Succinct Summation of the Week's Events

Succinct Summation of the Week’s Events:

Positives,

1)Initial jobless claims fell to 212k, 8k less than expected and down from 220k last week (revised up by 2k). Because a 189k print fell out of the calculation, the 4 week average rose to 219k from 213k.

2)The Philly manufacturing index for February did print positive at 5.2 vs -10.6 in January and above the estimate of -8.1. New orders though remained below zero as did backlogs and inventories. And of particular note, the employment component fell to -10.3 from -1.8. That’s the lowest since 2016, not including Covid. Prices paid rose 5.3 pts but is still below its 6 month average. Those received were little changed m/o/m. After falling below zero last month at -4, the 6 month outlook bounced to +7.2, about in line with its 6 month average. Of note, expectations for prices paid rose to a 4 month high and for a 3 month high for prices received. Capital spending plans did improve.

3)The February NY manufacturing read was still negative at -2.4 but after tanking to -43.7 in January. The estimate was -12.5. Same here, new orders, backlogs, inventories and employment were all below zero. And, prices paid rose to the highest level since last May and those received rose to a 5 month high. The 6 month outlook did rise to a 4 month high and price expectations receded after the jump last month. Capital spending plans fell, in contrast to the Philly index.

4)The February NAHB home builder survey rose 4 pts m/o/m to 48 and that was 2 pts above the estimate. The present situation got back above 50 at 52 from 48. The future is where the optimism really reigns as it was up 3 pts to 60. Keeping the headline though below 50 was the 33 print on Prospective Buyers Traffic, though up 4 pts m/o/m but remains well below 50.

5)The World Container Index Shanghai to Rotterdam price of a 40 foot container cooled for a 3rd week, falling by $138 to $4,288, though still up from $1,667 in the last week of 2023. It was at $1,851 in the same week in 2019. The Shanghai to LA route was little changed, down by $17 to $4,754 vs $2,100 in late December and vs $1,496 in mid February 2019.

6)In the NY Fed's Consumer Expectations survey, one yr inflation expectations remained unchanged at 3%, slipped to 2.4% for the 3 yr and as unchanged for the 5 yr at 2.5%. Price gain expectations for gas, food, rent, medical care and college all fell. On the labor market, it was mixed as the probability of losing one's job fell but the expected quit rate voluntarily did too. And, "The mean perceived probability of finding a job if one's current job was lost decreased by 1.7 percentage points to 54.2%, its lowest reading since June 2021." Expected earnings did rise while expected household spending growth was unchanged at 55. Credit access did improve "notably" with a decreased share of respondents reporting that it is more difficult to obtain credit now than a year ago, and a larger share reporting that it is now easier to do so." Of importance, "Perceptions about households' current financial situations improved in January with more respondents reporting being better off than a year ago and fewer respondents reporting being worse off." Slowing inflation and still good wage growth are the likely reasons.

7)The preliminary February UoM consumer confidence index rose a touch to 79.6 from 79 and about in line with the estimate of 80. Current Conditions slipped a bit while Expectations rose. One yr inflation expectations did tick up by one tenth to 3% while the longer term dart throw was unchanged at 2.9%. The bottom line from the UoM, “Consumers continued to express confidence that the slowdown in inflation and strength in the labor markets would continue…Consumers’ assessments of their personal finances are at their most favorable reading since January 2022.”

8)Foreigners bought a net $34b of US notes and bonds in December with the central bank side adding to its holdings after the two prior months of selling. The private side increase follows a big jump in November. Foreign holdings as a % of US marketable debt though continues to fall. China added to its holdings for a 2^nd month and Japan did for a 3^rd month. Hedge fund selling was seen with the drop in Cayman Island holdings.

9)From Shake Shack "We ended 2023 with strong momentum in the fourth quarter with our marketing strategies delivering positive traffic and our operational focus achieving further margin expansion…Outside of weather impacted weeks though, we saw that the underlying strength of our fourth quarter trends continued into January and while we're not providing specific numbers around February, our trends have improved from January levels and our guidance reflects this."