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.

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Click here to read our Economic Forecast for January 2023

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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.

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Click here to read our Economic Forecast for January 2023

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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.

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Click here to read our Economic Forecast for January 2023

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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.

In the week ending January 21, the advance figure for seasonally adjusted unemployment insurance weekly initial claims 4-week moving average was 197,500, a decrease of 9,250 from the previous week’s revised average. The previous week’s average was revised up by 750 from 206,000 to 206,750.

New orders for manufactured durable goods improved in December 2022 to 11.9% year-over-year – up from last month’s 6.9% year-over-year. If one inflation adjusts this data, the December improvement was 6.7%.  This is particularly strong growth and not indicative of a slowing economy. Much of this increase was driven by civilian aircraft orders.

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.

Sales of new single‐family houses in December 2022 were 26.6% below December 2021. An estimated 644,000 new homes were sold in 2022 which is 16.4% below the 2021 figure of 771,000. The median sales price of new houses sold in December 2022 was $442,100. The average sales price was $528,400. The seasonally‐adjusted estimate of new houses for sale at the end of December was 461,000. This represents a supply of 9.0 months at the current sales rate. The graph below shows the year-over-year change in houses sold (blue line) and the median sales price (red line). In other words, home prices continue to rise even while sales volumes fall.

Regional factory activity for the Kansas City Fed was basically flat in January 2023. The month-over-month composite index was -1 in January, up slightly from -4 in December and -2 in November  However, expectations for future activity were still positive, and many firms expected employment levels to increase over the next six months. Most regional Fed manufacturing indices are weak or in negative territory. One would expect poor manufacturing new orders and shipments in January.

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed down 10 points or 0.03%,
• Nasdaq closed down 0.18%,
• S&P 500 closed down 0.02%,
• Gold $1947 up $11.20,
• WTI crude oil settled at $81 up $0.43,
• 10-year U.S. Treasury 3.451% down 0.014 points,
• USD $101.67 down $0.25,
• Bitcoin $22,946 up $303 – Session Low 22,398

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

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Click here to read our Economic Forecast for January 2023

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Today’s Economic Releases:

From March 2022 to June 2022, gross job gains from opening and expanding private-sector establishments were 8.3 million, a decrease of 185,000 jobs from the previous quarter according to BLS data issued today. Over this period, gross job losses from closing and contracting private-sector establishments were 8.5 million, an increase of 1.6 million jobs from the previous quarter. The difference between the number of gross job gains and the number of gross job losses yielded a net employment loss of 287,000 jobs in the private sector during the second quarter of 2022. (See chart 1)  Too bad this new data is so old – so it is hard to use this to figure out the future.

The Corporate Bond Market Distress Index (CMDI) shows that the corporate bond market functioning appears healthy, with the overall market-level CMDI around its historical 30th percentile. Market functioning in the investment-grade segment continued to improve in January and is now below its historical 75th percentile.

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed up 104 points or 0.31%,
• Nasdaq closed down 0.27%,
• S&P 500 closed down 0.07%,
• Gold $1939 up $9.80,
• WTI crude oil settled at $80 down $1.55,
• 10-year U.S. Treasury 3.458% down 0.065,
• USD $101.95 down $0.18,
• Bitcoin $23,018 up $15 – Session Low 22,783

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

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Click here to read our Economic Forecast for January 2023

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Today’s Economic Releases:

Richmond Fed manufacturing firms reported some deterioration in business conditions in January. The composite manufacturing index fell noticeably into negative territory, decreasing from 1 in December to −11 in January. Each of its three component indexes: shipments, new orders, and employment declined, with the index for new orders plummeting from −4 to −24 in January. Alongside a slightly negative employment index, the wage index increased from 37 to 41 in January. Most regional Fed manufacturing indices are in negative territory implying manufacturing activity in the U.S. is declining.

The December 2022 Institute for Supply Management (ISM) Manufacturing PMI registered 48.4 percent, 0.6 percentage points lower than the 49 percent recorded in November. Regarding the overall economy, this figure indicates contraction after 30 straight months of expansion. The Manufacturing PMI figure is the lowest since May 2020, when it registered 43.5 percent. The New Orders Index remained in contraction territory at 45.2 percent, 2 percentage points lower than the 47.2 percent recorded in November. The Production Index reading of 48.5 percent is a 3-percentage point decrease compared to November’s figure of 51.5 percent. The Prices Index registered 39.4 percent, down 3.6 percentage points compared to the November figure of 43 percent; this is the index’s lowest reading since April 2020 (35.3 percent).

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed up 254 points or 0.76%,
• Nasdaq closed up 2.01%,
• S&P 500 up 1.19%,
• Gold $1932 up $3.80,
• WTI crude oil settled at $82 up $0.05,
• 10-year U.S. Treasury 3.528% up 0.042 points,
• USD $102.08 down $0.07,
• Bitcoin $22,961 up $246

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

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Click here to read our Economic Forecast for January 2023

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Today’s Economic Releases:

The Conference Board LEI for the U.S. decreased for the tenth consecutive month in December. The majority of the LEI’s components contributed negatively and drove the index down. In the six-month period ending in December 2022 the leading economic index decreased 4.2% (about an 8.2% annual rate), faster than the decline of 1.9% (about a 3.7% annual rate) during the previous six months. Is a recession coming? – historically, a decline this rapid has resulted in a recession.

Median weekly earnings of the nation’s 118.8 million full-time wage and salary workers were $1,085 in the fourth quarter of 2022 (not seasonally adjusted). This was 7.4% higher than a year earlier, compared with a gain of 7.1% in the Consumer Price Index for All Urban Consumers (CPI-U) over the same period. According to an analysis in today’s Wall Street Journal, black workers, young workers and people on the bottom of the income scale were among those who saw the largest pay increases last year, when employers were readily handing out raises in a tight labor market and high inflation environment.

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed up 331 points or 1.00%,
• Nasdaq closed up 2.66%,
• S&P 500 up 1.89%,
• Gold $1930 up $5.90,
• WTI crude oil settled at $81 up $1.07,
• 10-year U.S. Treasury 3.488% up 0.089 points,
• USD $101.99 down $0.07,
• Bitcoin $22,264 up $1,179 – Session Low $20,904
• Baker Hughes Rig Count: U.S. -4 to 771 Canada +14 to 241

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

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Click here to read our Economic Forecast for January 2023

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Today’s Economic Releases:

Total existing-home sales declined 34.0% year-over-year. The median existing-home price for all housing types in December was $366,900, an increase of 2.3% from December 2021. Per NAR Chief Economist Lawrence Yun:

December was another difficult month for buyers, who continue to face limited inventory and high mortgage rates. However, expect sales to pick up again soon since mortgage rates have markedly declined after peaking late last year.

Container imports into the USA declined 20% year-over-year whilst exports improve 15% year-over-year according to data analyzed by EconCurrents from the Ports of Los Angeles and Long Beach. These ports account for the majority of containers moved in and out of the USA.  The year-over-year comparison may not be totally comparable as there were issues last year with a huge backlog of ships waiting to offload a year ago. Our analysis is that exports continue to slowly moderate whilst imports are trending modestly up. Rising imports normally signal an improving economy.

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed down 252 points or 0.76%,
• Nasdaq closed down 0.96%,
• S&P 500 down 0.76%,
• Gold $1931 up $27.10,
• WTI crude oil settled at $80 up $0.90,
• 10-year U.S. Treasury 3.395% up 0.02 points,
• USD $102.05 down $0.31,
• Bitcoin $21,082 up $3.34 – Session Low $20,666

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

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Click here to read our Economic Forecast for January 2023

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Today’s Economic Releases:

Manufacturing activity in the region continued to decline overall, according to the firms responding to the January Manufacturing Business Outlook Survey. The diffusion index for current general activity rose from a revised reading of -13.7 in December to -8.9 in January. The new orders index improved from its December reading but remained negative. The firms continued to report overall increases in prices, and the prices received index remained elevated. Most future indicators were positive, but expectations for growth over the next six months were not widespread.

The number of CEO changes at U.S. companies rose 5% from 95 in November to 100 in December. December’s total is down 6% from the 106 CEOs who left their posts in the same month one year prior. In 2022, companies announced 1,235 CEO exits, down 8% from the 1,337 CEOs who left their posts in 2021. It is the lowest annual total since 2017 when 1,160 CEO exits were announced.

Privately‐owned housing units authorized by building permits in December were down 29.9% year-over-year. Privately‐owned housing starts in December were down 21.8 percent year-over-year. Privately‐owned housing completions in December were up 6.4% year-over-year. Housing continues to suffer from high mortgage rates.

In the week ending January 14, the advance figure for seasonally adjusted unemployment insurance weekly initial claims 4-week moving average was 206,000, a decrease of 6,500 from the previous week’s unrevised average of 212,500.

The union membership rate—the percent of wage and salary workers who were members of unions— was 10.1 percent in 2022, down from 10.3 percent in 2021, the U.S. Bureau of Labor Statistics reported today. The number of wage and salary workers belonging to unions, at 14.3 million in 2022, increased by 273,000, or 1.9 percent, from 2021. However, the total number of wage and salary workers grew by 5.3 million (mostly among nonunion workers), or 3.9 percent. This disproportionately large increase in the number of total wage and salary employment compared with the increase in the number of union members led to a decrease in the union membership rate. The 2022 unionization rate (10.1 percent) is the lowest on record. In 1983, the first year where comparable union data are available, the union membership rate was 20.1 percent and there were 17.7 million union workers.

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed down 614 points or 1.81% – markets reacted to weak economic data (see “Economic Releases” below),
• Nasdaq closed down 1.24%,
• S&P 500 down 1.56%,
• Gold $1906 down $4.30,
• WTI crude oil settled at $79 down $0.98,
• 10-year U.S. Treasury 3.375% down 0.16 points,
• USD $102.42 up $0.03,
• Bitcoin $20,757 down $335 – Session Low $20,476

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

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Click here to read our Economic Forecast for January 2023

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Today’s Economic Releases:

The Producer Price Index (PPI) for final demand continued to moderate in December 2022 increasing 6.2% year-over-year – declining from 7.3% in November. This continues to demonstrate that the Federal Reserve’s inflation-fighting methods are still working. For the last 13 years, the PPI and Consumer Price Index have correlated.

Advance estimates of U.S. retail and food services sales for December 2022 rose 6.0% above December 2021
If one inflation adjusts for this growth – retail sales have been contracting for the last 3 months (see the red line on the graph below). The primary reasons for the poor sales is gas stations and construction materials.

Industrial production growth slowed to 1.7% year-over-year in December 2022 – down from 2.2% in November. A look at the components of industrial production:

• Manufacturing is -0.4% year-over-year – down from +0.9% in November;
• Mining is +5.8% year-over-year – down from +6.8% in November;
• Utilities are +9.7% year-over-year – up from +4.2% in November (caused by cold weather energy demand)

Microsoft announced today it would cut 10,000 workers amid economic uncertainty, echoing major Technology companies in recent weeks. With Microsoft’s planned reductions, Challenger, Gray & Christmas, Inc. has tracked 19,150 job cuts announced by companies in this sector through January 18th.

According to the Federal Reserve’s Beige Book of January 18, 2023:

Overall economic activity was relatively unchanged since the previous report. Five Districts reported slight or modest increases in overall activity, six noted no change or slight declines, and one cited a significant decline. On balance, contacts generally expected little growth in the months ahead. Consumer spending increased slightly, with some retailers reporting more robust sales over the holidays. Other retailers noted that high inflation continued to reduce consumers’ purchasing power, particularly among low- and moderate-income households. Auto sales were flat on average, but some dealers noted that increased vehicle availability had boosted sales. Tourism contacts reported moderate to robust activity augmented by strong holiday travel. Manufacturers indicated that activity declined modestly on average, and, in many Districts, reported that supply chain disruptions had eased. Housing markets continued to weaken, with sales and construction declining across Districts. Commercial real estate activity slowed slightly, on average, with more notable weakening in the office market. Nonfinancial services firms experienced stable demand on balance. Most bankers reported that residential mortgage demand remained weak, and some said higher borrowing costs had begun to dampen commercial lending. Energy activity continued to increase moderately, and agriculture conditions were generally unchanged or improving.

A summary of headlines we are reading today:

Summary Of the Markets Today:

• The Dow closed down 391 points or 1.14%,
• Nasdaq closed up 0.14%,
• S&P 500 down 0.20%,
• Gold $1911 down $10.50,
• WTI crude oil settled at $81 up $1.29,
• 10-year U.S. Treasury 3.557% up 0.04 points,
• USD $102.38 up $0.17,
• Bitcoin $21,295 up $185 – Session Low 20,970

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

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Click here to read our Economic Forecast for January 2023

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Today’s Economic Releases:

CoreLogic’s latest Single-Family Rent Index (SFRI) shows that single-family rental price increases dropped to 7.5% year over year in November 2022, with all four tracked price tiers posting lower gains than a year earlier. November marked the seventh consecutive month of annual deceleration, and while Florida metro areas continued to post the nation’s highest rental cost gains, other Sun Belt cities such as Phoenix and Las Vegas which formerly showed the highest rent increases are now at the bottom. CoreLogic expects that rental price growth, along with home price appreciation, will continue to level off during the first part of 2023.

Manufacturing activity contracted sharply in New York State, according to firms responding to the January 2023 Empire State Manufacturing Survey. The headline general business conditions index fell twenty-two points to -32.9. New orders and shipments declined substantially. Delivery times held steady, and inventories edged higher. Employment growth stalled, and the average workweek shortened. Input price increases slowed considerably, and selling price increases also moderated. Looking ahead, firms expect little improvement in business conditions over the next six months.

The Federal Reserve Bank of New York’s Center for Microeconomic Data today released the December 2022 Survey of Consumer Expectations (SCE) Household Spending Survey, which provides information on individuals’ experiences and expectations regarding household spending. The survey shows a recent decline in monthly household spending growth, even though spending growth remains well above pre-pandemic levels. The share of households that report making a large purchase during the past four months fell compared to August 2022 and December 2021 levels, although it increased for home repairs, electronics, and furniture. The share reporting purchasing a vehicle declined to its lowest level since August 2020.

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A summary of headlines we are reading today: