NEW YORK (RealMoneyPro) -- Doug Kass of Seabreeze Partners is known for his accurate stock market calls and keen insights into the economy, which he shares with RealMoney Pro readers in his daily trading diary.
This past week, Kass pointed to similarities between high-profile social media and biotech earnings misses and certain Internet stocks in the late 1990's, and gave his reading of recent economic data.
1) Initial jobless claims fell to 262,000, well below expectations of 290,000 and down from 296,000 last week. That is the lowest one-week print since April 2000. The four-week average fell to 284,000 from 285,000 last week and continuing claims fell by 74,000 to also the lowest level since 2000.
2) Positive for main street, not so much for corporate profit margins: The employment cost index for Q1 rose .7% m/o/m, one tenth more than expected but noteworthy was the 2.6% y/o/y gain, the most since Q4 '08 where wages and salaries were also up 2.6% y/o/y. Private sector wages and salaries were higher by 2.8% y/o/y, the best since Q3 '08 and is now above the average since 2001 (when data started being collected) of 2.5%.
3) The Fed's preferred view of the inflation world, the PCE, rose 0.2% headline m/o/m and 0.1% core with 0.3% and 1.3% gains y/o/y respectively. By not focusing on the CPI, the Fed downplays the influence of 3.5% annualized rent growth.
4) Pending home sales in March rose 1.1% m/o/m, about in line with expectations of up 1% and February was revised up by 5 tenths to 3.6% growth. On a y/o/y basis, contract signings are up by 13.4% on an unadjusted basis (11.1% seasonally adjusted). The overall index is at the highest level since June '13.
5) The final April UoM confidence figure was unchanged with the initial read at 95.9, about in line with expectations and is the 2nd best read since '07. One year inflation expectations were 2.6% vs 3% in March, 2.8% in February and 2.5% in January.
6) The Fed does the right thing in leaving a June hike on the table as why lean in one direction with so much more data to see between now and then. Either way, market tightens for them with the 2-year note yield up 10 bps on the week to .60%, the highest in 5 weeks.
7) Japan's unemployment fell one tenth in March to 3.4% which matches the lowest level since 1997 and the jobs to applicant ratio held at 1.15, the highest since 1992. The drop in the employment rate however was for the wrong reason as the number of people employed fell but because the number in the labor force fell by more, the overall rate was down.
8) For the BoJ who wants higher inflation, Japanese March CPI rose 2.3% y/o/y headline, 2.2% core (just ex food) and 2.1% core/core (ex food and energy), all .1-.2 above the estimate. The core rate was up .2% y/o/y taking out the impact of the VAT hike vs zero in February.
9) Japan's industrial production in March fell .3% m/o/m but that was better than the estimate of down 2.3%. It's also down for a 6th straight month on a y/o/y basis as we cycle thru the pre consumption tax hike data last year. Household spending was weak in March but not as bad as expected and is off a touch compare last March, right before the VAT was hiked.
10) Annualized M3 money supply growth in the eurozone rose 4.6% in March, the fastest pace of gain in 6 years. Also, private sector loan growth in the region rose .1% y/o/y, the first positive read in 3 years. These 2 data points however help to unleash an ugly week in global sovereign bond markets. German 10 yr yield goes from 16 bps to 36 bps, France from 42 bps to 64 bps, Spanish and Italian yields jump by 10-15 bps and the US 10 yr yield is higher by 20 bps to a 7 week high to name a few.
11) Spain's economy grew 2.6% y/o/y in Q1, the best quarter since Q1 '08.
12) Greek Foreign Minister Varoufakis is asked to take the bench and hopes grow that a deal comes soon for more loans to be made that will in turn be used to pay off previous loans. The other positive is maybe we can stop talking about Greece outside of its beautiful islands.