Saturday, January 26, 2013

Weekly Indicators: positive at mid-winter edition

- by New Deal democrat

December monthly data reported this past week featured the index of Leading Indicators, up 0.5. This was anticipated as initial claims rebounded from their Hurricane Sandy-induced increase in November. On a 6 month basis, these are now significantly positive. On the other hand, both new and existing home sales declined from November.

Let's start this look at the high frequency weekly indicators by checking out how the increase in tax withholding may be affecting consumer spending.

Consumer spending
  • ICSC -1.5% w/w +3.2% YoY

  • Johnson Redbook +1.8% YoY

  • Gallup daily consumer spending 14 day average $75 up $10 YoY
Gallup remains very positive. The ICSC varied between +1.5% and +4.5% YoY in 2012. Johnson Redbook is also in its generally YoY growth range from 2012.

Housing metrics

Housing prices
  • YoY this week. +2.8%
Housing prices bottomed at the end of November 2011 on Housing Tracker, and have averaged an increase of +2.0% to +2.5% YoY for the last year, so this is a particularly positive reading.

Real estate loans, from the FRB H8 report:
  • 0.0% w.w

  •  +2.4% YoY

  • +2.6% from its bottom
Loans turned up at the end of 2011 and averaged about 1% gains YoY through most of 2012, and have recently shown somewhat more YoY strength. This week was at the top of its recent range.

Mortgage applications
  • +9% w/w purchase applications

  • +26% YoY purchase applications

  • +8% w/w refinance applications
Purchase applications have been going sideways for 2 years. This week's reading finally moved above that range, and was the best reading since April 2011. Refinancing applications were very high for most of last year with record low mortgage rates, and after a brief retreat, are once again very strong.

Interest rates and credit spreads
  • -0.01% to 4.69% BAA corporate bonds

  • -0.03% to 1.87% 10 year treasury bonds

  • +.02% to 2.82% credit spread between corporates and treasuries
Interest rates for corporate bonds have 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. That weak was slightly negative, although the YoY changes remain very positive.

Money supply

  • +1.4% w/w

  • +0.7% m/m

  • +9.4% YoY Real M1

  • -0.2% w/w

  • +0.9% m/m

  • +6.2% 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 bounced off last week's new low. Real M2 also made a YoY high of about 10.5% in January 2012. Its subsequent low was 4.5% in August 2012. Both are still quite positive in absolute terms.

Oil prices and usage
  •  Oil $95.88 up $0.32 w/w

  •   gas $3.32 up $.02 w/w

  • Usage 4 week average YoY +4.1%
Gas prices remain seasonally low. Unusually for the last year plus, the 4 week average turned positive YoY.

Employment metrics
Initial jobless claims
  •   330,000 down 5,000

  •   4 week average 351,750 down 7500
American Staffing Association Index
  • up 2 from 87 to 89 w/w up 3.7% YoY
Daily Treasury Statement tax withholding
  •  $162.0 B (adjusted for 2013 tax changes) vs. $161.2 B +0.5% YoY last 20 days

  •  $139.0 B (unadjusted) vs. $135.1 B up $3.9 B 1st 16 days of January monthly YoY
Employment metrics were in stark contrast this week. On the one hand, initial claims made another 5 year low this week. The increase in the ASA Index is normal in January. In the second half of 2012 the index's performance compared with 2011 declined significantly, although the absolute index was higher. This week, however, the Index equalled 2007 and only trails 2008. It is up 3.2% YoY. Tax withholding was again particularly weak for the second week in a row. Please note I am adjusting my YoY figures to reflect the increase in personal withholing tax rates since the first of the year.


Railroad transport
  •  -10,200 or -3.5% carloads YoY

  • +5700 or +3.5% carloads ex-coal

  • +29,700 or +13.5% intermodal units

  • +19,500 or +3.9% YoY total loads

  • 9 of 20 types of carloads up YoY, a decrease of 4 from last week
Shipping transport
  • Harpex up 3 to 359

  • Baltic Dry Index down 39 to 798
Rail transport has been whipsawing between very positive and very negative readings over the last month. This may well be the aftermath of the dock strikes. This week returned the data to its pre-strike pattern, although intermodal traffic was very stong. The Harpex index is still near its 3 year low of 352, but the Baltic Dry Index is well above its 52 week low, although still far off its 52 week high of 1100.

Bank lending rates
  • 0.230 TED spread down -0.002 w/w

  • 0.2037 LIBOR down .001 w/w
The TED spread is near its 52 week low. LIBOR is again at a new 52 week low and is close to a 3 year low.

JoC ECRI Commodity prices
  • up 1.40 to 129.53 w/w

  • +2.06 YoY
The most important negative this week was the Daily Treasury Statement, which, after accounting for the withholding tax increase, was for the second week in row, just barely positive YoY. Bond spreads were slightly negative for the week.

Almost everything else was slightly to very positive. Consumer spending remains quite positive, despite the increased tax withholding in their paychecks, although ever slightly less so than in the past month. Initial jobless claims were once again very positive. Bank lending rates and interest rate spreads also stayed very positive. Gas prices remain accomodative. House prices, loans, and especially mortgage applications are all positive, suggesting that the positive housing trend reflected in starts and permits will continue. Railroad and shipping data were up slightly.

The most important issue at the moment is when or whether the 2% increase in withholding tax rates will have an effect on consumers, although there's no significant evidence that it has shown up yet. Once again, this week the high frequency indicators show continued economic expansion.

Have a nice weekend.