Saturday, April 13, 2013

Weekly Indicators: whipsaw week, all positive edition

 - by New Deal democrat

Monthly March data released in the past week included two very poor reports: retail sales sank by -0.4%, and the U. Michigan consumer sentiment reading was the worst since last year. Inventories rose slightly. Producer prices actually declined.

One of the points I routinely make about this high freequency weekly data I follow is that it can be noisy. This week it completely reversed last week's poor readings, suggesting that change in weeks for the Easter/Passover holidays skewed the YoY data.

Let's start this week's look at the high frequency weekly indicators by looking at employment data, which completely flipped this week vs. last week:

Employment metrics

Initial jobless claims
  •   346,000 down 39,000

  •   4 week average 358,000 up 3,750
American Staffing Association Index
  • flat at 91 w/w up 1.1% YoY

Initial claims have established a new lower range of between 330,000 to 375,000 this year. In the last two years, beginning at the end of the first quarter there has been a spike of 20,000+ in jobless applications, and we certainly did see the pattern repeat in the previous two weeks. This week jobless claims returned to their new, lower range.  The ASA is still running slighty below 2007, and slightly ahead of last year, although the comparison is deteriorating a small amount.

Daily Treasury Statement tax withholding

  • $140.1 B (adjusted for 2013 payroll tax withholding changes) vs. $141.7 B, -1.1% YoY for the last 20 days.  The unadjusted result was $164.1 B for a 15.8% increase.

  • $68.3 B was collected during the first 9 days of April vs. $65.1 B unadjusted in 2012, a $3.2 B or 4.9% increase YoY.
These are the best YoY comparisons in over two months. While my best estimate is that collections should be up 15% due to the payroll tax increases that took effect on January 1, since that may not be accurate, now that we have enough data from this year I'm starting to make comparisons with earlier this year, and those comparisons have been improving. This week even the adjusted data was close to positive.


Railroad transport from the AAR
  • +10,000 or +3.7% carloads YoY

  • +1800 or +4.8% carloads ex-coal

  • +400 or +0.2% intermodal units

  • +10,500 or +2.1% YoY total loads
Shipping transport Rail transport had its worst week in a long time one week ago, but this week completely reversed and was completely positive.  The Harpex index remains slightly off its 3 year low of 352, and the Baltic Dry Index remains above its recent low.

Consumer spending Gallup had been very positive for 3 months, but April spending so far has been the lowest daily amount so far this year and was only slightly ahead of last year.  The ICSC varied between +1.5% and +4.5% YoY in 2012. In the last month it was near or even below the bottom of this range, but rebounded this week. The JR report this week is in the upper part of its typical YoY range for the last year.  None of these match the poor March retail sales report, although Gallup's report weakened considerably in comparison with recent months.

Housing metrics

Housing prices
  • YoY this week +5.3%
Housing prices bottomed at the end of November 2011 on Housing Tracker, and have averaged an increase of +2.0% to +2.5% YoY during 2012, but the YoY comparison has been as high as +5.8% in March this year.

Real estate loans, from the FRB H8 report:
  • up 16 or +0.4% w/w

  • up 28 or +0.8% YoY

  • +2.4% from its bottom
Loans turned up at the end of 2011 and averaged about 1% gains YoY through most of 2012.  In the last month these completely stalled but this week increased again.

Mortgage applications from the Mortgage Bankers Association:
  • +1% w/w purchase applications

  • +3% YoY purchase applications

  • +6% w/w refinance applications
Purchase applications had been going sideways for 2 years. In the last couple of months they have finally broken out of that range slightly to the upside.  Refinancing applications were very high for most of last year with record low mortgage rates, but have decreased slightly recently.

Interest rates and credit spreads
  •  4.70% BAA corporate bonds down -0.13%

  • 1.81% 10 year treasury bonds down -0.09%

  • 2.89% credit spread between corporates and treasuries down -0.04%
Interest rates for corporate bonds have generally been falling since being just above 6% two years ago in January 2011, hitting a low of 4.46% in November 2012.  Treasuries have fallen from about 2% in late 2011 to a low of 1.47% in July 2012. Spreads have varied between a high over 3.4% in June 2011 to a low under 2.75% in October 2012.  The  last several months saw a marked increase in rates and credit spreads have widened, but this week yields came down and the spread narrowed slightly.

Money supply

  • +2.2% w/w

  • +0.7% m/m

  • +9.3% YoY Real M1

  • +0.6% w/w

  • +0.8% m/m

  • +4.9% YoY Real M2
Real M1 made a YoY high of about 20% in January 2012 and has generally been easing off since.  This week's YoY reading remained above a new low set a month ago.  Real M2 also made a YoY high of about 10.5% in January 2012.  Its subsequent low was 4.5% in August 2012. M2 made a new high this week after falling almost 1% from its previous high in January.

Oil prices and usage
  •  Oil $91.48 down -$0.89 w/w

  •   gas $3.61 down $0.04 w/w

  • Usage 4 week average YoY -2.4%
The price of a gallon of gas has declined sharply since the end of February, and is actually down narly 10% YoY. The 4 week average for gas usage turned negative after nine weeks in a row of being positive YoY.

Bank lending rates The TED spread recently increased slightly off its 18 month+ low.  LIBOR remained at its new 52 week low and is close to a 3 year low.

JoC ECRI Commodity prices
  • down 0.97 to 126.35 w/w

  • +3.73 YoY
The weekly indicators have shown evidence that the economy was beginning to soften starting from the first week of February, and the high frequency indicators became more neutral in the weeks since then. Last week they came close to a critical mass of negativity. This week that entirely reversed, with every single indicator at least slightly positive, with the sole, questionable, exception of withholding tax receipts, which were down slightly on an adjusted basis, but still had their best week in almost three months.

The positives include housing prices and mortgage applications, gas prices lower than one or two years ago, and money supply remaining positive, although less so than previously. Commodities are mildly positive measured YoY, although they have retreated over the last month. Consumer spending is positive, although Gallup is much less positive than the last 4 months. Initial jobless claims turned strongly positive again this week. Rail turned positive as well. Real estate loans improved, as did credit spreads.

Basically neutral indicators include shipping rates, interest rates and temporary jobs. Overnight banking loans haven't budged.

After a positive, but muted, tone in the last several months, one week ago the data was tilting a little more towards negativity. My suspicion was that the combination of the payroll tax increase and sequestered budget cuts are now showing up int he high frequency data. This week it all reversed, as the negatives all disappeared, and the data returned to almost uniformly positive.

Was this just a two week whipsaw based on the changes in springtime religious holidays? We'll see next week. Have a nice weekend.