When the market opens Monday the main focus will be on the Coronavirus that appears to be gaining strength. Since we’re facing impending doom I thought we could look back on what happened last time a pandemic was coming down the tracks.
Where the next levels are from here if the virus accelerates. Minor support around 3200 and 3100. More substantial support 3020-2900.
The Baker Hughes rig count lost 2 this week. There are 794 oil and gas rigs operating in the US – down 265 over last year.
Brent Crude Oil lost 6.41% this week closing at $60.69/bbl
WTI Crude Oil lost 7.49% this week to close at $54.19/bbl
Heating Oil lost 6.78% this week closing at $1.74/gallon
Natural Gas lost 6.64% this week closing at $1.87 per million BTUs
Unleaded Gas lost 7.80% this week closing at $1.53/gallon
Metals Complex
Gold gained 0.74% this week closing at $1571.90/oz
Silver gained 0.22% on the week closing at $18.11/oz
Palladium gained 4.11% this week closing at $2316.30/oz
Platinum lost 1.39% this week closing at $1010.60/oz
Copper lost 5.68% this week closing at $2.68/lb
Employment Picture
Weekly Unemployment Claims – Released Thursday 1/23/2020 – In the week ending January 18th, initial claims were 211,000, an increase of 6,000 from the previous week’s revised level. The 4-week moving average was 213,250 a decrease of 3,250 from the previous week’s revised average.
Job Openings & Labor Turnover Survey JOLTS – Released 1/17/2020 – The U.S. Bureau of Labor Statistics reported the number of job openings declined from 7.3 million to 6.8 million on the last business day of November. Over the month, hires and separations were little changed at 5.8 million and 5.6 million, respectively. Within separations, the quits rate was unchanged at 2.3%. The layoffs and discharges rates were little changed at 1.1%.
December Jobs Report–BLS SummaryReleased 1/10/2020 – The US Economyadded 145k nonfarm jobs in December and the Unemployment rate remained at 3.5%. Average hourly earnings increased by 3 cents. Hiring highlights include Retail Trade +41k, Education and Health Services +36k, Construction +20k, Manufacturing -12k.
Average hourly earnings increased by 3 cents in December, y/y hourly earnings are up 2.9%.
U3 unemployment rate was unchanged at 3.5%. U6 unemployment rate decreased 0.2% to 6.7%.
The labor force participation rate was unchanged in December at 63.2% (Unchanged year/y).
Average workweek was unchanged at 34.3 hours.
Employment Cost Index – Released 10/31/19 – Compensation costs for civilian workers increased 0.7% for the 3-month period ending in September 2019. The 12 month period ending in September 2019 saw compensation costs increase by 2.8%, same as for the 12 month period ending September 2018. Wages and salaries were up 2.9% for the 12-month period ending September 2019, same as for the 12 month period ending September 2018. Benefit costs increased 2.3% for the 12-month period ending September 2019. For private industry workers, compensation costs increased 2.7% year-over-year, versus 2.9% for the 12 months ending September 2018. This report is published quarterly.
This Week’s Economic Data
Links take you to the data source
Existing Home SalesReleased 1/22 – Existing home sales increased in December. Sales increased 3.6% to a seasonally adjusted rate of 5.54 million. Sales are currently up 10.8% from one year ago. Housing inventory declined from 3.7 months of inventory to 3.0 months of unsold inventory and the total housing inventory declined from 1.64 million to 1.40 million. The median sales price for all types of homes was $274,500, up 7.8% year/y.
Recent Economic Data
Links take you to the data source
Housing Starts– Released 1/17 – New home starts in December were at a seasonally adjusted rate of 1.608 million; up 16.9% above November and 40.8% above last December’s rate. Building Permits were at a seasonally adjusted rate of 1.416 million, down 3.9% compared to November but up 5.8% over last year.
Industrial Production and Capacity Utilization – Released 1/17 – In DecemberIndustrial production declined 0.3%. A large decrease in the demand for heating in December resulted in a 5.6% decline in utilities that outweighed increases of 0.2% in manufacturing and 1.3% in mining. Industrial production declined at an annual rate of 0.5% for the fourth quarter. Total capacity utilization declined 0.4% to 77.0% in December which is 2.8% below its long-run average.
Retail Sales – Released 1/16 – U.S. retail sales for December increased 0.3% to $529.6 billion. U.S. retail sales are up 5.8% year/y.
Producer Price Index– Released 1/15 – The Producer Price Index for final demand was little changed in December increasing 0.1%. Core PPI was up 0.1%. Year over year the index for final demand rose 1.3%.
Consumer Price Index –Released 1/14 – The Consumer Price Index gained 0.2% in December. Core CPI, which excludes food and energy increased 0.1%. The monthly changes left total CPI up 2.3% year-over-year and core CPI up 2.3%.
Consumer Credit –Released 1/8 – Consumer credit increased at a seasonally adjusted annual rate of 3.5% in November. Revolving and nonrevolving credit decreased at annual rates of 2.75% and increased 5.75% respectively. Total Outstanding consumer credit is currently at $4.176 trillion.
U.S. Trade Balance – Released 1/7 – According to the U.S. Census Bureau of Economic Analysis the goods and services deficit declined in November to $43.1 billion. This decline is $3.9 billion lower than the deficit recorded in October. November exports were $208.6 billion, $1.4 billion more than October exports. November imports were $251.7 billion, $2.5 billion less than October imports. The goods and services deficit has declined $3.9 billion or 0.7% year to date. Year to date exports and imports decreased $0.1 billion or 0.1% and decreased $3.9 billion or 0.1% respectively.
PMI Non-Manufacturing Index (ISM Services)– Released 1/7 – Economic activity in the non-manufacturing sector grew in December for the 119th consecutive month. ISM Non-Manufacturing registered 55 percent, which is 1.1 percentage points above the November reading of 53.9 percent. This represents continued growth in the non-manufacturing sector, at a faster rate.
PMI Manufacturing ISM Index – Released 1/3 – December PMI remains in contraction territory as PMI decreased by 0.9% to 47.2% from November’s reading of 48.1%. The New Orders Index was down 0.4% from November’s reading of 47.2% to 46.8%. The Production Index registered 43.2% down 5.9%.
U.S. Construction Spending– Released 1/3 –Construction spending increased by 0.6% in November measuring at a seasonally adjusted annual rate of $1,324.1 billion. The November figure is 4.1% above the November 2018 estimate. Private construction spending was 0.4% above the revised October estimate at $985.5 billion. Public construction spending was 0.9% above the revised October estimate at $338.6 billion.
Consumer Confidence – Released 12/31 – The Consumer confidence index declined in December following declines in November and October. The Index now shows a reading of 126.5 down from 126.8 in November. Consumers’ assessment of current conditions improved but expectations declined.
Chicago PMI – Released 12/30 – Chicago PMI rose 2.6 points in December rising to 48.9, up from 46.3 in November. This increase shows the index rising to a four-month high; however, the index is now in contractionary territory for the fourth consecutive month. Supply Deliveries and Production saw the largest monthly improvements.
New Residential Sales– Released 12/23 – Sales of new single-family homes increased 1.3% to 719k, seasonally adjusted, in November. The median sales price of new homes sold in November was $330.8k with an average sales price of $388.2k. At the end of November, the seasonally adjusted estimate of new homes for sale was 323k. This represents a supply of 5.4 months at the current sales rate.
Durable Goods– Released 12/23 – New orders for manufactured durable goods decreased $5 billion or 2.0% to $242.6 billion in November.The decrease in November follows a 0.2% increase in October. 2 of the last 3 months have seen declines. Transportation equipment drove the decrease; down $4.9 billion or 5.9%.
Personal Income– Released 12/20 – Personal Income increased 0.5% in November according to the BEA. The majority of the increase in November was due to increases in compensation of employees, farm proprietor’s income, and personal interest income. Real PCE (the Feds preferred inflation gauge) increased 0.3% in November. Real disposable personal income increased 0.4% in November.
Third Estimate of 3rd Quarter GDP – Released 12/20 – According to the third estimate released by the Bureau of Economic Analysis, Real Gross Domestic Product (Real GDP) increased at an annual rate of 2.1% in the third quarter of 2019. The third estimate is based on data that are more complete than that of the second and advance estimates which showed an increase of 2.1% and 1.9% respectively. The third-quarter increase in real GDP observed positive contributions from personal consumption expenditures (PCE), federal gov’t spending, state and local gov’t spending, and residential fixed investment that were partly offset by negative contributions from private inventory investment, nonresidential fixed investment, and imports.
US Light Vehicle Sales – Released 9/4 – U.S. light vehicle sales were at a seasonally adjusted annual rate (SAAR) of 17.07 million units in August versus a SAAR of 16.82 million units in July.
Next week we get data on New Residential Sales, Durable Goods, Personal Income, Chicago PMI, Consumer Confidence, the Advance Estimate of 4th Quarter GDP, and the Employment Cost Index.
When the market opens Monday the main focus will be on the Coronavirus that appears to be gaining strength. Since we’re facing impending doom I thought we could look back on what happened last time a pandemic was coming down the tracks.
Where the next levels are from here if the virus accelerates. Minor support around 3200 and 3100. More substantial support 3020-2900.
Table of Contents
Fixed Income
FOMC December Statement Federal Reserve Dot Plots US Debt Measurement US Corporate Debt Tops $6 Trillion Treasury.gov yields
FOMC Policy Normalization Statement
Global Bond Yields
Daily US Treasury Yields
Foreign Exchange Market
Energy Complex
The Baker Hughes rig count lost 2 this week. There are 794 oil and gas rigs operating in the US – down 265 over last year.
Metals Complex
Employment Picture
Weekly Unemployment Claims – Released Thursday 1/23/2020 – In the week ending January 18th, initial claims were 211,000, an increase of 6,000 from the previous week’s revised level. The 4-week moving average was 213,250 a decrease of 3,250 from the previous week’s revised average.
Job Openings & Labor Turnover Survey JOLTS – Released 1/17/2020 – The U.S. Bureau of Labor Statistics reported the number of job openings declined from 7.3 million to 6.8 million on the last business day of November. Over the month, hires and separations were little changed at 5.8 million and 5.6 million, respectively. Within separations, the quits rate was unchanged at 2.3%. The layoffs and discharges rates were little changed at 1.1%.
December Jobs Report – BLS Summary Released 1/10/2020 – The US Economy added 145k nonfarm jobs in December and the Unemployment rate remained at 3.5%. Average hourly earnings increased by 3 cents. Hiring highlights include Retail Trade +41k, Education and Health Services +36k, Construction +20k, Manufacturing -12k.
Employment Cost Index – Released 10/31/19 – Compensation costs for civilian workers increased 0.7% for the 3-month period ending in September 2019. The 12 month period ending in September 2019 saw compensation costs increase by 2.8%, same as for the 12 month period ending September 2018. Wages and salaries were up 2.9% for the 12-month period ending September 2019, same as for the 12 month period ending September 2018. Benefit costs increased 2.3% for the 12-month period ending September 2019. For private industry workers, compensation costs increased 2.7% year-over-year, versus 2.9% for the 12 months ending September 2018. This report is published quarterly.
This Week’s Economic Data
Links take you to the data source
Existing Home Sales Released 1/22 – Existing home sales increased in December. Sales increased 3.6% to a seasonally adjusted rate of 5.54 million. Sales are currently up 10.8% from one year ago. Housing inventory declined from 3.7 months of inventory to 3.0 months of unsold inventory and the total housing inventory declined from 1.64 million to 1.40 million. The median sales price for all types of homes was $274,500, up 7.8% year/y.
Recent Economic Data
Links take you to the data source
Housing Starts – Released 1/17 – New home starts in December were at a seasonally adjusted rate of 1.608 million; up 16.9% above November and 40.8% above last December’s rate. Building Permits were at a seasonally adjusted rate of 1.416 million, down 3.9% compared to November but up 5.8% over last year.
Industrial Production and Capacity Utilization – Released 1/17 – In December Industrial production declined 0.3%. A large decrease in the demand for heating in December resulted in a 5.6% decline in utilities that outweighed increases of 0.2% in manufacturing and 1.3% in mining. Industrial production declined at an annual rate of 0.5% for the fourth quarter. Total capacity utilization declined 0.4% to 77.0% in December which is 2.8% below its long-run average.
Retail Sales – Released 1/16 – U.S. retail sales for December increased 0.3% to $529.6 billion. U.S. retail sales are up 5.8% year/y.
Producer Price Index – Released 1/15 – The Producer Price Index for final demand was little changed in December increasing 0.1%. Core PPI was up 0.1%. Year over year the index for final demand rose 1.3%.
Consumer Price Index – Released 1/14 – The Consumer Price Index gained 0.2% in December. Core CPI, which excludes food and energy increased 0.1%. The monthly changes left total CPI up 2.3% year-over-year and core CPI up 2.3%.
Consumer Credit – Released 1/8 – Consumer credit increased at a seasonally adjusted annual rate of 3.5% in November. Revolving and nonrevolving credit decreased at annual rates of 2.75% and increased 5.75% respectively. Total Outstanding consumer credit is currently at $4.176 trillion.
U.S. Trade Balance – Released 1/7 – According to the U.S. Census Bureau of Economic Analysis the goods and services deficit declined in November to $43.1 billion. This decline is $3.9 billion lower than the deficit recorded in October. November exports were $208.6 billion, $1.4 billion more than October exports. November imports were $251.7 billion, $2.5 billion less than October imports. The goods and services deficit has declined $3.9 billion or 0.7% year to date. Year to date exports and imports decreased $0.1 billion or 0.1% and decreased $3.9 billion or 0.1% respectively.
PMI Non-Manufacturing Index (ISM Services) – Released 1/7 – Economic activity in the non-manufacturing sector grew in December for the 119th consecutive month. ISM Non-Manufacturing registered 55 percent, which is 1.1 percentage points above the November reading of 53.9 percent. This represents continued growth in the non-manufacturing sector, at a faster rate.
PMI Manufacturing ISM Index – Released 1/3 – December PMI remains in contraction territory as PMI decreased by 0.9% to 47.2% from November’s reading of 48.1%. The New Orders Index was down 0.4% from November’s reading of 47.2% to 46.8%. The Production Index registered 43.2% down 5.9%.
U.S. Construction Spending – Released 1/3 – Construction spending increased by 0.6% in November measuring at a seasonally adjusted annual rate of $1,324.1 billion. The November figure is 4.1% above the November 2018 estimate. Private construction spending was 0.4% above the revised October estimate at $985.5 billion. Public construction spending was 0.9% above the revised October estimate at $338.6 billion.
Consumer Confidence – Released 12/31 – The Consumer confidence index declined in December following declines in November and October. The Index now shows a reading of 126.5 down from 126.8 in November. Consumers’ assessment of current conditions improved but expectations declined.
Chicago PMI – Released 12/30 – Chicago PMI rose 2.6 points in December rising to 48.9, up from 46.3 in November. This increase shows the index rising to a four-month high; however, the index is now in contractionary territory for the fourth consecutive month. Supply Deliveries and Production saw the largest monthly improvements.
New Residential Sales – Released 12/23 – Sales of new single-family homes increased 1.3% to 719k, seasonally adjusted, in November. The median sales price of new homes sold in November was $330.8k with an average sales price of $388.2k. At the end of November, the seasonally adjusted estimate of new homes for sale was 323k. This represents a supply of 5.4 months at the current sales rate.
Durable Goods – Released 12/23 – New orders for manufactured durable goods decreased $5 billion or 2.0% to $242.6 billion in November. The decrease in November follows a 0.2% increase in October. 2 of the last 3 months have seen declines. Transportation equipment drove the decrease; down $4.9 billion or 5.9%.
Personal Income – Released 12/20 – Personal Income increased 0.5% in November according to the BEA. The majority of the increase in November was due to increases in compensation of employees, farm proprietor’s income, and personal interest income. Real PCE (the Feds preferred inflation gauge) increased 0.3% in November. Real disposable personal income increased 0.4% in November.
Third Estimate of 3rd Quarter GDP – Released 12/20 – According to the third estimate released by the Bureau of Economic Analysis, Real Gross Domestic Product (Real GDP) increased at an annual rate of 2.1% in the third quarter of 2019. The third estimate is based on data that are more complete than that of the second and advance estimates which showed an increase of 2.1% and 1.9% respectively. The third-quarter increase in real GDP observed positive contributions from personal consumption expenditures (PCE), federal gov’t spending, state and local gov’t spending, and residential fixed investment that were partly offset by negative contributions from private inventory investment, nonresidential fixed investment, and imports.
US Light Vehicle Sales – Released 9/4 – U.S. light vehicle sales were at a seasonally adjusted annual rate (SAAR) of 17.07 million units in August versus a SAAR of 16.82 million units in July.
Next week we get data on New Residential Sales, Durable Goods, Personal Income, Chicago PMI, Consumer Confidence, the Advance Estimate of 4th Quarter GDP, and the Employment Cost Index.
Data Sources:
Bureau of Economic Analysis (BEA)
Congressional Budget Office (CBO)
U.S. Bureau of Labor Statistics (BLS)
Federal Reserve Economic Data (FRED Charts)
CME Fed Watch
U.S. Treasury – Yields
U.S. Census Bureau
Institute for Supply Management (ISM)
Weekly DOL Employment Data
BLS Monthly Jobs Report
JOLTS
US Energy Admin (EIA)
BLS Consumer Price Index CPI
BLS Producer Price Index PPI
Atlanta Fed GDPNOW
NY Fed Nowcast GDP
US Census Bureau Housing Starts
Consumer Credit
USCB Retail Sales
Construction Spending
Federal Reserve Dot Plots
NY Empire Index
Philadelphia Federal Reserve
P/E Ratio Data -Yardeni Research
Technical Analysis Info:
StockCharts.com – Financial Charts
Exponential vs Simple moving average
Other Links:
1973 Arab Oil Embargo
Hunt Brothers Silver
Long-Term Capital bailout
Categories:
Tags: