Just as Fonzie had difficulty saying the word 'wrong' or 'sorry' (that's from the tv show Happy Days for those who don't know who Fonzie is) and Elton John sang 'Sorry seems to be the hardest word', Jay Powell just couldn't bring himself yesterday to say the word 'pause', although he came close and said others talked about it. How many more banks need to fail before …
A non event relative to expectations
The commentary on the economy was pretty similar to what they said in March, and they specifically repeated that “The US banking system is sound and resilient” and acknowledging again that “Tighter credit conditions for households and businesses are likely to weigh on economy activity, hiring, and inflation.” So notwithstanding that last sentence stated for now a …
A view of the US service sector
The April ISM services index rose .7 pts m/o/m to 51.9 about as expected. This compares with 55.1 in February and 55.2 in January. After falling by 10 pts in March, new orders rose by 3.9 pts to 56.1. Backlogs were below 50 for a 2nd month but just below at 49.7. Inventories fell 5.6 pts to back under 50 at 47.2. Post ADP and ahead of Friday, the employment component …
ADP has been pretty volatile month to month
ADP said 296k private sector jobs were added in April, double the estimate and a pick up from the 142k seen in March. That’s the biggest one month job print since last July. Small and medium sized businesses drove most of the hiring. The biggest contributor and the main reason for the upside was the 154k increase in net hiring in leisure and hospitality. …
[Read more...] about ADP has been pretty volatile month to month
“They’re not funding deals that they thought they would fund in the future”…”Close rates have declined across all loan types”
While the Fed will hike today by 25 bps (I reiterate my belief that it is a mistake), the fed funds futures are predicting as of today that there is a 50 bps chance that they take it back at the July 26th meeting and by yr end another one thereafter. And by the end of next year, 200 bps of these hikes are priced to be reversed. While Powell will likely hint at a time …
Further fraying
Job openings in March shrunk for a 3rd straight month to 9.59mm. That’s the least since April 2021 as the economy was then reopening. It remains well above the February 2020 level of about 7mm but that was before the whole work from home trend skyrocketed which in turn impacted the amount of job openings that could be posted for one job. So, I can’t make an apples to …
‘Recession Roulette’/Travel remains the bright spot/Eurozone inflation
Well that April pause didn't last long. The Reserve Bank of Australia surprised us all with a 25 bps rate hike to 3.85%. Governor Lowe said "Inflation in Australia has passed its peak, but at 7% is still too high and it will be some time yet before it is back in the target range...Given the importance of returning inflation to target within a reasonable …
[Read more...] about ‘Recession Roulette’/Travel remains the bright spot/Eurozone inflation
US manufacturing
The April ISM manufacturing index was 47.1, remaining below 50 for the 6th straight month. It compares with 46.3 in March, 47.7 in February and 47.4 in January. New orders were 45.7, under 50 for the 8th straight month. Backlogs remained firmly below 50 at 43.1. inventories fell 1.2 pts m/o/m to 46.3 and follows the Q1 drag inventories brought to Q1 GDP. Customer …
Powell/Digging in a bit on CRE and also multi family rental rates/Other
Since rising by $393b in the post SVB bank bond duration bailouts, the Fed's balance sheet for the week ended April 26th has now shrunk by $171b and will continue to as QT is essentially back on (though I never viewed the expansion in those weeks after SVB as QE). The Fed will rely on this tightening as they stop with the rate hikes of the fed funds after …
[Read more...] about Powell/Digging in a bit on CRE and also multi family rental rates/Other
Succinct Summation of the Week’s Events
Succinct Summation of the Week’s Events: Positives, 1)Initial jobless claims fell to 230k from 246k and much lower than the estimate of 248k. The 4 week average fell to 236k from 240k. After jumping to the highest level since last November, continuing claims fell by 3k w/o/w to 1.858mm. 2)The March PCE inflation stats as well as income and spending were all …
[Read more...] about Succinct Summation of the Week’s Events
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor. Each day The Boock Report provides summaries and commentary on the macro data and news that matter, with analysis of what it all means and how it fits together.