Week of January 13 - 17, 2020

Maureen Kelliher, CFA

Maureen Kelliher, CFA

January 22, 2020

Weekly Economic Review

Weekly Macro Updates

Initial Jobless Claims (Jan 11) 218k est., 204k actual, 214k prior
Continuing Claims (Jan 4) 1750k est., 1767k actual, 1804k prior
CPI YOY (Dec) 2.4% est., 2.3% actual, 2.1% prior
CPI Ex Food & Energy YoY (Dec) 2.3% est., 2.3% actual, 2.3% prior
NFIB Small Business Optimism (Dec) 104.6 est., 102.7 actual, 104.7 prior
Real Average Hourly Earnings YoY (Dec) 0.6% actual, 1.1% prior
PPI Final Demand YoY (Dec) 1.3% est., 1.3% actual, 1.1% prior
PPI Ex Food & Energy YoY (Dec) 1.3% est., 1.1% actual, 1.3% prior
Empire Manufacturing (Jan) 3.6 est., 4.8 actual, 3.3 prior: R-
Retail Sales Ex Autos and Gas (Dec) 0.4% est., 0.5% actual, -0.2% prior: R-
Retail Sales Control Group (Dec) 0.4% est., 0.5% actual, -0.1% prior: R-
Housing Starts MoM (Dec) 1.1% est., 16.9% actual, 2.6% prior: R-
Building Permits MoM (Dec) -1.5% est., -3.9% actual, 0.9% prior: R-
Industrial Production MoM (Dec) -0.2% est., -0.3% actual, 0.8% prior: E-

 Strong or Improving
 Inconclusive or lacking trend
 Weak or declining
R+ Revised up
R- Revised down

Directional change based on general
long-term tends.

Capital Market Implications

Economic releases were decidedly positive last week; suggesting the economy, particularly consumer spending, remains solid. After lackluster sales in November, retail sales rebounded in December and posted an impressive month-over-month increase of 0.5% (ex-autos and gas). Control group retail sales, which are considered the best gauge of consumer activity, were also up 0.5% for the month. The housing market continued to strengthen as well last month, as housing starts (helped by moderate weather) surged 17% to 1.6 million, their highest level since December 2006. Building permits however declined in December, but that was after a strong showing in November. Housing’s renaissance has been well timed, as it has helped offset the lingering softness in manufacturing. Industrial production fell -0.3% last month due to an unseasonably warm December (less demand for heating).

Capital market participants were encouraged last week, as consumer sentiment remained high, inflation gauges moderated and the first phase of the US/China trade agreement was signed. As such, stocks both at home and abroad rallied. The S&P 500 Index and the Dow Jones Industrial Average both reached new highs last week, having climbed 2.0% and 1.8%, respectively. With only the energy sector retreating last week, the week’s rally was broad-based. Although not quite as strong as domestic returns, international markets also rose, with developed foreign markets ahead 0.9% and emerging markets up 1.2%. Coming into the long MLK holiday weekend the bond pits were relatively quiet. For the week overall, the Barclay’s US Aggregate Index was flat, US corporate bonds up 0.2% while 10-year municipals bonds gained 0.4%. High yield bonds also increased for the week, having risen 0.3%.