- Down -1.50 to 89.53 w/w
- Down -31.01 YoY
BBG Industrial metals ETF
Commodity prices as measured by ECRI continued to fall this week to fresh multi-year lows, while metals rebounded. I suspect this is mainly driven by Chinese weakness, and is a net boon to the US economy.
Initial jobless claims
- 271,000 down -6,000
- 4 week average 272,500 up +1,000
Initial claims remain well within the range of a normal economic expansion, as does the 4 week average.
The American Staffing Association Index
- Up +1 to 97
- Down -1.99 YoY
The YoY comparison had generally been positive to strongly positive since last spring. In the last two months turned neutral and then increasingly negative. The YoY comparisons have become less negative in the last month.
Tax Withholding (not available this week due to Treasury server issues)
- $ 122.6 B for the first 14 days of August vs. $ 121.0 B one year ago, up +$ 1.6 B or +1.3%
- $ 163.1 B for the last 20 reporting days ending Thursday vs. $ 154.6 B one year ago, up +$ 8.5 B or +5.5%
Beginning with the last half of 2014, virtually all readings have been positive. Twice in the last 3 weeks, due to particular daily weakness, we have seen negative readings, but the less volatile 20 day running sum remains quite positive.
Oil prices and usage
- Oil up +$ 5.01 to $ 45.30 w/w
- Gas down -$ .08 to $ 2.64 w/w
- Usage 4 week average up +5.8% YoY
The 2010-13 Oil choke collar remains broken. The price of gas and oil bottomed at the end of January at $ 2.02. They rose $ 0.80 to $ 2.82 in June, before declining in the last two months. Gas should be below $ 2 in some states already.
Bank lending rates
LIBOR rose sharply from its post-recession low set in one year ago, and the TED spread was also in an uptrend since the last the middle of 2014, rising off its November 2013 low. In the last few weeks, however the TED spread has whipsawed violently.
Both the Goldman Sachs and Johnson Redbook Indexes weakened after last Christmas, and weakened further YoY beginning in May. With the exception of 3 weeks in April, the Gallup report has been negative since the beginning of this year. The big difference appears to be that Gallup does not measure big, durable, purchases, but most importantly does include gas purchases.
- Carloads down -5.2% YoY
- loads ex-coal down -3.1% YoY
- Intermodal units up +5.0% YoY
- Total loads up +0.4% YoY
Rail traffic fell off a cliff in mid-February. Intermodal traffic quickly turned positive again, but domestic carloads, led by coal (for export) declined further in May and June (off -8% to -10% YoY), but have been less negative since.
After declining sharply for several months, making a 3-year low in mid-February, the BDI surged higher. Meanwhile, Harpex (container shipping) turned up sharply for 3 months, making almost continual new 4-year highs, peaking at 646 eight weeks ago, before turning down again. In the longer term, shipping rates bottomed about 3 years ago and have been in a slow and variable uptrend since, although the Baltic index did break that to the downside in the recent skid.
- Down -1.5% w/w
- Down -9.7% YoY
Over the last several years steel production had generally been in a decelerating uptrend. Since spring 2014, it turned mixed, and then cliff-dived 6 months ago.
There were no big changes this week.
Among long leading indicators, interest rates for corporate bonds and treasuries remained neutral. Mortgage rates have returned to being a positive. Refinancing is slightly improved from its multi-year bottom. Money supply, purchase mortgage applications, and real estate loans remain positive.
Among short leading indicators, the interest rate spread between corporates and treasuries turned even more negative. The US$ also turned even more negative. Temporary staffing was negative for the 15th week in a row, but it isn’t getting worse. Positives included jobless claims, oil and gas prices, and gas usage. Commodities are a big negative for (global) manufacturing, but are probably a big boon for consumers.
The coincident indicators range from the lukewarm positive to strongly negative. Tax withholding was again in its normal positive on a 20 day basis this week. On the other hand, the negative uptrends in LIBOR and the whipsawing in the TED spread continued. Steel production and rail carloads (led by coal) are still negative, although rail looks considerably “less worse.” Gallup spending remains negative, while Johnson Redbook is again just barely positive, and Goldman Sachs chain store sales more positive. Shipping has declined to neutral.
I suspect that the globe, as a whole, is in recession. The bottom line as to the U.S. remains that with good numbers in housing and vehicle sales, and especially with gas prices declining again, I still remain positive through the first half of next year.
Have a nice weekend!