Category Archives: Uncategorized

Pending home sales, Consumer confidence

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Another bad one:

Pending Home Sales Index
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Highlights
Pending home sales in November declined for the third time in four months as buyers continue to battle both rising home prices and limited homes available for sale. The pending home sales index was down 0.9 percent but up 2.7 percent from a year ago. Modest gains in the Midwest and South were offset by larger declines in the Northeast and West.

November’s dip continued the modestly slowing trend seen ever since pending sales peaked to an over nine year high back in May. NAR said that home prices rose too sharply in several markets, there were mixed signs of an economy losing momentum and waning supply levels all contributed to headwinds in recent months despite low mortgage rates and solid job gains.

The Northeast decreased 3.0 percent but is still 4.3 percent above a year ago. In the Midwest the index rose 1.0 percent and and is now 4.1 percent above November 2014. Pending home sales in the South increased 1.3 percent and are 0.5 percent higher than last November. The index in the West declined 5.5 percent but remains 4.5 percent above a year ago.

(not population adjusted…)

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Dallas Fed, Japan restarting nukes

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From bad to worse:

Dallas Fed Mfg Survey
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Highlights
Texas factory activity increased for a third month in a row in December. The production index, a key measure of state manufacturing conditions, rose from 5.2 to 13.4, indicating stronger growth in output. Some other indexes of current manufacturing activity also reflected growth in December, but the survey’s demand measures showed continued weakness.

New orders, an indicator of incoming demand, declined at a faster pace. The index has been below zero for five months and fell to minus 8.9 in December. The growth rate of orders index has been negative for more than a year and dipped 7 points to minus 14.3 this month. Meanwhile, the capacity utilization and shipments indexes posted their fourth positive readings in a row and inched up to 7.8 and 7.6, respectively.

Perceptions of broader business conditions weakened markedly in December. The general business activity index has been negative throughout 2015 and plunged to minus 20.1 this month. After pushing just above zero last month, the company outlook index fell 10 points in December to minus 9.7, its lowest level since August.

The survey’s price measures pushed further negative in December. The raw materials prices index declined to minus 8.6, suggesting a slightly steeper drop in input costs than last month. The finished goods prices index was negative all year and moved down to minus 15.9. Meanwhile, the wages and benefits index moved up to plus 20.4, indicating stronger wage growth.

Expectations regarding future business conditions were mixed in December. The index of future general business activity fell 9 points to minus 1.4, while the index measuring future company outlook fell but remained positive at 6.6. Indexes for future manufacturing activity declined but remained strongly positive.

Japan restarting a nuke, this will move trade towards surplus and eventually add support for the yen:

Japan court rules to restart Takahama nuclear reactors

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Unemployment claims, NYC apts, Japan spending, interview in Truth-Out

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Claims readings could be distorted because a smaller share of those potentially eligible for benefits are applying. The share of recently unemployed workers seeking benefits has fallen this year to just above 50%, according to the National Employment Law Project, a group that advocates for the unemployed.

The rate is down from record high of almost 80% just after the recession ended.

The application rate typically declines as expansions age, but the current pace is the lowest in 15 years. NELP Policy Analyst Claire McKenna said the low rate reflects a vastly different labor market for those who recently lost their jobs versus the long-term unemployed.

The unemployment rate for those out of work for five weeks or less fell below prerecession levels this year. The rate for those out of work for six months or more is well down from 2009, but it remains about double the rate recorded in mid-2007.

“This late into a very slow recovery you have a sizable population of unemployed people that are less likely to establish eligibility for benefits,” Ms. McKenna said. In past cycles, even those workers who didn’t find long-term jobs would have landed shorter-term work that subsequently allowed them to again seek for benefits.

Must be a consequence of income reductions for people getting oil related revenues…

;)

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Spending is the measure of ‘policy success’ for the households:

Japan : Household Spending
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December 1 chart. Can you spot the hike in the consumption tax?
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Economist Warren Mosler: If the EU Doesn’t Loosen Its Deficit Limits, Greece Should Leave the Euro

Six years into Greece’s economic crisis and following successive “bailouts,” there still seems to be no light at the end of the tunnel. Greece’s economy continues to shrink and unemployment remains at record high levels while the Syriza-led government coalition has reneged on its promises of radical change and ending austerity. The troika, in turn, continues to insist that strict austerity measures, including budget cuts and mass privatizations, be enforced in Greece.

In this interview, economist Warren Mosler, a leading figure in the field of modern monetary theory and the cofounder of the Center for Full Employment and Price Stability at the University of Missouri-Kansas City, discusses money, debt and the role of the European Union’s deficit limits in perpetuating the crisis, and shares the proposals he believes could help lead Greece out of its crisis.

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Personal spending

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Consumer spending revised down for last month. Seems best to wait for at least the first revision before commenting.
;)

And still waiting for the consumer to spend his gas savings?
;)

United States : Personal Income and Outlays
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Highlights
Because of a glitch at the Bureau of Economic Analysis, the personal spending portion of the personal income & spending report was posted early. Personal spending rose an as-expected and very respectable 0.3 percent in November with October revised 1 tenth lower to no change. Spending on durables was strong in the month, up 0.7 percent following a 0.3 percent dip in the prior month. Nondurables spending rose 0.5 percent while services, the largest spending component, rose 0.2 percent. The remainder of the report will be posted as scheduled at 8:30 a.m. ET tomorrow morning.

This is not adjusted for inflation, but there hasn’t been much change in inflation for quite a while before the latest dip in headline inflation. And note that given the size of the collapse in 2008 the subsequent growth has been that much more anemic:
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This one is inflation adjusted, and has turned down in the last year. And it includes health care premiums which had a one time addition of some 6 million new premium payers which contributed to the ‘bulge’:
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Rail traffic, China Beige Book, Bank loans

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Rail Week Ending 12 December 2015: Bad Data Continues And Marginally Worse Than Last Week

Week 49 of 2015 shows same week total rail traffic (from same week one year ago) declined according to the Association of American Railroads (AAR) traffic data. Intermodal traffic returned to contraction year-over-year, which accounts for approximately half of movements and weekly railcar counts continued deeply in contraction.

So who would’ve thought all that ‘monetary stimulus’ wouldn’t work???
;)

China Beige Book Shows ‘Disturbing’ Economic Deterioration

By Malcolm Scott

Dec 17 (Bloomberg) — China’s economic conditions deteriorated across the board in the fourth quarter, according to a private survey from a New York-based research group that contrasted with recent official indicators that signaled some stabilization in the country’s slowdown.

National sales revenue, volumes, output, prices, profits, hiring, borrowing, and capital expenditure were all weaker than the prior three months, according to the fourth-quarter China Beige Book, published by CBB International. The indicator is modeled on the survey compiled by the Federal Reserve on the U.S. economy, and was first published in 2012.

Earnings Deterioration

The Beige Book’s profit reading is “particularly disturbing,” with the share of firms reporting earnings gains slipping to the lowest level recorded, CBB President Leland Miller wrote in the release. While retail and real estate held up reasonably well, manufacturing and services performed poorly, with revenues, employment, capital expenditure and profits weakening.

The survey shows “pervasive weakness,” Miller wrote in the report. “The popular rush to find a successful manufacturing-to-services transition will have to be put on hold for a bit. Only the part about struggling manufacturing held true.”

After efforts including six interest-rate cuts since late 2014 failed to revive growth, policy makers are switching focus to fix problems like overcapacity on the supply side. President Xi Jinping — seeking to keep growth at a minimum 6.5 percent a year through 2020 — is juggling short-term stimulus with long-term prescriptions to avoid the middle-income trap that has ensnared developing nations after bouts of rapid growth before they became wealthy.

Nothing happening here:

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Architecture Billings Index, Fed comments

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Another setback for economic forecasters as this index falls below 50, indicating contraction:
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Seems to me the Fed has gotten lost in its own confused rhetoric, but that’s another story.

Point here is fed funds are a quarter point higher which will will make no discernible difference to macroeconomic outcomes, including the Fed’s employment and inflation mandates.

FED RAISES RATES BY 25 BASIS POINTS, FIRST SINCE 2006

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Draghi quote, Euro purchasing power parity, Small business index

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“Often wrong but never in doubt”?
;)

Quote from Mario Draghi:

But there is no doubt that if we had to intensify the use of our instruments to ensure that we achieve our price stability mandate, we would. There cannot be any limit to how far we are willing to deploy our instruments, within our mandate, and to achieve our mandate. And indeed the European Court of Justice has stated that the ECB must be allowed “broad discretion” when it “prepares and implements an open market operations programme”.

I can say therefore with confidence – and without any complacency – that we will secure the return of inflation to 2% without undue delay, because we are currently deploying tools that we believe will achieve this, and because we can, in any case, deploy our tools further if that proves necessary. “

More evidence the euro is fundamentally cheap:
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And yet another weak release:

NFIB Small Business Optimism Index

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Recent interview transcript, Car sales, Fed Atlanta GDP forecast

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Transcript: Interview with Economist Warren Mosler

Interesting- total sales rate unchanged, but domestic vehicle sales rate down again.

In other words, not currently growing:

Motor Vehicle Sales
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Highlights
Consumers have really shown their strength the last three months, buying vehicles at a 12-year high annualized rate of 18.2 million. That’s right, for three months in a row. The results, however, do not point to a monthly gain for the motor vehicle component of the November retail sales report — but they do point to a foundation of strength.

The composition of November’s unit sales shows a shift higher for light truck sales, no doubt the result of low gasoline prices, that offsets a shift lower for cars. Low gas prices are keeping more money in consumer pockets, reflected not only in a rising savings rate but also in exceptionally strong vehicle sales.
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Down again, now forecasting only 1.4% for Q4:
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