U.S. house prices were nearly flat in January, according to FHFA index. Year-over-year increase was 5.7% 

The Federal Reserve is playing with fire by lifting rates by Ambrose Evans-Pritchard

On the face of it, a 1% rate is risibly low a full eight years into the economic expansion. It is deeply negative in real terms. Savings are being whittled away.

Stephen Hawking points to artificial intelligence as a defining reason for needing stronger forms of globally enforced cooperation.

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• At its policy meeting on March 15, 2017, the Fed increased the benchmark interest rate, known as the federal funds rate, by 0.25%, or 25 basis points. The rate is now 0.75–1.00%, or 75–100 basis points. 

• The Producer Price Index for final demand increased 0.3% in February. Final demand prices rose 0.6% in January and 0.2% in December. In February, the final demand services index increased 0.4% and prices for final demand goods moved up 0.3%. 

• Australian Bureau of Meteorology said that there was an "increased chance" of El Niño occurring this year, with six of the eight prediction models suggesting thresholds may be reached by July. 

• (Economist) The number of American oil rigs has risen to 617 from 386 a year ago. 

•  One in four Americans believe we are living in the end times.

Baltic Exchange Dry Index (BDI) is up-to-date

Chinese Scientists Genetically Modify Human Embryos


and so it begins..

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• U.S. Total non-farm payroll employment increased by 235,000 in February, and the unemployment rate was little changed at 4.7 percent, the U.S. Bureau of Labor Statistics reported. Employment gains occurred in construction, private educational services, manufacturing, health care, and mining. (Thx Obama)

• The Eurozone base interest rate, namely the interest rate on main refinancing operations, will remain at 0.00 percent, with the marginal lending rate and deposit rate remaining at 0.25 percent and minus 0.40 percent respectively. 

• Brazil's economy shrank by 3.6% in 2016. This follows a contraction of 3.8% in 2015. Making this the most severe recession on record. But things are now looking up...

•  “If you're looking to the Congressional Budget Office for accuracy, you're looking in the wrong place." – so declares Sean Spicer. Forestalling a report that isn’t favorable to Republicans, Trump and R’s are actively looking to delegitimize the agency’s credibility. 

•  Scott Pruitt, head of EPA: Carbon dioxide not a contributor to climate change… 

•  Snap, Inc. went public and sold stock to “investors” without voting rights. Yup, Snap just issued stock that does not vote. Question: is stock that cannot vote - still stock? (Interesting times indeed!)

• U.S. Productivity increased 1.3 percent in the non-farm business sector in the fourth quarter of 2016; unit labor costs increased 1.7 percent (seasonally adjusted annual rates). In manufacturing, productivity increased 2.0 percent and unit labor costs increased 2.4 percent. 

• (Reuters) China's major corn producing regions are urging Beijing to give more financial aid to farmers and accelerate efforts to boost demand for grain as farmers struggle with low prices and nascent steps to get rid of its ageing, bulging stockpiles stumble.

•  (World Gold council) Indian Gold demand will recover from las year: Last year Indian demand fell to it is lowest level since 2009, rocked by a barrage of policy initiatives and a soaring gold price. But the outlook is better – we expect Indian demand to be between 650-750t in 2017. 

•  Signs of slowdown grow as Britain gears up to trigger EU divorce. Separate data from market research firm Kantar Worldpanel showed the inflation rate for groceries doubling in the space of a month as prices for food staples including butter, tea and fish all rose.

• The world has lost more than 1,000 rhinos per year for the past 3 years in South Africa. No end in sight to poaching... 

• Amazon told USA TODAY that Echo’s design precludes snooping. The Echo keep less than 60 seconds of recorded sound in its storage buffer. As new sound is recorded, the old is erased. So there's no audio record made of what went on in a room where an Echo sits. 

•  The Economist explains: Why diamond production may be about to peak 

• According to Swiss Re, low interest rates have cost U.S. Savers about $1 trillion from 2008 to 2015.

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• Fed's Yellen: Immigration contributes a lot to labor force growth, U.S. economic growth potential looks a bit less than 2%. 

 

• The EU Parliament wants the European Commission to force the US to either institute full reciprocity on visa policy or face a temporary suspension of visa-free access. 

 

• The NAR said its pending home sales index, based on contracts signed last month, fell 2.8 percent to 106.4. The NAR reported last week that U.S. existing home sales hit a 10-year high in January as buyers shrugged off higher prices and mortgage rates. Buyers are easily outnumbering sellers in several metro areas, "Most notably in the West, it's not uncommon to see a home come off the market within a month". 

 

• The White House is seeking to slash the National Oceanic and Atmospheric Administration’s budget by 17 percent, imposing big cuts to research and satellite programs, according to a memo obtained by The Washington Post. 

 

• Today 2/28/17, we have rumors floating around that the Trump admin may raise the ethanol blend cap from 10% to 15% - White house denies, so far. Corn and Soy Oil are therefore a bit more volatile. 

 

• Fed's Williams: Right now, interest rates are abnormally low. Says Fed needs to get interest rates to normal.. 

 

• Irish whiskey volumes have grown a staggering 131% in the last 10 years, beating a 13% rise for scotch and 56% for bourbon 

 

•  Oh great, more military spending, less on environment. Which will probably mean we’ll need more and more military spending ... Trump "intends" to propose a fed budget that dramatically increases defense spending by $54 billion while cutting virtually all other federal agencies by the same amount… 

•  (Reuters)The head of the U.S. Federal Communications Commission does not expect to review AT&T Inc's (T) planned $85.4 billion acquisition of Time Warner Inc (TWX), a spokesman for the agency said on Monday. 

• Trump’s administration is mulling plans to circumvent the World Trade Organization. Incoming administration officials asked the U.S. Trade Representative’s office to find ways to bypass WTO rules on dispute resolution to levy unilateral U.S. sanctions against other countries such as China, sources tell the Financial Times.

• More than 7,000 people have died in the war on drugs since Philippine President Rodrigo Duterte took office. A politician who has investigated the leader fears for her life and has since been arrested. Her most important witness, a former hitman, is living in hiding in the rainforest.

• More than 120 retired generals and admirals have signed a letter warning the White House against making significant cuts to diplomacy and development.

White House proposes steep budget cut to leading climate science agency
"If we don't look at it, the problem doesn't exist!"

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• Lots of talk (“so-called forecasts”), that the Dow/S&P is about to double in the first 4 years of the Trump admin. That would be a return of some 18% per year – undeniably “tremendous”!!

• Now the biggest single factor in the long-term direction of stocks is earnings “growth”. Currently the S&P 500 (you can trade it using SPY) is earning, per Barron’s Market Lab, $89.09, and $998 for the DJI. So, for the S&P to double, earnings would probably have to be somewhere close to $178 for the S&P and $2000 for the DJI in four years.
• Optimists see Trumps tax cuts adding about $13, and deregulation $7, for a total of $109 for the S&P. The difference would therefore have to come from somewhere else, perhaps accelerated GDP growth of well over 4%, which would probably result in higher interest rates (the Fed is planning to raise rates already) - creating competition. You can peruse the implications here.
• However, as you can see in the table, if rates should stay the same and earnings be $2000, the Dow could / should be trading at $84000 – now that would be a Trump rally, “tremendous indeed”!! And  that without considering the dividends -WOW!!

• Meanwhile, Trump’s administration will project gross domestic product growth of 3 to 3.5 % per year when hyping the economic impacts of proposed legislation. This could be a tad difficult to achieve according independent and nonpartisan agencies as well as private-sector economic forecasters -- some are calling it “Argentine-style data manipulation” ...

• In his annual letter to Berkshire Hathaway shareholders, the Oracle of Omaha said: “When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients.
  “Both large and small investors should stick with low-cost index funds.”

• U.S. Agriculture Department data show that Turkey has become the biggest supplier of organic corn and soybeans to the U.S. last year. In 2016 it shipped 400,000 metric tons of organic corn, nearly quadrupling its prior-year total, while its soybean shipments climbed 8x, Other key suppliers to U.S. organic-food companies are now Ukraine, Argentina, Romania and India. This is prompted by U.S. consumers' demanding organic products - produced without synthetic pesticides or genetically engineered seeds.

• 3,000 Scientists Have Asked for Help Running for Office to Oppose Trump

• Mexico says it has no intention of accepting new “unilateral” immigration rules revealed this week by the Trump administration that include plans to deport non-Mexicans to Mexico.

• (Reuters) Amid trade tensions with the United States, Mexico plans to send a delegation next month to visit Brazilian corn, beef, chicken and soy producers as an alternative to U.S. suppliers, its representative in Brazil said on Friday.
• Mexican chargé d'affaires Eleazar Velasco said Brazil is uniquely positioned to expand agricultural commodity sales to Mexico if trade with the United States is disrupted because it is closer than other potential suppliers like Australia.
• "The United States unilaterally wants to change the established rules of the game," Velasco told Reuters. "This will evidently lead us to rebalance our trade relations."

• Germany’s environment minister, announced that the government would be instituting a ban on meat at official functions held by the Ministry of Environment, citing the environmental burden of meat production as the reason for the ban.

Daily charts are up-to-date

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• Whatever might be going on in the White House, investors are keeping their faith in Trump -- so far. 

•  Mexican newspapers report Mexican Parliament anticipates to shift corn/soy imports to South America and were ready to source soybeans/corn from Brazil/Argentina.

•  German Consumer Price Index rose 1.9% 
• YoY German GDP came in at a seasonally adjusted plus 0.4% in Q4. 
• YoY the growth rate for 2016 was 1.9%, which was the strongest rate for half a decade. 

• (Reuters) U.S. President Donald Trump's vow to roll back government regulations at least 75 percent is causing anxiety for some pharmaceutical executives that a less robust Food and Drug Administration would make it harder to secure insurance coverage for pricey new medicines… "People often argue that the FDA is too restrictive," said Roger Perlmutter, head of research and development at Merck & Co Inc (MRK.N). "We have the sense that the balance is pretty right ... you have to have a well-characterized risk/benefit profile." 

• Solar now provides twice as many jobs as the coal industry: The solar industry is adding jobs much faster than the overall economy, but still makes up just over 1% of the country's total power supply. Clearly, there's room for growth.

•  House Repubs voted to eliminate the only federal agency that makes sure voting machines can’t be hacked

• Republicans terminate the EPA https://www.congress.gov/bill/115th-congress/house-bill/861/text

•  (Fortune) In a new interview with Quartz, Microsoft founder Bill Gates makes a rather stunning argument—that robots who replace human workers should incur taxes equivalent to that worker’s income taxes. “Right now, the human worker who does, say, $50,000 worth of work in a factory, that income is taxed . . . If a robot comes in to do the same thing, you’d think that we’d tax the robot at a similar level.”

• Catherine Rampell: National Endowment for the Arts budget, which Trump wants to eliminate: $148m Estimated annual cost (to NYC) to protect Trump Tower: $183m 

• The 10 biggest defense budgets in 2016 added to over $1.1 trillion. The U.S lead the way with $605 billion, followed by China with $145 billion.

•  U.S. annual inflation rate rose to 2.5% in January, from 2.1% in December.