Saturday, December 14, 2019
Q3 2019 Z.1 Flow of Funds:
Repo Madness
by Doug Noland
full column here:
Portions of the column
that interested me are
below. Ye Editor
Total Debt Securities
ended September at
217% of GDP,
slightly below Q1 ‘13’s
record 223% of GDP.
Total Equities
were 230% of GDP.
below Q3 2018’s record
243% of GDP, but booming
Q4 equities markets
will push this ratio
back toward all-time highs.
Total (Debt and Equities)
Securities ended Q3
at a record 447% of GDP
(below Q3 2018’s record 458%).
Previous Debt + Equities
cycle peaks were
379% of GDP during Q3 2007 and
359% of GDP to end Q1 2000.
For the week ending
December 13, 2019:
S&P500 gained 0.7% (up 26.4% y-t-d)
Dow Industrials added 0.4% (up 20.6%)
Dow Utilities little changed (up 19.3%)
Dow Transports rallied 0.6% (up 17.5%)
S&P 400 Midcaps unchanged (up 21.7%)
Small cap Russell 2000 added 0.3% (up 21.5%).
Nasdaq100 advanced 1.1% (up 34.1%)
Biotechs increased 0.3% (up 20.6%).
With bullion rising $16,
the HUI gold stock index jumped 3.9%
(up 40.6%).
Ten-year US Treasury bond yields
fell two bps to 1.82%
(down 86bps).
Freddie Mac 30-year fixed mortgage rates
rose five bps 3.73%
(down 90bps y-o-y).
Fifteen-year rates
gained five bps to 3.19%
(down 88bps).
Five-year hybrid ARM rates
slipped three bps to 3.36%
(down 68bps).
Jumbo mortgage 30-year fixed rates
up six bps to 3.98%
(down 55bps).
Over the past year,
Fed Credit barely changed and
M2 money supply surged 7.3%.
Commodities Watch:
Bloomberg Commodities Index gained 1.5% this week
(up 3.2% y-t-d).
Spot Gold rose 1.1% to $1,476 (up 15.1%).
Silver rallied 2.5% to $17.012 (up 9.5%).
WTI crude rose 87 cents to $60.07 (up 32%).
Gasoline gained 1.0% (up 26%)
Natural Gas dropped 1.6% (down 22%).
Copper jumped 2.1% (up 6%).
Wheat recovered 1.5% (up 6%).
Corn gained 1.1% (up 2%)
December 11 – Associated Press (Paul Wiseman):
“The U.S. budget deficit rose by 2% last month to $209 billion, another step in a journey back toward $1 trillion-a-year budget shortfalls. The… federal government took in $225 billion in tax and other revenue but spent a record $434 billion in November… The Congressional Budget Office is forecasting that the deficit for 2020 will hit $1 trillion and will stay above $1 trillion for the next decade. The country last ran annual $1 trillion annual deficits from 2009 through 2012 during and after the financial crisis… So far this budget year, the government is running a deficit of $343 billion, up 12% from a year earlier.”
December 11 – Reuters (Lucia Mutikani):
“U.S. worker productivity fell by the most in nearly four years in the third quarter…, while growth in unit labor costs was not as robust as initially thought. …Nonfarm productivity, which measures hourly output per worker, decreased at a 0.2% annualized rate in the last quarter, the biggest drop since the fourth quarter of 2015.”
December 13 – Reuters (Lucia Mutikani):
“U.S. retail sales increased less than expected in November as Americans cut back on discretionary spending, which could see economists dialing back economic growth forecasts for the fourth quarter. …Retail sales rose 0.2% last month. Data for October was revised up to show retail sales increasing 0.4% instead of gaining 0.3%... Economists… forecast retail sales would accelerate 0.5% in November. Compared to November last year, retail sales increased 3.3%.”
December 12 – New York Times (Alexandra Stevenson):
“ The boom has given way to a bust. A glut of cheap natural gas is wreaking havoc on the energy industry, and companies are shutting down drilling rigs, filing for bankruptcy protection and slashing the value of shale fields they had acquired in recent years.”
December 11 – CNBC (Maggie Fitzgerald):
“2019 is the year of CEO departures. In November, 148 chief executives left their posts, according to business and executive coaching firm Challenger, Gray & Christmas. Only five more CEOs need to depart for 2019 to be the highest year on record, and we already know of a few CEOs out in December.”
December 11 – Bloomberg:
“Vehicle sales in China are set to fall about 8% this year, an industry body said, the second straight annual drop for the world’s biggest auto market as consumers stay away from showrooms amid a cooling economy… The drop compares with about a 3% decline in 2018, when sales fell for the first time since 1990.”
December 9 – Reuters:
“China’s exports in November shrank for the fourth consecutive month, underscoring persistent pressures on manufacturers from the Sino-U.S. trade war but growth in imports may be a sign that Beijing’s stimulus steps are helping to stoke demand. The 17-month long trade dispute has heightened the risks of a global recession and fueled speculation that China’s policymakers could unleash more stimulus as growth in the world’s second-largest economy cooled to nearly 30-year lows. Overseas shipments fell 1.1% from a year earlier last month… China’s trade surplus for November stood at $38.73 billion, compared with an expected $46.30 billion surplus… and a $42.81 billion surplus recorded in October.”
December 12 – Associated Press (Gregory Katz):
“British Prime Minister Boris Johnson campaigned on one theme alone — ‘Get Brexit done.’ His sweeping victory in Thursday’s election means that could now happen within weeks. Even before his Conservative Party had officially crossed the winning line Friday, Johnson said it looked like his party had ‘a powerful new mandate’ to complete Britain’s divorce from the European union. Johnson now looks certain to pull Britain out of the EU by the Jan. 31 deadline, but he will still face the mountainous challenge of negotiating a complex trade deal with the EU by the end of next year — a task that many experts say is not possible.”
December 6 – Bloomberg (Ronojoy Mazumdar):
“India’s real estate, construction and infrastructure industries are in ‘deep trouble,’ and non-bank finance companies which lend to these sectors should have their asset quality reviewed, former central bank Governor Raghuram Rajan said. There is also ‘significant distress in rural areas,’ Rajan wrote… He said India is in a growth recession, defined as an economy growing at a slow pace and where unemployment is rising. India’s GDP growth slowed to 4.5% in the quarter ended September, a six-year low. A crisis among shadow lenders and a build-up of bad loans at banks have curbed lending in the economy.”
December 8 – Reuters (Daniel Leussink):
“Japan’s economy expanded at a much faster pace than initially reported in the third quarter, as resilient domestic demand and business spending offset the hit to growth from falling exports and global trade tensions. Gross domestic product grew an annualised 1.8% in July-September, stronger than the preliminary reading of 0.2% annualised growth…”
December 12 – Reuters (Leika Kihara and Kaori Kaneko):
“Japanese big manufacturers’ business mood sank to a near seven year low in the fourth quarter, a closely watched central bank survey showed, as the U.S.-China trade war and soft global demand weighed on the export-reliant economy. Companies expect conditions to remain unchanged or even worsen three months ahead, the Bank of Japan’s ‘tankan’ quarterly survey showed, suggesting that the fallout from the trade conflict could hurt broader sectors of the economy.”
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