Rover's Weekly Market Brief — 2/16/2018

Economy

Rising gasoline prices helped boost the Consumer Price Index (CPI) to a higher than expected +0.5% (+2.1% Y/Y) in January with core CPI,   which excludes food and energy,   up +0.3% (+1.8% Y/Y). In the energy component, prices increased for fuel oil (+9.5%) and gasoline (+5.7%), with minor decreases in the prices of electricity (-0.2%) and piped gas (-2.6%). Increases in costs for shelter (+0.2%), apparel (+1.7%), medical care services (+0.6%), car insurance (+1.3%), and used vehicles (+0.4%) helped raise core CPI for the month, with reductions from drops in airline fares (-0.6%) and new vehicles (-0.1%). On a yearly basis, prices rose the most in the West at +3.1%, with prices in the South increasing +1.8%, and the Midwest and Northeast both seeing +1.6% increases. Prices rose more in larger cities (>2.5 million) at +2.2% for the year compared to a +1.7% increase for smaller cities.

A +7.1% increase in gasoline prices accounted for nearly half of January’s Producer Price Index (PPI) gain of +0.4% (+2.7% Y/Y), recovering after a flat December. Final demand service prices increased +0.3% after a -0.1% drop the previous month, with increases for hospital outpatient care (+1.0%), retail trade services (+0.9%), and hospital inpatient care (+0.3%). In addition to the increase in gasoline prices, final demand goods prices increased for residential electric power (+1.3%), diesel fuel (5.1%), and vegetables (+3.4%), while prices fell for residential natural gas (-2.7%), construction equipment (-2.1%), and eggs (-36.7%). Core PPI, which excludes services as well as food and energy, increased +0.4% (+2.5% Y/Y), accelerating from Demember’s +0.1% increase.

In their largest decline since February 2017, retail sales unexpectedly fell -0.3% (+3.6% Y/Y) in January and December’s sales figures were revised downward to 0.0% from +0.4%. Sales dropped for building supplies (-2.4%, +3.6% Y/Y), vehicles (-1.3%, +1.6% Y/Y), personal care products (-1.2%, +0.5% Y/Y), and sporting/hobby supplies (-0.8%, -7.1% Y/Y). Sales increased at miscellaneous store retailers (+1.6%, +4.6% Y/Y), gasoline stations (+1.6%, +9.0% Y/Y), clothing stores (+1.2%, +1.9% Y/Y), and department stores (+0.8%, +0.4% Y/Y). Nonstore (e.g. online) sales were flat in January, but increased +10.2% for the year.

Upcoming Economic Reports:

Wednesday February 21 – Federal Open Market Committee (FOMC) Minutes

Wednesday February 21 – Existing Home Sales

Earnings Calendar:

 

Monday	Tuesday	Wednesday	Thursday	Friday
Reckitt Benckiser Group (RBGLY)	Walmart (WMT)	Wal-Mart De Mexico (WMMVY)	RELX (RENX)	Berkshire Hathaway (BRK.B)
Central Japan Railway (CJPRY)	HSBC Holdings (HSBC)	Energy Transfer Partners (ETP)	Glencore (GLNCY)	Basf (BASFY)