Posts by Gary Hall

Summary Of the Markets Today:

• The Dow closed down 139 points or 0.45%,
• Nasdaq closed down 0.90%,
• S&P 500 down 0.72%,
• WTI crude oil settled at $85 up 0.27%,
• USD $109.74 little changed,
• Gold $1683 up 0.38%,
• Bitcoin $19.649 down 0.18% – Session Low 19,370,
• 10-year U.S. Treasury 3.453% Unchanged,
• Baker Hughes Rig Count: U.S. +4 to 763 Canada +6 to 211

Today’s Economic Releases:

The Atlanta Fed’s GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2022 is 0.5% on September 15, down from 1.3% on September 9. After this week’s releases from the US Department of the Treasury’s Bureau of the Fiscal Service, the US Bureau of Labor Statistics, the US Census Bureau, and the Federal Reserve Board of Governors, decreases in the nowcasts of third-quarter real personal consumption expenditures growth and third-quarter real gross private domestic investment growth from 1.7% and -6.1%, respectively, to 0.4% and -6.4%, respectively, was slightly offset by an increase in the nowcast of third-quarter real government spending growth from 1.3% to 2.0%. What this decline in GDPNow says that the economy was only modestly (and not significantly) improving in 3Q2022 as the previous two quarters in 2022 were in contraction – but it is noteworthy that the data coming at the end of 3Q2022 is weak and may be signaling another contraction in 4Q2022.

Summary Of the Markets Today:

• The Dow closed down 173 points or 0.56%,
• Nasdaq closed down 1.43%,
• S&P 500 down 1.13%,
• WTI crude oil settled at $85 down 3.77%,
• USD $109.75 weakened 0.06%,
• Gold $1673 down 2.14%,
• Bitcoin $19.844 down 2.00% – Session Low 19,612,
• 10-year U.S. Treasury 3.449% Unchanged,

Today’s Economic Releases:

The Philly Fed Manufacturing Index declined in September 2022. The index for returned to negative territory, falling from 6.2 in August to -9.9 this month. The new orders index remained negative, and the shipments index declined but remained positive. This index is showing a weakly growing economy.

Prices for U.S. imports grew 7.8% year-over-year in August following a 8.7% YoY in July whilst U.S. export prices grew 10.8% in August after growing 12.9% the previous month. The trend of inflation is this sector continues to modestly abate.

In the week ending September 10, the advance figure for seasonally adjusted initial unemployment claims 4-week moving average was 224,000, a decrease of 8,000 from the previous week’s revised average. The previous week’s average was revised down by 1,000 from 233,000 to 232,000. New unemployment claims continues to modestly improve which is a sign of an improving economy.

Advance estimates of U.S. retail and food services sales for August 2022, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were 9.1% above August 2021. This is the first month since March 2022 where the inflation-adjusted YoY growth returned to positive territory (1.2% – red line on the graph below). This implies the economy is modestly growing in August.

the September 2022 Empire State Manufacturing Survey index climbed thirty points to -1.5. New orders edged higher, and shipments increased sharply. This index is implying a modest decline in manufacturing.

According to the Federal Reserve, industrial production decreased 0.2% in August. However, year-over-year growth has been holding quite steady at 3.7%. In fact, all elements of industrial production remain in positive territory EXCEPT utilities which show a 1.6% YoY contraction. This data set is indicating the economy is expanding at a healthy rate.

The combined value of distributive trade sales and manufacturers’ shipments for July, adjusted for seasonal and trading day differences but not for price changes, was up 12.5% from July 2021. Inventories Manufacturers’ and trade inventories for July were up 18.4% from July 2021. The key indicator of the health of this sector is the total business inventories/sales ratio which was 1.32. The July 2021 ratio was 1.26. These numbers indicate that inventories are growing with respect to sales – but remain in the range seen in the last 10 years [it could be just the supply chain catching up].

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Summary Of the Markets Today:

• The Dow closed up 30 points or 0.10%,
• Nasdaq closed up 0.74%,
• S&P 500 up 0.34%,
• WTI crude oil settled at $89 up 2.03% for the week,
• USD $109.82 strengthened 0.14%,
• Gold $1705 down 0.73%,
• Bitcoin $19.958 down 1.07% – Session Low 19,691,
• 10-year U.S. Treasury 3.412 Unchanged,

Today’s Economic Releases:

The Producer Price Index for final demand moved up 8.7% for the 12 months ended in August 2022 – down from last month’s 9.8%. The decrease in the index for final demand is attributable to a decline in final demand goods which was somewhat offset by a rise in final demand services. The CPI released yesterday for August 2022 showed an 8.2% YoY rise. In general, the CPI and PPI move in the same direction.

Summary Of the Markets Today:

• The Dow closed down 1,276 points or 3.94%,
• Nasdaq closed down 5.16%,
• S&P 500 down 4.32%,
• WTI crude oil settled at 88 down 1.48% for the week,
• USD $109.82 weakening 1.52%,
• Gold $1713 down 1.59%,
• Bitcoin $20,298 down 9.50% – Session Low 20,104,
• 10-year U.S. Treasury 3.27% little changed

Today’s Economic Releases:

The NFIB Small Business Optimism Index rose 1.9 points in August to 91.8, marking the eighth consecutive month below the 48-year average of 98 but reversing some of the declines in the first half of the year. Per NFIB Chief Economist Bill Dunkelberg:

The small business economy is still recovering from the pandemic while inflation continues to be a serious problem for owners across the nation. Owners are managing the rising costs of utilities, fuel, labor, supplies, materials, rent, and inventory to protect their earnings. The worker shortage is impacting small business productivity as owners raise compensation to attract better workers.

The CoreLogic Loan Performance Insights report shows overall mortgage delinquencies and foreclosure rates remained near two-decade lows in June 2022, with home price growth that remains in double digits and a strong U.S. job market helping to keep mortgage performance healthy. Overall mortgage delinquencies and foreclosure rates remained near two-decade lows.

The Consumer Price Index for All Urban Consumers (CPI-U) over the last 12 months was 8.3% – modestly down from the 8.5% posted last month. Shelter, food, and medical care indexes were the largest of many contributors applying upward pressure. These increases were offset by a 10.6-percent decline in the gasoline index. The bottom line is that the core index (removing food and energy) actually increased (red line on the graph below). Note that this extremely modest decline in the CPI keeps the door open for the Federal Reserve to continue to significantly boost the federal funds rate to fight inflation.

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Child poverty, calculated by the Supplemental Poverty Measure (SPM), fell to its lowest recorded level in 2021, declining 46% from 9.7% in 2020 to 5.2% in 2021, according to U.S. Census Bureau data released today.

Summary Of the Markets Today:

• The Dow closed up 230 points or 0.71%,
• Nasdaq closed up 1.27%,
• S&P 500 up 1.06%,
• Gold $1737 up $7.8,
• WTI crude oil settled at $88 up $1.13,
• 10-year U.S. Treasury 3.354%  little changed,
• USD index $108.32 strengthened 0.63%,
• Bitcoin $22,378 up 2.72%,

Today’s Economic Releases:

The CoreLogic National Fraud Risk Index saw a decrease year-over-year, however recent trends indicate fraud risk is back on the rise. The decline is partially due to the recalibration of our scoring model in the first quarter of 2022. However, higher risks were recorded during months in the second quarter, particularly for certain types of mortgage fraud.

On Friday, the Federal Reserve released their Z.1 Financial Accounts which shows a drop in household networth of 4.1% in 2Q2022 (not inflation adjusted – the the decline mostly due to the stock market). Our Joe Six Pack Index which is modeled on the average American who owns a house (and little more) shows that Joe’s financial health actually improved if one ignores inflation (and declined if you decide inflation is an important element of net worth) – red line on graph below.

The federal budget deficit was $944 billion in the first 11 months of fiscal year 2022 (that is, from October 2021 through August 2022), the Congressional Budget Office estimates—$1.8 trillion less than it was at the same point last year.

The Federal Reserve Bank of New York’s Center for Microeconomic Data today released the August 2022 Survey of Consumer Expectations, which shows that inflation expectations continued to decline across all horizons.

Summary Of the Markets Today:

• The Dow closed up 377 points or 1.19%,
• Nasdaq closed up 2.11%,
• S&P 500 up 1.53%,
• WTI crude oil settled at $86 down 3.21%,
• USD index $109.99 down 0.65%,
• Gold $1727 up 0.4%,
• Bitcoin $21,249 up 9.98%,
• 10-year U.S. Treasury 3.317% little changed

Today’s Economic Releases:

Total Average Equity Per Homeowner Hits a Record High of $300,000 in Q2 per CoreLogic. Homeowners with mortgages gained a collective $3.6 trillion year over year in the second quarter of 2022. The following graph shows the average equity gain by state.

July 2022 sales of merchant wholesalers were down 1.4% from last month but was up 15.3% from July 2021. As the numbers are not inflation adjusted, the inventory-to-sales ratio YoY change is the best way to look at the data – and this data shows that the inventory is modestly shrinking with respect to sales which somewhat indicates a modestly growing economy (see graph below).

Summary Of the Markets Today:

• The Dow closed up 193 points or 0.61%,
• Nasdaq closed up 0.6%,
• S&P 500 up 0.66%,
• WTI crude oil settled at $83 up 0.85%,
• USD index $109.63 down 0.19%,
• Gold $1718 down 0.51%,
• Bitcoin $19,402 up 0.56%,
• 10-year U.S. Treasury 3.317% little changed

Today’s Economic Releases:

The 2022 Wildfire Risk Report was issued by CoreLogic showing that the wildfire risk landscape is evolving. With the U.S. population increasing and residential development extending farther from metro areas, more homes and businesses will face the threat of wildfires. Read the report [here].

In the week ending September 3, the 4 week moving average was 233,000, a decrease of 7,500 from the previous week’s revised average. The initial unemployment claims is suggesting the economy is modestly improving.

In July 2022, the Federal Reserve says consumer credit increased at a seasonally adjusted annual rate of 6.2%. Revolving credit increased at an annual rate of 11.6%, while nonrevolving credit increased at an annual rate of 4.4%. There is no question consumer credit is increasing but it is being driven by by revolving credit (mostly credit cards) – and my prefered view using YoY analysis shows total credit is increasing 7.7%, revolving credit 14.9%, and non-revolving credit 5.7%. Unfortunately, much of the increase in credit is being caused by:

• inflation forcing many families to resort to credit cards to meet their daily needs., and
• goods and services inflation is running over 8%, and one would expect credit to expand at the same rate as inflation.

Summary Of the Markets Today:

• The Dow closed up 436 points or 1.40%,
• Nasdaq closed up 2.14%,
• S&P 500 up 1.83%,
• WTI crude oil settled at $82 down 11.09% for the week,
• USD $109.80 down 0.41,
• Gold $1728 up 0.9%,
• Bitcoin $19,000 up 0.79% – Session Low 18,612,
• 10-year U.S. Treasury 3.26% down 0.082

Today’s Economic Releases:

The goods and services deficit was $70.6 billion in July 2022, down $10.2 billion from $80.9 billion in June. July exports were $259.3 billion, $0.5 billion more than June exports. July imports were $329.9 billion, $9.7 billion less than June imports. Slowing imports usually is a sign of a slowing economy.

The Beige Book, an informal review by the Federal Reserve Banks of current economic conditions in their Districts, shows economic activity was unchanged, on balance, since early July, with five Districts reporting slight to modest growth in activity and five others reporting slight to modest softening. More anecdotal evidence the economy is slowing.

Summary Of the Markets Today:

• The Dow closed down 173 points or 0.55%,
• Nasdaq closed down 0.74%,
• S&P 500 down 0.41%,
• WTI crude oil settled at $87 down 0.59%,
• USD $110.26 up 0.33,
• Gold $1700 up 0.01%,
• Bitcoin $18,732 down 5.07% – Session Low 18,732,
• 10-year U.S. Treasury 3.342% unchanged

Today’s Economic Releases:

In August 2022 the Institute for Supply Management’s Services PMI^® registered 56.9% up 0.2 points from July.

According to CoreLogic’s Home Price Insights report, home prices nationwide, including distressed sales, increased year over year by 15.8% in July 2022 compared with July 2021. On a month-over-month basis, home prices declined by 0.3% in July 2022 compared with June 2022. The home price increase cooling trend continues with CoreLogic HPI Forecast indicating that home prices will increase on a year-over-year basis by 3.8% from July 2022 to July 2023.

Summary Of the Markets Today:

• The Dow closed down 338 points or 1.07%,
• Nasdaq closed down 1.31%,
• S&P 500 down 1.07%,
• WTI crude oil settled at 87 down 6.49% for the week,
• USD $109.60 down 0.03%,
• Gold $17251 up 0.68%,
• Bitcoin $19,899 down 0.38% – Session Low 19,784,
• 10-year U.S. Treasury 3.199% down 0.066%
• Baker Hughes Rig Count: U.S. -5 to 760 Canada +7 to 208

Today’s Economic Releases:

Total nonfarm payroll employment increased by 315,000 in August 2022, and the unemployment rate rose to 3.7 percent, the U.S. Bureau of Labor Statistics reported today. Notable job gains occurred in professional and business services, health care, and retail trade. Interesting that the civilian labor force increased by 786,000 which accounts for the rise in the unemployment rate. The household data shows employment increasing by 442,000 (versus the headline 315,000 in the establishment survey). Wednesday’s ADP employment report showed 132,000 private sector jobs were added (versus 308,000 in the establishment survey in this employment report). The strong employment report opens the Federal Reserve to continue raising the federal funds rate.

New orders for manufactured goods in July 2022, down following nine consecutive monthly increases, decreased 1.0%. This followed a 1.8% June increase. This data is not inflation adjusted and inflation-adjusted data makes manufacturing look sick (see graph below):

The Institute of Supply Management (ISM) showed its manufacturing index for August 2022 was unchanged from the previous month. Overall this index has been declining for the last year and is only modestly above the zero-growth line.