JACKSON HOLE, Wyo. -- And today we indulge the voyeurs in the audience.
We peek (ahead).
And hey. Take note. The word "market" in this column always and everywhere refers to the bond market.
The big market. The real one.
Not the sissy stock market.
The June retail sales numbers will be released tomorrow.
Retail sales rose a cycle-best 14.5% during the first quarter. The June figures (along with upward revisions to the May
report) will confirm what the better forecasters have been predicting since early April: The second-quarter retail performance will not come close to matching its first-quarter exhibition, but it will best the (average) showings we've seen during the three strong sales years ended 1998.
Overall sales will rise something on the order of 6.6% during the second quarter. Compare that with 14.5% during the first and an average 5.3% since 1996.
Sales excluding autos will rise something on the order of 8.2% during the second quarter. Compare that with 13.2% during the first and an average 5.0% since 1996.
Sales excluding building materials, gasoline and autos (this series is used to produce the
personal consumption expenditure
numbers that show up in the
gross domestic product
report) will rise something on the order of 6.9% during the second quarter. Compare that with 12.4% during the first and an average 5.0% since 1996.
The message here? Consumption is far from dead.
That, of course, has never prevented the slowdown types from pronouncing it so, and the third quarter might well serve up a chance for them to write up a fresh death certificate.
Spending now looks likely to decelerate between the second quarter and the third; even the go-go American consumer rests now and again.
The die-hard slowdown types will take such a deceleration to mean that their forecasts are finally bearing out. (We weren't wrong; we were just three years early.)
The rest of us will interpret it as a wiggle (or a stair-step?).
Just like the one we saw during the third quarter of 1998, and the ones we saw during the second and fourth quarters of 1997, and the one we saw during the third quarter of 1996, none of which said anything meaningful about a fundamental consumption profile that's proven just plain strong.
Indeed. Forget dead. Spending's not even within a stone's throw of the cemetery.
The June producer price indices will be released tomorrow.
The finished goods index has
increased an average 0.1% per month during the past year. A June increase of that magnitude would push year-on-year growth to 1.6% from 1.4% in May.
Note that this index bottomed in January 1998.
The core (excluding food and energy) finished goods index has also increased an average 0.1% per month during the past year. A June increase of that magnitude would keep year-on-year growth steady at 1.7% for a fourth straight month.
Note that this index also bottomed in January 1998.
The core intermediate goods index is likely to post a fourth straight increase for the first time since February 1997; the core crude goods index looks to rise again following a 2.3% (biggest since January 1995) surge in May.
The former bottomed in January 1999, and the latter bottomed in December 1998.
The message here? Slow creep. Nothing terrifying, but the trend is up.
And keep in mind that the core price measures do not include oil.
And that the producer price indices, unlike their consumer counterparts, are considered leading indicators.
The June consumer price indices will be released Thursday.
A below-trend 0.1%
increase in the overall index would keep year-on-year growth steady at 2.1% for a second straight month.
Note that this index bottomed in April 1998.
A below-trend 0.1% increase in the core index would push year-on-year growth to 2.1% from 2.0% in May.
Note that that 2.0% growth rate went down as the slowest since April 1966.
The message here? The consumer price indices say everything about the past and nothing about the future; they are rearview mirrors.
Yet they are (apparently) what the
is using to guide policy, and so we have to use them, too.
Decelerations (improvements) in year-on-year growth favor a steadier monetary policy; accelerations (deteriorations) point to a tighter one.
The June industrial production and capacity numbers will be released Friday.
They are likely to
show two things.
One is that the year-on-year pace of production continues to improve. It bottomed at 1.5% in December; the June increase is likely to come in north of 2.0%.
The other is that the year-on-year pace of capacity growth continues to decelerate. It peaked at 5.7% in January 1997; it is likely to come in at 4.4% in June (its slowest since April 1995).
The message here? The capacity glut is getting less glutty while the factory sector strengthens. The gap between capacity growth and production growth -- which had long been widening as a result of a stagnation in worldwide demand in general and the Asian crisis in particular -- is finally narrowing.
The best of a years-long period of good fortune on the price front has run its course.
How will the market react to the news these economic indicators will deliver?
Your correspondent has no earthly idea.
The market rallies on this round of data (concentrating on the relatively small monthly increases and setting aside trends and the direction of year-on-year growth rates) and then stumbles on the next one (beginning with gross domestic product and the
employment cost index July 29 and continuing through the
NAPM PMI Aug. 2 and then the
employment report Aug. 6).
And hey. Gamble at your own risk. That's just a guess.
Your narrator really knows nothing save something
This week will probably prove pivotal.
The mail makes it clear that I need to say this yet again: This column is not about shares.
This column is primarily about the economy and secondarily about the bond market.
It is not at all about shares.
The rest of the site is about shares. Go read the rest of the site if you're looking for insight as to which stocks and funds to buy and sell.
I take no credit if something in this column "helps" you make money in shares; I assume no blame if something "causes" you to lose it.
This column is not about shares.
Everybody got that?
for help with the poll.
And the third album from
is the musical selection of the week.
And hey. Many thanks to the most excellent
fellow who sent the books.
A Moebius strip tease?
Do not trust me.
You are beyond help.