Wikimedia CommonsMcPherson Square station, Metro, Washington, D.C.
Things were looking up today.
First, the scoreboard:
- Dow: 16,336.0 (+88.8, +0.5%)
- S&P 500: 1,870.5 (+11.7, +0.6%)
- Nasdaq: 4,327.3 (+47.3, +1.1%)
And now the top stories:
- Inflation remains cool. The consumer price index climbed by just 0.1% month-over-month in February, which was right in line with expectations. Year-over-year, prices were up 1.1%, but they decelerated from the 1.6% level in January.
- “The big story is the apparent slowdown in owners’ equivalent rent, which alone accounts for 31% of the index,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics. “OER rose 0.17% in February after a 0.20% gain in January, below the solid and accelerating prior trend of about 0.22-0.25% per month. But this is a technical effect; OER slows when utility costs rise. This effect will reverse in due course. The underlying pressure on rents is upwards.”
- Today’s housing data was mixed. Housing starts fell 0.2% to an annualized pace of 907,000 in February. Economists were looking for a 910,000 level. Building permits, however, jumped 7.7% to 1.01 million. This was much stronger than the 960,000 level expected.
- “Continued unseasonably severe weather, as well as a shortage of lots, kept housing starts subdued in February,” said Capital Economics’ Paul Diggle. “But the size of the shortfall between starts and household formation means that construction won’t stay this low for long.”
- Chris Rupkey, chief financial economist for Bank of Tokyo-Mitsubishi, tied it all together nicely: “No wonder the market stopped trading on the economic numbers with only modest changes reported for both CPI inflation and housing starts. No volatility. No reason for investors to change their views on the economic outlook… Our view is don’t wait for the economic recovery, it is here already.”
- Tesla was one of the big winners today. The stock jumped 2.6% after Goldman Sachs analyst Patrick Archambault raised his price target on the electric car-maker’s stock to $200 (which is actually much lower than where it trades today). His unconventional valuation model compared the work of Tesla CEO Elon Musk with the work of Steve Jobs, Henry Ford, and … the Maytag Repairman. From Archambault: “Keying off the history of the iPhone, (adjusting for the replacement cycle) would imply 3.1mn units by 2025 and a PV of $442 per share. The Model-T trajectory implies 3.3mn units and $478 per share; and the volume implied by a basket of transformative durable goods (laundry appliances/dishwashers/refrigerators) gets us 1.8mn units and $329 per share. However, this is offset by our base case (broadly unchanged from our previous forecast) and a downside case where Tesla’s present value is lower and hence we arrive at probability weighted share price of $180 for the auto business alone.”
Read more: http://www.businessinsider.com/closing-bell-march-18-2014-2014-3#ixzz2wLxWLG81