1)The June Philly manufacturing index jumped to 27.5 from -43.1 and that was well better than the forecast of -21.4. As for the 6 month outlook, it rose to 66.3 from 49.7 as optimism grows with the reopening. Capital spending plans also improved.
2)The June NY manufacturing index was well better than expectations at -.2 vs the forecast of -29.6 and that is up from -48.5 in May and -78.2 in April. The 6 month outlook jumped to 56.5 from 29.1 in May. Capital spending plans got back above zero but still remain below where they were in March.
3)Thanks to government transfers, core retail sales in May bounced back more than expected with an 11% m/o/m rise vs the 12.4% decline in April (revised up by 300 bps) and after a 3.2% rise in March. Auto/parts sales fell 6.3% y/o/y after a strong snapback in May of 44.1% m/o/m and building materials rebounded 10.9% m/o/m and are up 10.8% y/o/y.
4)According to the MBA, purchase applications rose 3.5% w/o/w, up for the 9th straight week and is now higher by 21% y/o/y. Refi’s rose for a 2nd week, by 10.3% w/o/w and are up 106% y/o/y.
5)The mood of the homebuilders rebounded sharply in June with the NAHB builder survey rising 21 pts m/o/m to 58 and thus getting back above the breakeven level. The estimate was 45. The Present situation also rose 21 pts m/o/m to 63 while the Future expectations bounced to 68 from 46. Prospective Buyers Traffic is still below 50 at 43 but that is up from 21 and likely still impacted by physically distancing. The NAHB is citing the urban to suburban move being made by many. “Builders report increasing demand for families seeking single family homes in inner and outer suburbs that feature lower density neighborhoods.” Here is the caveat though, “At the same time, elevated unemployment and the risk of new, local virus outbreaks remain a risk to the housing market.”
6)Negotiations in Europe begin in earnest on a 750b euro spending program.
7)If the ECB is willing to pay banks to take money from them, why not take them. The ECB announced that European banks borrowed 1.3 Trillion euros from them in the TLTRO program. Part of this money went to pay off previous TLTRO’s while the balance would be considered fresh capital. A total of 742 banks tapped it and the ECB said it would 548b of net new liquidity.
8)The June ZEW investor expectations index for the German economy rose to 63.4 from 51 in May. That was 3.4 pts better than expected while the Current Situation at a still deeply negative -83.1 was about in line. ZEW said “There is growing confidence that the economy will bottom out by summer 2020…The expected earnings for the individual sectors in Germany still vary greatly. Earnings expectations are strongly negative for export oriented sectors such as automotive and mechanical engineering, as well as the financial sector. In contrast, forecasts are fairly positive for info tech, telecom and consumer oriented services.”
9)Retail sales ex auto fuel in the UK in May did rise 10.2% m/o/m, exceeding the estimate of up 4.1% and that follows the 15% drop in April at the peak of the shutdown. There was a 42% jump in household goods and online sales now make up the biggest percentage of the spending pie.
10)Major League Baseball seems closer to an agreement for at least some season this year.
1)Initial jobless claims fell to 1.51mm from a revised 1.57mm last week and that was about 200k more than expected. Notwithstanding the reopening of the economy, continuing claims, delayed by a week in its release, was little changed at 20.54mm vs 20.61mm in the week prior.
2)In testimony this week, Jay Powell sounded like someone who was just winging it. The Fed by buying corporate bonds has now institutionalized the government nationalization of private assets and is illegal under the Federal Reserve Act. What’s the transmission to the real economy of Powell Capital Management buying the bonds of Microsoft, Apple and Amazon to name a few? Also, in an economic state where the all in unemployment rate is above 20% and many households are financially stretched, Fed Vice Chair Rich Clarida expresses his concern that the cost of living is not high enough.
3)Covid case counts jump in some states as some are not wearing masks.
4)Housing starts totaled 974k in May, below the estimate of 1.1mm while April was revised up by 43k to 934k. The increase in May came from multi family which rebounded by 39k from April while single family was little changed. Single family permits bounced by 79k m/o/m to 745k, although this is still below where it was in March at 884k and February at 994k. Multi family starts rose by 75k to 475k, getting back what it lost in April.
5)US industrial production in May rose 1.4% m/o/m after the shutdown decline of 12.5% in April. The estimate was for up 3% and most of the miss was due to a less than expected rebound in manufacturing.
6)The May Cass Freight Index said shipments fell 24% y/o/y. They said “Following what we believe was the trough in April, the Cass Freight Index showed some, but only little, improvement in activity last month…We were surprised not to see more of an up tick; the reopening schedule appears to have unfolded slower than we anticipated – and also because the freight data reported by some of the public companies showed a more significant sequential jump and better y/o/y improvements than Cass showed.”
7)The Bank of England left rates unchanged at .10% but raised their QE program to 745b pounds from 645b as expected and to be done by year end. What’s more QE going to do?
8)UK jobless claims rose by 529k in May, about half the level seen in April and vs just about 5k in March and February.
9)EU car registrations in May fell 52.3% y/o/y.
10)In China, retail sales in May fell 2.8% y/o/y vs the forecast of -2.3%. Industrial production was higher by 4.4% y/o/y as factories reopened but that was below the estimate of up 5%. Fixed asset investment ytd y/o/y fell by 6.3% y/o/y, a touch more than the expected drop of 6%.
11)Of course reflecting the shutdown, Australia lost 228k jobs in May, well more than the estimate of down 79k while its unemployment rate rose to 7.1% from 6.4%.
12)Japanese exports in May fell 28.3% y/o/y, more than the estimate of 26.1% and follows the April 22% y/o/y decline which was in the eye of the shutdown storm. Imports fell 26.2% in May vs the forecast of down 20.4%.
13)Singapore non oil exports fell 4.5% y/o/y in May, more than the estimate of up 1%.