I want to thank you so much for taking the time and interest to read my daily comments as I know you get a ton of stuff each day. Happy and healthy 2022 and get some rest this weekend as it’s going to be a really interesting and eventful new year, as it always is.
//www.youtube.com/watch?v=tK8KX9V7y98
Succinct Summation of the Week’s Events:
Positives
1)Initial jobless claims totaled 198k, 8k less than expected and follows a print of 206k last week. Smoothing out the influence of the holiday has the 4 week average at just under 200k at 199k. This compares with about 210k in January 2020. Notable was the sharp fall in continuing claims to 1.72mm, basically back to where it was pre Covid and down from 1.86mm in the week prior.
2)The Chicago December manufacturing PMI was up 1.3 pts m/o/m to 63.1, just above the estimate of 62. MNI said “Inventories hit a four yr high as firms created buffers for longer lead times.” Production and new orders rose while backlogs, employment and supplier deliveries were down. Price pressures moderated.
3)The December Richmond manufacturing index rose 4 pts m/o/m to 16, 5 pts better than expected. Shipments, new orders and backlogs led the way. Price pressures accelerated.
4)China’s December state sector weighted non manufacturing PMI rose to 52.7 from 52.3 and that was higher than the estimate of 52. Business activity expectations fell almost a point. The manufacturing component stood at 50.3 vs 50.1 in November and vs the estimate of 50. Expectations rose .5 pt.
5)South Korea said its industrial production figure for November was up a solid 5.1% m/o/m and that was double the estimate. Auto and semi manufacturing, the two things we need a lot more of, led the gain.
6)Vietnam said its exports jumped by 24.8% y/o/y in December, well better than the estimate of up 13.1%. Chemicals, plastics, petro, iron/steel, textiles and electronics led the way. Imports grew by 14.6% as expected.
7)Hong Kong’s November trade data exceeded expectations with exports up 25% y/o/y vs the forecast of up 18%. Imports grew by 20%, almost 200 bps better than estimated.
8)Thanks to a rush of LNG shipments, natural gas prices in Europe have fallen sharply this week to the lowest in 2 months.
9)Not messing around with inflation is the Hungarian central bank which hiked rates today by 20 bps to 4%. Since November they’ve raised rates by 220 bps.
Negatives
1)The US trade deficit for goods in November rose to a record high of $97.8b and that was well above the estimate of $88.1b and means we’ll likely see some trimming of Q4 GDP estimates. Exports fell 2.1% m/o/m while imports jumped by 4.7% m/o/m.
2)Pending home sales in November fell 2.2% m/o/m, under the estimate of a gain of .8% but it does follow a 7.5% increase in October. The NAR said “There was less pending home sales action this time around, which I would ascribe to low housing supply, but also to buyers being hesitant about home prices.”
3)While the rate of change in home prices continues to slow, the increases are still pretty sharp. S&P CoreLogic said its October home price index rose 19.1% y/o/y and 1% m/o/m.
4)The December Dallas manufacturing index fell to 8.1 from 11.8 and that was 5 pts below expectations. The 6 month outlook slipped to 8.1 from 11.8. Prices paid fell while those received was unchanged. New orders and backlogs fell as did inventories while employment rose.
5)The December Spanish CPI which jumped by 1.2% m/o/m, 3 times the estimate of up .4%. Versus last year prices are up 6.7%. Energy prices were the main driver and we can blame the spike in natural gas prices for this. The core rate rose 2.1% y/o/y vs 1.7% in November.
6)In the UK, the Nationwide Building Society said UK home prices rose 10.4% in 2021, the quickest rate of change in 15 years.
7)The November unemployment rate in Japan did tick up by one tenth to 2.8% but the jobs to applicant ratio held at 1.15.
8)John Madden made watching a football game that much more fun, //www.youtube.com/watch?v=Iv6SiAW3DvY
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.