Americans, they are feeling the bite from the sharp increase in payroll taxes that took effect at the beginning of January. There are growing signs that the broader economy is suffering, too. http://nyti.ms/WwUzYJ

• Reports this Week: Retail Sales (Wed), Capacity Utilization (Fri).

THE MARKETS WE GREET THIS WEEK…

http://on.wsj.com/11rbu2U

http://nyti.ms/XpiDZl

http://nyti.ms/WwUzYJ


US EQUITIESFINANCIAL

• The S&P500 closed higher for the sixth consecutive week, finishing Friday at 1,517.9, up 0.3%. The Dow Industrials did not follow suit, slipping 0.1% to close at 13,993.0; the NASDAQ settled at 3,193.9, up 0.5%.

• With more than 1,000 companies reporting so far, Bespoke Investment Group reports that 64.2% had topped fourth quarter earnings estimates, with 63.1% topping revenue expectations.

• It was a good week for the US Dollar, a bad one for the Euro, with the former gaining 1.4% and the latter losing 2.0% (closing at 1.3365).

• The Financial Times reports: After the ECB’s monthly interest rate-setting governing council kept rates on hold at 0.75%, Mr Draghi reiterated that the bank’s mandate was to target inflation –or maintain price stability – and not the exchange rate. But he added: “We want to see if this appreciation is sustained and if it alters our assessment of price stability.”

FINANCIAL

US DOLLAR


CHINA EQUITIESFINANCIAL FINANCIAL

VOLATILITY

• The Shanghai Composite Index gained 0.5%.

• Exports up 25% year-over-year in January, with imports gaining 28% -- both up versus December. Consumer price inflation was at +2.0% year-over-year in January, down from +2.5% in December.

• The Wall Street Journal reports: [China introduced new] policy guidelines to narrow the growing gap between rich and poor, vowing to turn over more of the profits of state-owned companies to pay for ambitious welfare programs.

• Volatility readings continue to be muted, with the CBOE VIX closing g at 13.02, up 0.9%, after moving between 12.89 and 14.75.

• Art Cashin of UBS: A new trade just appeared that suggests there will be a market event in the near future. Last week somebody put on a call spread on the VIX using the April 20 and 25 calls. You would have to be VERY confident in your outlook to risk $11 million on a directional position with the VIX at five year lows and the markets trying to break out to new highs.


• Nearby gold closed at $1,666.90 per ounce, basically unchanged on the week.

• The Financial Times reports: Commodities hedge funds surrendered at least 20% of their assets last year after investors pulled out large sums following the sector’s worst annual performance in more than a decade, according to fund managers and investors. The average commodity hedge fund lost 3.7% in 2012, according to Newedge, the biggest decline since the yardstick was created more than a decade ago…

• Initial jobless claims declined slightly during the week ending February 2, with the Department of Labor reporting filings at 366,000, down 5,000 on the week but up 5,000 year-over-year.

• CNBC reports: The [San Francisco Fed] report stated that in December 2012, the share of workers who were jobless six months or longer dipped below 40% for the first time since late 2009. The portion of unemployed Americans out of work for 99 weeks or longer fell to 11% in January — the lowest level in two years.

FINANCIAL

GOLDMACRO

JOBLESS CLAIMS

325,000

350,000

375,000

400,000

425,000

450,000

11-Feb 17-Mar 21-Apr 26-May 30-Jun 4-Aug 8-Sep 13-Oct 17-Nov 22-Dec 26-Jan

WEEKLY UNEMPLOYMENT INITIAL CLAIMS

Source: US Department of Labor


• Consumer spending was up during the week ending February 3, with Gallup tracking seeing outlays at $78 daily, up 8% on the week and up 44% year-over-year.

• Gallup: U.S. Economic Confidence improved to -13 in January, matching the five-year monthly high set in November 2012. Economic confidence improved steadily from September to November before falling back to -17 after the presidential election, but has now returned to its pre-election peak.

• The ICSC/Goldman Sachs chain store survey found sales gaining 2.6% year-over-year during the week ending February 2; Johnson/Redbook: +1.5% year-over-year.

• McDonald’s reported global same-store sales at -1.9% for January, with the EU at -2.1% and the US at +0.9%.

• Macy’s reported January same-store sales at +12%, while Kohl’s saw a 13% bump; Gap +8%, TJX +3%, Nordstrom +11%, Target +3%, Limited Brands +9%, The Buckle -2%, Zumiez +3%.

MACRO

THE CONSUMER CHAIN STORE SALESMACRO

$45

$50

$55

$60

$65

$70

$75

$80

$85

$90

$95

$100

$105

Aug Sep Oct Nov Dec Dec Jan

GALLUP CONSUMER SPENDING

Weekly Average of Daily TrackingSource: Gallup

0%

1%

2%

3%

4%

5%

10-Nov 17-Nov 24-Nov 1-Dec 8-Dec 15-Dec 22-Dec 29-Dec 5-Jan 12-Jan 19-Jan 26-Jan 2-Feb

CHAIN STORE RETAIL SALES

ICSC-Goldman Sachs Johnson Redbook

Year-over-Year ChangeSource: RetailSails, ICSC, Redbook


• Individual investors were bullish for the 11th

consecutive week, with the AAII survey showing 43% bullish (down from 48%), 28% neutral (unchanged) and 30% bearish (up from 24%).

• USA Today reports: Investors didn't just put aside their aversion to stocks in January: They tossed it out the window. Investors flooded traditional stock funds and exchange-traded stock funds with a record $77.4 billion in January, according to TrimTabs.com. January's inflow was $23.7 billion higher than the previous record…

• The 15-day rainfall map looks much better this week than last, but there is still talk about dry conditions on the North Island and impact on the tail end of the milk production season.

• From TVNZ: Despite some recent rain, rainfall is still way below normal and farmers in the Far North are discussing strategies including cutting back on milking and getting rid of stock Northland farms are not officially in drought yet and the recent rain was welcome, but it will take a lot more to make a difference.

MACRO

BULL/BEAR NEW ZEALANDWEATHER

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

65%

Nov Dec Jan

AAII INVESTOR SENTIMENT SURVEY

Bullish Bearish

Source: American Association of Individual Investors


• Consumer credit expanded in December, with US Federal Reserve data showing total outlays up 0.5% for the month and 5.7% year-over-year on an annualized, seasonally-adjusted basis..

• Revolving credit continued to lag, down 0.4% on the month and up only 0.3% year-over-year. Non-revolving credit was up 1.0% on the month and up 8.3% year-over-year.

• Actual data showed a $14.59 billion expansion in December, ahead of expectations for +$13.40 billion.

• The ISM Purchasing Manager’s Index for manufacturing came in at 53.1 for January, a strong advance over the 50.2 reading for December and just behind the 54.1 level seen in January 2012.

• The ISM PMI for services was at 55.2, down slightly from December’s 55.7 reading and lower than the 56.8 recorded in January 2012.

• Both measures are above the 50.0 mark that signals expansion.

MACRO

CONSUMER CREDIT ISM INDICESMACRO


US DROUGHTWEATHER COMMODITIES

GASOLINE

$3.00

$3.20

$3.40

$3.60

$3.80

$4.00

$4.20

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

US UNLEADED GASOLINE

2013 2012 2011

US Dollars Per GallonSource: DOE/EIA

• NOAA drought monitors show some improvement in the parched plains, several areas still fall under the “exceptional” heading.

• The Associated Press reports: Measurements taken last month show Lake Huron and Lake Michigan have reached their lowest ebb since record keeping began in 1918, and the lakes could set additional records over the next few months, the corps said. The lakes were 29 inches below their long-term average and had declined 17 inches since January 2012.

• Gasoline prices moved sharply higher during the week ending February 4, with all grades of unleaded averaging $3.604 per gallon, up 18 cents from the week prior and up 10 cents from the same week in 2012.

• Move was the biggest for a single week since February 2011, while prices have reached their highest level since late October.

• Demand has been strong, with the latest “product supplied” data showing a 4.7% year-over-year gain.


• Rail traffic in the US was mixed during the week ending February 2, with total car loadings down 3% year-over-year but intermodal activity up 7%.

• AAR SVP John T. Gray: The New Year brought a continuation of an old pattern: weakness in coal, strength in intermodal and petroleum products, and mixed results for everything else. Railroads recently announced that they expect to reinvest significantly... They’re making these investments because they are confident that demand for freight transportation…will continue to grow.

• The Baltic Dry Index finished at 748, down 0.3% for the week.

• A year ago, the BDI was actually a little lower: 715 before turning higher to the 2012 highs of 1,150-1,160 in May through July.

• The Wall Street Journal reports: China's state-owned port operators are stepping up their investments abroad, taking advantage of depressed prices as a global shipping downturn forces companies elsewhere to cut debt by unloading assets

MACRO

US RAIL TRAFFIC BALTIC DRY INDEXMACRO

-20%

-15%

-10%

-5%

0%

5%

10%

15%

Aug Sep Oct Nov Dec Jan

RAILROAD CARS LOADED: YEAR-OVER-YEAR CHANGE

Intermodal Total

Source: Association of American Railroads


SLAUGHTERDAIRY

• Dairy cow slaughter was down on a week-to-week basis but up year-over-year.

• For the week ending January 26, USDA reported slaughter at 64,651 head, down 6.0% from the week prior but up 9.3% when compared to the same week a year ago.

• April live cattle futures closed at 130.125, down 1.5%. Bill Gary of CIS has April cattle on a sell signal with a pullback objective of just over 128 and a longer-term objective of 125.

• Cream multiples firmed some, with USDA/AMS data implying a 120 rate, up from 117 the week prior and 116 a year ago.

• Dairy Market News reports: Class II production is steady to slightly higher as a few ice cream production facilities reopen. Multiples for Class II cream notched higher on the bottom, but remained steady on the top, ranging from 1.18 -1.21. Class IV cream prices continue flat, reportedly well below the approximate 1.24/1.25 multiple breakeven level.

DAIRY

CREAM PRICES

1.00

1.05

1.10

1.15

1.20

1.25

1.30

1.35

1.40

1.45

1.50

1 3 5 7 9 11 13 15 17 19 21 23 25

IMPLIED CLASS II CREAM MULTIPLE

2013 2012 2011

FOB Upper MidwestSource: USDA/AMS Dairy Market NewsBlimling and Associates estimates

week -->

30

35

40

45

50

55

60

65

70

75

Jan Feb Mar Apr May Jun Aug Sep Oct Nov Dec

DAIRY COW SLAUGHTER

2013 2012

Thousand HeadSource: USDA


CRUDE OILCOMMODITIES

1,000,000

1,020,000

1,040,000

1,060,000

1,080,000

1,100,000

1,120,000


CRUDE OIL AND PETROLEUM PRODUCT STOCKS

2013 2012 2011

Source: DOE/EIAThousand BarrelsExcludes SPR

• Crude oil prices were lower, with nearby NYMEX WTI futures closing at $95.72 per barrel, down 2.1%, after trading between $95.04 and $97.76.

• The Financial Times reports: The Seaway pipeline moves oil from Cushing in Oklahoma, the pricing point for WTI and a region where supplies are plentiful, to refineries on the Gulf of Mexico. Oil traders have bet that the expansion would reduce the glut of WTI, bringing its price in line with Brent. But crude oil stocks at Cushing actually climbed to 51.7m barrels last week…

$93

$94

$95

$96

$97

$98

$99

$100

$101

$102

$103

Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14

CRUDE OIL FUTURES CURVE

Feb 8 Feb 1


NATURAL GASCOMMODITIES

• Natural gas prices were lower, with nearby futures closing at $3.272 per mmbtu, down 0.9%, after trading between $3.259 and $3.459.

• Baker Hughes reported 425 rigs targeting natural gas, down three from the week prior.

• Platt’s reports: “Despite colder-than-normal conditions across basically the entire US on the updated 8-14 day [forecast], the bears are still refusing to hibernate for now,” Schneider Electric analyst Matt Smith said.

• Stocks -7.1% versus five-year average of -7.3%.

1000

1500

2000

2500

3000

3500

4000

4500


NATURAL GAS WORKING STORAGE

2013 2012 2011

Billion Cubic FeedSource: US DOE/EIA

$3.00

$3.20

$3.40

$3.60

$3.80

$4.00

$4.20

Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14

NATURAL GAS FUTURES CURVE

Feb 8 Feb 1


• Soybean oil prices were lower, with nearby futures closing at 51.43 cents per pound, down 2.9% to the lowest Friday close in four weeks.

• The latest USDA supply/demand figures, published Friday, showed Argentina soybean production in line with estimates, with global ending soybean stocks just ahead of the consensus.

• Soybean oil exports remain strong, with shipments at 33,973 metric tons and net sales at 25,592 metric tons.

SOYBEAN OILCOMMODITIES

49

50

51

52

53

54

Mar2013

May2013

Jul2013

Aug2013

Sep2013

Oct2013

Dec2013

Jan2014

Mar2014

May2014

Jul2014

Aug2014

SOYBEAN OIL FUTURES CURVE

Feb 8 Feb 1

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Mar Apr May Jun Jul Aug Sep Oct Nov Jan

SOYBEAN OIL EXPORT SHIPMENTS

Metric TonsSource: USDA/FAS


• Nearby corn futures closed at $7.0900 per bushel, down 3.7%, the lowest Friday settlement in four weeks.

• Bill Gary of CIS: A test of the recent 6.78 low Is not out of the question.

• Meanwhile, Agrimoney reports on a Macquarie view that ethanol will “become the price leader of corn…” with a rationing point which currently relates to a futures price of nearly $9.00 a bushel. Also, Rabobank says the pullback in old crop contracts “offers a buying opportunity…"

CORNCOMMODITIES

$5.50

$5.75

$6.00

$6.25

$6.50

$6.75

$7.00

$7.25

$7.50

$7.75

$8.00

Mar 13 May 13 Jul 13 Sep 13 Dec 13 Mar 14 May 14 Jul 14 Sep 14 Dec 14 Mar 15 May 15

CORN FUTURES CURVE

Feb 8 Feb 1

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Dec-12

CORN: NET "MANAGED MONEY" POSITION

Source: CFTC Disaggregated COTPositive Number Indicates Long


• Class III milk futures got a boost from stirring in the spot cheddar market as well as lingering end-user demand for deferred hedge coverage.

• Contracts for the second quarter of 2013 closed at an average of $18.04 per hundredweight, up 18 cents; July through December 2013 finished at $18.41, up six cents; February 2013 through January 2014 closed at $18.10, up 10 cents.

• The CFTC COT report showed speculators trimming their already small net long position by about 25%.

COMMODITIES

CLASS III MILK

$16.50

$17.00

$17.50

$18.00

$18.50

$19.00

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

CLASS III MILK FUTURES CURVE

Feb 8 Feb 1

-6,000

-5,000

-4,000

-3,000

-2,000

-1,000

0

1,000

2,000

Feb-12 Apr-12 Jun-12 Aug-12 Oct-12 Nov-12 Jan-13

CLASS III MILK: NET SPECULATIVE POSITION

Source: CFTC+ is net long; - is net short


• Coffee prices were sharply lower, with nearby futures at $1.4180 per pound, down 4%.

• The Wall Street Journal reports: Prices of robusta coffee beans are up 13% in the past year because of rising global demand, especially among price-conscious consumers in emerging markets like Russia and Brazil. In contrast, consumption of the costlier arabica bean in its strongholds of the U.S. and Europe is barely rising due to tepid economic growth.

• Sugar down 4%, cocoa up 1%.

COMMODITIES

SOFTS


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Volume 5 Number 6info.blimling.com/rs/blimling/images/Key_Indicators...KEY INDICATORS February 11, 2013 - 3 - 3 US EQUITIES FINANCIAL • The S&P500 closed higher for the sixth consecutive