Commodity prices as measured by industrial metals bottomed last November. ECRI subsequently turned up as well, enough so that both turned positive. Industrial metals, however, have turned south and are now back to negative.
Stock prices S&P 500
Stock prices became a positive having made new all-time highs during the last few months.
Regional Fed New Orders Indexes
(*indicates report this week)
- *Empire State down -8 to -7.5
- *Philly up +8.6 to +1.4
- Richmond down -35 to -20
- Kansas City down -2 to -7
- Dallas up +13.3 to +5.3
- Month over month rolling average: unchanged at -6
In March and April, the turning up of these indexes forecast the positive readings in the ISM. Then in May and June there was a serious divergence between the two, but in July the regional indexes became on balance positive, again forecasting the positive ISM. In August there was a serious downdraft which again forecast the poor ISM. September is off to a mixed start.
Initial jobless claims
- 260,000 up +1,000
- 4 week average 260,750 down -500
Initial claims remain well within the range of a normal economic expansion, as does the 4 week average.
The American Staffing Association Index
- Unchanged at 95 w/w
- Down -0.88 YoY
This index turned negative in May 2015, getting as bad as -4.30% late last autumn. Since the beginning of the year it became progressively "less bad" and for the last few months has been so close to positive YoY as to be a neutral.
- $92.7 B for the first 10 days of September vs. $88.3 B one year ago, up +$4.4 B or +5.0%
- $162.0 B for the last 20 reporting days vs. $162.7 B one year ago, down -$0.7 B or -0.4%
Beginning with the last half of 2014, virtually all readings were positive, but turned more mixed and choppy, and occasionally even negative, since August 2015. The last few months have shown a marked improvement -- until this week's negative 20 day reading. I suspect this is a one-off that will resolve once a poor week in August rolls off the comparison.
Oil prices and usage
- Oil down -$1.01 to $43.19 w/w
- Gas prices down -$.02 to $2.20 w/w
- Usage 4 week average up +4.2% YoY
The price of gas bottomed last winter at $1.69. Usage has been almost uniformly positive. Gas prices are off their summer seasonal high.
Bank lending rates
Both TED and LIBOR were already rising since the beginning of last year to the point where both have usually been negatives, although there were some wild fluctuations. Of importance is that TED was above 0.50 before both the 2001 and 2008 recessions. Both have now reached that level, and this week, both spiked further into negative territory.
Both the Goldman Sachs and Johnson Redbook Indexes progressively weakened in pulses during 2015, before improving somewhat since the beginning of last November. Redbook has recently turned very weak, while Goldman has turned more positive. Gallup has been very positive for the vast majority of this year. This week all three are positives.
- Carloads down -6.0% YoY
- loads ex-coal down -0.9% YoY
- Intermodal units down -4.8% YoY
- Total loads down -5.4% YoY
Rail traffic turned negative and then progressively worse in pulses throughout 2015. Rail loads became "less worse" in January and showed continued improvement until going over the proverbial cliff all spring (typically down -10% or more) in spring. It has been trending incrementally less awful except for the last three months, even scoring neutral twice in the last 5 weeks. This week it was slightly negative.
Harpex has recently resumed its decline again to repeated multi-year lows. On the other hand, BDI has improved enough -- to near 12 month highs, and higher then 20 of the last 24 months -- to score as positive. I am wary of reading too much into price indexes like this, since they are heavily influenced by supply (as in, a huge overbuilding of ships in the last decade) as well as demand.
- Down -1.8% w/w
- Down -3.6% YoY
Until spring 2014, steel production had generally been in a decelerating uptrend. It then gradually rolled over and got progressively worse in pulses through the end of 2015. This year it started out as "less worse" and turned positive a few months ago, but recently turned negative again. This appears to be due to renewed global Chinese "dumping."
The recent paradigm of good leading indicators, poor coincident iindicators has been shifting over the last three weeks.
Now ALL but one of the long leading indicators are positive. Interest rates for corporate bonds, treasuries, the yield curve, real money supply, real estate loans, mortgage rates, purchase and and refinance mortgage applications are positive. The only negative is that mortgage rates have not made new lows for over 3 years.
Short leading indicators turned a little more mixed. Stock prices, jobless claims, oil and gas prices, gas usage, and as of this week the spread between corporates and treasuries, are all positive. Both measures of the US$ are now neutral. Industrial commodities have joined the volatile regional Fed averages as a negative.
The coincident indicators remain mixed. For once recently all measures of consumer spending are positive. The BDI remained barely positive. Rail, steel, the Harpex shipping index, and bank rates remain negative, with bank rates really spiking. Tax withholding was mixed. Obviously I do not like a negative YoY tax withholding reading, but I suspect this will resolve next week.
In general, low interest rates are really driving positivity. The recent decline in commodities and spike in bank rates suggest a further bout of global weakness, and that may also be reflected in the slight rise of the US$ and increase in Treasury yields. While US monthly data for August has generally been poor, neutral staffing and slightly negative rail -- both improved from earlier this year -- argue that there is no real downturn.
Next week the focus shifts to housing.
Have a nice weekend!