Free Markets, Free People

Dale Franks

Dale Franks’ QandO posts

Economic Statistics for 28 Feb 12

The following statistics were released today on the state of the US Economy:

Durable goods orders fell -4.0% for January, but were still 8.1% higher than a year ago. Ex-transportation, orders fell -2.3% for the month, but were up 5.7% over last year.

Home prices are still falling, as Case-Schiller reports prices dropped a steep -0.5% in December. That’s down -4.0% from last December.

Consumer confidence jumped more than 9 points to 70.8. That’s still below the February 2011 index of 72.0, however.

The Richmond Fed Manufacturing Index jumped sharply, up 8 points to 20, indicating a strong increase in manufacturing in the district. This continues the trend of strong regional manufacturing reports we’ve been seeing, but is at odds with the weak durable goods orders data also released this morning.

State Street’s Investor Confidence Index says institutional investors may be getting skittish, as the index dropped to a very weak 86.5 in February.

In retail sales, Redbook reports a strong 3.4% year-over-year increase in same store sales. Conversely, ICSC-Goldman’s same-store sales index fell a big -1.0% for the week, and the year-over-year 2.7% increase is the lowest in three months.

~
Dale Franks
Google+ Profile
Twitter Feed

Economic Statistics for 27 Feb 11

The following statistics were released today on the state of the US Economy:

The National Association of Realtors reports the Pending Home Sales Index rose nearly 2 points to 97.0. Year-on-year, pending sales were up 5.6%.

In the Dallas Fed’s manufacturing survey, the business activity index rose to 17.8, and the production index rose to 11.2.

~
Dale Franks
Google+ Profile
Twitter Feed

Observations: The QandO Podcast for 26 Feb 12

This week, Michael, and Dale talk about the president’s energy speech.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.

I guess I’m a VFR guy now

Yesterday, on my ride home from work, I decided to go by North County House of motorcycles. While there, I saw a brand new 2010 VFR1200F with the DCT automatic transmission on sale. They’d marked it down from $17,499 to $11,999. So, I traded my FJR1300AE for it on the spot.

DalesNewVFR

This is the only picture I have of it, a crappy cell phone pic the sales guy took just before I geared up and rode off on it. Here’s a professional picture of it:

2010_honda_vfr1200f-normal

I didn’t get saddlebags with it, but I put my tailbag on it as soon as I got home.

In short, the VFR1200F has a V-4 powerplant that puts out a peak of 170HP, and  weighs approximately 600 lbs—which is about 60 lbs less than my FJR, with 145 peak HP. The performance is noticeably superior. It’s shaft-driven, with the shaft putting power to the rear wheel via a single-sided swingarm. It does the 1/4 in 10.2 seconds @ 136MPH. That’s about as fast as I need.

I had a lots of work to do today, so I only got a chance to ride it to the store and back. So I’ve only got 20 miles on it. I can already tell that there’s a bit of a learning curve for it. 

The transmission has an interesting setup. Honda took the dual-clutch transmission they use in their Formula 1 Race cars and fitted it to this motorcycle.  So, there’s no clutch.  You can can either manually shift using buttons on the hand grip, or you can switch it to an automatic transmission with two modes.

In automatic, there’s a standard Drive mode that short-shifts and is very strongly biased to fuel economy…to the extent that you’re in 6th gear by 40mph. Not very exciting at all.  Like a moderately sporty scooter. Then there’s the Sport mode. It’s…the opposite. It shifts at redline. And, while I can’t really use the sport mode much during the break-in period, it is…exciting. Let’s just say you can leave rubber from the rear wheel…in 3rd gear, though with brand-new tires.

You don’t need to know how I know that. Or how badly my pants were soiled.

The main difference is that, unlike the FJR AE model, you don’t have to hit 2,500RPM on the tach before it starts to move. Touch the throttle and it goes. And I mean goes. The performance simply outclasses the FJR in every way…if you want it to.

It’s got lots less wind protection and general cushy comfort than the FJR had, though I knew that going into it. I miss the heated grips, too.

But it’s a stonkin’ great engine. Which is what I was looking for in this case.

My cunning plan is to have both a fancy man’s sporty bike like a VFR or K1300S, and a fancy man’s touring bike, either the R1200RT or K1600GT. So, I guess I’m halfway there.

Economic Statistics for 23 Feb 12

The following statistics were released today on the state of the US Economy:

Initial jobless claims remain unchanged at 351,000 for the latest week. The 4-week moving average fell 7,000 to 359,000. The recent decreases in claims indicate that a positive Employment Situation report for the month.

The Bloomberg Consumer Comfort Index rose to the highest reading since April, 2008, coming in at -38.4. Of, course, that’s still a minus sign in front of that number.

The FHFA reports house prices improved a bit in December, rising 0.7%. That’s still down -0.8% on a year-over-year basis.

The Kansas City Fed Manufacturing Index came in well above expectations, rising from 7 last month to 13 in February.

~
Dale Franks
Google+ Profile
Twitter Feed

Energy prices are rising, but energy demand is declining.

We’ve been seeing some better—if not good—economic numbers lately, mainly in employment, but also in industrial production, and general business conditions. One might be tempted to believe there’s at least a mild recovery on the way. That’d be nice.

But I’m…troubled. First, there’s this:

Oil prices aren’t high right now. In fact, they are unusually low. Gasoline prices would have to rise by another $0.65 to $0.75 per gallon from where they are now just to be “normal”. And, because gasoline prices are low right now, it is very likely that they are going to go up more—perhaps a lot more…

In terms of judging whether the price of WTI is high or low, here is the price that truly matters: 0.0602 ounces of gold per barrel (which can be written as Au0.0602/bbl). What this number means is that, right now, a barrel of WTI has the same market value as 0.0602 ounces of gold.

During the 493 months since January 1, 1971, the price of WTI has averaged Au0.0732/bbl…

At this point, we can be certain that, unless gold prices come down, gasoline prices are going to go up—by a lot.

In other words, there’s at least an 18% price differential in the current price of oil compared to gold, compared to the historical average.

Another important thing to remember is that the current rise in energy prices does NOT appear to be related to demand for energy. According to the US Energy Information Agency, the US demand for both electricity and petroleum has been decreasing.

Statistics for energy use usually run a couple of months behind, but the recent figures for petroleum are that from August, 2011 until November 11, Total Crude Oil and Petroleum Products consumed, in thousands of barrels per month, fell from 593,757 to 562,019. Figures for the same months in 2010 are 609,517 and 569,312, respectively.

Similarly, the most recent electrical generation numbers, in millions of kilowatt hours, show that from August to November, 2011, total electricity consumption fell from 370,073 to 273,053. Both figures are about 2 million kWh less than the same months in 2010.

Now, maybe in the last two months there’s been a huge turnaround in energy consumption, but please note that the year-on-year demand is declining, and in general, has been since 2006.

So, if energy use is declining, while prices are increasing, and supply remains steady—or is increasing—then we can reasonably look to monetary reasons for the price increase, as the economic fundamentals do not explain the price changes.

The implications for energy prices, therefore, are not good. Start saving those pennies, kids.

For all the good it’ll do you.

Oh, and by the way, if the economy is recovering, why is energy demand decreasing, rather than increasing? Just asking.

~
Dale Franks
Google+ Profile
Twitter Feed

Economic Statistics for 22 Feb 12

 

The following statistics were released today on the state of the US Economy:

ICSC-Goldman reports store sales were driven up 3% last week by Valentines Day. Sales are 3.2% higher than last year. Predictions for the whole month however, are still below trend. Redbook’s same-store sales rate, at only a 2.9% year-over-year increase last week, continues to hold almost at the lows for the year. Conversely, Redbook is signaling a strong 1.4% gain for the month, in opposition to the ICSC-Goldman forecast.

Existing home sales rose 4.3% in January to a 4.57 million annual rate. But the median price still fell sharply, down -4.6% to $154,700.

The Mortgage Bakers Association reports mortgage applications fell -4.5%, with purchase apps down -2.9%, and refinance apps down -4.8%.

~
Dale Franks
Google+ Profile
Twitter Feed

Economic Statistics for 21 Feb 12

This is a fairly thin week for economic data, and today only has one statistics release of any interest.

The Chicago Fed National Activity Index rose from 0.17 last month, to 0.22 this month. The 3 month moving average was up sharply, though, to 0.14 from last month’s -0.19. Production, consumption, and housing remain a drag on the economy, however.

~
Dale Franks
Google+ Profile
Twitter Feed

Observations: The QandO Podcast for 19 Feb 12

This week, Michael, and Dale talk about the controversy over the HHS contraception mandate.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2010, they can be accessed through the RSS Archive Feed.