The Boock Report

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Succinct Summation of the Week’s Events – 12/27

Positives

1)Japan’s unemployment rate in November fell to 2.2% from 2.4% unexpectedly. The estimate was for no change. This was driven by a rise in the number employed and a drop in the size of the labor force. Also of note was the jobs to applicant ratio which held at 1.57, near the highest since the 1970’s.

2)For the first 20 days of December, exports out of South Korea, a key proxy of global trade, fell 2% y/o/y which is the smallest decline of the year which saw each month decline from 2018. Semi shipments remained weak though, falling 17% y/o/y while overall exports to China rose 5.3%.

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Negatives

1)The Fed’s balance sheet continued its sharp path higher, rising by $28b on the week and $112b for the month of December. It’s now about $400b bigger than it was in August. However the Fed wants to define what they are doing and the repo issues they are trying to address, many view this as only one thing.

2)Initial jobless claims totaled 222k, 2k more than expected after last week’s spike to 235k. The 4 week average rose to 228k from 226k and that is the most since February. Continuing claims, delayed by a week, fell by 6k but after last week’s 54k jump to the highest since August.

3)New home sales in November totaled 719k, 13k less than expected and October was revised down by 23k to 710k. Months’ supply fell to 5.4 from 5.5 while the median home price rose 7.2% y/o/y to $330,000, the highest since April. With price, this was influenced by mix with a pick up in the number of homes sold above $400k and a decline in those sold less than $300k.

4)The MBA said mortgage applications to buy a home fell 4.8% w/o/w, lower for a 3rd straight week but up 5.3% y/o/y. Refi’s fell by 5.1% w/o/w, down for the 3rd week in the past 4 but still up 128% y/o/y. Take this data at this time of the year with a grain of salt notwithstanding the attempted seasonal adjustments.

5)Core durable goods orders in November rose .1% m/o/m as expected but are down 1.1% y/o/y. There was a .3% drop in shipments vs the estimate of no change along with a one tenth downward revision to October.

6)The December Richmond manufacturing index fell to -5 from -1. The estimate was +1. This is the 4th month in the past 6 below zero.

7)Helped by the VAT hike, December CPI in Tokyo ex food and energy rose by .9% y/o/y from .7% in November and vs the estimate of .7%.

8)November industrial production in Singapore badly missed estimates with a 9.3% y/o/y decline vs the estimate of down .8%. The production of semi’s fell by 26% y/o/y.