The Commodities Channel

The Big Four Economic Indicators: December Real Retail Sales

Note: With the release of this yesterday's Consumer Price Index, we've updated this commentary to include the latest Real Retail Sales. Month-over-month nominal sales in December rose by 0.6% (0.63% to two decimals). Real Retail Sales, calculated with the seasonally adjusted Consumer Price Index, rose a lesser 0.3% (0.34% to two decimals). The chart gives us a close look at the monthly data points in this series since the end of the last recession in mid-2009.

S&P 500 Snapshot: A Modest Gain on Light Volume

The S&P 500 hit its -0.20% intraday low five minutes into the session and then recovered to a narrow trading range around the flat line through most of the session. A small rally in the final 30 minutes lived the index to its modest closing gain of 0.18%.

Trump Deficits Will Be Huge

There is much we don't know about how the Trump presidency will play out. Will the Wall get built? Who will pay for it? Will it have at least some fencing? Will repeal and replace happen at exactly the same time? Will Trump throw a ceremonial switch? Will there be a Trump National Golf Course in Sochi? It's anyone's guess.

New Year, New Policies, and Managing the New Risks

We would like to take this opportunity to extend our warmest Holiday Wishes to all of our clients and their advisers. 2016 certainly was a year for the history books – from the Brexit surprise to the November surprise; the year certainly was not one that improved the reputation of pollsters!

Fear Not: EM Bonds Can Handle Higher Rates, Trump

Higher interest rates, a stronger dollar and Donald Trump: three reasons to avoid emerging-market (EM) debt? Not necessarily. Rising rates seem to be signaling faster growth, and that’s good news for many EM bonds and currencies.

Washington, D.C. moves to center stage…

Time for the new White House and Congress to put pen to paper. While the equity markets have sustained their high levels, intra-day volatility in currencies, bonds and equities have surged as those markets attempt to react to every rumor and tweet out of Washington and Trump Tower.

The Big Four Economic Indicators: A December Bounce in Industrial Production

Today's report on Industrial Production for December shows a month-over-month increase of 0.8 percent (0.83 percent to two decimals), which was above the consensus of a 0.6 percent increase. However, the previous month was revised downward from -0.4 percent to -0.7 percent. Industrial Production peaked in November 2014, only one point higher than its pre-recession peak in November 2007. It has contracted for 17 of the last 25 months. The year-over-year change is 0.5 percent, the first YoY increase after 15 consecutive months of YoY contraction.

Consumer Price Index: Headline CPI Rises Above 2%

The Bureau of Labor Statistics released the December Consumer Price Index data this morning. The year-over-year non-seasonally adjusted Headline CPI came in at 2.07%, up from 1.69% the previous month. Year-over-year Core CPI (ex Food and Energy) came in at 2.20%, up from the previous month's 2.11%. This is the first month of Headline CPI above 2% since June 2014, 30 months ago.

Weekly Gasoline Price Update: Regular and Premium Down Three Cents

It's time again for our weekly gasoline update based on data from the Energy Information Administration (EIA). The price of Regular and Premium are both down three cents from last week. According to, Hawaii has the highest average price for Regular at $3.03 and San Francisco is the most expensive city, averaging $2.96. South Carolina has the cheapest at $2.10. The WTIC end of day spot price closed at 52.48, up 0.52 from this time last week.

The Latest News in Alternative Investing

Using alternative investments allows investors to hedge against changes in the market and still see positive returns. Commodity ETFs and real estate investments offer investors options outside of traditionally “safe” investments. The rise of popularity in alternative investments has led to the acquisition of many smaller, specialized firms with specific industry knowledge that claim to understand how to best profit from the many asset classes.

"Ain't No Mountain High Enough"

Who can forget the harrowing start to the year that saw markets plunge 13% in the first 20 days of January? China debt fears, global deflation, secular stagnation worries, the Brexit and the United States election surprises were the dominant headlines of 2016.

On My Radar: Keep One Eye On Bonds. Keep the Other on Inflation

I hate making predictions. I got the tech wreak and sub-prime right, but was far too early on those predictions.

Will Q4 Earnings Confirm Recent Economic Strength?

My scorecard for earnings season will look for the following company characteristics: Confidence. I expect most to have a murky outlook, with no reason to set the future bar very high. Important trade relationships – imports or exports. Comments on these fears may create some buying opportunities. Concern about a stronger dollar. Everyone is teed up to watch for this, and we should as well.

New Research on Forecasting Returns with the CAPE Ratio

I developed a methodology that uses valuations based on a 35-year moving-average of the CAPE ratio instead of its long-term mean. It predicts a 10-year annualized real return of 5.8%, similar to the long-term market trend value of 5.4%.

Forecasting with Friends

I gave you my own thoughts last week (see “Skeptically Optimistic”). Today we’ll review several other forecasts from people who deserve your attention. Of necessity, I must leave out some good ones, but I think the ones I cover will give you plenty of useful information.