Saturday, November 12, 2011

Weekly Indicators: Autumn rebound vs. Oil choke collar edition

- by New Deal democrat

It was a sparse week for significanlt monthly data. Consumer sentiment, both as to the present and the future, returned to their pre debt debacle levels as measured by the University of Michigan. Gallup's daily survey has shown some improvement but not nearly back to pre-July levels. Meanwhile, both import and export prices declined significantly, suggesting that inflation may be beginning to recede.

Asice from Oil, the high frequency weekly indicators generally had another positive week, although housing was a little soft and money supply receded.

Starting with jobs, the BLS reported that Initial jobless claims fell 7,000 to 390,000. Only 3 weeks in the last 3 years have been lower. The four week average declined to 400,000. The four week average remains close to its best reading in over 3 years.

The American Staffing Association Index remained at 91 last week. In the last couple of months, this series has resumed a slight upward trajectory, but remains lower YoY.

Tax withholding was up slightly YoY. Adjusting +1.07% due to the 2011 tax compromise, the Daily Treasury Statement showed that for the last 20 days throught November 9, $132.9 B was collected vs. $130.2 a year ago, a gain of $2.7 B or 2.0%.

Housing indicators declined slightly. The Mortgage Bankers' Association reported that seasonally adjusted purchase mortgage applications increased 4.8% last week. On a YoY basis, purchase applications were down -2.5%. Despite the decline, this remains back in the range that purchases mortgage applications have had been in for the 15 months before September. Refinancing rose 12.1% w/w. Refinancing has been very volatile and affected by small changes in interest rates.

Meanwhile, YoY weekly median asking house prices from 54 metropolitan areas at Housing Tracker showed that the asking prices declined -0.9% YoY. The areas with YoY% increases in price increased by four to a new high of 19. The areas with double-digit YoY% declines decreased back to 2. One third of all metropolitan areas in this survey now have YoY positive changes in asking prices.

Retail same store sales were strongly or tepidly positive depending on the reporting source. The ICSC reported that same store sales for the week of November 5 increased 2.7% YoY, and 1.0% week over week. Shoppertrak reported that YoY sales rose 3.7% YoY and were up 8.5% week over week.

Weekly BAA commercial bond rates decreased .25% to 5.11%. contrarily, yields on 10 year treasury bonds fell .21% to 2.07%. This is the fifth week in a row of decreasing spreads between the two rates, a good sign, inconsistent with an ongoing recession.

The American Association of Railroads reported that total carloads increased 3.5% YoY, up about 18,000 carloads YoY to 537,700. Intermodal traffic (a proxy for imports and exports) was up 8000 carloads, or 3.5% YoY. The remaining baseline plus cyclical traffic increased 9800 carloads or 3.4% YoY. Total rail traffic has improved substantially in the last month after having turned negative for 6 of 12 weeks during the summer.

Money supply continues to recede from its Euro crisis induced tsunami. M1 declined anoother -1.1% last week. It is now completely flat m/m but remains up 20.0% YoY, so Real M1 remains up 16.1%. M2 also declined another -3/7% w/w. It remained up 0.3% m/m, and 9.9% YoY, so Real M2 was up 6.0%. The YoY increase in both M1 and M2 remains near historic high levels. Despite the news out of Italy and Greece, this still may reflect a return of some confidence as to the Euro situation.

Finally, the Oil choke collar engaged after just a few weeks of relatively good news. Oil closed over $99 a barrel on Friday. This is back above the recession-trigger level calculated by analyst Steve Kopits. Gas at the pump declined $.03 to $3.42 a gallon. Measured this way, we probably are still about $.15 above the 2008 recession trigger level. Gasoline usage is once again off substantially, down -4.3% YoY, at 8671 M gallons vs. 9056 M a year ago. The 4 week moving average is off 5.5%. This is the steepest YoY drop yet in that average, and may be evidence that consumers have permanently altered their gasoline usage habits towards more conservation.

The coincident and short leading part of the high frequency indicators (jobs related, retail sales, rail traffic, and commercial bonds) have strongly rebounded from their brief contraction a couple of months ago. There is simply no recession or even a stall in these numbers. The decline in the longer leading indicators, however -- mortgages, money supply, and Oil -- is troublesome.

Have a nice weekend.