Article 5

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Market volume picked up some around 1:30 and remained in the low status for the session's afternoon. The declines across the board were deep enough to wonder what Mr. Market has in store for tomorrow, but not deep enough to be really worried say some investors.

By 4 pm trader's who bought in on yesterdays session lows are now wondering if they did the right thing. Is today going to be the wake-up call? But is it saying to buy or sell?

Econintersect: Week 27 of 2014 shows same week total rail traffic (from same week one year ago) grew according to the Association of American Railroads (AAR) traffic data. Rail growth this week was particularily strong reversing the last several weeks of softer growth.

Oil prices rose during the second quarter. West Texas Intermediate (WTI) crude, the U.S. benchmark, increased $4 from the first quarter to average $102.66 per barrel. This is $8 higher than last year. Brent, the global benchmark, increased slightly to $109.13. This is up $6 from last year.

Midday markets recovered fractionally from the morning opening salvo but remains down over a half point and the DOW off triple digits.

By noon the volume was falling to anemic levels, averages were trading sideways and investors are asking what the heck is going on? Traders are becoming increasing concerned about a possible correction in the near future.

The headlines say May 2014 wholesale sales improved and inventories grew - and our analysis essentially disagrees that sales improved. This data series is very noisy, and had been on a roller coaster of one good month / one bad month. Because of this noise, the best way to look at this series may be the three month rolling averages for unadjusted sales which continued to accelerate this month.

The premarket numbers were down over one percent this morning on fears of Portuguese banks being in trouble. Market opened lower with the SP500 gaping down to 1.1% on moderate to heavy volume. By 10 am the markets were recovering fractionally, but still at -0.75% as worried investors gradually dipped their toes back into the murky market waters.

CoreLogic today released its 2014 storm surge analysis featuring estimates on both the number and reconstruction value of single-family homes exposed to hurricane-driven storm surge risk within the United States. According to the findings, more than 6.5 million homes along the U.S. Atlantic and Gulf coasts are at risk of storm surge inundation, representing nearly $1.5 trillion in total potential reconstruction costs. More than $986 billion of that risk is concentrated within 15 major metro areas. This exposure could constitute significant risk for homeowners and financial services companies, as many at-risk homes lack protection from insurance coverage.

The market was expecting the weekly initial unemployment claims at 305,000 to 321,000 (consensus 315,000) vs the 304,000 reported. The more important (because of the volatility in the weekly reported claims and seasonality errors in adjusting the data) 4 week moving averagemoved from 315,000 (reported last week as 315,000) to 311,500.

"NATO's Article 5 offers little protection against Vladimir Putin's Russia," Iulian Fota, Romania's presidential national security adviser, told me on a recent visit to Bucharest. "Article 5 protects Romania and other Eastern European countries against a military invasion. But it does not protect them against subversion," that is, intelligence activities, the running of criminal networks, the buying-up of banks and other strategic assets, and indirect control of media organs to undermine public opinion. Moreover, Article 5 does not protect Eastern Europe against reliance on Russian energy. As Romanian President Traian Basescu told me, Romania is a somewhat energy-rich island surrounded by a Gazprom empire.

Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.

Even Angela Merkel now seems to agree that austerity has run its course. When Italy's prime minister, Matteo Renzi, together with other European leaders, led a fresh charge against the ill-fated policy after the European elections, Berlin caved in surprisingly quickly.

The solar power industry continued to sparkle in 2013.

That's according to figures from the Renewables 2014 Global Status Report, recently released by REN21, the Renewable Energy Policy Network for the 21st Century.

In a 2010 Bloomberg Television interview, Alan Greenspan said,

The U.S. trade deficit fell to $44.4 billion in May, the U.S. Census Bureau and the U.S. Bureau of Economic Analysis reported last Thursday. The deficit was a 5.5% decrease from $47.0 billion in April. Total May exports were $195.5 billion, up $2.0 billion from $193.5 billion in April, while imports were $239.8 billion, down $0.7 billion from $240.5 billion in April.

Germany trashed Brazil 7-1 at the Estadio Mineirao in Belo Horizonte to reach the World Cup final. Nobody could have predicted that devastating scoreline, leaving Brazilian players and fans devasted. 

Amid the sluggish recovery, there has been a lot of talk about ways to cut government spending. Yet sound government lending and subsidies can have lasting benefits for the economy as a whole for many years to come. Government programs that invest in communities, especially in areas with low-income borrowers, can help spur growth and earn a positive return on their investments.

The pace of turnover among the nation's chief executive officers rose in June, as 103 CEOs announced their departures during the month. The June total was up 5 percent from the 98 CEO departures recorded in May. It was 9.6 percent higher than the 94 CEO changes announced the same month a year ago.

by Mike Bryan - Federal Reserve Bank of Atlanta

Let me make two claims that I believe are, separately, uncontroversial among economists. Jointly, however, I think they create an incongruity for how we think about and measure inflation. The first claim is that over time, inflation is a monetary phenomenon. It is caused by too much money chasing a limited number of things to buy with that money. As such, the control of inflation is rightfully the responsibility of the institution that has monopoly control over the supply of money - the central bank.

Econintersect: The 18 June 2014 meeting statement presented the actions taken. This post covers the economic discussion during this FOMC meeting between the members. The Fed's Balance Sheet (which we report on weekly) continues to grow at record levels (albeit now at a slower pace). 

This was the third meeting chaired by Janet Yellen. The meeting minutes have a slightly different feel with more convergence of views and events. The more interesting points are highlighted in bold below.

One of the more interesting meeting minute statements:

The concept of color, light, design, and layout having an actual effect on patient health and well-being is not a new one.