Macro Update: 1/21/12

1/21/12:

Jobless Claims: 352k,    implies .95% payroll growth (major positive change if sustained)
Payrolls: 1.25% Yoy      implies 2.68% growth.

Retail Sales:
  Monthly: 6.5% YoY (65th percentile) | 3.4% inf-adj YoY
  ICSC Weekly: 3% (37th percentile)
  Rebook Weekly: 2.8% (42nd percentile)

 Mortgage Purchase: -7.9% YoY but still improving on a RoC basis.

ECRI: -7.5% up nearly 1% from last week
ECRI Inflation: N/A

Confidence Indices:
  Michigan: 74
  Consumer Conf: 64.5
  Manufacturing Surveys:
  ISM: 53.9, implies 3.48% growth

Economic Surveys:
   Philly: 7.3,            implies 2.69% growth
   Chicago: 62.5,      implies 4.27% growth
   Dallas: -3,             implies 1.19% growth
   Richmond: 3,        implies 2.81% growth
   Empire: 13.48,      implies 1.89% growth
   Milwaukee: 57.77, implies 2.42% growth
     Weighted avg: 2.71% growth implication

Home prices:
   Case Shiller: -3.4% in October
   Zillow: -4.6% YoY in November
   List prices down 2.1% YoY in December. Negative trend remains.
   Total Homes Sold: Up 4.2% YoY
   Price per sq. ft down 4.2% YoY
   Foreclosure sales: 19% up 3% YoY
  Percent with increasing values: 31% up 7.2%

Economic Surprises:
  US: 97th percentile of positive surprise index data points.
  Europe: 54th percentile of positive surprise index. (up nearly 40pts WoW)

Money Supply:
  M2: Growing at 9.6% annual rate. 86th percentile
  M0: Growing at 31% annual rate.
  Excess reserves: $1.52 trillion
  M2 Velocity: 2.3% percentile

Mortgage Delinquencies:
  BBMDPDLQ: Bloomberg all inclusive Prime (30+ through REO): 23.27% (14% growth)
  ALT-A: 34.68% (flat trajectory)
  Subprime: 21.25% (shrinking by 48% annually, odd data set)

Prime Mortgages (non-agency):
  ARM1: 102.58
  ARM2: 90.824
  FRM1: 105.024
  FRM2: 95.121

On the Run CDX Investment Grade: 106 (27% wider YoY)

Leading Indicators (non-financial)
  Average weekly hours, manufacturing: 41.5 (strong)
  Average weekly initial claims for unemployment insurance 352k (spike pos)
  Manufacturers’ new orders, consumer goods and materials 119.01(pos, but slowing)
  Index of supplier deliveries – vendor performance 49.9 (flat,slowing)
  Manufacturers' new orders, nondefense capital goods 45.6 (10%, slowing)
  Building permits, new private housing units 681 (20%, strong)
  Index of consumer expectations 63.6 (recent pop but low)


Brief thoughts: Changes in the macro data were to the upside in the US. Only a few real data point changes this week with Initial Claims being the major mover. If the 352k print isn’t a one off aberration, it signifies a significant pickup in job creation, but it comes on the heels of a 399k print. Both sit approximately 25k off the 4wk moving average, just on opposite sides of that trend. Until we have confirmation in either direction, it seems best to assume claims from this week were shifted into the week prior.
   Looking abroad, Eurozone confidence picked up significantly moving from -54 to -32, with German sentiment moving from a -53.8 to a -21.6 (-49.4 survey). Further East, Chinese retail sales remained strong, Australian job creation disappointed, Japanese Industrial Activity disappointed, and Chinese GDP surprised slightly to the upside. A mixed bag in Asia, but overall improvement in Europe. There’s no conclusive evidence for any change in the status quo globally and equity and credit moves reflect that.

Follow-ups: We’re still consistent with a muddle through scenario in all the trailing data, and some of the leading data has picked up in the past week. ECRI still suggests a recession, which means the cognitive dissonance remains.