Economic Headlines 4/15/2008

If you weren't depressed enough writing out checks to the IRS today, these economic headlines should do the trick. In inflation news, US PPI rose by 1.1%, twice as much as expected. Core PPI, excluding food and energy, was up by a more modest .2, as expected. Luckily, I don't know anybody that actually buys food or consumes energy, so this was actually very good news. US foreclosure filings jumped 57% in March. According to Realty Trac, one in every 538 households was in some stage of foreclosure. Furthermore, about $460 billion of adjustable-rate loans are scheduled to reset this year. The Fed's interest rate cuts should help alleviate some of the pain, however, it is unclear how many of the adjustable loans had very low teaser rates that must adjust higher regardless of the Fed's cuts. On the corporate side, US corporate bankruptcies are accelerating as borrowers are having difficulty refinancing. The amount of distressed corporate bonds (those yielding more than 10%) jumped to $206 billion on April 11, 2008 from $4.4 billion in March of 2007. Remember March 2007? My nine month old could've crawled into a branch of Countrywide and received a $2 million, no money down, interest only loan. My baby knows those days are over. I'm pretty sure that's why she was crying yesterday.

In a rare bit of good news, J&J reported strong earnings. Revenues were up 8% and earnings increased 40% from a year ago. Also, the NY Fed Factory Index unexpectedly rose in April. Of course, futures are higher because everyone knows inflation and bankruptcies don't matter, but an incredibly volatile measure of manufacturing in NY does.