So the March meeting of the F_O_M_C and whether they give some guidance that loosens their flexibility allowing for a possible June rate hike will be very interesting to me any way as I believe the F_E_D is moving to normalize policy for reasons "Other" than the economy is able to stand on its own two feet. While I agree that the economy is not that bad that it justifies extreme emergency measures like ZIRP, I do have my suspicions as to why the F_E_D is moving toward policy or more policy normalization, something we first noticed the very day they launched QE3 as they began to lay the ground work for an exit from QE.
This morning's data...
| Prior | Consensus | Consensus Range | Actual | |
| Business Barometer Index - Level | 59.4 | 58.7 | 55.5 to 59.6 | 45.8 |
The Chicago PMI for February plunged 13.6 points to a sub-50 level of 45.8, the lowest level since July 2009. The report attributes the plunge to bad weather and effects tied to the West Coast port slowdown. New orders, production and employment all posted double-digit declines. New Orders saw the largest monthly decline ever recorded!
There's not much in the way of silver lining in the Sub-indices either...
- Prices Paid rose compared to last month
- New Orders fell compared to last month
- Employment fell compared to last month
- Inventory rose compared to last month
- Supplier Deliveries rose compared to last month
- Production fell compared to last month
- Order Backlogs fell compared to last month
- Business activity has been positive for 11 months over the past year.
The bottom line thus far on why this report came in so bad is tentatively the weather/snow and the West Coast Port log-jam, although I say tentatively as we'll have to wait until March to see if that's truly the case. January's brief respite of economic improvement following 3 consecutive months of declines may just be a seasonally adjusted blip.
Next Consumer Sentiment came in...
| Released On 2/27/2015 10:00:00 AM For Feb, 2015 | ||||||||||
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And Pending Home Sales...
| Prior | Consensus | Consensus Range | Actual | |
| Pending Home Sales Index - Level | 100.7 | 104.2 | ||
| Pending Home Sales Index - M/M | -3.7 % | 2.0 % | 0.0 % to 6.0 % | 1.7 % |
This is a modest rise at 1.7 compared to December's -3.7% print, but a miss of consensus making this the 5th consecutive miss for Pending Home Sales.
Monday's existing home sales report was weak in contrast to price reports from Case-Shiller and FHFA which showed strength, so a bit of mixed data. NAR blames, believe it or not, a LACK of inventory!
In normal times, one would expect the market to be shooting up over a 1% move today just because in this case, bad news is good news for the fans of accommodative policy, but somehow I suspect that no matter what the data is, the F_E_D is going to do what they are going to do. This is the most powerful organization in the worked. For you small business owners, if you were making a change in your business, would you prepare for it well ahead of time or wait month to month to decide when to make such a change, like say expanding your business or maybe even consolidating it? How much more do you suppose the most powerful organization in the world pre-plan?
On a final note, NY D_E_D president William Dudley, Cleveland F_E_D Pres. Lorreta Mester and F_E_D Vice Chair Stanley Fischer join the BOJ's Deputy Governor, Hiroshi Nakaso and the ECB's Victor Constancio in a Monetary Policy forum in NY today.
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