The Ticker District

Peter: 11/20 – Succinct Summation of Week’s Events:

By - - Macro & The Boock Report & Weekly Data Summaries on November 20, 2015 2:05 PM Follow-Ups Peter Initial


  1. Initial jobless claims totaled 271k, in line with expectations and down from 276k last week. The 4 week average moved to 271k from 268k as a 259 print five weeks ago drops out of the average. Continuing claims fell by 2k to just above 15 year lows.
  2. Single family permits in October rose by 17k to 711k, the most since December ’07. Permits to built multi family totaled 439k, up 28k from September.
  3. As the average 30 yr mortgage rate rose by another 6 bps w/o/w and is up 20 bps over the past three weeks to 4.18%, the highest in four months, fence sitters got off their arse. Mortgage applications to buy a home rebounded by 11.9% w/o/w while refi applications were up by 2.3% after three weeks of declines.
  4. The Philly manufacturing index for November rose to +1.9. While weak, it was a touch above the estimate of -.5 and off negative prints of -4.5 and -6.0 in the two prior months. The forward looking 6 month outlook for Business Activity rose almost 7 pts but only after falling by about 7 pts in October. Capital spending plans rose to 25.9 from 7.2 in October but it was at 27.2 in September.
  5. The November ZEW investor confidence survey of the German economy in the coming six months rose to 10.4 from 1.9 in October. That was above the estimate of 6.0 and almost gets back the 10.2 pts that were lost in October. The current conditions component was little changed at 54.4 vs 55.2 last month but that is the lowest since February. ZEW said “the currently high level of consumption in Germany, the recent decline in the external value of the euro, and the ongoing recovery in the US are likely to bolster the robust development of the German economy.”
  6. UK headline CPI fell .1% y/o/y, unchanged with September and in line with expectations. The core rate rose one tenth to 1.1% and has held pretty steady this year as the monthly average year to date is up 1%.
  7. October eurozone core inflation was revised up a tenth to a 1.1% gain y/o/y. It’s the most since October ’13 as services inflation is now running at 1.3% y/o/y, the most since May. Headline inflation was left unchanged at a .1% y/o/y gain driven by an 8.5% drop in energy.


  1. Terrorism wreaks havoc on the lives of innocent civilians in multiple countries.
  2. Mario Draghi says “we will do what we must to raise inflation as quickly as possible.” He can guarantee himself a European recession if he gets it because there is little chance wages will rise “as quickly as possible” too. He also said, “Low core inflation is not something we can be relaxed about, as it has in the past been a good forecaster for where inflation will stabilize in the medium term.” He says this days after core CPI for October printed up 1.1% y/o/y, the highest since August 2013.
  3. The FOMC minutes introduce us to “the concept of an equilibrium real interest rate–sometimes labeled the “neutral” or “natural” real interest rate, or “r*”–that can serve as a benchmark to help gauge the stance of monetary policy.” Based on current growth rates, this model tells the Fed rates should be very low. I will include this quote again from the WSJ back in June: “The Fed has consistently estimated that its near zero interest rate policy and bond buying would produce faster growth. Yet each year yields disappointment. Then the Fed uses the reality of slower growth to explain why it needs to continue the policies that haven’t produced faster growth. The Fed has been in a perpetual policy feedback loop.”
  4. October US housing starts totaled 1.06mm, 100k less than expected and September was revised down by 15k. The total level of starts is at the lowest level since March. Single family starts fell by 18k m/o/m to 722k, the lowest since June while multi family starts slowed dramatically to 338k from 451k in the month prior and the slowest pace since March.
  5. The November NY manufacturing survey was little changed at -10.7 vs -11.4 in October. The estimate was -6.5 and the index is below zero now for the 4th straight month and in the 6th month in the past 8. The overall Business Conditions 6 month outlook fell 3 pts to 20.3, the lowest since November ’12 which the NY Fed said “optimism about future conditions remained tepid.” Capital spending plans were basically unchanged at 12.7 vs the 6 month average of 14.4 and Technology Spending plans fell almost 4 pts to a 5 month low.
  6. Industrial production in October fell .2% m/o/m vs expectations of up .1%. Manufacturing however rose .4% m/o/m, twice expectations driven by production of motor vehicles/parts (up .7% m/o/m and 10.9% y/o/y) and machinery. The drag on the headline IP figure was a 2.5% drop in utility output which is clearly due to the mild weather. Mining production fell for a 2nd month and is down 6.9% y/o/y for obvious reasons.
  7. US October CPI rose .2% m/o/m both headline and core as expected. The y/o/y gains were .2% and 1.9% respectively. That core rate of gain matches the most since May ’14 as services inflation ex energy rose .3% m/o/m for the 2nd straight month and 2.8% y/o/y. Just you wait when next year the decline in oil prices recycles out of the headline figure.
  8. Foreigners bought $17.4b worth of US notes and bonds in September but the 12 month TOTAL is just $10B. Purchases were north of $400b in each of 2011 and 2012, fell to as little as $41b in 2013 and quickened to $165b in 2014. The trend is clear that foreigners (China and Japan in particular) are buying less US debt. I get the US dollar rally on a Fed rate hike but is the rally really on firm footing if the dramatic slowdown in Treasury buying trend continues? Just something to think about.
  9. Japan’s economy is technically back in a recession after reporting a 2nd straight .2% q/o/q GDP decline.
  10. Japanese exports in October fell 2.1% y/o/y, in line with the estimate but the first drop since August ‘14. The volume of exports fell for the 5th month in the past 6 on a y/o/y basis. They fell 4.6% y/o/y. Imports dropped by 13.4% y/o/y, worse than the estimate of down 8.6% and the 2nd lowest print since ‘09.
  11. Prices of Chinese apartments for both new and existing ones continued their recovery in October on a y/o/y basis but cooled a bit on a m/o/m look. For new apartments y/o/y prices rose in 16 cities of 70 surveyed vs 12 in September and one back in May. On a m/o/m basis though prices rose in 27 cities vs 39 in September but still up from 2 back in January. For existing apartments, prices rose in 24 cities vs 15 in the prior month and vs 1 back in April. Prices were little changed m/o/m.
  12. Collateral damage from China, Indonesian exports in October fell 21% y/o/y vs the estimate of a 17% drop. That is the sharpest decline since one month in 2012 and in 2009 before that. A 43% y/o/y drop in the exports of oil and gas was the main reason but non oil and gas exports still fell by 17%. Imports collapsed by 28% y/o/y vs the forecast of a fall of 22%.
  13. UK retail sales in October ex fuel fell .9% m/o/m, three tenths worse than expected and September was revised down by two tenths. The 3% y/o/y gain was the slowest since September ’14.


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This is Part of a 3 part Debate on Macro