Summary for Week of May 11th

The key stories for the week were the elections in France and Greece, and JPMorgan's $2 billion trading loss on a synthetic credit position. JPMorgan CEO Jamie Dimon said the losses were due to 'egregious mistakes', 'sloppiness" and that the "portfolio still has risk'. This doesn't appear to be a systemic risk, just poor risk management at JPMorgan.

The Greek political situation is unsettled, and the Europeans have said they support Greece through the next election on June 17th. After that ' who knows? There is a strong possibility that Greece will leave the euro not long after the next election.

This was a light week for US economic data. The trade deficit was a little higher than expected, but most of the data improved slightly. The 4-week average of initial weekly unemployment claims declined, small business confidence improved, and consumer sentiment improved, and there were more job openings in March.

In an under reported story, both Fannie and Freddie reported improved performance due to 'stabilization of house prices' in certain areas. The sharp decline in "for sale" inventory appears to be supporting house prices, and inventory and house prices continue to be key stories for 2012.

Here is a summary in graphs:

' Trade Deficit increased in March to $51.8 Billion

The trade deficit was above the consensus forecast of $49.5 billion.

The first graph shows the monthly U.S. exports and imports in dollars through March 2012.

Exports increased in March, and are at record levels. Imports increased even more. Exports are 13% above the pre-recession peak and up 7% compared to March 2011; imports are 3% above the pre-recession peak, and up about 8% compared to March 2011.

The second graph shows the U.S. trade deficit, with and without petroleum, through March.

The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

Oil averaged $107.95 per barrel in March, up from $103.63 in February. Import oil prices were probably a little higher in April too, but will probably decline in May. The increase in imports was a combination of more petroleum imports and more imports from China.

' BLS: Job Openings increased in March

This graph shows job openings (yellow line), hires (dark blue), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

Jobs openings increased in March to 3.737 million, up from 3.565 million in February. The number of job openings (yellow) has generally been trending up, and openings are up about 17% year-over-year compared to March 2011. This is the highest level for job openings since July 2008.

Quits increased in March, and quits are now up about 8.5% year-over-year and quits are now at the highest level since 2008. These are voluntary separations and more quits might indicate some improvement in the labor market. (see light blue columns at bottom of graph for trend for "quits").