Rover’s Weekly Market Brief — 1/12/2018

Economy

Wholesale inflation ^[6] fell -0.1% in December for the first decline since August 2016, bringing the yearly rate down to +2.6%, significantly increasing from 2016’s +1.7% yearly rate. Prices for goods were flat in December, but stripping out the volatile food (-0.7%) and energy (0.0%) components brought the inflation rate for goods to +0.2%. Service prices were down -0.2% primarily due to decreases for trade services (e.g. retailing) (-0.6%), and transportation and warehousing services (-0.4%). Excluding the trade, transportation and warehousing components raises service prices to a +0.1% gain for the month.

A +0.4% increase in the cost for shelter made up almost 80% of December’s +0.1% increase in consumer prices ^[7], with the core index up +0.3% to its largest increase since January 2017. On a yearly basis, consumer inflation was 2.1% (-0.1% M/M), and core consumer inflation was 1.8% (+0.1% M/M). The December report’s Year in Review for 2017 highlighted accelerating increases vs 2016 for the food index (+1.6% vs -0.2%), and the energy index (+6.9% vs +5.4%), and slowing increases for shelter (+1.8% vs +2.2%) and medical care (+1.8% vs +4.1%). The review also noted that the education index was up +2.0%, for the smallest yearly increase in the index’s history, and that there were consecutive yearly declines for airline fares (-4.0%), apparel (-1.6%), and household furnishings (-0.8%).

Retail sales ^[8] increased for the fourth month in a row with a +0.4% increase in December, and November sales were revised upward from a +0.8% to a +0.9% increase. December 2017 sales were up +5.4% vs December 2016, and total yearly sales for 2017 were up 4.2%, marking the largest increase in three years. Sales increased significantly for nonstore (i.e. online) retailers (+1.2%), building supplies (+1.2%), restaurants (+0.7%), and furniture stores (+0.6%), but dropped for “miscellaneous ^[9]” retailers (-2.9%), leisure activity retailers (-1.6%) and department stores (-1.1%). On a yearly basis, sales increased strongly for nonstore retailers (+12.7%), building supplies (+9.9%), and furniture stores (+9.9%).

Upcoming Economic Reports:

Wednesday January 17 – Industrial Production

Thursday January 18 – Housing Starts

Earnings Calendar:

 

Monday	Tuesday	Wednesday	Thursday	Friday
Straight Path Coms (STRP) [10]	UnitedHealth Group (UNH) [11]	Bank of America (BAC) [12]	IBM (IBM) [13]	Schlumberger (SLB) [14]
Nobility Homes (NOBH) [15]	Citigroup (C) [16]	Goldman Sachs Groiup (GS) [17]	Morgan Stanley (MS) [18]	Sun Trust Banks (STI) [19]