CPI Up Less Than Expected

December 2, 2003

· Gold prices topped $400 per ounce yesterday for the first time since early 1996. The rise accompanied other indications of strength in pricing power including the rise in the November ISM price index.

· During the last twenty years there has been a 41% correlation between the level of gold prices and the y/y change in the CPI.

· Prices of metals generally have been strong as industrial activity has firmed. Stainless steel scrap prices have risen nearly 50% since yearend 2002 and copper prices have risen 37%. Aluminum prices also have risen 13%.

· During the last twenty years there has been a 43% correlation between the y/y change in metals prices as measured by the Journal of Commerce/ECRI index and the change in factory sector industrial production.

Commodity Prices	12/01/03	12/31/02	Y/Y	2002	2001	2000
Gold: Handy & Harman Base Price ($/oz.)	$400.25	$344.80	26.5%	$310.05	$271.06	$278.88
Stainless Steel Scrap ($/gross ton)	$1,159.00	$782.00	57.0%	$717.10	$650.52	$739.07
Copper: High Grade (COMEX, $/Lb.)	$0.96	$0.70	26.3%	$0.72	$0.73	$0.84

Chain Store Sales Begin Holiday Season Soft

December 2, 2003

By Tom Moeller

· Chain store sales fell 0.1% during the week that included Thanksgiving, according to the BTM-UBSW survey. Following the 1.2% gain in sales the opening week of November, weekly sales have been lackluster.

· Sales during November with just one day left to tally were 0.5% ahead of October. That followed a 0.6% m/m October decline.

· During the last five years there has been a 61% correlation between the year-to-year percent change in the BTM-UBSW measure of chain store sales and the change in non-auto retail sales less gasoline.

· The BTM-UBSW retail chain-store sales index is constructed using the same-store sales reported by 78 stores of seven retailers: Dayton Hudson, Federated, Kmart, May, J.C. Penney, Sears and Wal-Mart.

· Analysis from the Federal Reserve Bank of Richmond titled "Why Does Consumer Sentiment Predict Household Spending?" is available here.

BTM-UBSW (SA, 1977=100)	11/29/03	11/22/03	Y/Y	2002	2001	2000
Total Weekly Retail Chain Store Sales	422.8	423.3	5.2%	3.6%	2.1%	3.4%

Challenger Layoffs Eased

December 2, 2003

By Tom Moeller

· Announced job cuts in November reversed much of the prior month's rise according to Challenger, Gray & Christmas. Job cut announcements fell 42.1% m/m after having more than doubled in October.

· The three month moving average of job cut announcements nevertheless rose (-13.8% y/y) due to the October spike.

· Job cut announcements eased m/m in the aerospace (-85.4% y/y), automotive (-44.2% y/y), chemical (-86.4% y/y), and financial (-90.9% y/y) industries. Announced layoffs in the electronics industry surged m/m although they were down 21.3% y/y.

· Job cut announcements differ from layoffs in that many are achieved through attrition or just never occur.

· During the last ten years there has been an 83% (inverse) correlation between the three month average level of announced job cuts and the y/y percent change payroll employment.

Challenger, Gray & Christmas	Nov	Oct	Y/Y	2002	2001
Announced Job Cuts	99,452	171,874	-36.9%	1,431,052	1,956,876

Commentary Archive