1)The Markit manufacturing and services composite November PMI index rose 1 pt to 51.9 with manufacturing up to 52.2 from 51.3 and the services side rising 1 pt to 51.6. Quantifying the current levels, Markit said it’s consistent with GDP growth of about 1.5% and job growth of “approximately 100,000.” Still, “business expectations for the future are still well below levels seen earlier in the year, reflecting heightened anxiety regarding trade wars and geopolitical uncertainty, as well as recent low customer inquiry numbers and the weakness of new sales volumes.”
2)The final November UoM consumer confidence index was 96.8, better than the first print of 95.7 and the estimate of no change. It’s the 3rd straight month of increases and has almost gotten back the sharp August plunge when the tariff battle was full blown. The index was 98.4 in July. The internals were mixed from October as Current Conditions fell 1.6 pts m/o/m but was offset by a 3.1 pt rise in Expectations. One year inflation expectations held at 2.5%. The UoM highlighted the political biases that are impacting the responses to this survey. “One side anticipates a recession, while the other side expects an uninterrupted expansion in the year ahead.”
3)After 4 straight weeks of declines to the lowest level since early February, the weekly Bloomberg consumer confidence index got back what it lost last week with all three components rebounding.
4)The November Philly manufacturing index rose to 10.4 from 5.6 in October, 4.4 pts better than expected and compares with 12 in September. The internals were very mixed though. The overall 6 month business activity outlook rose 2 pts to 35.8 but capital spending plans fell 17 pts to 19.4, the least since November 2016, the month of the election.
5)According to the MBA, purchase apps rose by 6.7% w/o/w while the y/o/y increase was up by 7.3%.
6)Housing starts in October were about as expected when taking into account the September revision. Single family starts improved to 936k from 918k in September and that is the most since January. In terms of geography it still remains very bifurcated. Single family starts in the Northeast plunged by 20k to the least since February 2015. Single family starts in the Midwest were little changed and up in the South and West. Multi family starts increased by 30k m/o/m but are extremely volatile month to month. At 378k it compares to the 6 month average of 391k. As for permits, single family rose to 909k, up from 881k in the month prior and that is the most since August 2007 but is still under its 25 year average of 964k. Multi family permits were positive, jumping 42k m/o/m to 552k, the highest since March 2018.
7)In the UK, the CBI industrial orders figure for November improved to -26 from -37 and that was 4 pts more than expected. Call it less bad as it comes off the lowest since 2010. CBI said “While the thick fog of uncertainty from a no deal Brexit has lifted somewhat, the manufacturing sector remains under pressure from weak global trade and a subdued domestic economy. Order books remain below average, and output volumes continue to fall. When taking into account the deteriorating outlook for manufacturing globally, it’s clear that the outlook for the sector remains precarious.”
8)The French business confidence index in November was unchanged from October as expected and which has been pretty steady over the past 9 months as services offsets manufacturing weakness.
9)Japan’s combined PMI rose to 49.9 from 49.1 with manufacturing at 48.6 while services got back above 50 at 50.4.
10)Taiwan’s October exports fell 3.5% y/o/y, the 12th month in a row of declines but was a bit better than the estimate of a decline of 4.5%.
11)The PBOC tweaked its short term rate and the 1 yr and 5 yr LPR lower by 5 bps.
1)For the 2nd week in a row, initial jobless claims came in well more than expected. At 227k, it compares with the estimate of 218k and last week was revised to 227k from 225 (the initial estimate was 215k). This brings the 4 week average up to 221k from 217.5k and that is the highest since late June. Continuing claims, delayed by a week, rose by 3k to the most since mid August.
2)The yield to worst in the Barclays CCC credit index jumped by a rather sharp 60 bps on the week and at 11.98% sits at the highest level since January 4th, 2019. The ultimate question here is whether it will be contained or not.
3)Existing home sales in October totaled 5.46mm, a touch below the estimate of 5.49mm and September was revised down by 20k to 5.36mm. As the number of homes for sale shrank, the months’ supply fell to 3.9 from 4.1 and that is the lowest since March but typically slips this time of the year. Home prices rose a steep 6.2% y/o/y and contributes to why first time buyers made up 31% of purchases and still remains stuck in this low 30% range vs historical levels of around 40%.
4)Refi’s fell by 7.7% but after jumping by 13% last week and are still up by 152% y/o/y with the sharp y/o/y drop in rates.
5)The NAHB home builder index for November fell 1 pt from October to 70. The estimate was for no change. Even still, with the breakeven being 50, builders are certainly highly confident. The internals were mixed as the Present Situation fell 2 pts but only after rising by 3 pts last month. The Future Outlook was up by 1 pt while Prospective Buyers Traffic was down by 1 pt after jumping by 4 pts in October. Demand has improved with lower mortgage rates. With respect to the supply of homes and the ability of builders to deliver, “lot shortages remain a serious problem, particularly among custom builders. Builders also continue to grapple with other affordability headwinds, including a lack of labor and regulatory constraints.”
6)In September, foreigners were net sellers of $34.3b of US notes and bonds after selling $30.5b in August. This brings the year to date level of selling to $82b. Back in 2011 and 2012 foreigners were net buyers of $400b+ in each year. China and Japan, our two biggest foreign holders, continued to be sellers. Don’t worry though, the Federal Reserve is back to monetizing US debt by a total of $60b per month in T-bills.
7)The Eurozone manufacturing and services PMI for November fell to 50.3 from 50.6. Manufacturing improved slightly, although is still contracting, to 46.6 from 45.9 and vs the estimate of 46.4. Services weakened to 51.5 from 52.2 and below the forecast of 52.4. Markit said “Manufacturing remains in its deepest downturn for 6 years amid ongoing trade woes, and November saw further signs of the weakness spilling over to services, notably via slower employment growth…Business remains concerned by trade wars, Brexit and a general slowdown in demand, with heightened uncertainty about the economic and political outlook driving further risk aversion.”
8)The UK manufacturing and services composite index fell below 50 at 48.5 from exactly 50. Manufacturing slipped further to 48.3 while services are down to 48.6. Markit said notwithstanding the Brexit uncertainty, “the PMI surveys are not only warning that the underlying trend in the economy is deteriorating markedly, but also that the labor market is cooling.”
9)The November Australia manufacturing and services composite index is now below 50 at 49.5 vs 50 in October. Both components are less than 50. Markit said “Where output decreased, panelists reported challenging economic conditions and relatively weak customer demand.”
10)October CPI ex food and energy in Japan rose .7% y/o/y vs .5% in September, one tenth more than expected and the quickest pace since April 2016. It took a VAT hike to get even this.
11)South Korean exports in the first 20 days of November fell 9.6% y/o/y while imports were down by 11.2%.
12)Japan’s exports in October fell 9.2% y/o/y, below the estimate of down 7.5% and which is the 11th straight month of y/o/y declines. A fall in auto, steel and semi exports led the way and exports to China were down by 10.3% and to the US by 11.4%. Imports dropped by 14.8% y/o/y, slightly better than the estimate of -15.2%.
13)Singapore’s non oil exports fell by 12.3% y/o/y in October, more than the estimate of down 10%. It’s a decline for the 9th month in the past 10. Exports specifically to China fell by 5.5%.
14)Janet Yellen this week acknowledged the Fed’s complicity in penalizing savers for about a decade in order to bail out and subsidize borrowers.