1)The February Chicago manufacturing index rose to 49 from a depressed 42.9 in January. The estimate was 46. In the 1st special question “Will the signing of the Phase 1 deal with China/Epidemic have any impact on your business? The majority 45.7% reported little impact, while 30.4% noted no impact at all and 23.9% mentioned a large impact.” The 2nd question asked about the impact from Boeing and 91% said there was none.
2)The Dallas manufacturing index for February did improve by a slight 1 pt to 1.2. The estimate was zero.
3)The PCE, the Fed’s favorite inflation gauge, rose .1% m/o/m both headline and core and both one tenth less than expected. Versus last year the headline PCE rate was higher by 1.7% and 1.6% at the core level.
4)January pending home sales rose 5.2% m/o/m after a 4.3% decline (revised slightly up from the 1st print of -4.9%) in December. That was above the estimate of up 3%. Inventory is still a problem as is pricing but lower mortgage rates and a good labor market is the offset.
5)Core durable goods orders for January surprised to the upside with a 1.1% m/o/m gain vs the estimate of up .1% and December was revised up by 3 tenths. Maybe some was pent up spending upon the signing of the trade deal. Capital spending (not included here is spending on software and some other R&D) though remains modest as it was up just 1.4% y/o/y.
6)The final February UoM consumer confidence index was 101 vs the 1st print of 100.9 and that was a touch above the estimate of 100.7. It’s up from 99.8 in January. One year inflation expectations fell one tenth to 2.4%. Income expectations improved by 10 pts m/o/m while employment expectations moderated but only after a jump in January. Spending intentions were mixed. In what I’m very surprised did not change, those expecting higher stock prices 12 months from now held at 65.6, just below the highest on record. A pretty good contrarian indicator.
7)New home sales in January totaled 764k, 46k more than expected and December was revised up by 14k to 708k. This marks the 6th month in the past 8 that has a 7 handle. With only a modest rise in the number of homes for sale, months’ supply fell to 5.1 from 5.5.
8)The drop in the average 30 yr mortgage rate saw purchase applications rise 5.7% w/o/w but after 3 weeks of declines. They are up 10.2% y/o/y on still easy comparisons. Refi’s were little changed w/o/w, down by .8% but still are up a huge 152% y/o/y.
9)Japan’s January industrial production number was better than expected as was South Korea’s (less negative than feared).
10)In Japan in January retail sales were better than expected which is good to see considering the VAT hike back in October. Also, the February CPI figure for Tokyo was up .7% y/o/y, down from .9% in January and one tenth less than expected.
11)The Bank of Korea held rates unchanged unexpectedly with the Governor saying “A health security crisis is the cause of the current economic difficulties. In a situation like that, micro support for self-employed businesses and companies in trouble is more effective than an interest rate cut.”
12)The German February unemployment rate held at 5% and the number of unemployed fell by 10k instead of rising by 4.5k as expected.
13)The February German IFO business climate index held in at 96.1 vs 96 in January. The estimate was 95.3. The expectations component rose a touch offsetting a slight drop in the current assessment. IFO said “The German economy seems unaffected by developments surrounding the coronvirus.” That’s about to change.
14)The UK consumer continued to feel better in February as confidence rose for the 3rd straight month to match the best level since May 2017.
15)French February consumer confidence held at near the high in this cycle.
16)French business confidence in February was unchanged but better than expected. The index was 105 vs the estimate of 103.
17)In the eurozone, the February economic confidence index for the region rose .9 pts m/o/m to 103.5 and that was above the estimate of 102.8 mostly led by a rise in confidence in manufacturing and with the consumer. While still depressed, this index is now up for 4 straight months.
1)The spread of the virus is now more prevalent.
2)The world’s central banks over the years have wasted so much monetary ammunition on the nonsense desire for 2% inflation that they’ve now left themselves basically no tools to deal with what they were initially created for, being the lender of last resort and dealing with REAL economic challenges and crisis.
3)Initial jobless claims rose to 219k from 211k last week and that was 7k more than expected. As a print of 217k dropped out, the 4 week average was little changed at 210k vs 209k. Continuing claims, delayed by a week, fell by 9k.
4)Within the income data for January, the key component of private sector wages and salaries slowed to a pace of 3.7% y/o/y vs 4.6% in December and really after a run of more than 4% increases. Spending when including the December upward revision was as expected and thus shouldn’t move GDP estimates much.
5)US goods exports in January fell 1% m/o/m and are also down 1% y/o/y. Exports in this cycle topped out in May 2018, just as the trade war was beginning to heat up. Imports fell 2.2% m/o/m after a rise last month and see below where they stand, in part reflecting only a decent pace of consumer spending.
6)The Conference Board’s February consumer confidence index rose slightly to 130.7 from 130.4 in January but the estimate was 132.2. The two main components were very mixed as the Present Situation fell a rather sharp 8.8 pts to 165.1, the lowest since June 2019 but the Expectations side was up by 6.4 pts to the highest since July 2019. One year inflation expectations did tick up by 2 tenths to 4.6% from 4.4% which is just below the 5 year average of 4.8%. The answers to the jobs questions did weaken. Spending intentions improved with those planning on buying an automobile, home and major appliance all rose m/o/m.
7)After a surprise jump of 25 pts in January, the Richmond manufacturing index in February almost gave it all back and fell by 22 pts to -2. The internals did pretty much the same.
8)There was disappointment with Japan’s labor market data as its unemployment rate jumped by two tenths unexpectedly to 2.4%, the number of employed fell and the job to applicant ratio plunged to 1.49 from 1.57. On the latter though, the labor ministry said it was due to a calculation change for job listings that began in January.
9)Distorted by the timing of the Lunar Holiday and of course the public outbreak of the virus late in the month, Hong Kong’s exports in January plummeted by 22.7% y/o/y, well worse than the estimate of down 3.7%. Imports dropped by 16.4% y/o/y vs the forecast of down 2.5%. A government spokesperson said “Looking ahead, despite some easing in US-Mainland trade tensions lately, the global economic recovery is still fragile and fraught with uncertainties. Of particular concern is the threat of the novel coronavirus infection, which will heavily weigh on regional production and trading activities. Hong Kong’s merchandise exports will face a very austere external trading environment in the coming few months.”
10)In the UK, the CBI retail sales index for February was little changed at 1 vs zero in January. The estimate was 3 but CBI said “there has been a noticeable improvement in investment plans from the previous quarter, with investment intentions seeing the largest swing in the survey’s history. This was driven by large firms and specific sectors (notably grocery, clothing and non-store retailing).”
11)Eurozone loans to non financial businesses in January rose 2.6% y/o/y, the same lackluster pace as seen in the prior two months. Households responded more as loans to them grew by 3.7% y/o/y vs 3.5% in December and this is being mostly driven by mortgages which rose by 4.1% y/o/y.