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By New_Deal_democrat April 12, 2014 9:29 am
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Weekly Indicators: Credit spreads and Jobless claims shine as positive trend continues edition
This was a very light week for monthly data.  March import, export, and producer prices were up more than expected.  February consumer credit increased substantially. The preliminary consumer confidence reading for April improved.
 

My weekly report on the high frequency weekly indicators is meant to provide an up-to-this-week snapshot of the economy.  They will confirm a trend or indicate a switch in trend well before monthly reports.  They are also a way to mark my, and your, opinions to market and keep us close to reality.

 

As recently, let's start again with consumer spending:

 

Consumer spending

Gallup's 14 day average of consumer spending averaged between $80 and $100 for most of 2013, with frequent YoY comparisons over $20, and few less than +$10.  In 2013 the YoY range for the ICSC declined to between +1.5% and +3.0%, while Johnson Redbook YoY was between from +2% to a high over +4%.  The ICSC remains near the low end of its recent rnage, while Johnson Redbook is in midrange.  For the third week in a row we also got a decent reading from Gallup.

 

Steel production from the American Iron and Steel Institute 

  • -3.2% w/w
  • -3.9% YoY

Steel production over the last several years has generally been in a decelerating uptrend.  After a strongly positive move late in 2013, YoY comparisons turned negative again in January and have been mixed since.  This week is most negative in awhile.

 

Transport

 Railroad transport from the AAR 

  • +15,200 carloads up 5.4% YoY
  • +10,700 carloads up 6.8% ex-coal
  • +29,200 or +12.6% intermodal units
  • +44,600 or +8.7% YoY total loads

Shipping transport

Rail transport ended 2013 on a very positive note.  Rail traffic was very volatile in February but has rebounded sharply in the last four weeks.  The Harpex index slowly rose, then stabilized, but has slowly declined since July 2013. The Baltic Dry Index made a new 3 year high in December 2013, then fluctuated and have now declined.  Both the Baltic Dry Index and the Harpex Index were in a range near their bottom for about 2 years, but rose significantly above those ranges in 2013.

 

Interest rates and credit spreads

  • 5.02% BAA corporate bonds up +0.02%
  • 2.77% 10 year treasury bonds up +0.05%
  • 2.25% credit spread between corporates and treasuries down -0.03%

Interest rates for corporate bonds made a low of 4.46% in November 2012. Treasuries fell to a possible once-in-a-lifetime low of 1.47% in July 2012, but rose over 1.6% above that mark in late 2013.  Yields declined significantly since the relatively poor December employment report three months ago, and have remained in that range.  Spreads made a new post-recession low this week.  Their recent high was over 3.4% in June 2011.

Housing metrics

Mortgage applications from the Mortgage Bankers Association:

  • w/w purchase applications up +3%
  • YoY purchase applications down -14%
  • w/w refinance applications down -5%

Both refinance applications and purchase applications are still near their recent post-recession lows.

Housing prices

  • YoY this week +11.1%

Housing prices bottomed in November 2011 on Housing Tracker, and YoY comparisons rose to just shy of +12% in late 2013. In the last month the YoY reading has declined from this range, but rebounded again this week.  The still sharp YoY increase in prices, which are now roughly halfway between their 2006 peak and 2012 trough, might actually be a negative, given higher mortgage rates. 

Real estate loans, from the FRB H8 report:

  • +0.1% w/w
  • +0.1% YoY
  • +3.9% from their bottom

Loans turned up at the end of 2011, but with higher interest rates, the comparisons rolled over and had been almost consistently negative since April 2013, although they have improved in the last month, turning positive YoY for the last three weeks.

Money supply

M1 

  • -0.7% w/w
  • -1.1% m/m
  • +8.0% YoY Real M1

 M2 

  • -0.3% w/w
  • +0.3% m/m
  • +4.6% YoY Real M2

In January 2012, YoY Real M1 made a high of about 20%, and YoY Real M2 made a high of about 10.5%.  Growth in both decelerated since then.  Real M2 made a new 2 year low several months ago.  Both Real M1 and Real M2 improved substantially since, at YoY rates that have stabilized in the last few weeks.

 

Employment metrics

 Initial jobless claims

  • 300,000 down -26,,000
  • 4 week average 316,250 down -3,250

Initial claims rose this week, but were still quite low, and are near their post-recession lows on a 4 week basis.

 

The American Staffing Association Index increased +1 to 95. It is up +2.90% YoY.

 

Only late 2007 and early 2008 were better than 2013. The YoY comparison faded in February but stabilized in the last month. It is now only -1 off its all time pre-great recession high for April.

 

Tax Withholding 

  • $58.4 B for the first 7 days of April vs. $58,7 B last year, down -$0.3 B or -0.5%
  • $174.8 B for the last 20 days ending Wednesday vs. $164.5 B for 20 days ending Wednesday 1 year ago, up +$10.3 B +6.3%.

The rolling 20 day measure continues to show reasonable to substantial improvement YoY, although the last few days include a rare negative number.

 

Oil prices and usage

  • Oil up +$2.60 to $103.74 w/w
  • Gas up +.02 to $3.60 w/w
  • Usage 4 week average YoY up +4.4%

The price of Oil began its seasonal climb in February.  It is slightly higher than it was exactly one year ago, but remains below 2 and 3 years ago. The price is now high enough to slightly engage the oil choke collar. The 4 week average for gas usage was again positive this week, after being negative for eight straight weeks, suggesting that its weakness had to do with the unusually severe winter.  In the larger picture, it continues to look like in 2013 the Oil choke collar finally loosened its hold on the economy slightly.

Bank lending rates

The TED spread and LIBOR are both somnolent. LIBOR remained near the 3 year low it set last week.

 

JoC ECRI Commodity prices

  • Up +2.26 to 127.66 w/w
  • -0.54 YoY 

The long leading indicators continued their 2014 trends. Treasury rates are significantly below their December highs. Money supply continued its rebound.  Bank lending rates remain low.  Real estate loans remained slightly positive.  Only mortgage applications continue to be poor.

 

The short leading indicators were generally very positive this week.  Initial jobless claims had one of their best post-recession readings of all.  Credit spreads made a new post-recession low. Commodities were neutral.  Only gas and oil were slightly negative, as their seasonal increase is now enough to slightly engage the oil choke collar.

 

The coincident reports were more mixed.  Consumer spending was positive.  Rail transport was also strongly positive.  YoY comparisons of gas usage were up.  Tax withholding was mixed.  Only steel and shipping were negative.

 

This week was yet another positive week.  It looks like clear sailing in the immediate future.

 

Have a nice weekend!

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