Chicago PMI

 

- Business Barometer Index for October 2011 was 58.4 indicating expansion.

 

Dallas Federal Reserve Manufacturing Survey (October)

The Dallas Fed Index was still positive but down from 5.9 to 4.1. http://www.dallasfed.org/data/outlook/2011/1110/tmos1110.cfm

BLS Employment Situation Report is this Friday.  Consensus is still for a slow growth of about 90,000 jobs.

Personal Income and Expenses  (September 2011)

 

Personal Income - Month/Month  +0.1 %
Personal Income - Year/Year   +4.4 %
Consumer Spending - Month/Month +0.6 %
Consumer Spending - Year/Year change    5.3 %
Core PCE price index - Month/Month +0.0 %
Core PCE price index - Year/Year  +1.6 %

 

PCE is an inflation measure weighted by actual consumer spending.

 

Real Disposable Income is still flat as evidenced in this graph

Employment Cost Index

 

ECI - Quarter/Quarter +0.3 %. Previous was +0.7%
ECI - Year/Year +2.0 %. Previous was +2.2%

Increases in employment costs are largely due to increased costs of benefits and reflect increased health care costs.

GDP

 

1st look at 3rdQ2011 GDP is +2.5%.  This was right at expectation.  Previous quarter was +1.3%

Final Sales of domestic products were +3.6% (annualized)

This uptick was seen by Consumer Metrics starting in the middle of June.  Consumer Metrics sees a flattening of this growth as we start the 4thQ so the 3rd Q could be a one time blip.

 

 

 

Eurozone

 

The fact that some solution was reached regarding Greek debt is positive but 1) there are four more countries to deal with and 2) the long term macroeconomic effects are still unknown.

Jobs

 

- Initial Jobless Claims for late week was 402,000
- previous was 403,000
- consensus was 405,000

 

This is the story of a jobless and weak recovery.

 

 

 

 

Pending Home Sales (September 2011)

 

NAR Pending Home Sales Index - 84.5.  Previous was 88.6.

Given where we have been and where rates are this is an indication that the housing sector remains very weak.

 

Durable Goods Orders (September)

New Orders - Month/Month -0.8 %
Ex-transportation - Month/Month  1.7 %

It is possible that this indicates that the GDP gains in 3rdQ will not be matched by the 4thQ.  The flattening of the leading Consumer Metrics data is still there.

Housing

New Home Sales -  (seasonally adjusted annual rate) 313,000.  Previous was 295,000.  Consensus was 302,000.

MBA Mortgage Applications

The is week/week data and the previous week had a holiday making this data of minimal value.
 
Purchase Index - Week/Week +6.4 %
Refinance Index - Week/Week  +4.4 %
Composite Index - Week/Week  +4.9 %

Housing

S&P Case-Shiller Home Price Index

20-city, Month/Month Seasonally adjusted +0.0 %
20-city, Month/Month Not Seasonally adjusted +0.2 %
20-city, Year/Year Not Seasonally adjusted -3.8 %

FHFA Home Price Index (August)

Month/Month -0.1%
Year/Year -4.0%

Consumer Confidence

- Confidence level for October was 39.8. Previous was 45.3.  Consensus was 46.0

Consumer Confidence is a measure of predisposition to spend.  THis is not a good omen for 4thQ GDP.

 
Retail Sales

- Redbook Year/Year +4.1%
- ICSC-Goldman Store Sales - Week/Week change  -0.8 %. Year/Year +2.4%

Chicago Fed Index

The national activity index published by the Chicago Federal Reserve was -0.22 up from the previous -.28.

This index is a weighted average of 85 existing indicators of national economic activity.

This week has potential for massive volatility.  Wednesday is supposed to be the day by which the Eurozone debt settmelent thing is announced.  I would offer the opinion that when it is announced no one will know what the consequences will be. That will not keep the airheads in the media from offering their opinions. Thursday is 3rdQ2011 GDP and  is expected to be about +2.5%.  The best leading indicator I use is from Consumer Metrics which saw this uptick in June.  The probles is that those gains do not seem be be continuing into 4thQ.

 

Jobs 

- Initial Jobless claims (week ending 10/125) 403,000
- Previous was 404,000. Consensus was 400,000
- 4-week moving average was 403,000

While the 4-week average continues to decline, this is not a picture of a healthy jobs market.  It appears more as a picture of a jobs market which is weak and too slowly recovering from the worst stages of an illness.

 

Leading Economic Indicators

 

LEI was +0.2% for September.  The pop in LEI is almost entirely due to a drop in the 10-year Treasury yield.  At present, LEI puts too much stock in the value of monetary policy.

 

Housing 

 

Existing Home Sales for September were 4,910,000 (seasonally adjusted annual rate)
That was -3.0% month/month but +11.3% year/year.  There is a lot of inventory which must be sold but economic uncertainty and tough mortgage qualifying restrain buying.

Philadelphia Fed

General Business Conditions Index was 8.7 an improvement from September's -17.5

Inflation (September 2011)

 

- CPI - Month/Month (overall)  +0.3%
- CPI - Year/Year (overall)  +3.9%
- CPI - Month/Month (core)  +0.1%
- CPI - Year/Year (core)  +2.0%.

 

There are several stories behind this data.  The first is that the only lasting effect of QE II was inflation of commodity prices. The second may be that core inflation has subsided.  The good news for seniors is that, as a consequence of this high inflation we had, Social Security benefits will increase 3.6% starting in January 2012.

 

Housing

 

- Housing Starts (September 2011) 658,000. Previous was 571,000, consensus was 590,000

- Permits 594,000. Previous was 620,000.  Consensus was 620,000.

We need 1,500,000 annual Housing Starts to keep pace with population growth.  We are still seeing the effects of working on the inventory of existing homes consequent to the collapse of the housing bubble.

 

Mortgage Applications  (week ending 10/14)

 

Last week had a holiday so this data may be less than compelling:

Composite Index - Week/Week -14.9 %
Purchase Index - Week/Week -8.8 %
Refinance Index - Week/Week -16.6 %

 

Inflation (Wholesale)

 

PPI - Month/Month  +0.8 %
PPI - Year/Year +7.0 %
PPI less food & energy - Month/Month +0.2 %
PPI less food & energy - Year/Year +2.5 %

 

 

This is inflation at the wholesale level.  The numbers are high but businesses have been profitable and able to absorb the increases in the raw material costs. Inflation is much more insideous when it bleeds over to CPI.

 

Housing Market Index

 

Housing Market Index value was 18 for September. Previous was 14.  Consensus was 15.

 

This report is produced by the National Association of Home Builders. 

 

"This latest boost in builder confidence is a good sign that some pockets of recovery are starting to emerge across the country as extremely favorable interest rates and prices catch consumers' attention," said NAHB Chief Economist David Crowe. "However, it's worth noting that while some builders have shifted their assessment of market conditions from 'poor' to 'fair,' relatively few have shifted their assessments from 'fair' to 'good.' One reason is that builders are facing downward pricing pressures from foreclosed homes at the same time that building materials costs are rising, and this is further squeezing already tight margins."

 

Retail

 

ICSC-Goldman Store Sales

Week/Week change +0.1 %
Year/Year change +3.6 %

 

Redbook

 

Year/Year Change +4.6%

Consumer Metrics

The Consumer Metrics indices based on on-line shopping have flattened after their sharp increases in July & Auguest.  This may portend increased 3rd Q 2011 GDP growth followed by flat 4thQ GDP growth.  First look at 3rdQ 2011 GDP will be Thursday October 27.  If it as strong as Consumer Metrics would indicate that would cause equity buying and Treasury selling.  This is the same week when we may see significantly increased angst about Eurozone debt.  Next week could be a roller coaster.

Industrial Production/Capacity Utilization (September 2011)

- Industrial Production was +0.2%
- Previous was +0.2%, consensus +0.2%
- Capacity Utilization was 77.4%
- Previous was 77.4%. Consensus was 77.5%.

Empire State Manufacturing Survey

- index was -8.48

Upper New York State (where manufacturing used to be) is a place where the economy has been ravaged by high property taxes.  If you make a list of property tax rate by county, 14 of the 15 highest rates are in New York State.  In 1978 California voters passed Proposition 13.  San Francisco instantly cut its property tax rate by 57%.  Within 4 years inflation adjusted revenue to SF was 2/3'rds higher than before Prop 13.