Market Recon Friday

Good Morning,
                        Last day of the week, my good, and tired colleagues.  Took one in the teeth yesterday ??  Of course you did  That’s why we diversify when we allocate, right?  Well, we are at one of those points where we have to make an allocation decision.  Discipline is the key to victory, and sticking to a laid out plan one of the keys to discipline, but this one is not so easy. If you are a regular reader, then you are well aware that our physical gold allocation currently stands at 7.5% of the model portfolio, and it has ever since we took it there from 5%.  The yellow stuff was still below $1100 when we did that in late December.  In the late March re-allocation we made the stipulation that if Gold hit $1275 with momentum that we would add 2.5% to that allocation, making it 10%, and withdraw that portion from cash, dropping that number to 25%.  This price action is an obvious reaction to sudden dollar weakness via the Bank of Japan.
                      I am thinking of slowing down my trigger pull response to Gold hitting this level, and watching today’s action.  We got here far quicker than I imagined, and in normal markets, gold prices have struggled at this time of year.  For the last four years in a row, gold has come in during the second quarter.  While I really have little doubt about Gold’s long term value as a currency in the next global  monetary system, it’s value in the short term as a commodity may be difficult to determine, and I am going to drag my feet a little.  A better point of entry, or point of addition might be possible at a time other than this morning.
                        Ok, now dig in, gang.  Six and a half hours of everything you’ve got.  I ask for no more, but I also demand no less.  YOU demand no less.  The temptation to coast is there.  You all can see that finish line.  Maybe children depend on you, maybe it’s just for pride.  Maybe you can make a few extra bucks, and give some to someone less talented, but with still… very human needs.  Love each other.  When the guy next to you goofs off, be the example.  No go.  Everything for a thought out reason.  Friday.
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Spin the Wheel
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08:30 ET
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PCE Price Index (March):  Honestly, what is more important in the macro landscape at this point than is this single data-point as far as monetary policy goes ??  There are many factors that go into policy decisions, but inflation is the single item that could force the committee to either act, or not, even if it were against their will.  Now that energy prices have rebounded, the headline number is expected to move back into positive territory on a month over month basis.  That’s nice, but no sentient being watches the headline print for this one anyway.  It’s the core rate that printed at 0.1% m/m, and 1.7% y/y for February.  If the CPI is any indicator, core consumer level inflation did cool some for March, though in the case of the CPI that number cooled from a well above target y/y print of 2.3% to a still above target 2.2% y/y print.  This year over year number will be your impact number of the day.
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Personal Income & Consumer Spending (March):  Been a while since we’ve had a peanut butter jelly macro release, but that’s what these two add up to.  You really can’t just compare either one of these against it’s own history, but you must also compare them against each other.  Saving is good for the individual, but the velocity of money is good for the economy….. and therein lies the never ending conundrum.  Personal Income has been winning this battle on a regular basis in recent months.  Income grew 0.2% on a monthly basis in February, which equaled it’s worst m/m increase since last Summer.  Spending, however, as anybody who’s selling anything knows… has been a tough go.  Personal Spending has either printed at, or been revised to 0.1% m/m or less in five of the last six months.  Today, we expect to see slight positive movement on both fronts.  Maybe we get a 0.3% m/m tag for Income, and a 0.2% print for Spending.  Unless you see horrible numbers with horrible revisions in this space, the inflation prints will dominate media coverage.
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Employee Cost Index (Q1):  Like your job ??  Don’t be expensive, and that includes benefits.  Believe it or not, this item used to be closely tied to consumer level inflation, as it was thought that when it cost more to employ folks that prices in general would have to move in the same direction.  Well, the ECI has been hot… for a while.  The number grew 0.6% q/q in Q4, and that was the sixth quarter in seven that the cost of employing someone full-time grew by that much or more.  Obama-care is the likely culprit here, and is also the likely cause fore the national explosion of part-time labor with no employer sponsored benefits.  Maybe that’s why your Phillips Curve isn’t working… Hello !!!! Smack, smack.
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09:45 ET
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Chicago PMI (April): Here’s a completely unpredictable macro-economic data-point.  For seven consecutive months, this release has printed at least 3.1 away from consensus view.  Sometimes much better than expected, sometimes much worse, with no real ascertainable trend.  Today, the experts are looking for something close to 53.2.  Will they be close ??  Spin the wheel, take a chance.  Everyone walks away with a prize.
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10:00 ET
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U of M Consumer Sentiment (April {f}): Two weeks ago, this item hit the tape at 89.7, well below expectations.  How accurate was that?  Tough to say.  This one has been printing for months in the 91’s and 92’s, but the Conference Board’s similar data-point did disappoint on Tuesday.  The people who look into the crystal ball are thinking this one comes in above 90.  I’m skeptical.  We’ll see at 10am.  This one does impact the market.
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13:00 ET
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Baker Hughes Rig Count (Weekly): Last week, we saw the US Oil Rig Count drop from 351 to 343, while Canadian Rigs actually increased from 10 to 12.  It will be interesting to see if the strength in Crude that we’ve witnessed of late brought anyone back on line.  I have been of the belief that $48 WTI is where we’ll see some movement on this, but different producers have different price points.  Don’t be caught not paying attention at 1pm on a Friday, kids.
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Friday’s Earnings Highlights
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Before the Open: AMT (1.26), AON (1.33), CVX (-.16), CTB (.97), XOM (.31), TYC (.45)
After the Close: I don’t know, but it’s probably going to be disgusting.