Kansas City Fed Has Good News (DIA, SPY, IWM, QQQ)

Kansas City Federal Reserve posts good news on manufacturing activity in the nation's heartland.

The Tenth District of the Federal Reserve reported that manufacturing activity increased in February and expectations climbed while exports dropped and optimism surrounding future output and hiring climbed.

From the report:

“Tenth District manufacturing activity increased further in February, and expectations also climbed higher. Price indexes generally moderated from the previous month, although slightly more firms indicated plans to increase prices in the future.

The month-over-month composite index was 13 in February, up from 7 in January and -2 in December, and the highest since last June…The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes. Manufacturing activity increased in both durable and nondurable goods-producing plants, with notable strength in machinery, fabricated metals, and aircraft production. Other month-over-month indexes were mixed in February but remained solid. The production and order backlog indexes moved higher, and the employment index edged up from 9 to 11. In contrast, the shipments and new order indexes fell slightly, and the new orders for exports index dropped from 10 to -7.” Read full report

Major U.S. stock indexes and ETFs responded positively to the news with the Dow Jones Industrial Average DIA rising 47 points at noon time in New York, the S&P 500 SPY gaining 0.23%, the Russell 2000 up 1.02% and the Nasdaq 100 QQQ adding 0.57%.

In other Federal Reserve news today, Dallas Federal Reserve Bank President Richard Fisher agreed with the Kansas City report showing improvement when he said that he didn't see the need for further quantitative easing from the Federal Reserve.

He told CNBC that things were improving and he doesn't see the need for QE3.  Of course, we all know that the Fed has engaged in historic measures to prop up the U.S. economy including keeping interest rates near zero, “QE1″ and “QE2,” “Operation Twist” and by buying approximately $2.3 Trillion in government bonds overall.  Rates are expected to stay low through 2012 but Mr. Fisher said that date was not set in stone and could be modified if new data warrants.

On the other hand, Fed meeting minutes from late January show that views on the need for more easing by the Fed were mixed among the Board's members.

Bottom line: Manufacturing continues to improve at modest rates in the nation's heartland but remain mixed. The Federal Reserve remains cautiously optimistic but dissent over the need for further easing continues.

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