- by New Deal democrat
This week was thin on monthly data: housing sales are still awful, but no more awful than they've been for the last two years. Housing prices are still falling (a mixed blessing, I really should write more on that), regional manufacturing reports were very good, but durable goods ex-Boeing stunk. This last one is of a piece with the weak industrial production report from the last week, and will have an impact on the LEI. Finally, 4th quarter GDP was revised downward, due in part to the effect of the "50 little Hoovers." I've drafted a piece on state financing which has been sitting unfinished for 2 weeks, maybe I ought to get to that too....
Anyway, as I've said I am watching our high frequency indicators especially to contrast the forces of continued strengthening (initial jobless claims) vs. Oil's choke hold on the economy. As I've reported already, both moved to or past their inflection points this week. Initial jobless claims came in at 381,000 and the 4 week average at 402,000 is the lowest since before the Black September 2008 meltdown. At the same time the price of a barrel of Oil briefly crossed $100, pushing it past the point of 4% of GDP that in the past has heralded recessions.
Oil jumped over $10 to $97.88 a barrel. Gas at the pump rose five more cents to $3.19 a gallon. This is an increase of $.50 in 4 months. If this week's spike in Oil does not reverse, expect pain at the pump to be palpable shortly. Despite that, this week gasoline usage was 37,000 barrels a day higher than last year, or +0.4%, all things considered a welcome sign.
Railfax showed a rebound for the second week in a row, up 11.9% YoY. Baseline and motor vehicle carrier traffic still remain barely ahead of last year on a 4 week moving average, and shipments of waste and scrap metal remain at last year's levels. Intermodal traffic, a gauge of imports, is the reason for the overall rebound, as it is up 10% YoY.
The Mortgage Bankers' Association reported an increase of 5.1% in seasonally adjusted mortgage applications last week, essentially canceling out last week's decline. This series remains generally in a flat range since last June. Refinancing increased 17.8%, also rebounding from last week's double-digit decline, but remains near its lowest point since last July 3. Spring selling season is about to begin, and the effect of higher mortgage rates is something to watch.
The American Staffing Association Index remained at 90 again. This was 13% higher than a year ago, but this series has completely stalled out in terms of relative YoY gains. In other words, it has stopped making progress towards its pre-recession peak.
The ICSC reported that same store sales for the week of February 19 increased 3.0% YoY, and also increased 2.6% week over week. This series' YoY comparisons had been trending lower since the first of the year, so this is actually quite good. On the other hand, Shoppertrak reported that sales actually declined 0.4% YoY for the week ending February 13. This is the second YoY decline in a row. Shoppertrak believes this can be attributed to the calendar effects of President's Day. On a week over week basis, sales increased 5.4%.
Weekly BAA commercial bond rates dropped -.07% to 6.15%. This compares with a -0.8% decrease in the yields of 10 year treasuries to 3.60%. Both series are near recent highs, but there is still no relative weakness in corporate bonds.
M1 was down 0.5% w/w, up 1.6% M/M, and still up a strong 9.0% YoY, so Real M1 is up 7.3%. M2 was up 0.1% w/w, up .8% M/M and up 4.1% YoY, so Real M2 is up 2.4%. M2 has dropped back below the 2.5% "green light" zone.
Adjusting +1.07% due to the recent tax compromise, the Daily Treasury Statement showed adjusted receipts for the first 16 days of February of $119.9 B vs. $123.5 B a year ago, for a loss of -3.0%+ YoY. For the last 20 days, $147.7 B was collected vs. $143.4 B a year ago, for a gain of 3%. This 20-day gain is poor compared with most comparisons over the last 10 months.
In the case of the dueling inflection points, I expect Oil prices to win. The question is, whether this recent spike is a blip, which will be reversed shortly, or whether there will be pain at the pump again this spring and summer.
