1)The preliminary February UoM consumer confidence index ticked up by 1.1 m/o/m to 100.9, just shy of the highest in this cycle. The estimate was 99.5. The components were mixed as Current Conditions fell by .6 pts m/o/m but was offsets by a 2.1 pt rise in Expectations. One year inflation expectations held at 2.5%. The Net Income component jumped 10 pts to the best level since March. Employment expectations fell 8 pts m/o/m but after jumping by 13 pts last month. Business expectations did moderate. Spending intentions were mixed. Finally, those that think the stock market will be higher in 12 months rose further to a hair below a record high dating back to 2002.
2)Refi’s rose 5% as mortgage rates hold at multi year lows and are higher by 207% y/o/y.
3)The NFIB small business optimism index for January rose to 104.3 from 102.7. The NFIB remains optimistic that lower corporate tax rates and reduced regulatory pressure will continue to have a positive impact on small business sentiment. “Small business owners are confidently filling open positions, raising wages, and investing in their business.” They did mention that “The biggest risk appears to be potential global implications of the Wuhan coronavirus” but I don’t think small business had any really way in January of quantifying yet the impact.
4)While the Fed reported that their balance sheet ‘broke out’ to the upside with another increase of about $16b to $4.18T, the highest since late September 2018, they also did announce that they were taking another step towards reducing the size of their repo operations.
5)Pitchers and catchers head to Spring Training.
1)The corona virus continues to spread and with each passing week more economic activity is hindered where only some will be made up.
2)While Jay Powell said nothing new in his testimony in front of both sides of Congress this week, him saying again that the Fed will just go back to the well of zero rates and QE in light of all the available evidence of its use here and abroad and its ineffectiveness and broad side effects, remains disappointing.
3)The NY Fed’s Q4 2019 household debt data revealed this: “transitions into delinquency among credit card borrowers have steadily risen since 2016, notably among younger borrowers.” Within this, credit card payments late by 90 days or more rose to 5.32%, the highest in 8 years vs 5.16% in Q3. For those borrowers aged 18-29, the 90+ day delinquency rate is the most since Q4 2010 at 9.36%. Part of the increase was reclassifying some retail credit card debt but doesn’t explain all of the rise.
4)January core retail sales saw no change from December vs the estimate of up .3% and December was revised down by 3 tenths and November was revised lower by one tenth. Core retail sales since August, thus 5 months since, is down a total of .3%. January core sales vs January 2019 is up 3.1% and which compares to the 5 yr average of 3.7% and 2 yr average of 4.1%.
5)Headline CPI in January was up 2.5% y/o/y and 2.3% y/o/y at the core level. That’s the 23rd straight month with a 2 handle on core inflation.
6)The Atlanta Fed’s January sticky core CPI just reached 2.8% y/o/y, the highest since November 2008.
7)As measured by the JOLTS data, the demand for labor in December continued to shrink. The total number of job openings totaled 6.42mm, down from 6.8mm and below the estimate of 6.93mm. That is the least since December 2017. The number of hirings rose by a modest 80k and the number of quitters fell by 80k.
8)Mortgage applications for a purchase fell for a 2nd week and by 5.8% but the y/o/y gain was still 16% (easy comparison’s though after the aftermath of the tough Q4 of 2018).
9)US industrial production in January fell .3% m/o/m, one tenth more than expected and December was revised down by one tenth. The manufacturing component was as expected, falling one tenth but December was also revised lower by one tenth. For perspective, the manufacturing index closed 2019 at 104.9. It began the year at 106.4. Blame it on tariffs mostly. Utility output was very weak due to an obviously mild winter. Mining production rose both m/o/m and y/o/y.
10)Chinese auto sales fell 22% y/o/y in January with the China Passenger Car Association saying it could be down more than 30% in February.
11)France’s Q4 mainland unemployment rate fell to 7.9% from 8.2%. That’s the lowest since Q4 2008.
12)Eurozone industrial production saw a 2.1% m/o/m decline in January, one tenth more than expected, November was revised down by 2 tenths and the y/o/y decline was 4.1% which matches the worst print since 2009. This figure has declined y/o/y for 14 straight months.
13)The UK economy had no growth in Q4 from Q3 as expected but GDP was still up 1.1% y/o/y as a rise in government spending helped to offset little growth in consumer spending and a sharp decline in capital investment.
14)The Sentix Eurozone Investor Confidence index for February fell to 5.2 from 7.6 and that was below the estimate of 5.9. Sentix said “While at the beginning of the year there was still a clear upswing scenario for the global economy, the outbreak of the corona virus in China has changed the situation significantly. The drastic measures taken by the Chinese government for the Hubei region show the danger to the global economy if the outbreak cannot be limited regionally. So far, however, the effects on the economy have been relatively limited from the point of view of the investors surveyed by Sentix, even if they are significant for China.”