Saturday, January 21, 2012

Weekly Indicators: all positive edition

- by New Deal democrat

Before turning to the high frequency weekly indicators, as usual let's briefly check out the monthly reports. Virtually all of the monthly data reported this week was positive, including industrial production, capacity utilization, the Empire State and Philly Fed reports, and housing permits and existing home sales. On the other hand, housing starts did decline month over month, and consumer prices were totally flat, meaning that in 4Q 2011 there was a very slight DEflation, normally a sign of coincident weakness.

There is still one more week where holiday seasonality can significantly influence the some of high frequency weekly indicators.

Weekly employment-related data continued positive, by one standard very strongly so:

The BLS reported that Initial jobless claims fell by 47,000 to 352,000, the best report in almost 4 years. The four week average declined by 3500 to 379,000. This is close to the lowest level since mid-2008.

The American Staffing Association Index rose by 11 to 84 last week, the best January reading since 2008. The steep rise nevertheless does show typical seasonality.

There was a surge in tax withholding in the last 20 day reporting period. the Daily Treasury Statement showed that withholding for the first 12 days of January 2012 was $109.1 B vs. $98.0 B a year ago. Adjusting +0.54% due to the 2011 tax compromise, for the last 20 reporting days, $172.0 B was collected vs. $158.1 B a year ago, a gain of +8.8%.

Housing data was strongly positive:

The Mortgage Bankers' Association reported that seasonally adjusted purchase mortgage applications increased 2.2% YoY and was also up 10.3% from one week ago. The overall trend remains flat since June 2010. Refinancing rose 27.9% in the last week as mortgage rates continued to hit new lows.

For the seventh week in a row, YoY weekly median asking house prices from 54 metropolitan areas at Housing Tracker were positive, up +2.5% YoY. This is the best reading in close to 5 years. A majority of metro areas -- 31 -- had YoY price increases. Only 7 areas still had YoY% price declines of -5.0% or worse. Chicago remained the only area with a 10% YoY price decrease.

Sales and transportation continued strong:

Retail same store sales continued to perform well. The ICSC reported that same store sales for the week ending January 14 increased 3.0% YoY, but were flat week over week. Shoppertrak, did not report, however, Johnson Redbook reported a weak 2.8% YoY gain, the weakest in 6 months.

The American Association of Railroads reported that for the week ending January 14, 2012, with U.S. railroads originating 298,560 carloads, up 5.5 percent compared with the same week last year. Intermodal volume for the week totaled 229,091 trailers and containers, up 7.4 percent compared with the same week last year.

Money supply and Credit spreads improved:

M1 increased +1.2% last week, and +1.6% month over month. It is also up 19.4% YoY, so Real M1 is up 16.4%. This is near its peak YoY gain at the end of last summer. M2 was up +0.2% week over week, and up +1.4% month over month, and up 10.4% YoY, so Real M2 was up 7.4%. This is about 3% less than its YoY reading at the crest of the tsunami.

Weekly BAA commercial bond rates declined .07% to 5.21%. Yields on 10 year treasury bonds fell .04% 1.95%. Falling spreads on lower rates is the best signal, although it is only for one week. This spread had a 52 week maximum difference in October and has been generally flat for the last month.

Gasoline usage in particular continues to be much lower YoY:

Oil closed at $98.33 a barrel on Thursday. This is about at the recession-trigger level calculated by analyst Steve Kopits (adjusted for general inflation). Gas at the pump rose $.01 a gallon to $3.39. Measured this way, we are just at or slightly above the 2008 recession trigger level. Gasoline usage, at 7996 M gallons vs. 8775 M a year ago, was off -8.9%! The 4 week moving average is off -6.9%. Since March the YoY comparisons have been almost uniformly negative, and substantially so since July. It's at least possible some of this reflects the unusually warm winter most of the country has been experiencing.

Now let's turn to new high frequency indicators designed to track the global slowdown/recession:

The TED spread is at 0.520 down from 0.542 week over week. This index is slightly above its 2010 peak, but has declined from its 3 year peak of 3 weeks ago. The one month LIBOR is at 0.277, down from one week ago and below its 12 month peak of two weeks ago, and also remains below its 2010 peak.

The Baltic Dry Index at 893 has plummeted in the last 3 weeks and further continues to decline from its October 52 week high of 2173. The Harpex Shipping Index was declining for a full year, but at 396 is above its 52 week low of 389 two weeks ago. Please note that these two indexes are influenced by supply as well as demand, and have generally been in a secular decline due to oversupply of ships for over half a decade. The Harpex index concentrates on container ships, and has been leading at recent tops and lagging at troughs. The BDI concentrates on bulk shipments such as coal and grain, and has been more lagging at the top but has turned up first at the 2009 trough.

Finally, the unweighted Shadow Weekly Leading Index was positive this week. Next day, so was the ECRI WLI. Why was I not surprised?

For the last two weeks, global worries have been abating. In the US virtually all the news is positive, but some weakly so. Still, there is no sign of any present or imminent downturn in the economy right now.

Have a good weekend.

P.S. This is a slightly truncated version due to ongoing time constraints. I will update with money supply, withholding taxes, and railroad information later if time permits.
UPDATE 1/22: the missing info has now been added.