Economic and financial news for the week ending September 13, 2019

Saturday, September 14, 2019

Just the Facts

by Doug Noland

full article is here:

http://creditbubblebulletin.blogspot.com/2019/09/just-facts-september-14-2019.html

Portions that 

interested me

are below:

Ye Editor

For the week ending 

September 13, 2019:

S&P500 gained 1.0% (up 20.0% y-t-d)

Dow Industrials rose 1.6% (up 16.7%). 

Dow Utilities unchanged (up 18.8%). 

Dow Transports rose 5.0% (up 17.9%)

S&P 400 Midcaps gained 2.7% (up 18.0%)

Small cap Russell 2000 surged 4.8% (up 17.0%). 

Nasdaq100 added 0.5% (up 24.7%)

Biotechs jumped 3.7% (up 5.0%). 

With GOLD bullion declining $18, 
the HUI gold stock index 
dropped 5.9% (up 27.1%).

 U.K.'s FTSE gained 1.2% (up 9.5% y-t-d).

Japan's Nikkei jumped 3.7% (up 9.9% y-t-d).

France's CAC40 gained 0.9% (up 19.5%)

German DAX advanced 2.3% (up 18.1%)

Spain's IBEX 35 rose 1.6% (up 7.0%). 

Italy's FTSE MIB increased 1.1% (up 21.1%). 

Brazil's Bovespa added 0.5% (up 13.7%), and 

Mexico's Bolsa increased 0.3% (up 2.9%). 

South Korea's Kospi rose 2.0% (up 0.4%).

 India's Sensex gained 1.1% (up 3.7%).

 China's Shanghai increased 1.1% (up 21.5%). 

Turkey's Istanbul National 100 surged 4.6% (up 13.4%). 

Russia's MICEX slipped 0.2% (up 17.8%).

US Ten-year Treasury yields 
rose 34 bps to 1.90% (down 79bps). 

US Long bond yields 
jumped 35 bps to 2.37% (down 64bps). 

US Benchmark Fannie Mae MBS yields 
surged 46 bps to 2.83% (down 66bps).

Freddie Mac 30-year fixed mortgage rates 
gained seven bps to 3.56% (down 104bps y-o-y). 

Fifteen-year rates 
rose nine bps to 3.09% (down 97bps). 

Five-year hybrid ARM rates 
increased six bps to 3.36% (down 57bps). 

Jumbo mortgage 30-year fixed rates 
up 11 bps to 4.32% (down 35bps).

Federal Reserve Credit 

Over the past year, 

contracted 10.6%. 

M2 money supply 

gained 5.4%

over the past year.

Commodities Watch:

Bloomberg Commodities Index declined 1.3% this week (up 17.3% y-t-d). 

Spot Gold retreated 1.2% to $1,489 (up 16.1%). 

Silver fell 3.0% to $17.569 (up 13%). 

WTI crude dropped $1.67 to $54.85 (up 21%). 

Gasoline fell 1.3% (up 17%)

Natural Gas surged 4.7% (down 11%). 

Copper rallied 2.5% (up 3%). 

Wheat surged 4.3% (down 4%). 

Corn jumped 3.7% (down 2%).

September 13 – Financial Times (Peter Wells): 
“The yield on the benchmark 10-year note surged 34 bps since last Friday to a six-week high of 1.90%, the largest weekly rise since mid-November 2016. An iShares exchange traded fund tracking US Treasuries fell 2.1% over the past five sessions, putting it its worst weekly performance also since that same November week nearly three years ago. The yield on the 10-year Treasury rose for an eighth consecutive session, the longest streak since March 2017.”

September 11 – Bloomberg (John Gittelsohn): 
“Assets in mutual funds and exchange-traded funds tracking U.S. equity indexes surpassed those run by stock-pickers for the first time last month, according to… Morningstar Inc. August fund flows helped lift assets in index-tracking U.S. equity funds to $4.271 trillion, compared with $4.246 trillion run by stock-pickers… Investors added $88.9 billion to passive U.S. stock funds while pulling $124.1 billion from active managers this year through August…”

September 10 – Wall Street Journal (Ryan Dezember):
Hedge funds and other money managers in August built up a big bet that natural gas prices would decline—their most bearish position in the futures market in over a decade—only to have prices shoot up 25%. 
Prices usually weaken when summer subsides since there is less demand to generate electricity for air conditioners.”

September 10 – Financial Times (Steve Johnson): “Bonds are so richly priced that around 30% of the entire universe of euro-denominated EM debt, with a face value of about €115bn, now trades with a negative yield… That has never happened before. What is more, not all of this negatively yielding debt consists of short-maturity bonds issued by the EU sovereigns of eastern and central Europe, which are usually considered ‘safe’ by fixed income investors. The bundle includes Polish government debt at a maturity as far out as 2026, along with bonds from Indonesia, China and South Korea.”

September 11 – Reuters (Richard Leong):
 “U.S. money market fund assets have hit their highest level since October 2009, as investors piled more cash into these low-risk products despite a lessening of concerns about U.S.-China trade tensions… Assets of money funds, which are seen as being nearly as safe as bank accounts, climbed by $24.57 billion to $3.355 trillion in the week ended Sept. 10…”

September 11 – CNBC (Riya Bhattacharjee and Chris Eudaily):
 “President Donald Trump… tweeted that he will delay increasing tariffs on $250 billion worth of Chinese goods from Oct. 1 to Oct. 15 as a ‘gesture of good will’ to China. Trump said the postponement came ‘at the request of the Vice Premier of China, Liu He, and due to the fact that the People’s Republic of China will be celebrating their 70th Anniversary.’ The tariffs were set to increase to 30% from 25% on the goods. He is set to be in Washington for talks in early October.”

September 9 – Bloomberg (Mike Dorning): 
“The U.S. Agriculture Department’s top trade official called Chinese President Xi Jinping a ‘communist zealot,’ as he warned farmers the Asian leader is a tough adversary in negotiations. Ted McKinney, the department’s undersecretary for trade, offered the provocative characterization of the Chinese leader… at a sensitive time in U.S.-China relations… ‘Let me just tell you what: Mr. Xi Jinping is a communist zealot. He sees himself very much in the spirit of Mao Zedong,’ McKinney said… to 380 farmers the group gathered in Washington to lobby the government.”

September 12 – Associated Press (Martin Crutsinger): “The U.S. government’s budget deficit increased by $169 billion to $1.07 trillion in the first 11 months of this budget year as spending grew faster than tax collections. The… deficit with just one month left in the budget year is up 18.8% over the same period a year ago. Budget experts project a surplus for September, which would push the total 2019 deficit down slightly below the $1 trillion mark. The Congressional Budget Office is forecasting a deficit this year of $960 billion, compared to a 2018 deficit of $779 billion.”

September 10 – Wall Street Journal (Janet Adamy and Paul Overberg): “American incomes remained essentially flat in 2018 after three straight years of growth, according to Census Bureau figures… Median household income was $63,179 in 2018, an uptick of 0.9% that census officials said isn’t statistically significant from the prior year based on figures adjusted for inflation. The poverty rate in 2018 was 11.8%, a decrease of a half percentage point from 2017, marking the fourth consecutive annual decline in the national poverty rate. It was the first time the official poverty rate fell significantly below its level at the start of the recession in 2007.”

September 13 – Wall Street Journal (Harriet Torry): “Spending on vehicles drove strong retail sales in August, suggesting American shoppers continue to support the economy… Retail sales… climbed a seasonally adjusted 0.4% in August from a month earlier… The robust report beat economists’ expectations and came on the heels of stronger spending in July than initially estimated, a 0.8% rise. The data provide reassurance that household spending remains an economic bulwark against signs of a global slowdown, though perhaps not enough to prevent some softening in U.S. growth in the third quarter.”

September 10 – Bloomberg (William Edwards): “Optimism among U.S. small-business owners fell in August to the lowest level in five months, with the outlook for the economy and sales slumping amid escalating trade tensions and recession fears. The decline of 1.6 points to 103.1 in the National Federation of Independent Business’s index resulted from weaker expectations for businesses and sales…”

September 10 – Reuters (Lindsay Dunsmuir and Howard Schneider): “The share of Americans without health insurance rose for the first time in a decade last year and U.S. household income hardly budged, according to a government report… that laid bare issues that could be central to the U.S. presidential election next year. …About 27.5 million residents, or 8.5% of people, did not have health insurance in 2018, an increase of almost 2 million from the year before when 7.9% of people lacked coverage, the Census Bureau said.”

September 13 – Reuters (Andrew Galbraith): 
“China will exempt some agricultural products from additional tariffs on U.S. goods, including pork and soybeans, China’s official Xinhua News Agency…, in the latest sign of easing Sino-U.S. tensions before a new round of talks aimed at curbing a bruising trade war.”

September 8 – Associated Press (Joe McDonald): “China’s trade with the United States is falling as the two sides prepare for negotiations with no signs of progress toward ending a tariff war… Imports of American goods tumbled 22% in August from a year earlier to $10.3 billion… Exports to the United States, China’s biggest market, sank 16% to $44.4 billion.”

September 11 – Financial Times (Benjamin Parkin): “Indian businesses typically enter September full of optimism about the spending boost that celebrations including Navratri and Diwali will bring as the country embarks on its biggest annual festive season. But this year, car manufacturers, suppliers and dealers are facing the festivities with something closer to dread. 
India’s vehicle market, until recently projected to be on track to become the world’s third largest, is facing its worst crisis since records began more than two decades ago. Car sales in August fell 41% from a year earlier…, extending a dismal run in which sales have fallen more than 20% each month since April. ‘We have never seen a crisis as painful as this one,’ said Puneet Gupta, an automotive analyst at IHS Markit. ‘When the market is flat we see people getting worried. This time it’s minus 40%, which is unimaginable . . . We are moving backwards rather than moving forwards.’”

September 7 – Bloomberg (Rahul Satija and P R Sanjai): “A prolonged shadow-banking crisis and hurdles in bankruptcy rules are set to keep India atop the world’s worst bad-debt pile, even as Italy, which held the title previously, quickens the clean-up of its lenders. Moody’s… to Credit Suisse Group AG. warned that more loans may sour in the Asian nation’s banking system. More than 2.4% of total loans in India’s banking system may be under stress on top of the 9.6% bad debt ratio as of June, the highest among major economies, Credit Suisse estimates shows. Italy, on the other hand, has nearly halved its ratio to 8.5% in the last three years.”

September 9 – Associated Press: 
“Moody's… downgraded Ford's credit rating to junk status, citing expectations that the automaker will be weighed by weak earnings and cash generation as it pursues a costly restructuring plan. Ford responded by saying that its underlying business is strong and its balance sheet is solid.”

September 8 – Reuters (Francois Murphy): 
“The U.N. nuclear watchdog told Iran… there is no time to waste in answering its questions, which diplomats say include how traces of uranium were found at a site that was not declared to the agency. It also said Iran was starting to follow through on its pledge last week to further breach its 2015 nuclear deal with world powers, this time installing more advanced centrifuges and moving toward enriching uranium with them, which the deal bans.”

September 7 – Reuters (Parisa Hafezi): 
“Iran said… it was now capable of raising uranium enrichment past the 20% level and had launched advanced centrifuge machines in further breaches of commitments to limit its nuclear activity under a 2015 deal with world powers.”

September 11 – Financial Times (Demetri Sevastopulo): “The Pentagon is compiling a list of companies with ties to the Chinese military as part of a stepped-up Trump administration effort to stop Beijing from obtaining sensitive technologies and protect US defence supply chains. The US defence department is trying to identify Chinese companies and organisations with direct and indirect relationships with the People’s Liberation Army to help reduce the chances of US weapons supply chains being compromised… The Pentagon has become increasingly concerned about supply chains, seeking ways to tackle critical gaps in the US industrial base and prevent infiltration by adversaries. The focus has intensified under the Trump administration, which in 2017 named China a ‘revisionist’ power in its first national security strategy.”