China’s demand for gold jumped 20% to 294 tonnes in the first quarter of 2013, while global gold demand overall slid 13% thanks to the dramatic rotation of demand from paper to physical. Chinese demand in gold bars and coins grew to 109.5 tonnes – more than double the five-year quarterly average of 43.8 tonnes. Central banks added 109.2 tonnes of gold to their reserves in Q1 2013, the ninth consecutive quarter of net purchases. But it was the Q1 ETF outflows of 176.9 tonnes, equating to a 7% decline in total gold ETF holdings that obscured the strong rise in investment for gold bars and coins at the retail level. In the face of the huge ‘paper’ gold ETF outflows, ‘physical’ gold demand surged to its highest in 18 months…

Source: http://www.zerohedge.com/news/2013-05-16/gold-demand-one-chart-physical-vs-etf

The Commerce Department said that starts at building sites for homes plunged -16.5 percent last month to a 853,000-unit annual rate. That was below analysts’ expectations of a 945,000-unit rate.

Definition:
A housing start is registered at the start of construction of a new building intended primarily as a residential building. The start of construction is defined as the beginning of excavation of the foundation for the building.

Why Investors Care:
Two words…Ripple Effect. This narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as housing starts, investors can gain specific investment ideas as well as broad guidance for managing a portfolio.

Source: Bloomberg,

Here’s an illustration from Julian Jessop at Capital Economics via FT Alphaville:

Source: http://www.thereformedbroker.com/2013/05/14/chart-o-the-day-the-stocks-commodities-disconnect/

It seems as though this makes no sense at all - shouldn’t commodities be benefiting from the same easy money policies as stocks are? - but the explanation can be found, according to Jessop and FT’s Paul Murphy, in the weakness of China:

The moves are logical. Stocks are up because of rampant QE, which is squeezing investor flows out of bond markets and into equities. And the reason we’ve got rampant QE is the continued lack of near-term economic recovery globally, which is manifestly bad for industrial commodities.

Jessop notes that industrial metals are particularly sensitive to Chinese growth prospects and it seems noteworthy that Shanghai is one stock market that is not rising at present…

Curious how the student loan bubble, just shy of $1 trillion, and now the largest debt portion of the US household non-mortgage wallet,  bigger than credit card and auto loan debt – affects your state? Then the following three charts just out from the NY Fed are for you.

What the data shows is that less than 12% of the population in Hawaii has student loans, while the record is in D.C. at over 25%. All those “students” in the nation’s capital. Really?

But that’s not all. While the average loan balance is under $21,000 in Wyoming, it is once again highest in D.C., with the average loan balance over $40,000. It is almost as if D.C. “students” have learnedhow to game the system.

Full Story here: http://www.zerohedge.com/news/2013-05-14/us-student-loan-bubble-broken-down-state-and-why-washington-dc-stands-out-sore-thumb

Yet where the very “studious” population in the capital city truly excels is in the amount of delinquency: here it is all West Virginia at the top with over 18% of all loans delinquent 3 months and over, while DC is not even in the top 10 – must be all those well-paying jobs for interns and college grads in the beltway. It is almost as if someone is closing their eyes when it comes to the delinquencies of DC borrowers. But that would be yet another preposterous conspiracy theory of course…

Borrowers as share of population:

The supporting detail.

• Student loan borrowers as a share of the population. The population with active student loan debts, or “SL borrowers,” as a share of the population with a credit record varies substantially over space. For example, in Hawaii, less than 12 percent of people with a credit report have student debt, while in the District of Columbia over 25 percent do.
• Student loan balances per SL borrower. Student indebtedness is significant for SL borrowers in virtually all states. Educational indebtedness per SL borrower ranges from a low of just under $21,000 in Wyoming to a high of over $28,000 in Maryland. Again, Washington, D.C., stands out: the average SL borrower there owes over $40,000. In general, we find SL-borrower debt levels are highest in California and along the Atlantic and Gulf coasts.
• Percent of balance ninety-plus days delinquent. Delinquency rates show a distinct regional pattern, with states in the south and southwest having generally higher rates than those in the north. The lowest delinquency rate is South Dakota, at just over 6.5 percent, while the highest is in West Virginia, at nearly 18 percent.

Source: http://tech.fortune.cnn.com/2013/05/13/apple-share-buyback-leitao/

That leaves, by Robert Paul Leitao’s calculations, $58 billion to be spent over the next 11 quarters.

Leitao, who writes the Posts at Eventide blog and oversees the Braeburn Group of independent analysts, used two assumptions to create the charts above: That the $58 billion would be spent in equal parts of approximately $5.272 billion each, and that Apple’s share price would rise $25 each quarter from $475 per share this quarter to $725 per share in fiscal Q1 2016 (the last calendar quarter of 2015).

As a result of the exercise, Leitao made several interesting discoveries:

• The repurchase program represents a material boost to Apple’s bottom line. For example, even if September’s net income were to be flat, Apple would report nearly $.25 more in EPS (earnings per share) because there will be that many fewer shares in the denominator.
• By the end of the program, Apple will have repurchased just under 100 million shares, or approximately 10.55% of its current diluted share count.
• The company will save more than $2.230 billion in dividend payouts on the retired shares — even if it  increases its dividends 10% each May. That works out to a savings of nearly $370 million each quarter, or nearly $1.5 billion per year moving forward.

“The dividends saved each year will go a long way to covering the interest costs on the funds borrowed to facilitate the share repurchases,” Leitao nots, “while Apple continues to earn interest on the off-shore funds not repatriated and used for the share repurchases.”

NOTE:  Included in the numbers is the expectation the 1,494,992 shares received on April 1, 2013 will be included in the June quarter reduction in the share count. Not included are any new shares used for stock-based compensation during the 11-quarter period.

Source: http://www.businessinsider.com/chart-of-the-day-aol-vs-netflix-2013-5