Macro Snapshot 1/15/12

1/15/12:
Jobless Claims: Last printed 399k vs. 375k expectations. Implies minimal payroll growth
Payrolls: Rising YoY at 1.25% which implies reasonable growth of mid-2% area.
Retail Sales: Real sales growing at 3.4% YoY. Still relatively healthy.
Mortgage Purchase: Up 4% WoW, but still down over 7% YoY and at 1997 levels. Nothing compelling in housing yet.
ECRI: -8.4% Still back at 2000-2001 levels. Very disconcerting.
ECRI Inflation: -4.3%
Confidence Indices:
Michigan: Strong rally off 8/11 lows, back to 74.
Consumer Conf: Strong rally back to 64.
Manufacturing Surveys:
ISM: Last print of 53.9. Consistent with 3.4% growth

Philly: Last print of 6.8. Consistent with 2.6% growth
Chicago: Last print of 62.5. Consistent with 4.27% growth
Dallas: Last print of -3. Consistent with 1.19% growth
Richmond: Last print of 3. Implies 2.8% growth
Empire: Last print of 9.53. Implies 1.53% growth
Milwaukee: Last print of 57.8. Implies 2.42%
Weighted avg: 2.64%
Home prices:
Case Shiller: -3.4% in October
Zillow: List prices down 2.1% YoY in December. Negative trend remains.
Total Homes Sold: Up 3.2% 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. March ‘11,
Europe: 29th percentile of positive surprise index.
Money Supply:
M2: Growing at 9.8% annual rate. 86th percentile
M0: Growing at 30% 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: 101.36
ARM2: 93.89
FRM1: 104
FRM2: 89.85

Leading Indicators (non-financial)
Average weekly hours, manufacturing: 41.5 (strong)
Average weekly initial claims for unemployment insurance 399k (spike neg)
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: The trailing data is reasonably consistent with a muddle-through scenario. Payroll growth and the manufacturing surveys are consistent with mid-2% growth. Confidence has rallied significantly from the August lows. The consistently better than expected data across the board has taken Citi’s economic surprise indices to very high levels (97th percentile). The cognitive dissonance comes from the fact that the ECRI leading indicators are significantly negative here. Additionally, claims took a large leap to 399k this week. The current claims data implies approximately flat to slightly down job growth and has for a while. Overall, it’s a mixed picture, but more positive than I’d expect. There are enough positive data points to balance out my overall fear/expectations of impending difficulty. More digging will be required to understand the dire forecast out of ECRI. The financial components are likely important as 2/10s for instance should be signaling impending weakness.

Follow-ups: N/A