Saturday, July 27, 2013

Weekly Indicators: a midsummer respite edition

 - by New Deal democrat

Monthly data reported in the last week included a 5 month high in the Michigan consumer confidence index. Almost all of this was due to the present conditions sub-index, while expectations for the future, a component of the LEI, gained only slightly. Durable goods were up, but only due to transportation. New home sales were up. Existing home sales were down.

Let's start this week's look at the high frequency weekly indicators again by looking at the Oil choke collar:

Oil prices and usage
  • Oil $104.70 down -$3.35 w/w

  • Gas $3.68 up +0.04 w/w

  • Usage 4 week average YoY up +3.1%
The price of Oil retreated from its 52 week high. The price of a gallon of gas should follow (and already is on GasBuddy). The 4 week average for gas usage was, for the third time in a long time, up YoY.

Interest rates and credit spreads
  •  5.29% BAA corporate bonds down -0.12%

  • 2.54% 10 year treasury bonds down -0.10%

  • 2.75% credit spread between corporates and treasuries down -0.02%
Interest rates for corporate bonds had been falling since being just above 6% in January 2011, hitting a low of 4.46% in November 2012. Treasuries previously were at a 2.4% high in late 2011, falling to a low of 1.47% in July 2012, but remain back above that high, although they have backed off the recent new high. Spreads have varied between a high over 3.4% in June 2011 to a low of 2.73% in October 2012, and are very close to that low again.

Housing metrics

Mortgage applications from the Mortgage Bankers Association:
  • -2% w/w purchase applications

  • +6% YoY purchase applications

  • -1% w/w refinance applications
Refinancing applications have decreased sharply in the last 9 weeks due to higher interest rates to a two year low. Purchase applications have also declined from thier multiyear highs in April, and this week were again only slightly positive YoY.

Housing prices
  • YoY this week +8.5%
Housing prices bottomed at the end of November 2011 on Housing Tracker, and averaged an increase of +2.0% to +2.5% YoY during 2012. This weeks's YoY increase remained close to its 6 year record.

Real estate loans, from the FRB H8 report:
  • +0.3% w/w

  • +0.5% 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 several months the comparisons have completely stalled.

Money supply

  • +1.3% w/w

  • +0.8% m/m

  • +7.1% YoY Real M1

  • +0.5% w/w

  • +0.8% m/m

  • +5.0% YoY Real M2
Real M1 made a YoY high of about 20% in January 2012 and eased off thereafter. Earlier this year it increased again but has backed off its highs significantly.  Real M2 also made a YoY high of about 10.5% in January 2012.  Its subsequent low was 4.5% in August 2012. It increased slightly in the first few months of this year and has generally stabilized since, although it has declined slightly in the past few weeks.

Employment metrics

The American Staffing Association did not report an update to their Index this week.

Initial jobless claims
  •   343,000 up +9,000

  •   4 week average 345,250 down -750
Tax Withholding
  • $137.4 B for the first 18 days of the month of July vs. $124.7 B last year, up +$12.7 B or +10.2%

  • $147.4 B for the last 20 reporting days vs. $134.4 B last year, up +13.0 B or +9.7%
Daily tax withholding has improved to the middle part of its YoY range compared with its YoY average comparison in the last 7 months. Initial claims remain within their recent range of between 325,000 to 375,000, and have flattened out just as they have in the last 3 springs and summers.


Railroad transport from the AAR
  • -3200 carloads down -3.0% YoY

  • +6100 carloads or +3.8% ex-coal

  • +6900 or +2.8% intermodal units

  • -1600 or -0.3% YoY total loads
Shipping transport Rail transport has been both positive and negative YoY in the last several months. This week it was negative once again. The Harpex index had been improving slowly from its January 1 low of 352, but has flattened out in the last 6 weeks. The Baltic Dry Index remained close to its 52 week high. In the larger picture, both the Baltic Dry Index and the Harpex declined sharply since the onset of the recession, and have been in a range near their bottom for about 2 years, but have stopped falling.

Consumer spending Gallup's YoY comparison was extremely positive this week. The ICSC varied between +1.5% and +4.5% YoY in 2012, while Johnson Redbook was generally below +3%. The ICSC has recently been relatively weak, but Johnson Redbook remains close to the high end of its range.

Bank lending rates The TED spread is still near the low end of its 3 year range, although it has risen slightly in the last month.  LIBOR has made another new 3 year low.

JoC ECRI Commodity prices
  • up +0.89 to 123.77 w/w

  • +5.70 YoY
This was a positive week, with the only outright negatives being mortgage applications, which are still declining, and energy prices, which are high enough to engage the Oil choke collar. YoY S&P 500 earnings also remain slightly negative.

Interest rates have subsided somewhat from their recent highs, and spreads are near 52 week lows. Other positives include bank rates, money supply, house prices, and commodities. Consumer spending is extremely positive as measured by Gallup, very positive as measured by Johnson Redbook, but only weakly positive as measured by the ICSC.

Neutrals to slight positives include real estate loans, jobless claims, withholding taxes paid, and shipping rates.

This week saw a respite in the recent negative turn in the long leading indicators of interest rates and mortgages, as well as a decline in the oil price spike. Short leading and coincident indicators remain positive.

Have a nice weekend.