Update #2/ Week of May 17, 2010

Good Morning Everyone and Happy Tuesday! Equity markets are struggling this morning in the face of some disappointing economic news releases. The first release was April’s Producer Price Index (inflation barometer for producers, and a sign on prices for the consumer 4-6 months out). April showed a .1% decrease, which was in line with expectations, but economists don’t want deflation. That’s not a good thing either. Prices should rise (as this will affect earnings, too), but only in the 1 to 3 percent range. The month previous the PPI had shot up .7%, so this reaction in April is a little disconcerting. The core PPI did rise .2%, slightly higher than the .1% anticipated.

Housing starts for April did rise 5.8% to an annualized rate of 672K, stronger than the 650K expected. However, building permits dropped 11.5% in April to an annualized rate of 605K . . . far worse than the 680K for which analysts were looking. Equity markets have pulled back and slipped into negative territory, but for those most part are hovering around the unchanged mark. Credit markets are improving and thus rates are still improving. That’s always the good news.
I’m out in the field today. Call me on my cell if I can help you in any way. Have a terrific Tuesday