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Dailyfutures.com
U.S. Dollar Index, Eurodollars, Treasury Bonds, and the S&P 500 Index
U.S. Dollar index
Chart Comment
On December 17th, the U.S. dollar index closed decisively above its 100-day average for the first time since April, helped by the positive unemployment report on December 4th. So far, prices are staying above the average, helped by obvious problems in Europe. Possible resistance at 81.50? (updated 3-5).
Key Events - U.S.
2010
3-5 - February unemployment rate stayed at 9.7% with a loss of 36,000 jobs, a smaller loss than expected.
2-26 - Q4 GDP +1.4%; up .1% from a year ago.
2-18 - Fed increased discount rate from .50% to .75%.
2-10 - Bernanke hints that the discount rate will soon be raised.
2-5 - January unemployment rate improved from 10.0% to 9.7%, the best in five months. Loss of 20,000 jobs was a little disappointing.
1-29 - Q4 GDP +1.4%; up slightly from a year ago.
1-21 - Bank of Canada est.: U.S. real GDP +2.5% in 2010 and +3.9% in 2011.
1-8 - December unemployment rate stayed at 10.0% with a net loss of 85,000 jobs, a bigger decline than expected.
1-4 - ISM manfuacturing index increase from 53.6 to 55.9 in December, stronger than expected and the highest reading in almost four years.
2009
12-22 - Q3 GDP +.6%; -2.6% from a year ago.
12-11 - U.S. retail sales up 1.9% in November from a year ago, the first annual gain since August of 2008.
12-4 - November unemployment rate improved from 10.2% to 10.0%, much better than expected.
11-25 - U.S. jobless claims fall 35,000 to 466,000, the lowest in 14 months.
11-24 - Q3 GDP +.7%; -2.5% from a year ago.
11-19 - OECD GDP est.: +2.5% in 2010 and +2.8% in 2011.
11-6 - October unemployment rate increased from 9.8% to 10.2%, higher than expected.
11-2 - ISM manufacturing index increased from 52.6 to 55.7 in October, stronger than expected. The employment index increased from 46.2 to 53.1, an unexpected sign of expansion.
10-29 - Q3 GDP +.9%; -2.3% from a year ago.
10-19 - Andrew Bary in Barron's: It's time to raise short-term rates to "a more normal 2%."
10-16 - September industrial production up .7%, better than expected and the fourth consecutive gain.
10-9 - U.S. exports up slightly in August, but down 21% v. year ago.
10-5 - ISM services index increased from 48.4 to 50.9 in September, stronger than expected and the first sign of expansion in over a year.
10-2 - September unemployment rate increased from 9.7% to 9.8%. NFP -263,000, a bigger drop than expected and the 21st consecutive decline.
10-1 - IMF est.: Real GDP -2.7% in 2009 and +1.5% in 2010.
9-30 - Q2 GDP down 3.8% from a year ago, a little better than expected.
9-15 - August retail sales +2.7%, best monthly gain since January of 2006.
9-15 - Bernanke says recession 'very likely over.'
9-14 - Jim Rogers: 'I Expect a Currency Crisis or Semi-Crisis'
9-10 - U.S. exports up 2% in August, but down 22% from year ago.
9-4 - August unemployment rate increased from 9.4% to 9.7%, the highest since June of 1983.
9-1 - ISM manufacturing index increased from 48.9 to 52.9 in August, better than expected and the highest since June of 2007.
8-27 - Q2 GDP down 3.9% from a year ago, a little better than expected.
8-21 - This week, Warren Buffett, Joseph Stiglitz, and PIMCO's El Erian all made negative comments about the U.S. dollar.
8-14 - Industrial production +.5% in July, better than expected.
8-7 - Unemployment rate improved from 9.5% to 9.4% in July - first improvement since April of 2008. 247,000 jobs lost is a smaller loss than expected.
7-31 - GDP stats revised: Q1 down 3.3% and Q2 down 3.9% from a year ago.
7-9 - Jobless claims down 52,000 to 565,000, the lowest in five months.
7-8 - IMF est.: U.S. GDP -2.6% in 2009 and up .8% in 2010.
7-2 - Unemployment rate increased from 9.4% to 9.5% in June with a loss of 467,000 jobs, a bigger loss than expected.
6-25 - Final Q1 U.S. GDP -2.5% from a year ago.
6-24 - OECD est.: U.S. real GDP -2.8% in 2009 and +.9% in 2010.
6-15 - Revised IMF estimate: 2009 U.S. GDP -2.5% and 2010 GDP up .75%.
6-11 - Retail sales +.5% in May, the first gain in three months.
6-10 - U.S. exports down 2.3% in April to the lowest in nearly three years.
6-5 - Unemployment rate increased from 8.9% to 9.4% in May with a loss of 345,000 jobs, a smaller decline than expected.
6-2 - U.S. pending home sales index posts biggest monthly gain in over seven years.
Fundamental Notes
U.S. real GDP was up .1% in the fourth quarter from a year ago. For all of 2009, real GDP was down 2.4%, down from a .4% gain in 2008. On August 25, 2009, the CBO predicted that real GDP will be down 2.5% in 2009 and up 1.7% in 2010. On June 24, 2009, the OECD predicted that real GDP will be down 2.8% in 2009 and up .9% in 2010.
In 2008, we learned (again) that economic freedom in the financial industry is not a good idea. On October 9, 2008, a survey by the World Economic Forum said that the soundness of the U.S. banking system ranked number 40 in the world - far from the top. Overall, the U.S. government spends 37% of the nation's income which is high when you consider that it does not include universal healthcare (which costs 15% of GDP privately, but 9% of GDP publicly). Tax revenues total 28% of GDP.
U.S. Stats:
Latest real GDP growth: Up .1% in the fourth quarter v. year ago.
Unemployment rate: 9.7% in February.
Consumer price index: +2.6% in January v. year ago.
Latest interest rate change: Reduced from 1.00% to .125% on December 16, 2008.
GDP: US$14 trillion (Q2 2009 BEA estimate).
Public debt/GDP: 61% and rising (2007 CIA estimate). Possibly 100% by 2014.
Population: 307.2 million (2009 CIA estimate).
Heritage Foundation Economic Freedom Ranking: 6th in 2009.
Components of the U.S. dollar index: 58% Euro; 13% Yen; 12% Pound; 9% Canadian dollar;
4% Swedish krona; 4% Swiss franc.
Eurodollars
Chart Comment
Eurodollar prices are climbing while the Fed shows no hurry to raise the federal funds rate. On February 19th, the Fed raised the discount rate to .75%, but also insisted that they are not close to raising the federal funds rate. So far, prices remain above their 100-day average (updated 2-24).
Fundamental Notes
As the financial panic progressed, investors fled to short-term government securities for safety, but that game should be ending soon. Economic growth has resumed, but it will likely be slow for a long time. The CBO said on August 25, 2009 that it expects three-month T-bill rates to average .2% in 2009 and .6% in 2010. The consumer price index is expected to be down .5% in 2009, but up 1.7% in 2010.
Treasury bonds
Chart Comment
June T-bond prices have been chopping around the 100-day average lately with support from Europe's problems and weak U.S. economic news. On March 5th, prices closed slightly below the 100-day average and at its lowest in a week - a sign of weakness (updated 3-5).
Standard and Poor's 500 index
Chart Comment
The economy is not what anyone would call "bullish," but the Fed's low-interest rate policy has been good for stock prices. Most recently, the higher close on February 18th was impressive (updated 3-5).
Fundamental Notes
The financial crisis of 2008 will go down in history as the worst contraction since the Great Depression, thanks to a government policy of laissez faire in the banking industry. Fortunately, the federal government intervened massively to keep the credit markets working and the economy is slowly rebounding. In 2006, S&P 500 earnings peaked just shy of $88. In 2010, analysts are hoping earnings will bounce back to roughly $78.
Abbreviations
CBO - Congressional Budget Office.
GDP - Gross Domestic Product.
IMF - International Monetary Fund.
OECD - Organization for Economic Cooperation and Development.
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