Subpoena For Fed Chairman Ben Bernanke

Daily Market Commentary for March 13, 2012

The Federal Reserve is fighting a subpoena for Fed chairman Ben Bernanke to testify in a civil lawsuit challenging Bank of America's takeover of Merrill Lynch & Co in 2008 (read more at Millennium-Traders.Com)
http://www.millennium-traders.com/ne...ommentary.aspx

Commerce Department on Tuesday reported that retail sales climbed the fastest in five months in February, as rising gasoline prices weren’t enough to choke off U.S. consumers’ demand for cars, clothing and other goods. The report said sales rose a seasonally adjusted 1.1% to $407.8 billion last month, with January’s retail sales revised higher to show a 0.6% advance instead of the 0.4% initially reported. December sales were upwardly revised to show a 0.3% gain instead of a previously reported flat performance and excluding autos, sales for February climbed 0.9%. February’s sales climbed a strong but less impressive 0.6%, excluding autos as well as sales at gasoline stations. Monthly gasoline sales jumped 3.3%, the best advance since March, with average gas prices 20 cents a gallon higher at the pump than in January, gasoline stations had a banner month. The Energy Information Administration is expected to knock off $629 from the average natural-gas heating bill this winter, being a reason why consumers may have continued to spend despite the increased pressure at the pump was the unusually warm weather. For the second consecutive month, building materials, garden equipment and supplies dealers saw a 1.4% gain. Sales at clothing and clothing accessory stores climbed 1.8% to a 15-month high as Americans bought spring clothes early. Sales at dealers of motor vehicles and parts bounced back from a January decline to advance 1.6%. February sales data showed furniture and home-furnishing stores with a 1.2% drop, the worst month since April 2011, while department stores’ sales rose 1.5%, the best monthly gain since November 2010. Compared to February 2010, retail sales overall rose 6.5% and excluding autos and gas, retail sales were 5.8% stronger. Retail sales aren’t adjusted for price, so with inflation running at around 3%, volumes are up about 3.5% compared to the same month of the prior year.

In January, business inventories climbed as car dealers correctly anticipated a strong pickup in demand, as reported by the Commerce Department on Tuesday. Inventories rose a seasonally adjusted 0.7% to $1.57 trillion, the largest increase since October. December’s inventories were revised higher to show a 0.6% increase from the 0.4% previously reported. The ratio of inventories to sales at the end of January remained at 1.27. The growth in January’s inventories was driven by a 2.6% surge in motor vehicle and parts stockpiles, which helped set the stage for the 1.6% gain in sales of cars and parts for February. Retail inventories grew 1.1%, but growth was 0.4% excluding autos. Rising inventories are usually viewed as a good sign for the economy, as they suggest companies are stockpiling goods in anticipation of selling them at a future date.

U.S. Trade Representative Ron Kirk announced Tuesday that the U.S. has requested talks with China at the World Trade Organization about China's export restrictions on certain rare-earth minerals. The talks are the first step in a WTO dispute settlement process and if the matter is not resolved in 60 days, the U.S. can ask the WTO to set up a dispute settlement panel. Additionally, the European Union and Japan asked for talks with China on the rare minerals, tungsten and molybdenum. "China continues to make its export restrains more restrictive, resulting in massive distortions and harmful disruptions in supply chains for these minerals throughout the global marketplace," Kirk said in a statement. China lost a similar WTO case on its export limits on magnesium and zinc, in January. The Obama administration has recently taken a tougher stance with China on economic issues.

The Labor Department on Tuesday reported job openings at U.S. workplaces declined to 3.46 million in January from 3.54 million in December. Job openings rose 21% compared with the prior year with private openings having increased 23% to 3.11 million and government openings rose to 352,000 from 325,000. When the recession began in December 2007, there were nearly 4.3 million jobs open. In January, with nearly 12.76 million unemployed people, there were nearly 3.7 potential job seekers for each opening, roughly the same as in December. In January of 2011, there were about 13.92 million unemployed people - about 4.9 potential seekers per opening. The number of separations, such as quits and layoffs, fell slightly in January to 3.94 million from 4.02 million in December. Total number of hires decreased to 4.16 million from 4.19 million.

The following is the text of the announcement made by the Federal Open Market Committee Tuesday: “Information received since the Federal Open Market Committee met in January suggests that the economy has been expanding moderately. Labor market conditions have improved further; the unemployment rate has declined notably in recent months but remains elevated. Household spending and business fixed investment have continued to advance. The housing sector remains depressed. Inflation has been subdued in recent months, although prices of crude oil and gasoline have increased lately. Longer-term inflation expectations have remained stable. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects moderate economic growth over coming quarters and consequently anticipates that the unemployment rate will decline gradually toward levels that the Committee judges to be consistent with its dual mandate. Strains in global financial markets have eased, though they continue to pose significant downside risks to the economic outlook. The recent increase in oil and gasoline prices will push up inflation temporarily, but the Committee anticipates that subsequently inflation will run at or below the rate that it judges most consistent with its dual mandate. To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014. The Committee also decided to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability. Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Sarah Bloom Raskin; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who does not anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate through late 2014.” The following is the text of the announcement made by the Federal Open Market Committee Tuesday: “Information received since the Federal Open Market Committee met in January suggests that the economy has been expanding moderately. Labor market conditions have improved further; the unemployment rate has declined notably in recent months but remains elevated. Household spending and business fixed investment have continued to advance. The housing sector remains depressed. Inflation has been subdued in recent months, although prices of crude oil and gasoline have increased lately. Longer-term inflation expectations have remained stable. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects moderate economic growth over coming quarters and consequently anticipates that the unemployment rate will decline gradually toward levels that the Committee judges to be consistent with its dual mandate. Strains in global financial markets have eased, though they continue to pose significant downside risks to the economic outlook. The recent increase in oil and gasoline prices will push up inflation temporarily, but the Committee anticipates that subsequently inflation will run at or below the rate that it judges most consistent with its dual mandate. To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014. The Committee also decided to continue its program to extend the average maturity of its holdings of securities as announced in September. The Committee is maintaining its existing policies of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate to promote a stronger economic recovery in a context of price stability. Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Sarah Bloom Raskin; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who does not anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate through late 2014.”


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