1) The government will not partially close again this time around.
2) Headline PPI in January was one tenth less than expected when including a revision to December. The core rate though was up .2% m/o/m as expected and 2.6% y/o/y. Trade costs jumped by .8% and transportation/warehousing was higher by .5%.
3) In December, there were 7.3mm job openings, a record high and well above the estimate of 6.8mm and up from 7.2mm in November. Hiring’s though were up by a more modest 95k and the hiring rate was unchanged (likely reflecting the challenge of finding the right workers in terms of needed skills). The quit rate also was unchanged at 2.3%.
4) Off the lowest level since April 2017 the NY manufacturing survey for February improved to 8.8 from 3.9 and that was almost 2 pts above the estimate. Business expectations also rose and got back what it lost last month.
5) US Import prices both with energy and without fell more than expected, keeping input costs at bay.
6) From the lowest level since the month of the presidential election, the UoM consumer confidence index rose to 95.5 from 91.2 in January and vs 98.3 in December. Most of the gain came from the expectations component while current conditions were higher by just 1.2 pts. One year inflation expectations retreated by two tenths to 2.5%. There was a 1 pt gain in those expecting Higher Income after falling by 2 pts last month. On the question ‘Will the country have continuous good times over the next 12 months”, this component rose 18 pts after plunging by 26 pts in January. Unemployment expectations got back what it lost last month but at 91 is still down from 105 in November. Buying intentions did increase with those wanting to buy a home and a car rising to the best in 4 months. But there was an 11 pt rise in those wanting to sell. Those wanting to buy a major household item rose 5 pts after falling by 14 in January. The UoM said “The early February gains reflect the end of the partial government shutdown as well as a more fundamental shift in consumer expectations due to the Fed’s pause in raising interest rates.”
7) President Xi is optimistic too that a trade deal will take place. Details to come.
8) Chinese exports did rise 9.1% y/o/y, well better than the expected decline of 3.3%. Imports only fell by 1.5% vs the forecast of down 10.2%. Take though with grain of salt until the February numbers are reported because there is a lot of pull forward activity ahead of Lunar New Year.
9) China’s FX reserves in January increased to $3.087T, up $15b m/o/m and slightly above the estimate. It’s still though bouncing around the $3T level.
10) China’s CPI in January slowed to a 1.7% gain from 1.9% and was two tenths less than expected. It was all food and energy though as the core rate rose to 1.9% from 1.8%. PPI was up less than forecasted.
11) The producer price index in Japan rose just .6% y/o/y in January, well below the 1% estimate and fell by .6% m/o/m, down for a 3rd month. The drop in commodity prices led the way.
12) In response to the 10 yr JGB yield going back below zero last week, again just crushing the profits of Japanese banks, the BoJ overnight cut the amount of 10-25 year bonds to 180b yen from 200b last time in order to try to steepen the curve again.
13) The French mainland unemployment rate fell 3 tenths to 8.5% and that’s well better than the estimate of no change. It’s also the lowest since Q1 2009. Importantly, the unemployment rate for those aged between 15-24 fell below 20% for the first time in 10 years at 19.5%.
14) The UK January CPI was up by 1.8% y/o/y, one tenth less than expected but the 1.9% rise in the core rate was as expected and unchanged with December. Wholesale prices came in less than expected but output charges are still running below the input price gains.
15) UK retail sales ex auto fuel in January were up by 1.2% m/o/m, above the estimate of up .2%.
16) The Swedish Riksbank remains committed to get out from underneath them. They kept rates unchanged today at -.25% as expected after hiking by 25 bps in December but said they want to get back to zero “during the 2nd half of 2019, provided that the economic outlook and inflation prospects are as expected.”
1) December retail sales dropped by a sharp 1.7% m/o/m at the core level (ex auto’s, gasoline and building materials), much worse than the estimate of up .4%. The weakness was broad based but we’ll see next month whether the seasonal adjustments were faulty or not.
2) Initial jobless claims totaled 239k, 14k more than expected and this is completely free of distortions. This brings the 4 week average to 232k from 225k last week and that is the most since January 2018.
3) The NFIB small business optimism index in January fell to 101.2 from 104.4. That’s the lowest print since November 2016 when it sat at 98.4 during the month of the presidential election. Plans to Hire fell 5 pts to the least since April 2018. Those that Expect a Better Economy is down to 6% from 16%. It was 34% six months ago. There were also notable declines in those that Expect Higher Sales and it’s a Good Time to Expand. Those that Plan to Increase Inventories fell to just 1% from 8% in December. Capital spending did hold steady, rising 1 pt after falling by 4 last month. Earnings expectations remained negative by a bit less so. The wage components were mixed as current plans for pay rose 1 pt but future plans for it fell by 4. Lastly, those expecting Higher Selling Prices fell 2 pts. The number one business problem remained “the availability of qualified labor” followed by “regulations and red tape.”
4) The January CPI saw no change at the headline level and a .2% core rate of increase which brings the y/o/y increases to 1.6% and 2.2% respectively. This is in line with expectations. Another decline in oil prices kept a lid on the headline figure. Food prices were up .2% m/o/m and 1.6% y/o/y. In what continues to be the case, services inflation ex energy remains persistent as it grew by .2% m/o/m and 2.8% y/o/y. We finally saw an increase in goods prices ex food and fuel. They jumped by .4% m/o/m and actually brings the y/o/y gain to .3%.
5) From the NY Fed this week and their analysis of the auto loan market: “Although rising overall delinquency rates remain below 2010 peak levels, there were over 7 million Americans with auto loans that were 90 or more days delinquent at the end of 2018. That is more than a million more troubled borrowers than there had been at the end of 2010 when the overall delinquency rates were at their worst since auto loans are now more prevalent. The substantial and growing number of distressed borrowers suggests that not all Americans have benefitted from the strong labor market and warrants continued monitoring and analysis of this sector.
6) The MBA said for the week ended Feb 8th, the average 30 yr mortgage rate fell 4 bps w/o/w to 4.65%, the lowest in a year. But, purchases applications fell 6.1% w/o/w and are down for 4 straight weeks. Versus last year, they are weaker by 5.3% and the index is now at the lowest level since mid November if we don’t include the holiday influenced last print of 2018. Refi’s were unchanged but still down 17% y/o/y.
7) January industrial production fell .6% instead of rising .1% as expected. Weakness was particularly seen in manufacturing with a .9% decline vs the forecast of no change. December was also revised down. Auto production was terrible, falling by 9% m/o/m and is now down y/o/y by .7%. Production fell for both machinery and computer/electronics. Capacity utilization also fell.
8) Japan’s economy in Q4 grew by 1.4% y/o/y as expected helped mostly by business spending. Private consumption was up modestly. Overall trade was a drag as we know it’s been in many places of the world.
9) Singapore’s economy rose by 1.9% y/o/y in Q4, below the estimate of 2.1% and the slowest since Q3 2016.
10) China’s aggregate financing figure was off the charts above expectations at 4.6 Trillion yuan, well more than the estimate of 3.3 Trillion. The upside was mostly on the non bank side. M2 growth also increased by 3 tenths to 8.4%. The caveat though, similar to the trade data, a lot was rushed ahead of the Lunar New Year.
11) The Germany economy in Q4 saw zero growth q/o/q after a two tenths decline in Q3. On a y/o/y basis growth was just .6%, the weakest since Q3 2013. The domestic side certainly did better than net trade. For 2019, growth is expected to be 1%. For the Eurozone as a whole, growth in Q4 was 1.2% y/o/y.
12) Eurozone IP in December was down by .9% m/o/m, 5 tenths worse than expected and the y/o/y drop of 4.2% was the weakest since 2009.
13) The UK economy grew by 1.3% y/o/y in Q4, one tenth less than expected and vs 1.5% in Q3. It matches the slowest since Q2 2012 and since the Brexit vote in June 2016, the UK has had just one quarter with a 2 handle (2% in Q3 2017).
14) Amazon (Atlas) Shrugged.
What NY has done has resulted in some of the following: Lost jobs. Lost job experience. Lost internships. Lost high paying jobs. Lost life experiences. Lost taxes. Lost construction workers. Lost work for architects. Lost steel, cement production. Lost plumbing supplies. Lost electrical work. Lost carpet and hard wood floor sales. Lost infrastructure improvements in the area. Lost sales at restaurants. Lost food delivery. Lost taxi, Uber, Lyft, bus and subway rides. Lost ticket sales for LIRR, NJ Transit and Metro North. Lost car sales. Lost Broadway show ticket sales. Lost Yankees, Mets, Knicks, Nets, Jets, Giants, Ranger, Islander and Devils ticket sales. Lost dry cleaning services. Lost clothing sales. Lost housing transactions and commissions. Lost furniture shopping. Lost household formation. Lost ‘my first apartment.’ Lost airline flights. Lost retail sales on any other thing spent with the money from those high paying jobs.
#EVERYONE LOST #CAPITALISM WORKS