Positives
1)The October CPI rose .4% headline and .3% core, both two tenths below expectations. The headline y/o/y increase was 7.7% vs 8.2% in September. The core rate was higher by 6.3% y/o/y after the 40 yr high print of 6.6% in the month before. Energy prices rebounded by 1.8% m/o/m after 3 months of declines and are higher by 17.6% y/o/y. Food prices rose another .6% m/o/m and up by 11% y/o/y. Services inflation ex energy rose .4% m/o/m and 6.7% y/o/y with the latter steady with September at a 40 yr high. On the goods side, core prices saw an outright drop of .4% m/o/m and the y/o/y pace slowed to 5.1% from above 6% in September.
2)The October Cleveland Fed’s 16% trimmed CPI rose 6.95% y/o/y vs 7.30% in September and is the first month since January 2021 that has seen a deceleration.
3)The October Manheim wholesale used car index fell 2.2% m/o/m and is now down 10.6% y/o/y. The index itself is at the lowest since August 2021.
4)The National Association of Realtors yesterday came out with their Q3 home price report and said prices rose 8.6% y/o/y, a needed and not unexpected downshift from 14.2% in Q2. They however said the “monthly mortgage payment on a typical existing single family home with a 20% down payment was $1,840, up 50% y/o/y.” Absorb this stat too, “The median income needed to buy a typical home has risen to $88,300 – that’s almost $40,000 more than it was prior to the start of the pandemic, back in 2019.”
5)In Japan, September regular base pay rose 1.3% y/o/y, a pretty modest pace but still the 2nd highest print since 1997 after the 1.5% y/o/y rise seen in August.
6)Taiwan’s exports in October were down .5% y/o/y but that was much better than the estimated decline of 6%. Imports jumped 8.2% vs the forecast of a 5% drop.
7)While challenged by falling real wages, retail sales in the Eurozone in September were better than expected when we include the upward revision to August. They are still though declining y/o/y and have so for 4 straight months.
8)The investor mood in Europe improved in November as the Sentix investor confidence index rose to -30.9 from -38.3. Mild weather helped as it gave confidence that the region can make it through the winter without any natural gas supply issues. Sentix said “Concerns about a catastrophic gas shortage are fading.”
9)When the downward revision to August is included, the September industrial production figure out of Germany was slightly better than expected but “The mood among companies is still very low and demand is noticeably decreasing” according to the economy ministry.
10)The elections are over (outside of more counting for some and the December Georgia vote) and the commercials stop, for now.
Negatives
1)After rising by 4 months in a row by a total of almost 10 pts off a record low, the November initial UoM consumer confidence index fell by 5.2 pts to 54.7. One yr inflation expectations rose one tenth to 5.1%, a 4 month high. The 5-10 yr look also was up one tenth to 3%, a 5 month high. Those that said it’s a good time to buy a home plunged by 10 pts and at just 33, it is the lowest that I have data on going back to 1978. And because 92% of homeowners that have a mortgage have a rate below 5% according to Fannie data, there was a 9 pts drop in those that said it’s a good time to sell a house to the lowest since August 2020. Those that said it’s a good time to buy a vehicle fell 4 pts but after rising by 11 pts in October. On a major appliance, there was a 19 pt drop in spending intentions after rising by 17 pts last month. The UoM said this, “Overall, declines in sentiment were observed across the distribution of age, education, income, geography, and political affiliation, showing that the recent improvements in sentiment were tentative.”
2)With the average 30 yr mortgage rate rising 8 bps w/o/w to 7.14% after falling by 10 bps in the week before, refi’s dropped by 3.5% w/o/w and are lower by 87% y/o/y. Purchases rose 1.3% w/o/w after 6 weeks in a row of declines. They are lower though by 41% y/o/y.
3)The October NFIB small business optimism index fell to 91.3 from 92.1. For comparison, this figure has averaged 92.7 this year. The NFIB said, “Owners continue to show a dismal view about future sales growth and business conditions, but are still looking to hire new workers. Inflation, supply chain disruptions, and labor shortages continue to limit the ability of many small businesses to meet the demand for their products and services.”
4)China reported its October loan data and there was a sharp drop in lending. Aggregate financing was 908b yuan, almost half the estimate of 1.6T and well below the 3.53T print in September. Of this, bank loans were 615b and M2 slowed to an 11.8% y/o/y rate of change from 12.1% in the month before and vs the estimate of 12%.
5)China’s trade data reflected the global slowdown and its own internal struggles. Exports fell .3% y/o/y instead of rising by 4.5% as expected. Exports to the US fell 12.6%, lower to the EU by 9%, and declined by 15% to the UK but rose to other parts of Asia ex Hong Kong. Imports, many of which end up in eventual exports, declined by .7% y/o/y. The estimate was for no change. Reflecting the challenges of its residential housing industry, m/o/m imports of iron ore, steel and copper all fell. Imports m/o/m of crude and refined products rose but declined for natural gas and coal.
6)Another crypto implosion and this one very notable and very large.
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.