Week of October 14 - 18, 2019

Maureen Kelliher, CFA

Maureen Kelliher, CFA

October 22, 2019

Weekly Economic Review

Weekly Macro Updates

Initial Jobless Claims (Oct 12) 215k est., 214k actual, 210k prior
Continuing Claims (Oct 5) 1675k est., 1679k actual, 1689k prior
Empire Manufacturing (Oct) 1.0 est., 4.0 actual, 2.0 prior
Retail Sales Advance MoM (Sep) 0.3% est., -0.3% actual, 0.6% prior: R+
Retail Sales Ex Autos & Gas (Sep) 0.3% est., 0.0% actual, 0.4% prior: R+
Retail Sales Control Group (Sep) 0.3% est., 0.0% actual, 0.3% prior
NAHB Housing Market Index (Oct) 68 est., 71 actual, 68 prior
Housing Starts MoM (Sep) -3.2% est., -9.4% actual, 15.1% prior: R+
Building Permits MoM (Sep) -5.3% est., -2.7% actual, 8.2% prior: R+
Business Inventories (Aug) 0.2% est., 0.0% actual, 0.3% prior: R+
Philadelphia Federal Reserve Business Outlook (Oct) – positive (7.6 est., 5.6 actual, 12.0 prior
Industrial Production MoM (Sep) -0.2% est., -0.4% actual, 0.8% prior: R+
Capacity Utilization (Sep) 77.7% est., 77.5% actual, 77.9% prior
Leading Index (Sep) 0.0% est., -0.1% actual, -0.2% prior: R -

 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

Last week, September retail sales were a surprise, as sales declined for the first time since February.  A price-related drop in gasoline receipts and a fall-off in auto sales drove the decline in headline sales.  Control group sales, which eliminates the more volatile retail sectors, were flat for September.  Although these numbers suggest consumption slowed during the third quarter, control group sales for the quarter as a whole, rose by an outsized 6.8% annualized.  Additionally, given advanced retail sales are extrapolated from activity over the first two weeks of the month, they are often revised.  Indeed, August sales were revised substantially higher and, for the year, retail sales rose a healthy 4.1%.  Housing related releases were mixed during September while August’s revisions were positive.  Although industrial production ticked down -0.4% last month the decline was partly due to the GM strike.  On the other hand, September’s leading economic indicators were negative for the second consecutive month.  

Generally, global markets headed higher last week, as third-quarter earnings announcements were better than feared and hints of a possible mini-trade deal with China circulated.  For the week overall, the S&P 500 Index gained 0.6% while the Dow Jones Industrial Average sank -0.1% (driven by declines in Boeing and J&J).  With hopes of a trade deal on the horizon, international markets did well.  Developed foreign markets climbed 1.2% last week and emerging markets increased 1.3%.  The yield curve continued to steepen during the week, as short rates declined and longer dated rates increased.  As such, some bond sectors did better than others.  For the week, high yield and US corporate bonds both rose more than 0.3%, while the Barclay’s US Aggregate Index closed relatively flat and ten-year municipal bonds slumped -0.2%.