I josh of course. What Mr. Lockhart knows and what he’s prepared to say in order to keep his chip in the game are two polar opposites. I used to wish this were not so, but, you know, I have given up “wishing”.

Wishing is for those callers to 1-800-HELP and recipients of so-called tax rebates. Oh, throw in those who buy lottery tickets as a part of their estate planning, as well.

The next word out of the Atlanta Fed is that speculators are the problem and have to be rooted out of their holes.

Traders do not wish; they deal in facts. That is, they used to. Now the US government sees fit to tell the world that inflation in America rose a mere +0.2% this past month, and just +0.1% if you ex-out energy and food costs.

Just for fun, let’s try to determine the cost for a family of four to travel to the Indianapolis 500 race this coming holiday weekend. Maybe we could look at the added cost this year to fuel up those military jets that buzz the stadium just about the time everybody breaks out in a rousing “God Bless America” or the costs to power those racing machines or equip them with tires because they don’t go onto the track ex-rubber. Insurance, now that’s another story, all included in the higher ticket price.

I think the added costs of running the Indy 500 race this year just by itself is enough to power inflation in the St. Louis Fed region by probably +1%. Maybe more if you factor in the milk for the winner.

The point is, when does a Fed Head stop being a Talking Head for the sell-side?

Second question: Is an economic slowdown a Fed policy initiative? Maybe I'll leave the answer to that to Professor Burton Malkiel, given that he's likely to say that it is a random occurence. You see, if I'm going to ask a question, being a good trader I want to know the answer in advance.

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Global Economics Review

Here are the key US economic reports and the Econoday analysis from last week.

US Economic Calendar.

US Treasury Budget for April. Tax receipts led to a surplus for April of +159.3, just shy of the expected gain of +160.0 billion. Fiscal year-to-date receipts have slowed to a +3.0% gain while outlays were up +7.4%. Individual income tax receipts are up +6.0% while corporate income taxes are down -14.7%.

US Import and Export Prices for April. Import prices surged + 1.8% in April due to energy and food costs, for a Y/Y gain of +15.4%. Export prices also increased, up +0.3% for a +7.7% Y/Y rise.

US Retail Sales for April. Retail sales, ex-auto and gasoline sales, surprised on the upside. Ex-autos, retail sales jumped +0.5% in March after a gain of +0.4% in Feb. Analysts had forecast a +0.3% gain. Ex-autos and gasoline, retail sales lifted a surprising +0.6% in April, after gaining +0.2% in March.

US Business Inventories for March. Lower inventories caused by less production and a greater than anticipated drawdown by retailers resulted in a positive report.

US Consumer Price Index for March. This was a shocking report, stretching all credibility. The authorities in govt are stating that consumer inflation in March grew by just + 0.2% and just + 0.1% if food and energy costs are factored out. The mind boggles. Surely these reports ought to be produced by the private sector.

New York Fed survey for May of manufacturing in NY. Prior to this report, I stated: “Can we really trust the New York Fed? Did manufacturing really stabilize in April?” Now the report suggests that general business conditions in New York state are atrocious.

Philadelphia Fed survey for May of manufacturing in the region. Conditions are bad.

US Production Index (mines, factories, utilities) for April. Industrial production is now worse than previously figured.

US Housing Starts for April. April's 1.032 million units (annualized) were down -30.6% Y/Y, but were above the consensus expectation for a 0.940 million units.

The Reuter's/University of Michigan's Consumer sentiment index for May. The index dropped from an already very low 62.6 in April to a yet lower 59.5. A reading this low last occurred in 1980. I forewarned with my statement a week ago, “This is the new American dance, “The Paulson-Bernanke Limbo”. How low can they go?”

So much for last week, it was another bad one although retail sales started to pick up.

Let’s look ahead. Here is next week’s economic calendar, which is a quiet pre-Memorial Day week:

US Economic Calendar.

US Producer Price Index data for April.

US Existing Home Sales data for April. A pick-up in sales is needed to start reducing the overhang in supply, which is depressing prices.

The economic issues that Americans are struggling with are global in scope. If the global economy suffers further contraction, there is little more the monetary authorities can do. High inflation rates will likely mean very few central bank rate cuts in the next couple years.

Weekly International Economic Report .

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US Equity Markets Review

DJIA ino.com chart

DJIA stockcharts.com chart

This was a rally week in a Bear market: 22 Dow components up and 8 down.

The DJIA, S&P 500 and NASDAQ Composite gained +1.9%, +2.7%, and +3.4% respectively, led by the commodity price sensitive Basic Materials and Energy and by Tech.

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NASDAQ Composite ino.com chart

NASDAQ Composite stockcharts.com chart

Tech, including Semi-conductors, shows continued strength.

Here is the list of the ten highest-weighted non-financial stocks in the Nasdaq Composite. Put them in a watchlist (see Google Finance Portfolio) and watch them like a hawk. If you want, add a couple like SNDK and ADBE:
AAPL MSFT GOOG QCOM RIMM CSCO INTC ORCL GILD EBAY

Daily RSI-7 for the Nasdaq 100 Big-10

Weekly RSI-7 for the Nasdaq 100 Big-10

Monthly RSI-7 for the Nasdaq 100 Big-10

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The US equity market Sector ETF Summary

This week, there were 10 sectors up and 0 down.

(From the WIR of a week ago) Anyway, let’s agree that it’s a Bear market. We could even agree that it will be that until (i) Industrial Production and Real Estate Construction turn around, and (ii) Humungous Bank & Broker (HB&B) starts writing off assets and accordingly restocks their capital base, if they can.

Here’s the SPY Monthly, Weekly and Daily data charts:

SPY Monthly data:

SPY Weekly data:

SPY Daily data:

The tables I now show are for eleven GICS Sector Index Funds (ETF’s), including two for Technology (XLK and SMH), for a total of ten GICS sectors. They cover the full spectrum of the US equity market.

Table 1: Cara ETF List is sorted by price performance Week over Week (W/W), i.e. 1W%N.

Sorted by 1-Week Price Performance

Symbol	Close	1Day Change	1Day %Change	1W %Change	2W %Change	4W %Change	YTD %Change	3M %Change	6M %Change	12M %Change
XLB	45.88	0.53	1.17%	5.23%	7.78%	3.43%	11.09%	13.99%	13.82%	14.27%
XLE	88.95	3.13	3.65%	4.93%	9.18%	6.25%	11.89%	22.10%	22.86%	35.39%
SMH	33.28	0.13	0.39%	4.85%	4.69%	9.47%	6.12%	16.45%	1.49%	-11.13%
IYZ	26.92	0.15	0.56%	4.26%	3.22%	12.26%	-7.71%	5.73%	-9.33%	-19.26%
XLY	33.44	-0.23	-0.68%	3.85%	0.75%	4.27%	3.85%	3.75%	-1.88%	-14.91%
XLK	25.37	-0.06	-0.24%	3.55%	2.34%	6.51%	-2.87%	11.66%	-3.02%	0.48%
SPY	142.66	0.13	0.09%	2.71%	0.81%	3.02%	-1.57%	5.56%	-2.15%	-5.90%
XLI	39.28	-0.10	-0.25%	2.69%	0.98%	2.51%	2.00%	6.83%	1.37%	2.53%
XLP	28.49	-0.01	-0.04%	2.48%	1.35%	1.90%	0.35%	4.17%	-0.28%	3.37%
XLU	40.89	0.41	1.01%	2.15%	-0.32%	0.94%	-2.85%	2.61%	-1.90%	-4.24%
XLF	26.26	-0.24	-0.91%	1.04%	-5.10%	-0.72%	-7.40%	-2.12%	-13.62%	-30.73%
IYH	63.74	0.08	0.13%	0.71%	-1.19%	0.08%	-9.07%	-4.58%	-10.25%	-11.47%

You can do this table yourself by entering the following string into the Summary window at Billcara2.com and then clicking on the link for Performance. SPY XLE XLB XLI XLY XLP IYH XLF XLK SMH IYZ XLU . You can also add more ETF’s – up to 30 in total.

For a list of components to many ETFs, go to the AMEX.com web site, and click on ETF’s.

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10 (energy: XLE)

15 (basic materials: XLB)

20 (industrial: XLI)

25 (consumer discretionary: XLY)

30 (consumer staples: XLP)

35 (healthcare: IYH)

40 (financial: XLF)

45 (technology, semiconductor: SMH)

50 (telecom: IYZ)

55 (utilities: XLU)

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Individual Sector ETF Review

I use XLK for the Tech sector for a total of ten (10) sectors, but also include Semiconductors (SMH) because it is my bellwether on the economy plus use SPY to see where each sector stands relative the broad market.

Sector 10 (energy: XLE, IYE, VDE, OIH, PBW and IXC)

Here’s the XLE Monthly, Weekly and Daily data charts:

XLE Monthly data:

XLE Weekly data:

XLE Daily data:

Table 2: Senior oil & gas equities

Sorted by 1-Week Price Performance

Symbol	Close	1Day Change	1Day %Change	1W %Change	2W %Change	4W %Change	YTD %Change	3M %Change	6M %Change	12M %Change
ECA	94.10	2.29	2.49%	9.51%	19.33%	9.13%	35.18%	34.83%	38.30%	55.72%
PBR	70.65	2.38	3.49%	9.37%	-43.22%	-43.70%	-40.54%	-38.27%	-33.20%	32.70%
STO	41.68	1.81	4.54%	9.20%	12.44%	23.31%	33.42%	44.52%	35.02%	55.00%
SU	134.82	5.36	4.14%	7.99%	20.87%	16.01%	22.26%	39.91%	31.83%	61.46%
TOT	88.25	2.97	3.48%	6.39%	5.00%	8.74%	5.97%	21.72%	10.33%	20.84%
CEO	192.08	-1.62	-0.84%	6.13%	9.14%	7.72%	14.73%	21.15%	17.65%	112.34%
PTR	146.94	1.57	1.08%	4.58%	-6.39%	16.48%	-15.38%	-2.95%	-22.62%	12.60%
RIG	160.54	5.14	3.31%	4.48%	5.67%	1.17%	10.00%	24.38%	35.76%	77.53%
XOM	92.67	1.37	1.50%	4.33%	3.41%	-1.41%	-0.90%	8.55%	8.90%	13.78%
CVX	100.38	1.89	1.92%	3.07%	5.31%	7.73%	7.40%	20.07%	16.75%	24.34%
SLB	105.31	1.86	1.80%	0.29%	5.70%	3.40%	4.70%	25.25%	12.68%	37.66%
IMO	57.07	0.18	0.32%	-1.21%	3.01%	-3.19%	3.91%	6.47%	7.86%	34.89%

Energy (XLE +4.9% W/W) has enjoyed a solid two weeks, although much of this week’s gain was earned on Friday (+3.7%).

Crude Oil ($WTIC +0.06% W/W) retained its strength on the basis of Friday’s move of +1.77%, closing at 126.04.

The Canadian oil and gas sector was strong again (ECA +9.5% and SU +8.0%), following the week earlier gain of +11.9% for each of these surging stocks. Imperial Oil (IMO) though had a small loss on the week.

PetroBrazil (PTR) gained +9.4% and Statoil (STO) was up +9.2% as share prices are reflecting the underlying asset prices based on 100+ oil.

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Integrated Oil & Gas - Canada

Oil & Gas Exploration & Production -Canada

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Sector 15 (basic materials: IYM, XLB, IGE and VAW)

Here’s the XLB Monthly, Weekly and Daily data charts:

XLB Monthly data:

XLB Weekly data:

XLB Daily data:

Table 3: Senior metals and steel equities:

Sorted by 1-Week Price Performance

Symbol	Close	1Day Change	1Day %Change	1W %Change	2W %Change	4W %Change	YTD %Change	3M %Change	6M %Change	12M %Change
PKX	144.38	0.48	0.33%	13.16%	15.84%	23.97%	-1.42%	5.76%	-9.17%	27.57%
GGB	48.87	2.88	6.26%	12.42%	16.94%	31.16%	70.28%	72.32%	62.74%	120.73%
RIO	43.91	1.74	4.13%	10.94%	10.02%	15.77%	34.24%	37.09%	24.04%	-3.26%
TS	59.15	1.27	2.19%	10.87%	9.72%	8.93%	33.25%	56.69%	22.59%	30.23%
AA	43.15	0.41	0.96%	10.53%	19.50%	19.00%	19.43%	20.80%	18.84%	10.53%
RTP	554.93	8.43	1.54%	9.86%	14.57%	13.18%	32.22%	27.41%	25.43%	95.52%
BHP	95.00	1.58	1.69%	8.05%	13.10%	17.34%	34.92%	35.71%	27.12%	84.25%
TCK	51.71	1.53	3.05%	7.66%	18.52%	8.57%	42.69%	56.37%	22.77%	26.96%
MT	101.56	0.98	0.97%	7.39%	13.92%	14.37%	32.93%	44.06%	43.55%	77.12%
VCP	32.80	-0.35	-1.06%	6.42%	4.16%	4.43%	10.44%	8.29%	0.09%	60.16%
NUE	82.07	0.63	0.77%	4.67%	10.46%	11.03%	41.57%	32.35%	56.44%	23.66%
DOW	42.88	0.38	0.89%	4.00%	5.12%	7.25%	10.66%	11.03%	6.64%	-7.37%

Basic Materials (XLB +5.23%) was the winning sector this week, switching positions with Energy. The gain on Friday was a healthy +1.17%, not as much as XLE, but reflective of the very weak $USD on Friday.

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Sector 20 (industrial: IYJ, XLI, VIS, and IYT)

Here’s the XLI Monthly, Weekly and Daily data charts:

XLI Monthly data:

XLI Weekly data:

XLI Daily data:

Table 4: Senior capital goods makers and transportation:

Sorted by 1-Week Price Performance

Symbol	Close	1Day Change	1Day %Change	1W %Change	2W %Change	4W %Change	YTD %Change	3M %Change	6M %Change	12M %Change
FLR	191.37	-0.27	-0.14%	16.71%	25.23%	19.53%	32.53%	58.45%	41.88%	91.37%
ABB	32.69	0.25	0.77%	4.98%	5.86%	16.88%	14.14%	42.56%	16.88%	61.43%
HON	61.81	-0.62	-0.99%	3.73%	1.95%	1.34%	3.19%	10.30%	10.61%	6.31%
ERJ	42.09	0.25	0.60%	3.44%	0.02%	-0.31%	-6.74%	-4.71%	-13.80%	-10.81%
MMM	78.66	0.80	1.03%	3.07%	0.14%	-5.11%	-4.90%	-1.61%	-3.57%	-8.55%
TXT	62.43	-1.81	-2.82%	2.56%	0.69%	2.39%	-6.56%	9.09%	-2.67%	19.71%
CAT	83.70	0.20	0.24%	2.37%	1.09%	-1.85%	18.50%	19.66%	20.54%	10.20%
BA	85.17	-0.38	-0.44%	1.32%	-0.61%	8.28%	-1.67%	-0.01%	-5.36%	-10.67%
UTX	73.96	-0.33	-0.44%	1.13%	-1.52%	2.00%	-1.66%	3.40%	-0.46%	8.00%
UPS	70.77	-0.59	-0.83%	0.68%	-3.43%	-3.31%	2.33%	-2.28%	-1.72%	-0.80%
FDX	90.95	0.09	0.10%	0.64%	-6.10%	-5.96%	5.56%	3.45%	-6.04%	-16.51%
GE	32.13	-0.24	-0.74%	-0.43%	-3.63%	-1.71%	-12.60%	-6.52%	-16.87%	-12.76%

The Industrials (XLI +2.69% W/W) were strong, except for GE (-0.43% W/W), and except for Friday’s small loss (-0.25%).

Construction operator Fluor (+16.7% to 191.37) has been on fire, up +25.2% in two weeks because Q1 profits lifted +63% to $138 million, exceeding analysts' predictions. The stock was $150 at the beginning of the month.

Competitor ABB (ABB) was also hot this week, up +5.0%. Like Fluor, these companies receive long-term contracts that are mostly resistant to the effects of inflation or short-term economic weakness. But traders need to catch them early on the upswing, which sometimes can be seen in the additional trading volumes.

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Sector 25 (consumer discretionary: XLY, IYC and VCR)

Here’s the XLY Monthly, Weekly and Daily data charts:

XLY Monthly data:

XLY Weekly data:

XLY Daily data:

Table 5: Senior consumer discretionary equities

Sorted by 1-Week Price Performance

Symbol	Close	1Day Change	1Day %Change	1W %Change	2W %Change	4W %Change	YTD %Change	3M %Change	6M %Change	12M %Change
TGT	54.88	-0.22	-0.40%	5.05%	1.80%	0.51%	10.85%	3.41%	1.86%	-4.24%
BBBY	33.78	-0.81	-2.34%	4.94%	2.05%	4.29%	19.11%	15.49%	7.55%	-15.63%
JCP	45.01	-1.31	-2.83%	4.89%	-0.38%	11.72%	8.07%	-3.54%	4.21%	-40.56%
NKE	67.53	-0.49	-0.72%	4.10%	-0.19%	-0.53%	6.72%	8.41%	7.81%	27.44%
GOL	16.51	-0.01	-0.06%	3.90%	-3.79%	8.62%	-31.18%	-10.90%	-38.69%	-43.75%
EBAY	31.17	-0.76	-2.38%	3.90%	0.19%	-1.70%	-4.06%	12.16%	-4.80%	-6.26%
WHR	74.87	-1.02	-1.34%	3.37%	-0.97%	-8.71%	-6.27%	-15.39%	-1.69%	-32.91%
BC	16.73	-0.03	-0.18%	3.21%	-0.48%	4.24%	-1.12%	-1.76%	-18.43%	-49.06%
DIS	34.91	-0.08	-0.23%	1.78%	4.24%	11.43%	9.64%	7.45%	7.32%	-3.05%
BDK	67.51	-0.87	-1.27%	1.03%	-0.15%	-1.20%	-3.46%	-0.95%	-20.15%	-27.61%
TM	101.87	-2.25	-2.16%	0.55%	-2.93%	0.32%	-4.31%	-8.22%	-7.56%	-16.85%
CCL	39.65	-0.71	-1.76%	-0.18%	-5.46%	-6.66%	-9.18%	-4.11%	-11.71%	-17.21%

Consumer Cyclicals (XLY +3.85% W/W) did not sink this week despite more high prices at the fuel pump. This seems to be the effect of the cash payout program of the US government.

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Sector 30 (consumer staples: XLP, VDC, RTH and IYK)

Here's the XLP Monthly, Weekly and Daily data charts:

XLP Monthly data:

XLP Weekly data:

XLP Daily data:

Table 6: Senior consumer staples equities

Sorted by 1-Week Price Performance

Symbol	Close	1Day Change	1Day %Change	1W %Change	2W %Change	4W %Change	YTD %Change	3M %Change	6M %Change	12M %Change
PDA	61.86	2.31	3.88%	10.70%	5.20%	22.08%	28.53%	28.07%	16.08%	81.62%
SBUX	17.05	0.98	6.08%	7.49%	3.57%	-6.74%	-11.72%	-6.79%	-26.42%	-39.55%
KR	27.96	0.97	3.59%	6.31%	2.16%	11.84%	8.92%	4.06%	-2.41%	-5.06%
ABV	78.55	-0.16	-0.20%	6.01%	-0.46%	2.29%	8.37%	4.29%	5.08%	21.52%
WAG	36.37	-0.19	-0.52%	3.94%	3.09%	1.14%	-2.60%	2.54%	-9.01%	-19.68%
PG	66.75	0.39	0.59%	2.36%	-0.07%	-0.63%	-7.69%	0.68%	-8.80%	5.42%
KO	57.07	0.06	0.11%	1.64%	-2.89%	-5.06%	-6.58%	-2.88%	-8.86%	8.21%
BUD	51.73	-0.08	-0.15%	1.57%	2.88%	7.88%	0.19%	7.73%	4.00%	2.88%
PEP	67.87	-0.20	-0.29%	0.53%	-1.78%	-3.87%	-9.86%	-5.38%	-8.47%	-1.12%
WMT	57.04	-0.08	-0.14%	-0.24%	-0.80%	1.30%	21.62%	15.37%	23.09%	20.90%
DEO	81.00	1.16	1.45%	-0.43%	-1.66%	-2.54%	-4.77%	-3.05%	-9.29%	-4.24%
WFMI	29.06	-0.06	-0.21%	-11.35%	-16.92%	-11.81%	-26.91%	-25.72%	-35.86%	-27.02%

Consumer Staples (XLP +2.48% W/W). Starbucks (SBUX +7.5%) had a good week for a change. Actually it had a good day – on Friday SBUX was up +6.1%. A couple hedge funds --Nelson Peltz’s Trian and Lee Ainslie’s Maverick Capital— announced they took large positions. I wonder if they were reading me from a recent blog? (LOL)

Whole Foods Market (WFMI) took a hit of -11.4% W/W after the Q1 earnings dropped -13%, missing analyst’s estimates. Besides, in a price-conscious inflationary economy, the always high prices at Whole Foods are given a second thought by many of their customers.

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Sector 35 (healthcare: IYH, XLV, VHT, IXJ, and IBB)

Here’s the IYH Monthly, Weekly and Daily data charts:

IYH Monthly data:

IYH Weekly data:

IYH Daily data:

Table 7: Senior healthcare equities

Sorted by 1-Week Price Performance

Symbol	Close	1Day Change	1Day %Change	1W %Change	2W %Change	4W %Change	YTD %Change	3M %Change	6M %Change	12M %Change
DNA	70.19	1.36	1.98%	2.42%	4.39%	-3.48%	4.14%	-3.41%	-6.40%	-10.62%
NVO	68.98	1.29	1.91%	2.21%	2.85%	-3.12%	8.12%	5.64%	-43.68%	-32.12%
GSK	44.46	0.47	1.07%	1.28%	-1.98%	2.63%	-11.38%	0.61%	-9.17%	-21.73%
PFE	20.03	-0.05	-0.25%	1.21%	-2.81%	-2.15%	-12.57%	-10.30%	-14.37%	-26.68%
BMY	21.94	-0.03	-0.14%	1.06%	-6.04%	-0.72%	-16.04%	-5.84%	-21.05%	-27.06%
NVS	51.36	0.17	0.33%	0.88%	0.33%	7.47%	-5.88%	2.25%	-2.80%	-10.58%
AET	43.56	0.75	1.75%	0.72%	1.33%	4.24%	-23.09%	-14.32%	-20.68%	-16.33%
JNJ	66.68	0.00	0.00%	0.20%	-2.31%	0.26%	1.17%	6.01%	-1.58%	5.76%
AMGN	42.03	-0.02	-0.05%	-0.05%	-2.10%	-2.41%	-9.81%	-9.88%	-24.26%	-22.64%
MDT	46.98	-0.09	-0.19%	-1.69%	-4.61%	-6.02%	-5.09%	-4.36%	2.64%	-10.12%
UNH	32.32	0.62	1.96%	-1.88%	-3.44%	-13.23%