1)Delayed by a week and likely distorted by the holidays, continuing claims fell to 1.56mm, well less than the estimate of 1.733mm and down from 1.753mm in the week prior.
2)Cass Freight said its shipments index for December rose 7.7% y/o/y after a 4.5% growth rate in November while little changed m/o/m. It did though rise 4.2% from November when they seasonally adjust it. They said “Though the record backlog of 105 containerships off Southern California and sharp declines in intermodal volumes in early 2022 still demonstrate capacity constraints on freight volumes, the strong finish to 2021 shows progress as the trucking industry has begun to build driver and equipment capacity in spite of extraordinary challenges.”
3)For wage earners, the Fed’s Beige Book reflected intensifying wage gains in each reporting district.
4)Inflation remains the key theme in the December NFIB small business optimism index which rose .5 pt m/o/m to 98.9 and compares with the 6 month average of 99.1. This was the NFIB’s bottom line, “Small businesses unfortunately saw a disappointing jobs report, with staffing issues continuing to impact their ability to be fully productive. Inflation is at the highest level since the 1980’s and is having an overwhelming impact on owners’ ability to manage their businesses.” Specifically with inflation, “22% percent report inflation as the single most important problem operating their business, a 20 pt increase from the beginning of 2021 and the highest level since Q4 1981.”
5)Import prices in December fell .2% m/o/m after a .7% increase in November. The estimate was for up .2%. Prices ex petro grew by .3%, half the estimate but after a .7% gain last month. And prices ex food/fuel were higher by .5%. On a y/o/y basis, import prices ex petro were up by 6.8% and ex food/fuels by 5.7%.
6)China said exports rose 17.3% y/o/y in December, just above the estimate of up 16.3%.
7)China said its producer price index for December rose 10.3% y/o/y, pretty robust but below the estimate of up 11.3% and follows a 12.9% gain in November. Consumer prices were up by 1.5% y/o/y, less than the estimate of up 1.7% with a sharp drop in pork prices. Core prices grew by 1.2% y/o/y, the same pace as the month prior and services prices rose by 1.5%.
8)Chinese aggregate financing in December totaled 2.37T yuan, almost as expected with bank loans making up 1.13T of this. Money supply growth as measured by M2 was higher by 9%, above the estimate of 8.6%.
9)The Bank of Korea hiked interest rates by 25 bps as expected to 1.25% and expect more to come. Governor Lee said “Inflationary pressures are expected to be much larger than earlier expected. There are uncertainties surrounding the pandemic, but they are unlikely to derail the domestic economy’s recovery.”
10)The almost 5 pt drop in the Eurozone Sentix investor confidence index in December driven by omicron seems to have stabilized in January as we certainly know a lot more about it. This index rose 1.4 pts m/o/m to 14.9. The current assessment was up 3 pts while expectations were flat. There is nothing market moving from this but Sentix did say “This give more contour to our basic scenario that the global economy is recovering and finding its way out of the mid-cycle slowdown.”
11)Somewhat old was the November unemployment rate which fell another tenth to 7.2%. For perspective, it was at 7.4% in February and 7.1% in March 2020
1)Retail sales in December fell a sharp 3.1% m/o/m at the core and there was no respite on the revision to November as that was revised down by 4 tenths to a decline of .5%.
2)Initial claims totaled 230k, 30k more than forecasted and up from 207k last week. Smoothing out the holidays has the 4 week average at 211k vs 205k in the week before.
3)CPI in December rose .5% headline and .6% core m/o/m and both were one tenth more than expected. Versus last year, the headline print was 7% and the core rate was 5.5%. The headline print came in spite of a .4% m/o/m drop in energy prices even though they are still up 29% y/o/y. Food prices grew by .5% m/o/m and 6.3% y/o/y. Services inflation ex energy was up .3% m/o/m and 3.7% y/o/y and rents are still badly lagging reality. Core goods prices jumped 1.2% m/o/m and by 10.7% y/o/y.
4)The December Cleveland Fed’s 16% trimmed CPI rose .4% m/o/m and 4.8% y/o/y. That y/o/y gain is the most in 30 years.
5)The December PPI was up .2% m/o/m headline and .5% core. The headline figure was 2 tenths below expectations but offset by a 2 tenths upward revision to November to 1%, so thus as expected when taken together. The core rate was in line but November was revised up by a 2 tenths too to a .9% increase. Versus last year, PPI was up 9.7% and 8.3% ex food and energy. Food and energy prices fell m/o/m but are still up 13% and 31% respectively y/o/y. Core goods prices rose another .5% m/o/m and 9.4% y/o/y. Service prices were up by .5% m/o/m and 7.9% y/o/y driven by transportation and warehousing.
6)The NY Fed’s consumer expectations survey for December reflected no change in inflation expectations but still at high levels of 6% and 4% for both median one year and three year forecasts. Specifically, expectations for rent and medical care price increases remained unchanged with November at 10% and 9.6% respectively. They fell for gasoline, food and the cost of college. Helping to mitigate the inflation worries however was “the median expected growth in household income increased by .2 percentage point to 3.4% in December, a new series high. The increase was most pronounced for respondents with no more than a high school diploma.” But, the 3.4% is obviously well below the 6% inflation expectations.
7)Implied freight rates from the Cass Freight data was pretty robust. “The freight rates embedded in the two components (shipments and expenditures on freight) decelerated to a 33% y/o/y increase in December from 38% in November” but “rose another 3.5% m/o/m on a seasonally adjusted basis in December, to a new record.” Here’s color behind this, “Significant excess miles in the freight network are persisting into 2022 as the economy faces ongoing disruptions. Chassis production improved significantly in Q4 2021, but only enough to turn the direction of the chassis fleet from contraction to slight growth, and the chassis fleet remains far from what is needed to address rail network congestion.”
8)For wage payers, the Fed’s Beige Book reflected intensifying wage gains in each reporting district.
9)Industrial production in December fell .1% m/o/m, 3 tenths below expectations but mostly offset by a 2 tenths upward revision to November. The manufacturing component was soft, falling .3% m/o/m vs the estimate of up .3% and November was revised down one tenth. Capacity utilization was 76.5% vs 76.6% last month and below the forecast of 77%.
10)According to the MBA, the average 30 yr mortgage rate jumped by almost 20 bps for the week ended January 7th to 3.52%, the highest since March 2020 coincident with the rise in Treasury yields. Refi’s were flat as a pancake w/o/w while still down 50% y/o/y. Purchases rose 2.2% w/o/w but after a sharp holiday fall in the week before.
11)The first UoM consumer confidence index for January fell to 68.8 from 70.6 and that was just below the estimate of 70. Current conditions fell by 1 pt m/o/m while expectations were lower by 2.4 pts. One year inflation expectations ticked up by one tenth to 4.9%, matching the highest since 2008 and the 5-10 yr longer term outlook was up by 2 tenths to back above 3% at 3.1%, the most in 11 years. Employment expectations were particularly softer on net, down by 10 pts to the lowest since November 2020. Income expectations were mixed. There was no change in the percentage of people that expect family income to beat inflation over the next 5 years but still stands at the lowest since 2014. To the question “Is the government doing a good job in fighting inflation and unemployment”, the answer fell to the lowest since 2014 too. As a corollary, “When asked to assess their finances, 33% reported being worse off financially than a year earlier, just above the April 2020 shutdown low of 32%, the worst since 2014.” Spending intentions were mixed. Since February, retail sales ex auto’s are up 10.5% and core goods prices are up by 10.8%.
12)Chinese imports grew by 16% y/o/y which was well less than the estimate of almost 24%.
13)Japan reported December PPI was up 8.5% y/o/y. While just below the estimate of 8.8%, it’s only modestly off the November print of 9.2% y/o/y which was the quickest since 1980.
14)According to a Bank of Japan quarterly survey, one year household inflation expectations are 5%, the most in 13 years. The percent of households that expect higher inflation a year from now totaled 78.8%, up from 68.2% in September and that is the highest percentage in two years. A higher percentage also expects inflation to rise over a 5 yr time frame.
15)While dated November data, wholesale prices in Germany rose 16.1% y/o/y and .2% m/o/m after a 1.3% gain in October.