Summary Of the Markets Today:

• The Dow closed down 207 points or 0.61%,
• Nasdaq closed down 1.68%,
• S&P 500 closed down 1.11%,
• Gold $1887 up $1.90,
• WTI crude oil settled at $78 up $1.28,
• 10-year U.S. Treasury 3.638% down 0.038 points,
• USD $103.49 up $0.06,
• Bitcoin $22,840 down $366.35 – Session Low $22.720

*Stock data, cryptocurrency, and commodity prices at the market closing.

Click here to read our Economic Forecast for February 2023

Today’s Economic Releases:

December 2022 sales of merchant wholesalers were up 7.3% (green line on the graph below) year-over-year. However, after the inflation adjustment – year-over-year sales were down 1.7% (red line on the graph below). Sales continue to worsen and should be considered a potential recession flag. The December inventories/sales ratio for merchant wholesalers was 1.36 (blue line on the graph below). The December 2021 ratio was 1.24. A rising ratio is could be a recession flag.

The federal budget deficit was $459 billion in the first four months of fiscal year 2023, the Congressional Budget Office estimates—$200 billion more than the shortfall recorded during the same period last year. Outlays were 9 percent higher and revenues were 3 percent lower from October through January than during the same period in fiscal year 2022. Outlays in fiscal year 2023 were reduced by the shifting of certain payments—totaling $63 billion—from October 1, 2022 (the first day of fiscal year 2023), into fiscal year 2022 because October 1 fell on a weekend. If not for those shifts, the deficit would have been $522 billion, double the shortfall during the same period in fiscal year 2022.

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed up 266 points or 0.78%,
• Nasdaq closed up 1.90%,
• S&P 500 closed up 1.29%,
• Gold $1883 up $3.20,
• WTI crude oil settled at $77 up $3.19,
• 10-year U.S. Treasury 3.681% up 0.049 points,
• USD $103.39 down $0.23,
• Bitcoin $23,260 up $465 – Session Low 22.687

*Stock data, cryptocurrency, and commodity prices at the market closing.

Click here to read our Economic Forecast for February 2023

Today’s Economic Releases:

Home prices nationwide, including distressed sales, increased year over year by 6.9% in December 2022 compared with December 2021. On a month-over-month basis, home prices declined by 0.4% in December 2022 compared with November 2022 (revisions with public records data are standard, and to ensure accuracy, CoreLogic incorporates the newly released public data to provide updated results). The CoreLogic HPI Forecast indicates that home prices will decrease on a month-over-month basis by 0.2% from December 2022 to January 2023 and on a year-over-year basis by 3% from December 2022 to December 2023.

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $67.4 billion in December, up $6.4 billion from $61.0 billion in November, revised.

In 2022, consumer credit increased by 7.8%, with revolving and nonrevolving credit increasing by 14.8% and 5.6%, respectively. During the fourth quarter, consumer credit increased at a seasonally adjusted annual rate of 6.5%, while in December it increased at a seasonally adjusted annual rate of 2.9%. This data is not inflation adjusted – inflation-adjusted consumer credit increased 1.8% year-over-year (red line on the graph below).

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed down 360 points or 0.1%,
• Nasdaq closed down 1.00%,
• S&P 500 closed down 0.61%,
• Gold $1880 up $3.50,
• WTI crude oil settled at $74 up $0.99,
• 10-year U.S. Treasury 3.638% up 0.106 points,
• USD $103.61 up $0.69,
• Bitcoin $23,010 up $132.77 – Session Low 22.657

*Stock data, cryptocurrency, and commodity prices at the market closing.

Click here to read our Economic Forecast for February 2023

Today’s Economic Releases:

Global Supply Chain Pressure Index (GSCPI) estimates for January 2023 show global supply chain pressures decreased moderately. The largest contributing factors to supply chain pressures were declines in Korean delivery times, Chinese delivery times, and Euro Area backlogs. The GSCPI’s recent movements suggest that the Asia developments that were interrupting the index’s normalization may have been a transitory factor.

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed down 128 points or 0.38%,
• Nasdaq closed down 1.59%,
• S&P 500 closed down 1.04%,
• Gold $1879 closed down $52.20,
• WTI crude oil settled at $73 down $2.67,
• 10-year U.S. Treasury 3.536% up 0.138 points,
• USD $102.97 up $1.22,
• Bitcoin $23,368 down $125 – Session Low $23,257
• Baker Hughes Rig Count: U.S. -12 to 759 Canada +2 to 249

*Stock data, cryptocurrency, and commodity prices at the market closing.

Click here to read our Economic Forecast for February 2023

Today’s Economic Releases:

Total nonfarm payroll employment rose by 517,000 in January 2023, and the unemployment rate declined from 3.5% to 3.4%. Job growth was widespread, led by gains in leisure and hospitality, professional and business services, and health care. Employment also increased in government, partially reflecting the return of workers from a strike. The household survey showed employment growth at 894,000 vs the establishment headline number of 517,000. The household survey increased the size of the workforce by 866,000. Interestingly, the all-in unemployment rate (U-6) worsened from 6.5% to 6.6%. This employment data is considered very good and suggests that the economy is not near a recession and that the Federal Reserve has a long way to go to cool inflation (as employment growth generally fans inflation). Wall Street does not want the federal funds rate to continue to increase to fight inflation, and the employment data shows that the rate will likely keep increasing in the foreseeable future.

Just a reminder that the above employment data are seasonally adjusted. Januarys historically have negative job growth due to the layoffs of seasonal jobs – as shown in the below NOT SEASONALLY ADJUSTED graph. The layoffs this January 2023 were less than normal causing the seasonally adjusted headline number to grow.

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed down 39 points or 0.11%,
• Nasdaq closed up 3.25%,
• S&P 500 closed up 1.47%,
• Gold $1927 down $15.40,
• WTI crude oil settled at $76 down $0.56,
• 10-year U.S. Treasury 3.398% up 0.002 points,
• USD $103.73 up $0.51,
• Bitcoin $23,847 up $19.90 – Session Low 23,519

*Stock data, cryptocurrency, and commodity prices at the market closing.

Click here to read our Economic Forecast for February 2023

Today’s Economic Releases:

In the week ending January 28, the advance figure for initial unemployment insurance claims 4-week moving average was 191,750, a decrease of 5,750 from the previous week’s unrevised average of 197,500.

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed up 7 points or 0.02%,
• Nasdaq closed up 2.00%,
• S&P 500 up 1.05%,
• Gold $1968 up $22.50,
• WTI crude oil settled at $77 down $1.91,
• 10-year U.S. Treasury 3.413% down 0.114 points,
• USD $101.17 down $0.93,
• Bitcoin $23,741 up $750.42 – Session Low 22,853

*Stock data, cryptocurrency, and commodity prices at the market closing.

Click here to read our Economic Forecast for February 2023

Today’s Economic Releases:

The ADP National Employment Report shows employers created 106,000 jobs in January 2023 and annual pay was up 7.3% year-over-year. 106,000 is a very weak number but ADP said that weather-related disruptions on employment during their reference week likely negatively impacted the gains this month – significantly impacting business with 1 to 19 employees.

Construction spending during December 2022 was 7.7% above December 2021. However, when construction spending is inflation adjusted, it is DOWN 9.2% year-over-year. Construction is paying the price for the Fed’s inflation-fighting increase of the federal funds rate – and is a drag on the economy.

The January 2023 Manufacturing PMI registered 47.4%, 1 percentage point lower than the seasonally adjusted 48.4% recorded in December. Regarding the overall economy, this figure indicates a second month of contraction after a 30-month period of expansion. The Manufacturing PMI figure is the lowest since May 2020, when it registered a seasonally adjusted 43.5%. The New Orders Index remained in contraction territory at 42.5%, 2.6 percentage points lower than the seasonally adjusted figure of 45.1% recorded in December. The Production Index reading of 48% is a 0.6-percentage point decrease compared to December’s seasonally adjusted figure of 48.6%. Yes, manufacturing is currently a drag on the economy.

graph source: https://ycharts.com/indicators/us_pmi

The number of job openings increased to 11.0 million on the last business day of December 2022. Over the month, the number of hires and total separations changed little at 6.2 million and 5.9 million, respectively. This is a sign of continued strength in employment. The graph below shows that the number of job openings (red line) continue to far exceed the number of jobs being added (blue line).

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed up 369 points or 1.09%,
• Nasdaq closed up 1.67%,
• S&P 500 up 1.46%,
• Gold 1944 up $4.60,
• WTI crude oil settled at 79 up 1.21,
• 10-year U.S. Treasury 3.503% down 0.048,
• USD $102.07 down $0.20,
• Bitcoin $22,971 up $183.84 – Session Low 22,631

*Stock data, cryptocurrency, and commodity prices at the market closing.

Click here to read our Economic Forecast for February 2023

Today’s Economic Releases:

The Conference Board Consumer Confidence Index® decreased in January following an upwardly revised increase in December 2022. The Index now stands at 107.1 (1985=100), down from 109.0 in December (an upward revision). The Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—fell to 77.8 (1985=100) from 83.4 partially reversing its December gain. The Expectations Index is below 80 which often signals a recession within the next year. Both present situation and expectations indexes were revised up slightly in December. Ataman Ozyildirim, Senior Director, Economics at The Conference Board stated:

Consumer confidence declined in January, but it remains above the level seen last July, lowest in 2022. Consumer confidence fell the most for households earning less than $15,000 and for households aged under 35.

The Chicago Business Barometer moderated by -0.8 points to 44.3 in January; the fifth consecutive month below 50. This follows a December rebound to signal a softer downturn. This barometer is used by pundits to predict the national ISM manufacturing levels.

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed down 261 points or 0.77%,
• Nasdaq closed down 1.96%,
• S&P 500 closed down 1.30%,
• Gold $1922 down $7.40,
• WTI crude oil settled at $78 down $1.89,
• 10-year U.S. Treasury 3.55% up 0.032 points,
• USD $102.27 up $0.34,
• Bitcoin $22,749 down $962.37 – Session Low 22,652

*Stock data, cryptocurrency, and commodity prices at the market closing.

Click here to read our Economic Forecast for January 2023

Today’s Economic Releases:

The Texas Manufacturing Outlook Survey slowed in January. The production index, a key measure of state manufacturing conditions, fell from 9.1 to 0.2, with the near-zero reading suggestive of flat output. Other measures generally indicated weakened manufacturing activity this month. The new orders index was negative for an eighth month in a row—suggesting a continued decrease in demand—though it moved up from -11.0 to -4.0. The growth rate of orders index inched down to -12.3. The capacity utilization index was positive but dipped from 7.9 to 6.0, while the shipments index returned to negative territory at a reading of -6.3. Most other Fed regional manufacturing surveys have shown to be in contraction or minimal growth.

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed up 29 points or 0.08%,
• Nasdaq closed up 0.95%,
• S&P 500 closed up 0.25%,
• Gold $1929 down $1.10,
• WTI crude oil settled at $79 down $1.62,
• 10-year U.S. Treasury 3.52% up 0.029 points,
• USD $101.96 up $0.12,
• Bitcoin $23,125 down $14.65 – Session Low 22,638
• Baker Hughes Rig Count: U.S. unchanged at 771 Canada +6 to 247

*Stock data, cryptocurrency, and commodity prices at the market closing.

Click here to read our Economic Forecast for January 2023

Today’s Economic Releases:

Personal income increased $49.5 billion, or 0.2% at a monthly rate, while consumer spending decreased $41.6 billion, or 0.2%, in December 2022. The increase in personal income primarily reflected increases in compensation and proprietors’ income. However, we prefer to view consumption and expenditures as inflation-adjusted year-over-year change to dampen the volatility – real disposable income (blue line on the graph below) improved to -1.7% year-over-year growth (from last month’s -2.3% and real personal consumption expenditures (red line on the graph below) growth improved to 2.2% year-over-year (from last month’s 1.7%). The personal saving rate (that is, personal saving as a percentage of disposable personal income) was 3.4% in December, compared with 2.9% in November.

The Pending Home Sales Index (PHSI)* — a forward-looking indicator of home sales based on contract signings — improved 2.5% to 76.9 in December. Year-over-year, pending transactions dropped by 33.8% (see chart below). An index of 100 is equal to the level of contract activity in 2001. Improved in this case means “not as bad as the previous month”.  NAR Chief Economist Lawrence Yun stated:

This recent low point in home sales activity is likely over. Mortgage rates are the dominant factor driving home sales, and recent declines in rates are clearly helping to stabilize the market.

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed up 206 points or 0.61%,
• Nasdaq closed up 1.76%,
• S&P 500 closed up 1.10%,
• Gold $1930 down $12.60,
• WTI crude oil settled at $81 up $0.90,
• 10-year U.S. Treasury 3.495% up 0.033 points,
• USD $101.81 up $0.18,
• Bitcoin $23,024 up $87 – Session Low 22,899

*Stock data, cryptocurrency, and commodity prices at the market closing.

Click here to read our Economic Forecast for January 2023

Today’s Economic Releases:

Unfortunately, I do not think GDP came in strong as the headline suggests. Real gross domestic product (GDP) increased at an annual rate of 2.9% in the fourth quarter of 2022, after increasing by 3.2% in the third quarter. GDP in the fourth quarter primarily reflected increases in inventory investment and consumer spending that were offset by a decrease in housing investment. EconCurrents does not use quarter-over-quarter growth to evaluate GDP – but uses year-over-year growth to view GDP. 4Q2022 continued the downward slope of GDP growth showing 1.0% growth year-over-year, down from 3Q2022 1.9% year-over-year (see graph below).

The Real gross domestic product (GDP) release includes the inflation adjuster (deflator). This deflator (green line on graph below) shows continued moderation of inflation from 7.1% for 3Q2022 to 6.3% for 4Q2022.

My favorite coincident indicator, the Chicago Fed National Activity Index (CFNAI), showed three of the four broad categories of indicators used to construct the index made negative contributions in December – but the negative elephant in the room was industrial production. The index’s three-month moving average, CFNAI-MA3, decreased to –0.33 in December from –0.14 in November. According to the authors of the index, this means the economy did not expand in December 2022. The graph below shows the historical values of the CFNAI-MA3 (which is used for economic forecasting) – and the red line shows the value that the authors of the index believe is the recession line.

A summary of headlines we are reading today: