Succinct Summation of the Week's Events:

Succinct Summation of the Week's Events:

Positives,

1)Initial jobless claims totaled 220k, 5k less than expected and follows the 217k print last week which was partly influenced by the Labor Day holiday. The 4 week average fell to 225k from 230k as a 240k print drops out. Continuing claims, delayed by a week, rose by 4k to 1.688mm after falling by 35k in the week before.

2)Import prices in August were about as expected when including the August downward revision and are down 3% y/o/y with a big part of this just being the comp of sharp gains last year. Prices ex petro were unchanged m/o/m for a 2nd month and are down 1.1% y/o/y. The jump in energy prices showed up in this figure with a 6.5% m/o/m rise.

3)Acknowledging that this particular data point is so volatile month to month, the September NY manufacturing survey rose to +1.9 from -19 in August and vs +1.1 in July, +6.6 in June and -31.8 in May. That was better than the consensus print of -10. Optimism about business for the coming 6 months as it rose to 26.3 from 19.9 and that is the highest since March 2022.

4)US industrial production in August rose .4% m/o/m, 3 tenths more than anticipated and July was revised up by 6 tenths to a .7% gain. The manufacturing component though was a touch light when we include the slight July downward revision. It was utility and mining output that drove the beat. Within manufacturing and ahead of the UAW strike, auto production fell 5% m/o/m after a 5.1% increase in July and 3.9% fall in June and is up 5.9% y/o/y. Manufacturing production ex autos were up .6% m/o/m led by machinery and computers/electronics. Capacity utilization was 79.7% vs 79.5% in July. 

5)The MBA said purchase applications rose 1.3% off the lowest level since 1995.

6)C&I loans outstanding for the week ended 8/30 did lift by $6.9b to the highest since late June.

7)From WMT: "In the US, things are better than I would have expected them to be when we started the year. I was concerned about the amount of inflation in categories like dry grocery and consumables, how that would impact discretionary purchases, had an eye on the consumer balance sheet, all those things that we were all thinking about at the beginning of the year, but things have held up better than I would have guessed, and I think the employment situation, wage increases, some pockets of disinflation are helping that. So we do see some behavioral change for some customers that are particularly pressured from a budget point of view."

8)From JPM's Jamie Dimon: "I'll tell you about the consumer, but there's a big but. It's pretty good. They have more money than they've had. Home prices have gone up for the last 15 years. Asset prices have gone up. Their balance sheet is in great shape. Their incomes have gone up. They've got more cash in their checking accounts than pre Covid. It was a lot more, and it's been coming down. So that excess, we call it excess savings, seems to be normalizing. Wages are going up, particularly at the low end. It's pretty good, which is why you have a pretty good economy."  

9)China saw August economic data that was mostly better than expected. Retail sales were up 4.6% y/o/y (travel, leisure, and hospitality leading the way) vs the 3% forecast and industrial production grew by 4.5% y/o/y, above the estimate of 3.9%. Fixed asset investment ytd was about as expected. Also of note was the .3% m/o/m drop in new home prices which is the 3rd straight month of declines. 

10)China reported its August CPI and PPI that were about as expected. The 3% y/o/y drop in PPI is the least since March and CPI ex food and energy held at up .8%, the most since January. 

11)China said there was a bigger than expected increase in August aggregate loan data after the shockingly low July figure. Total financing was 3.12T yuan, 430b yuan more than forecasted though M2 growth slowed to 10.6% from 10.7%.

12)With inflation still running well above their deposit rate, the ECB hiked by 25 bps to 4.0%. 

13)In the UK, wage growth remained robust in the 3 months ended July with weekly earnings ex bonus up by 7.8% y/o/y, the same pace seen in the month before but just in line with inflation, give or take.

Negatives,

1)The UAW strikes.

2)August CPI headline rose .6% m/o/m and by 3 tenths core with the former as expected and the latter one tenth above expectations. Versus last year, headline CPI was up 3.7% vs 3.2% in July and the core rate was higher by 4.3% vs 4.7% in the month before. A 5.6% m/o/m jump in energy prices drove the headline print while food prices were up by .2%. Services inflation ex energy prices were up .4% m/o/m and 5.9% y/o/y as previous rental growth continues to flow thru CPI in a delayed fashion. On the core goods side, prices fell by one tenth m/o/m and are basically flat y/o/y, up by .2%.