Macro Snapshot 1/28/12

1/28/12:

Jobless Claims: 377k, implies .44% payroll growth (~50k/mo)

Payrolls: 1.25% Yoy Implies 2.68% growth.

Retail Sales:

   Monthly: 6.5% YoY (65th percentile) | 3.4% inf-adj YoY

   ICSC Weekly: 2.8% (33rd percentile)

   Redbook Weekly: 2.5% (34th percentile)

   

Mortgage Purchase: -7.947% YoY, giving back some the recent gains, 
   but still trending closer to home on a rate of change basis.

ECRI: -6.5% up 1% from last week

   ECRI Inflation: N/A

Confidence Indices:

   Michigan: 75 (+1)

   Consumer Conf: 64.5

Manufacturing Surveys:

   ISM: 53.9,     implies 3.48% growth

   Philly: 7.3,   implies 2.69% growth

   Chicago: 62.5, implies 4.27% growth

   Dallas: -3,    implies 1.19% growth

   Richmond: 12,  implies 3.78% growth

   Empire: 13.48, implies 1.89% growth

   Milwaukee: 58, implies 2.42% growth

   Weighted avg: 2.85% growth implication

Home prices:

   Case Shiller: -3.4% in October

   Zillow: -4.6% YoY in November

   List prices -2.1% YoY in December. Negative trend remains.

   Total Homes Sold: +4.2% YoY

   Price per sq. ft -4.2% YoY

   Foreclosure sales: 19% +3% YoY

   Percent with increasing values: 31% +7.2%

Economic Surprises:

   US: 95th percentile of positive surprise index data points.

   Europe: 50th percentile of positive surprise index.

Money Supply:

   M2: Growing at 9.6% annual rate. 86th percentile

   M0: Growing at 28% annual rate.

   Excess reserves: $1.51 trillion

   M2 Velocity: 0.4th percentile (continues to slow)

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: 102.208

   ARM2: 91.339

   FRM1: 104.819

   FRM2: 96.181

On the Run CDX Investment Grade: 106 (16% wider YoY)

Leading Indicators (non-financial)

   Average weekly hours, manufacturing: 41.5 (strong)

   Average initial claims               377k (back to average)

   New orders, consumer goods           120.89(pop, slowing YoY)

   Supplier deliveries                  49.9 (flat,slowing)

   New orders, nondefense capital goods 48.884 (18%, strong pop)

   Building permits                     679 (8%, down from 20%)

   Consumer expectations                63.6 (recent pop but low)

Brief thoughts:    Mixed changes in the indicators this week with next week being far more important for data points. Claims, retail sales, economic surprises, and building permits all moderated, while ECRI and most manufacturing data points gained ground. I don’t think anything stands out as extremely pertinent here. GDP, which was released earlier this week, was somewhat surprising. Consensus has generally been that the 4th quarter was extremely strong, and consistent beats on the numbers front left most people I know expecting a better than reported consensus Q4 GDP number. What we got was a slight disappointment (2.8% vs. 3%) with moderating inflation data. Real final sales were only up .8% leaving inventory restocking to drive much of the Q4 number. This doesn’t strike me as a particularly encouraging data point given the overall buzz surrounding Q4, but it’s still reasonable growth if consistent.

   The market has a very strong tone to it with the Fed’s now perpetual plan for zero rates. It seems likely that we’ll see decent volatility either way in line with which way the data comes in. There are many professionals that are underinvested and cautious that will likely be forced to throw in the towel in an illiquid market should the numbers come in strong or even in line. If the numbers suggest the muddle through scenario is waning and ECRI’s recession call was in fact right, we’re in for a bumpy ride lower. Overall perception seems to be extremely uncertain for a large part of the investing audience and shifts in one direction or the other should have a meaningful impact.

Follow-ups:    Muddle through remains intact. The huge downward shift in claims disappeared, which seemed likely even last week. Next week will provide a lot more meat in terms of new numbers.