1Q2013 Gross Domestic Product: Third (Final) Estimate

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The Bureau of Economic Analysis (BEA) estimated 1Q2013 growth in real U.S. gross domestic product (GDP) at a seasonally adjusted and annualized rate of +1.8 percent, 0.6 percentage point lower than the previous (preliminary) 1Q estimate. This growth rate was 1.4 percentage points higher than the 4Q2012 estimate. Personal consumption expenditures (PCE) and private domestic investment (PDI) added to 1Q growth, in that order; government consumption expenditures (GCE) and net exports (NetX) dragged on growth. For reasons explained below, this latest estimate is perhaps a truer reflection of the state of the economy than were the prior 1Q estimates. 

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“A significant revision to consumer spending on services was large enough to account for the entire downward adjustment in the headline number,” wrote the analysts at Consumer Metrics Institute (CMI). “That was accompanied by materially weaker exports and fixed investments. All of those revisions were enough to lower the BEA's bottom line "real final sales of domestic product" by over 0.5 percent.”

For this set of revisions, CMI observed, the BEA assumed annualized net aggregate inflation of 1.26 percent. In contrast, during the first quarter (i.e., from December to March) the seasonally adjusted CPI-U index published by the Bureau of Labor Statistics (BLS) rose by 2.10 percent (annualized), and the price index published by the Billion Prices Project (BPP) rose at an annualized rate of 5.35 percent. Had the CPI-U been used to convert the "nominal" GDP numbers into "real" numbers, the reported headline growth rate would have been a much more modest 0.96 percent. And if the BPP index (which, CMI argued, best reflects the experiences of the American consumer) had been used as the deflator, the economy would have been reported to have been contracting at a -2.30 percent annualized rate.

Finally, real per capita disposable income was revised lower once more. In this report real per capita disposable income contracted during the quarter at an astonishing -9.21 percent annualized rate.

CMI wrapped up their observations with the following:

At best this new release reports an economy with lackluster growth, created at great expense by a combination of unprecedented fiscal and monetary stimulus that have obviously progressed well past the point of diminishing returns. To be fair, many other national governments would be thrilled to be reporting a 1.78 percent annualized growth rate. But that observation in itself (without mentioning the plunging export numbers) also reflect global economic headwinds that do not bode well for sustaining even lackluster numbers over the balance of the year.

And we continue to note the one truly serious domestic issue within the data:

-- Real per capita disposable incomes took yet another hit. The astonishing annualized contraction of real per capita disposable income has now reached -9.21 percent -- dwarfing the -7.52 percent contraction rate recorded in 1Q2009 (the worst quarterly contraction recorded during the official duration of the "Great Recession").

From time to time we may quarrel with the quality of the BEA's deflators. And frankly we may even find that at face value the lackluster numbers amount to nothing more than a sham "recovery." But the most shocking part of this report is glaringly obvious from the real per capita disposable income numbers: all of the unprecedented fiscal and monetary stimulus has left American households materially worse off than they were two years ago.

Troubling indeed.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

June 2013 Macro Pulse -- A One-Month Hiatus

Please accept our apologies, but scheduling conflicts have forced us to temporarily suspend publishing this report. Our intention is to resume publication next month, so check back in mid-July. We intend to continue posting the blogs most closely tied to the forest products industry in the meantime, however.

The Macro Pulse blog is a commentary about recent economic developments affecting the forest products industry. The monthly Macro Pulse newsletter summarizes the previous 30 days of commentary available on this website.

May 2013 Consumer and Producer Price Indices (incl. Forest Products)

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The seasonally adjusted Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in May. Over the last 12 months, the all items index increased 1.4 percent before seasonal adjustment. The shelter index rose 0.3 percent and accounted for more than half of the seasonally adjusted all items increase in May. The energy index rose modestly, with the gasoline index flat but increases in the electricity and natural gas indexes accounting for the rise. The food index, however, turned down in May, with the food at home index falling 0.3 percent.

The seasonally adjusted Producer Price Index for finished goods (PPI) rose 0.5 percent in May. Prices for finished goods fell 0.7 percent in April and 0.6 percent in March. At the earlier stages of processing, prices received by manufacturers of intermediate goods declined 0.1 percent in May, and the crude goods index advanced 2.2 percent. On an unadjusted basis, prices for finished goods moved up 1.7 percent for the 12 months ended May 2013. 

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Forest products-related price indices appear to be in the process of “topping out” or are in decline. Pulp, Paper & Allied Products ticked up by just 0.1 percent between April and May. Wood Fiber costs were flat in May, while Lumber & Wood Products and Softwood Lumber both dropped (the latter quite significantly). 

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The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

May 2013 Industrial Production, Capacity Utilization and Capacity

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Industrial production (IP) was unchanged in May after having decreased 0.4 percent in April. In May, manufacturing production rose 0.1 percent after falling in each of the previous two months, and the output at mines increased 0.7 percent. The gains in manufacturing and mining were offset by a decrease of 1.8 percent in the output of utilities. At 98.7 percent of its 2007 average, total industrial production in May was 1.6 percent above its year-earlier level. Wood Products advanced by 1.1 percent while Paper was unchanged in May. 

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The rate of capacity utilization for total industry edged down 0.1 percentage point to 77.6 percent, a rate 0.2 percentage point below its level of a year earlier and 2.6 percentage points below its long-run (1972-2012) average. Like industrial production, Wood Products capacity utilization rose by 1.1 percent but was unchanged for Paper. 

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Capacity at the all-industries and manufacturing levels moved higher (both 0.2 percent). By contrast, both Wood Products and Paper contracted by 0.1 percent.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

May 2013 Employment Report

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According to the Bureau of Labor Statistics’s (BLS) establishment survey, non-farm payroll employment increased by 175,000 in May. Also, the unemployment rate (based upon the BLS’s household survey) ticked back up to 7.6 percent as more job seekers reentered the workforce. The job gains were slightly better than MarketWatch’s expectations of 164,000. 

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Employment rose in professional and business services, food services and drinking places, and retail trade; in fact, 122,000 of the 175,000 jobs added in May were those that generally command below-average wages). Manufacturing, meanwhile, shrank by 8,000 jobs. Government employment contracted at the federal and state levels. The change in total non-farm payroll employment for March was revised from +138,000 to +142,000, and the change for April was revised from +165,000 to +149,000. With these revisions, employment gains in March and April combined were 12,000 less than previously reported. 

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Other internals of the report were (at this point, no longer surprisingly) weak. Granted, the employment-population ratio rose slightly at the same time the number of persons not in the labor force retreated from its recent peak. However, these improvements are marginal and mean job growth is keeping up with population growth but not reabsorbing the glut of workers let go during the Great Recession. Moreover, rather ironically, the number of unemployed workers actually increased from 11.66 to 11.76 million. 

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Average hourly earnings rose by $0.01, resulting in a 2 percent year-over-year increase. With CPI-U running at an official rate of 1.1 percent, wages are technically keeping up with price inflation. 

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If there was a bright side to the employment report it is that most of the jobs reported in May were full time; the number of part-time employees actually dropped by 12,000. 

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Employment taxes withheld continue to ramp up on a year-over-year percentage-change basis, leaving less in consumers’ pockets. 

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Employment is converging with the previous peak at a slower pace than all prior recessions going back to 1973; circles in the chart above indicate when previous recoveries reached their corresponding pre-recessionary employment highs. The economy still has 2.42 million fewer jobs than at the January 2008 peak. 

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The figure above presents a variety of forecasts related to when employment might return to the January 2008 peak (dashed line) or converge with the number of jobs that likely would exist had the recession not occurred (gray line). At May’s rate of job gains, it will take until November 2014 to recapture January 2008’s employment level (i.e., without adjusting for population growth).

Bottom line: This jobs report was “within or above expectations.”

Mike Shedlock pointed fingers in a recent blog posting. “Digging under the surface,” Shedlock wrote, “much of the drop in the unemployment rate over the past two years is nothing but a statistical mirage coupled with a massive increase in part-time jobs starting in October 2012 as a result of Obamacare legislation.”

“As a personal anecdote, I was in the Traverse City, Michigan area this past week, a very nice town with nice shops in the downtown area. I asked one of the clerks about the number of hours she was working and they were reduced from 32 to 25, same as with numerous other shops on the same street. She did not understand why. She does now.

“I have asked waiters in many cities similar questions over the past few months and have received many similar answers.

“Multiply this scene by hundreds or thousands of shops in thousands of towns and the reduction from 32 to 25 hours coupled with additional hiring to make up the needed hours played a significant role in distortion of normal hiring patterns and unemployment statistics.”

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

April 2013 International Trade (Softwood Lumber)

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Softwood lumber exports rose by 8 MMBF (5.7 percent) in April while imports increased by 56 MMBF (5.5 percent). Exports were 12 MMBF (9.2 percent) above year-earlier levels; imports were 303 MMBF (39.1 percent) higher. 

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North America (i.e., Canada and Mexico) maintained its claim on the “top spot” for U.S. softwood lumber exports in April; Canada was also the largest single-country destination. Meanwhile, Canada is far-and-away the largest source of softwood lumber imports into the United States. Imports from Romania, Austria and Estonia have increased markedly on both year-over-year and year-to-date change bases. 

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Over half of U.S. softwood lumber exports left the country through West Coast (primarily Seattle, WA) customs districts in April. At the same time, however, Great Lakes customs districts (especially Duluth, MN) handled most of the softwood lumber imports coming into the United States. 

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Douglas-fir made up just under one-quarter of all softwood lumber exports in April, followed by southern yellow pine.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

April 2013 International Trade (General)

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Total April exports of $187.4 billion and imports of $227.7 billion resulted in a goods and services deficit of $40.3 billion, up from $37.1 billion in March. April exports were $2.2 billion more than March exports of $185.2 billion. April imports were $5.4 billion more than March imports of $222.3 billion.

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On a global scale, data compiled by the Netherlands Bureau for Economic Policy Analysis showed that world trade volume decreased by 0.2 percent in March while prices fell by 2.1 percent.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

April 2013 Manufacturers’ Shipments, Inventories and New & Unfilled Orders

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According to the U.S. Census Bureau, the value of manufactured-goods shipments decreased $3.5 billion (0.7 percent) to $478.7 billion in April. Durable goods shipments, decreased $1.0 billion (0.4 percent) to $227.4 billion, led by computers and electronic products, down three of the last four months, led the decrease, down $0.8 billion or 3.0 percent to $27.6 billion.

Shipments of nondurable goods decreased $2.6 billion (1.0 percent) to $251.3 billion, led by petroleum and coal products. Wood shipments retreated by 0.3 percent, but Paper increased by 0.2 percent. 

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Data from the Association of American Railroads (AAR) and the American Trucking Associations’ (ATA) advance seasonally adjusted For-Hire Truck Tonnage Index help round out the picture on goods shipments. AAR reported a 0.8 percent decrease in not-seasonally adjusted rail shipments in April (relative to March), and a 0.4 percent drop from a year earlier; on a trend-line basis, total shipments were off 2.6 percent from a year earlier. Excluding coal carloads, year-over-year shipments were down 0.2 percent. Seasonal adjustments accentuated the 0.8 percent March-to-April decrease, expanding it to a 1.2 percent decrease. Rail shipments of forest-related products were lower in April than a year earlier, thanks largely to a 52.5 percent drop in lumber and wood products shipments. The ATA’s advance index showed a 0.2 percent contraction in April. 

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Inventories increased $1.1 billion (0.2 percent) to $627.9 billion, the highest level since the series was first published on a NAICS basis in 1992. The inventories-to-shipments ratio was 1.31.

Durable goods inventories increased $1.3 billion (0.3 percent) to $377.8 billion (also the highest level since the series was first published on a NAICS basis), led by transportation equipment. Inventories of nondurable goods decreased $0.2 billion (0.1 percent) to $250.1 billion, led by petroleum and coal products down $1.1 billion (2.3 percent) to $46.6 billion.

Forest products inventories rose by 1.7 (Wood) and 0.2 (Paper) percent. 

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New orders increased $4.9 billion (1.0 percent) to $474.0 billion; excluding transportation, new orders decreased 0.1 percent. Durable goods orders increased $7.4 billion (3.5 percent) to $222.7 billion, led by transportation equipment. New orders for nondurable goods decreased $2.6 billion (1.0 percent) to $251.3 billion. 

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Unfilled orders increased $2.6 billion (0.3 percent) to $995.9 billion; the unfilled orders-to-shipments ratio was 6.26, up from 6.21 in March. Durable goods increased $2.6 billion (0.3 percent) to $995.9 billion, led by computers and electronic products. Real (i.e., inflation adjusted) unfilled orders, a good litmus test for sector growth, appear to be sputtering after regaining only about half the ground given up during the Great Recession.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

May 2013 ISM Reports

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The most-closely followed nationwide manufacturing diffusion index contracted in May. The Institute for Supply Management’s (ISM) PMI registered 49.0 percent, a decrease of 1.7 percentage points from April's seasonally adjusted reading of 50.7 percent (50 percent is the breakpoint between contraction and expansion). Expectations had been for a PMI of 51.0 percent, especially after the “booming” Chicago Business Barometer -- which typically is a useful predictor of ISM’s PMI (but in which, during May, virtually all of the comments were strangely despondent despite the upbeat data). This was “the biggest PMI contraction in four years,” MarketWatch observed. Also “the first sub-50 print since November 2012,” added another analyst; and “the New Orders of 48.8, was the worst since July 2012. Both Production and Backlogs tumbled by -4.9 and -5.0 to 48.6, and 48.0 respectively. In brief, of the 11 series tracked by the ISM, only three posted a reading over 50 in May. This compares to just two out of 11 that were below 50 in April.” 

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“Several comments from the [respondent] panel indicate a flattening or softening in demand due to a sluggish economy, both domestically and globally," said Bradley Holcomb, chair of the Institute for Supply Management Manufacturing Business Survey Committee. A Wood Products respondent was representative of the group, saying, "Market was holding strong until mid-month -- then softened."

The pace of growth in the service sector picked up slightly in May. The non-manufacturing index (now known simply as the “NMI”) registered 53.7 percent, 0.6 percentage point higher than April’s 53.1 percent and in line with expectations. The majority of respondents' comments are optimistic about business conditions,” said Anthony Nieves, chair of ISM’s Non-manufacturing Business Survey Committee. (A more accurate description might be “mixed.”) “However,” he added, “there is a degree of uncertainty about the long-term outlook." 

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While non-manufacturing factory orders missed expectations, that miss was made worse by the fact that what was built was not sold (yet) as inventory-to-sales ratio hit a post-recession high.

Wood Products reported a slowdown in activity once again despite employment and import and export orders all picking up (albeit at a slower pace). Paper Products experienced a broader-based expansion. Two of the three service sectors we track reported growth.

Relevant commodities up in price included diesel, caustic soda, corrugated boxes and packaging, and natural gas. Gasoline and lumber (pine, spruce and treated) were variously reported as either up or down in price. Paper was down in price. Lumber (hardwood, pine and plywood) were the only relevant commodities in short supply.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

May 2013 Monthly Average Crude Oil Price

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The monthly average U.S.-dollar price of West Texas Intermediate (WTI) crude oil regained most of the ground lost since February, rising by $2.73 (3.0 percent) to $94.80 per barrel in May. That price increase occurred despite a concurrent modest strengthening of the dollar, the lagged impacts of still-tepid consumption levels -- including a drop of 183,000 barrels per day (BPD) to 18.5 million BPD in March, and a continued build-up in crude stocks.

The monthly average price spread between Brent crude (the predominant grade used in Europe) and WTI shrank in April by over 33 percent, to $10.18 per barrel -- the smallest differential since December 2011. Brent and WTI prices were essentially identical until the end of 2010. 

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Although the monthly average WTI price rose slightly, daily prices have retreated about $5 per barrel since mid-May. ASPO-USA‘s June 3 Peak Oil Review had the following to say about recent developments:

“Weak demand in the United States and EU, adequate production, large inventories, expectations as to Federal Reserve actions, and little perception of a threat to oil exports from the turmoil in the Middle East have resulted in slipping prices. The decision by OPEC to maintain its 30 million BPD production quota was behind Friday’s sharp decline which left NY oil just below $92 a barrel and London just above $100.

“The EIA reported that US crude stocks grew another 3 million barrels the week before last and are now at the highest level since 1931, a big historical jump from the 1981 high reached only recently. U.S. tight-oil production is up 17 percent over last year with Eagle Ford production now over 500,000 BPD.

“The outlook for the global economy and oil demand in the immediate future is generally not good. Unemployment in the Eurozone hit another record high last week. Nearly all forecasters are making downward adjustments to their outlooks for China, and despite incessant optimism in the financial press, the U.S. economy does not seem to be rebounding in any significant way. The OECD said last week that protracted economic weakness in Europe ‘could evolve into stagnation with negative implications for the global economy.’

“Of long-term significance was last week’s report that China’s coal production fell 2 percent to 1.15 billion tons in 1Q2013, while stockpiles climbed to 150 million tons above normal. China’s coal imports climbed 25 percent to 110 million tons during the period. Rapid growth in China’s coal production, which has been running at around 10 percent a year, has been the backbone of China’s economic miracle.... Without steady increases in coal production it is difficult to see how China can maintain spectacular economic growth rates in coming years by relying on renewables, nuclear, and increased efficiency.”

Given that outlook, futures traders’ pessimistic outlook is quite understandable. 

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The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

May 2013 Currency Exchange Rates

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In May the monthly average value of the U.S. dollar appreciated against the three major currencies we track: by 3.1 percent relative to the yen; 0.3 percent against the euro, and 0.1 against Canada’s loonie. On a trade-weighted index basis, the dollar strengthened by 0.5 percent against a basket of 26 currencies. 

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Canada: As indicated by the negligible shift in the exchange rate, the relationship between the Canadian and U.S. economies remained relatively stable during May. Canadian real GDP expanded at an annualized rate of 2.5 percent in 1Q2013 (2.4 percent between February and March), the fastest pace in six quarters. Exports (especially of mining and oil and gas extraction) were the largest contributor to growth during 1Q; about the only negative readings involved declines in residential investment and manufacturing sales. Interestingly, the bulk of the drop in manufacturing sales were confined to petroleum and coal products, and chemical manufacturing industries. We infer from those two (potentially, at least  somewhat contradictory) data points that the drops in coal and chemical manufacturing must have been particularly steep.

Europe: Frankly, we have about given up trying to understand why the euro remains as strong as it is given the abandonment of any serious attempts to rein in member countries’ deficits, and the lousy fundamentals of the European economy. As to the latter, Markit's flash Eurozone Services PMI rose in May to 47.5, a three-month high, from 47.0 in April. Apparently, as CNBC indicated, “that was a little better than economists polled by Reuters expected, [but] the PMI has now spent 16 straight months below the 50 mark that divides growth and contraction.” French companies continued to fare poorly in May, while activity in German firms effectively stagnated.

The story for the manufacturing sector was much the same; the manufacturing PMI rose to 47.8 in May (from 46.7 in April) -- thanks to new orders and output declining at a slower pace -- comfortably beating expectations of 47.0 predicted by economists. Combining both the services and manufacturing reports, the composite PMI hit a three-month high of 47.7 in May, compared with April's 46.9, while showing continuing job losses.

The only explanations we can fathom are that the euro is an anti-dollar currency, and that conditions in the United States (including the government’s management of the economy) are really no better than their European counterparts.

Japan: The tremendous infusion of funds via the Bank of Japan’s monetary policy easing appears to be having the desired effect: Japan's consumer prices swung 0.3 percent higher in April compared to March, although they remained 0.4 percent below year-earlier levels. As a result of more favorable currency exchange rates, industrial production rose 1.7 percent in April. "Most of the data looks quite good and the industrial production..is encouraging," said Kim Eng Securities strategist Andrew Sullivan. "CPI data seems to be improving, but there is a long way yet to go."

As we stated last month, however, we agree with Mish Shedlock, that the BOJ’s inflation-encouragement policy “will eventually succeed ‘in spades’ and [Japan] will be extremely unhappy with the result once it happens.” Christine Hughes of OtterWood Capital Management is equally pessimistic about the end result of Japan’s monetary policy experiment, and explained her position in a very well-done video presentation entitled The Math Is Stacked Against Japan -- It's Not 'If', It's When.

China: Depending upon whom one wants to believe, China’s manufacturing sector either contracted or expanded in May (HSBC’s flash China manufacturing PMI claimed contraction, while official estimates showed marginal expansion). Separately, some are beginning to wonder if China is approaching a “Minsky moment” (i.e., a sudden, major collapse of asset values). In an article reproduced on the ZeroHedge website, analysts at Société Générale point out that a non-negligible share of the corporate sector and local government financial vehicles are struggling to cover their financial expense. At the macro level, they estimate that China's debt servicing costs have significantly exceeded underlying economic growth. As a result, the debt snowball is getting bigger and bigger, without contributing to real activity.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.

April 2013 U.S. Construction

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Overall construction spending in the United States increased by 0.4 percent during April, to a seasonally adjusted and annualized rate (SAAR) of $860.8 billion, thanks entirely to a 2.2 percent increase in private residential spending; all other categories declined. 

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Total housing starts retreated from March’s breach of the one million unit mark (SAAR), mainly on weakness in the multi-family component. Single-family starts dropped by a modest 13,000 units (2.1 percent) to 610,000 units, whereas the fallback in multi-family starts (-155,000 units, or 38.9 percent, to 243,000 units) was the largest month-to-month plunge since 2006. 

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April’s fallback in starts wasn’t the fault of questionable seasonal adjustments, as non-seasonally adjusted estimates (except for single-family starts) also declined. Total starts were up less than 15 percent over year-earlier levels. 

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Sales of new single-family homes advanced by 10,000 units (2.3 percent) to 454,000 (SAAR). The median price of new homes sold jumped by $20,900 (8.3 percent), to a new all-time record high of $271,600. With sales advancing in the face of retreating starts, the three-month average starts-to-sales ratio retreated to 1.42 in April. 

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Single-unit completions followed starts lower (by -58,000 units or 9.8 percent), while the inventory of new single-family homes ticked higher in absolute terms (+5,000 units) but months-of-sales remained stable at 4.1 months. 

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Existing home sales nudged higher (+30,000 units or 0.6 percent, SAAR) to 4.97 million units in April; even so, the share of total sales comprised of new homes ticked up to 8.4 percent. The median price of previously owned homes sold in April pushed upward (by $8,900 or 4.8 percent), to $192,800  the highest price since September 2008. 

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The continued rise in the median price of existing homes for sale ($11,600 or 6.7 percent in March) is adversely impacting housing affordability. Concurrently, Standard & Poor’s reported that the 10- and 20-City Composites in the S&P/Case-Shiller Home Price indices both posted monthly gains of 1.4 percent from February to March (10.3 and 10.9 percent, respectively, relative to a year earlier). 

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With builders’ confidence in the residential market rising, the number of permits applied for soared in April. Total permits jumped to nearly 1.02 million units (+127,000 units or 14.3 percent). The rise resulted primarily because of strength in the multi-family component (+109,000 units or 37.5 percent, to 400,000 units); single-family units also rose by a more modest 18,000 units (3.0 percent), to 617,000 units. Total permits were nearly 36 percent higher in April than a year earlier. 

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Although the housing market “weather” has been “mostly sunny to partly cloudy” during recent months, some storm clouds appear to be building on the horizon. For example,

• Architectural billings plunged over the past two months by the most since November 2008; the current level of activity is at its lowest since June 2012.
• Random Lengths’ framing lumber composite price has slumped by over 20 percent during the current quarter (other indices put the decline at 28 percent).
• Wells Fargo, JPMorgan-Chase and Citi have all but halted foreclosures. The reason given for this development was to “ensure late-stage foreclosure procedures were in accordance with guidelines,” but the decision coincided with a report that the length of time required to sell foreclosed homes has hit a record high of nearly 400 days.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.