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By New_Deal_democrat October 3, 2015 10:00 am
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Weekly Indicators: consumer expansion, industrial recession redux edition
Monthly data for September started with good news and bad news.  Motor vehicle sales had their best month in about 10 years, and one of their 10 best months ever.  Consumer confidence soared.  Jobs growth, on the other hand, was weakly positive, with plenty of negative internal data.  The ISM manufacturing index just barely remained positive.
August data included positive personal income and spending, positive construction spending, and negative factory orders. 

My usual note: I look at the high frequency weekly indicators because while they can be very noisy, they provide a good Now-cast of the economy.  The indicators will confirm a trend or indicate a switch in trend well before monthly and quarterly reports.

In general I am going in order of long leading indicators, then short leading indicators, then coincident indicators.


Interest rates and credit spreads

  • 5.36% BAA corporate bonds up +0.05%
  • 2.05% 10 year treasury bonds down -0.11%
  • 3.31% credit spread between corporates and treasuries up +0.16%
30 year conventional mortgage rate:
  • 3.77%, down -.20%


Interest rates for BAA corporate bonds made a 50+ year low in January. This was not confirmed by AAA corporate bonds.  Their one year low was 4.3%, and more recently their one year high was 5.3%.  After a possible once-in-a-lifetime low of 1.47% in July 2012, Treasuries rose to over 3% in late 2013, then fell through 2014 and into early 2015, to at or below 2%.  Yields then broke out to the upside, but fell below 2% briefly on Friday.  Spreads have widened further, and are very negative.

Mortgage rates are back down below 4%, so I am scoring them a positive.




Mortgage applications


  • -6% w/w Purchase applications
  • +20% YoY Purchase applications
  • -8% w/w Refinance applications
Real Estate loans
  • +0.5% w/w
  • +4.8% YoY

Mortgage applications had been awful for several years, before turning up early this year in response to very low rates.  With rates back below 4%, I expect this number to continue to be positive.

Real estate loans have been firmly positive for close to two years.


Money supply


  • +0.7% w/w
  • -0.3% m/m
  • +5.7% YoY Real M1
  • +0.3% w/w
  • +0.7% m/m
  • +6.4% YoY Real M2

Real YoY money supply remains firmly positive.


Trade weighted US$ (Broad)

  • Up +1.56 to 120.89


The US$ appreciated about 20% against the Euro in particular late last year.  It made yet another new high during this past week.


Commodity prices


  • Down -1.07 to 87.88 w/w 
  • Down -28.55 YoY
BBG Industrial metals ETF
  • 97.48 up +1.03 w/w
Commodity prices as measured by ECRI retreated to their multi-year lows this week, as did industrial metals.  I suspect the recent collapse is mainly driven by Chinese weakness, and is a net boon to the US economy.


Employment metrics

 Initial jobless claims

  • 277,000 up +10,000 
  • 4 week average 270.750 down -1000

Initial claims remain well within the range of a normal economic expansion, as does the 4 week average.


The American Staffing Association Index 


  • Up +2 to 100 98
  • Down -3.47 YoY

The YoY comparison had generally been positive to strongly positive since last spring. In the last five months this turned neutral and then increasingly negative. The YoY comparison blew out to its worst comparison since the Great Recession last week, and stayed close to that this week.


Tax Withholding

  • $171.1 B for the month of September vs. $170.6 B one year ago, up +$0.5 B or +0.3%
  • $161.0 B for the last 20 reporting days ending Thursday vs. $154.2 B one year ago, up +$6.8 B or +4.4%


Beginning with the last half of 2014, with a few exceptions, virtually all readings have been positive. September was weak, but ended positive.  The 20 day rolling total is normally positive again. I am returning this to a weak positive.


Oil prices and usage

  • Oil up +$0.26 to $45.66 w/w
  • Gas down -$.01 to  $2.32 w/w 
  • Usage 4 week average up +4.2% YoY 9059 vs 8690


The 2010-13 Oil choke collar remains broken.  The price of gas and oil bottomed at the end of January at $2.02.  They rose $0.80 to $2.82 in June, and have declined since then. Gas is below $2 in many states.


Bank lending rates


Both TED and LIBOR have risen since the beginning of this year to the point where both are negatives, although there have been some wild fluctuations.


Consumer spending

Both the Goldman Sachs and Johnson Redbook Indexes weakened after last Christmas, and weakened further YoY beginning in May.  Until the last 4 weeks, with the exception of 3 weeks in April, the Gallup report had been negative since the beginning of this year.  The big difference appears to be that Gallup does not measure big, durable, purchases, but most importantly does include gas purchases. Gallup had yet another good week this week.



Railroad transport

  • Carloads down -5.4% YoY
  • loads ex-coal down -0.5% YoY
  • Intermodal units up +2.1% YoY
  • Total loads down -1.8% YoY

Shipping transport

Rail traffic fell off a cliff in mid-February. Intermodal traffic quickly turned positive again, but domestic carloads, led by coal (for export) declined further in May and June (off -8% to -10% YoY), and has been at consistent, less negative YoY comparisons since, indicating that if we could seasonally adjust, we would probably find traffic increasing in the last few months. This week virtually all of the weakness was confined to coal.

After declining sharply for several months, making a 3-year low in mid-February, the BDI surged higher, and then declined again.  Meanwhile, Harpex (container shipping) turned up sharply for 3 months, peaking at 646 in July, before turning down again. In the longer term, shipping rates bottomed about 3 years ago and have been in a slow and variable uptrend since, although the Baltic index did break that to the downside in the recent skid.

Steel production


  • Up +1.7% w/w
  • Down -7.6% YoY

Over the last several years steel production had generally been in a decelerating uptrend.  Since  spring 2014, it turned mixed, and then cliff-dived 7 months ago.




Among long leading indicators, interest rates for corporate bonds and treasuries  remained neutral.  Mortgage rates, and purchase and refinance mortgage applications are positives. Real estate loans are positive.  Money supply is positive.


Among short leading indicators, the interest rate spread between corporates and treasuries remains quite negative, as is the US$.  Positives included jobless claims, oil and gas prices, and gas usage.  Commodities remain a big global negative.  Temporary staffing is negative for the 20th week in a row, and more intensely so for the 2nd straight week.


Among coincident indicators, steel production, shipping, rail transport ex-intermodal, the TED spread and LIBOR all are negative.  Tax withholding and consumer spending are now uniformly positive if weakly so.


We continue to have a stark bifurcation.  Consumer-related indicators - mortgages, oil and gas, jobless claims, and consumer spending - all remain positive.  But those portions of the US economy most exposed to global forces, including the US$, commodities, and industrial production and transportation, are all firmly negative.  Employment on net is still a positive, though more weakly so.  Housing and cars, those two most leading sectors of the US economy remain positive (with a post-recession record for motor vehicle sales last month), and thus so do I. 


Have a nice weekend!

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