Retail sales, industrial production, capacity utilization, jobless claims, housing starts, and a fire update.
Waiting for the Other Shoe to Drop
With tariffs in play, there are multiple forces at work in the business world.
The first is the stock market, which is trying to guess what the effect of all the tariffs will be and reacting instantaneously to any news that presents itself. Hence, the S&P is down 14% from its high mark on February 19.
The second is driven by economics and waiting for the economic numbers to reflect what the stock market has already indicated, what it thinks to be the truth (for now).
And we are still waiting. For example…
Retail sales for March were higher than expected, up 1.4% for the month, vs. 1.2% expected and 0.2% the month before.
That’s everyone going out to buy stuff before the prices increase from tariffs.
Automobiles were a big part of that, and this was expected.
Industrial production was down 0.3% vs. expectations of dropping 0.1%. It was up last month by 0.8%. That’s a bigger drop than expected, but may indicate that factories are expecting people to spend less.
And capacity utilization decreased. That means that while manufacturers have the capacity to make stuff, that utilization actually decreased from the month before. That falls in step with the drop in industrial production.
And of course, confounding everyone, initial jobless claims came in less than expected at 215,000 vs. 225,000 expected. At some point, the government layoffs will start kicking in.
And housing starts did drop, but permits were up.
As Rafiki would say, “Very peculiar, don’t you think?”
The Fires
Briefly, not much has changed since our last report.
The fires were in early January and three months later, things have ground to not quite a halt, but a serious pause.
The main resource website page – recovery.lacounty.gov – has a number of FAQs. One is “What are the next steps after debris removal?”.
The answer was: “LA County is working to develop a checklist to streamline the rebuilding process.”
That must be some list if they are still working on it.
In another section, property owners who inquire about using the existing foundation are told it needs to be certified by a civil engineer and must meet current building codes. A link is provided for the civil engineers to access the necessary form. When you click on the link you get… Page Not Found.
Nice.
BTW, rebuilds, even like-for-like, will need to have solar panels and indoor fire sprinklers included, regardless of whether you had them before.
I’m thinking outdoor fire sprinklers might be more useful.
Looking for a New Bank?
An old client of mine went looking for a new bank; he was tired of the Big 4.
He Googled “Banks near me” and called each one.
His goal was to find a bank where a person answered the phone.
After a number of calls were answered by an automated service, one call was finally answered by a person in three rings. And that’s where he opened his account.
Honestly, it’s as good a criterion as any.
It’s a short Report this week, folks, but here is a takeaway or two for you.
Basically, the stock market knows there will be an impact from the tariffs, but what that impact is at this point is only a guess. However, it is guessing bad news and has priced in what effectively is a 14% decrease in value for many publicly held companies. If you are concerned for your retirement savings, just remember that your retirement savings is at least a 20-year play if you are 65 or younger. You have a lot of time to make up for losses you may experience.
Economists are waiting for reports to come out that have the tariffs as part of their numbers. That will give them some guidance as to what to expect, at which point the stock market will adjust accordingly.
That’s it for this week. There will be no Report next week, so don’t think because it hasn’t shown up in your inbox next Monday that your subscription was cancelled for non-payment.
Enjoy your Easter break, if you are taking one.
