The Kirk Report

Energy Spring

With the start of Spring, isn't it interesting to see energy spring from its recent consolidation zone. Of course, this is not just a seasonal blip. Anyone that has noticed the relative strength in the refiners (see WNR, TSO, GLP, HOC) and/or has monitored the crack spread knows that gasoline prices are headed substantially higher in the weeks ahead no matter what is going on with Iran.

What will higher gas prices mean to the consumer and the economy? Like usual, expect the bulls to stand by the assumption that it won't hurt. Just add it to the list of other problems like the recession in the housing market, subprime meltdown, inflation/stagflation, and whatever else you can imagine.

The Fed Minutes

While investors digest the minutes for the Fed's last meeting, it is clear the initial take is that higher interest rates are coming, but the Fed doesn't expect the economy to go down the toilet (i.e. stable prices & stable growth). What a shocker. So, how long will this higher-rate cycle continue? How about for another year!

The Pressures of Inflation

Leave it to Greenspan to find a way to take a half-step toward dropping the "measured pace" language without doing the dirty deed completely. As you probably already know, Greenspan & Co. took the next best step by saying that "pressures on inflation have picked up recently." You think so Alan? Welcome to the party my friend!

As an astute observer of the obvious, Greenspan's acumen is about a sharp as butter knife as he continues to play CYOB (cover your own butt), when dealing with the economy. And, as we can see by the reaction so far, the market is starting to loose its patience with him. What they wanted to hear is that inflation remains under control, but I guess since it is no longer election season, he'll have to take the middle road. Buckle up, folks, it is going to be a very interesting final hour.

Weekly Leading Index

With the market not doing so well, you would also think that we'd see a confirmation in the economic numbers. Perhaps they're only lagging, but the ECRI's weekly leading index continues to trend higher, causing them at least to conclude that we'll see an acceleration in growth starting in the second half of 2005. READ

Economic Mumbo Jumbo

The ECRI's weekly leading index fell again last week, so it will be interesting to see how this week's data affects the trend. As many of you know, I have found ECRI's data to provide a reliable big picture view of how the economy is actually performing. I prefer that to the numerous economic mumbo jumbo and opinions we all have to sift through on a daily basis.

In addition, a nice member this morning drew my attention to an article about the ERCI which recently appeared in the Economist. It is a worthwhile read if you're interested.

Weekly Leading Index

After being in a negative trending state for several months, it is significant that the weekly leading index is turning upward once again. As many of you already know, this is one of my favorite economic indicators.

Is Offshoring Jobs Accelerating?

While one of the convictions of the bullish herd is that the employment picture is finally improving, I found a facinating new study that indicates the number of jobs sent overseas this year will actually double the estimates. If anything, it probably suggests I should remain bullish on outsourcing opportunities.

A Crude Move

It's funny to hear all of the chatter in the financial media about how the falling price of oil will foster in a new bull market. Wasn't it just a few weeks ago these same folks were talking about how oil doesn't matter? Nevertheless, with crude now in a giant tailspin, there are some savvy forecasters willing to step out and offer their view on where the price of oil is going to go next. READ

Why Did Greenspan Raise Rates?

Everyone seems to have an a different opinion about why the Fed raised rates yesterday. But, like John Crudele at the New York Post, I think the Fed raised rates primarily because it needs to get out of the corner it has painted itself into. When the economy slows down next year the Fed needs to have the flexibility to lower rates again. READ

Companies Do More With Less

One of the strongest arguments for the bull is that corporate America is now flushed with cash. The idea is that they will begin to spend it, particularly in the fourth quarter, as end-of-the-year budget flushing always helps technology companies. Nevertheless, on Page 1 of this morning's Wall Street Journal, there's an interesting article suggesting that the recovery in tech is already is losing steam. As Ken Brown and Scott Thurm write, this is "terrific news for corporate buyers but is holding back a major driver of overall economic growth." READ