Jobless Claims (week ended 5/19/2012)

 

- Initial Claims were 370,000. 
- Previous was 372,000 revised up from 370,000
- 4-week Moving Average was 370,000 down from 375,000

 

Graph:  http://mam.econoday.com/showimage.asp?imageid=22573

 

There are two facts here:  1) the jobs market is not as bad as it was and 2) it is still not healthy.  Massive deficits and accomodative-to-the max-monetary policy have done little.

 

Durable Gods Orders (April 2012)

 

New Orders - Month/Month 0.2%
New Orders - Year/Year 6.9%
Ex-transportation (core) - Month/Month -0.6%
Ex-transportation (core) - Year/Year  6.3%

 

DGO is a bouncy piece of data and, thus, difficult to parse but the core Month/Month is another sign that recovery is weak.

 

The fact is that apart from 2ndQ2011 the entire recovery has been very weak.

 

The Euro

 

Concern about Greece in particular and the EU in general has sent the Euro to a two year low v. the US dollar.  The sad thing is that consequently the US is not seeing the cost of its massive deficits because Treasury borrowing costs are so low.  Some day, two or three years from now buyers of US Treasury debt are going to demand higher yields. We may be seeing a debasement of fiat currencies in general.  At present the US dollar simply isn't as debased as the Euro.

New Home Sales (April 2012)

 

- New Home Sales (seasonally adjusted annualized rate) 343,000.  Previous was 332,000 revised down to 328,000.  This is another or the "not as bad as it was but still not good" series of data releases.

 

Mortgage Applications (week ended 5/18/2012)

 

Purchase Index - Week/Week -3.0%
Refinance Index - Week/Week +5.6%
Composite Index - Week/Week +3.8%

 

Lower rates = more refinancing.  Weakness in the purchase index indicate that the housing market is still troubled by the weak economy.

 

FHFA House Price Index (March 2012)

 

-Month/Month change was +1.8% which by recent standards is astronomical.

 

Graph: http://mam.econoday.com/showimage.asp?imageid=22564

 

Analyzing housing data is getting a bit complex because there are many distressed sales occurring which are all cash transactions. That means that they don't appear in the Mortgage Application or FHFA data.

 

Until we get a lot more people working we are not going to see a significant recovery in housing.

 

The fundamentals are not driving markets today.  EU/Greek angst is causing flight-to-quality buying of U.S. Treasuries. What is happening there is systemic.  Capital is moving out of some countries and into others and banks are facing existential threats.  I was going to say “Things can’t get much worse” but let’s see what next week holds.

Existing Home Sales (April 2012)

 

- Existing Home Sales (Seasonally Adjusted Annual Rate) - 4,620,000. 
- Previous was 4,480,000 revised to 4,470,000

 

http://mam.econoday.com/showimage.asp?imageid=22558

 

Considering how low interest rates are and considering how much values have dropped this data indicates a lack of confidence from potential buyers.

 

Chain Store Sales (week ended 5/19/2012)

 

- Redbook Store Sales Year/Year +2.7%.  Previous was +3.7%.
- ICSC-Goldman Store Sales week/week -1.7%.  Previous was -0.8%.  Year/Year +3.8%.  Previous was +4.5%.

 

The economy has been remarkably flat since the 2ndQ2011.

 

Even though fundamentals are weak today it appears that the long awaited technical bear market is lifting Treasury yields.  This should last two weeks at most. 

Chicago Federal Reserve  (April 2012)

 

- Index of National Activity +0.11.  Previous was -0.44 revised from -0.29.  This is another case where only revising previous data makes the latest data look good.  Moving the previous down .15 means that the net was 0.04 worse than previous.

 

- 3 Month Moving Average -0.06

Jobless Claims (week ended 5/12/2012)

 

- Initial Claims 370,000 which was the same as the previous week only after the previous week was revised upward to 370,000

 

- 4-week Moving Average was 375,000

 

The good news is that the jobs market is not getting worse.  The bad news is that it is not getting any better except for the thinnest of margins.

 

Leading Economic Indicators (April 2012)

 

- Month/Month -0.1%

 

FOMC

 

FOMC minutes suggest the possibility of additional monetary easing but the real story is that there is absolutely nothing monetary policy can do faced with massively irresponsibility fiscal policy which, at present, calls for decreasing spending and increasing taxes at the end of this year.

 

Despite this, Treasury yields are falling because things are worse in the EU.

Mortgage Applications (week ended 5/11)

 

 
Purchase Index - Week/Week -2.4%
Refinance Index - Week/Week 13.0%
Composite Index - Week/Week 9.2%

 

Refinanace application move up when rates move down but the purchase index indicates that the real estate market remains flat.

 

Housing Starts (April 2012)

 

Starts -  717,000 (seasonally adjusted, annualized)
Permits - 715,000 (seasonally adjusted, annualized)

 

We need about 1,500,000 starts to accomodate population growth. 

 

Industrial Production

 

Production - Month/Month 1.1%. Previous was revised from flat to down 0.6%
Capacity Utilization Rate - 79.2%

 

Growth may be slow but the manufacturing part of the economy is expanding.

 

http://mam.econoday.com/showimage.asp?imageid=22536

 

PPI (April 2012)

 

- PPI - Month/Month  -0.2%
- PPI - Year/Year  +1.9%
- Core PPI (less food & energy) - Month/Month +0.2%
- Core PPI (less food & energy) - Year/Year +2.8%.

 

Lower oil prices brought down overall PPI and core is right about where the Fed wants.

 

This is a chart of year/Year core (bars) and overall (line):

 

http://mam.econoday.com/showimage.asp?imageid=22510

 

University of Michigan Consumer Sentiment (May 2012)

 

- Level 77.8.  Previous was 76.4.  Consumers say they are ready to spend.

 

Jobs (week ended 5/5/2012)

 

- New Claims 367,000
- Previous was revised from 365,000 to 368,000
- 4-Week Moving Average 379,000.

 

Bloomberg headlines this data as "U.S. Jobless Claims Decline, Allaying Concerns of Labor Setback."  Part of the problem is the unwillingness of media to accurately report data.  The jobs market is not good, it is just not as bad as it was last month.  The flat jobs market restrains GDP growth and has serious social costs.

 

Graph: http://mam.econoday.com/showimage.asp?imageid=22495

 

Import/Export Prices (April 2012)

 

Export Prices - Month/Month 0.4%
Export Prices - Year/Year 0.7%
Import Prices - Month/Month -0.5%
Import Prices - Year/Year 3.4%.

 

The drop in imports prices is about oil.

 

Graph: http://mam.econoday.com/showimage.asp?imageid=22497

 

Trade Deficit (March 2012)

 

- Trade Balance deficit  $51.8 billion. Previous was $46.0 billion.

There are no fundamentals today.  When the U.S. Treasury market opened in Tokyo (Sunday evening Eastern time) Treasury prices were up sharply (yields down) presumable based on the uncertainty generated by the French Presidential election. The angst must have subsided because this morning Treasuries are tame here in the U.S.

Jobs

 

BLS Employment Situation Report (April 2012)

 

- Non-farm jobs were +115,000.  Previous was revised to +154,000 from +120,000.

 

- Average Hourly Earnings was flat
- Average Workweek was flat.

 

The Unemployment Rate fell to 8.1% because there were 342,000 fewer people in the civilian labor force.  The labor participation percentage (size of the labor force/adult noninstitutionalized population) fell from 58.5% to 58.4%.  More attention should be paid to the participation ratio because it is the people working who drive GDP and pay taxes.  Cheering for a lower unemployment rate when the labor participation ratio is falling misses the point.

 

Another disappointing report.  There is no mystery.  The housing bubble was a borrowed money bubble and the recovery is taking much longer than recovery from a typical cyclical recession.