Gold Prices Top $400/oz.

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.

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.

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.