GDP Tracker

Atlanta Fed real time GDP tracker

St.Louis Fed Real time GDP Tracker

Some positive news The S&P super composite trucking index made up of 11 trucking companies is at 20 year highs for sure, possibly All time highs,Recall that Trucks move consumer goods whereas Trains move Companies or Business goods.Consumer demand is high

Economic data

U of Michigan 1-year inflation expectations.Recall the Fed always likes to say we need Inflation expectations anchored, someone must have forgotten to attach the anchor to this months data.

Personal income released alongside spending today and if you had to guess with some 40 million people applying for jobless benefits you would think Income to be much lower for the month..Not the case as people making more money not working vs working remarkable isn’t it.

Morning 5-29

Plenty of News today:

  • Axios: Pres Trump signed Exec Order last night aimed at limiting the legal protections that shield social media platforms from liability for content posted on their platforms ; despite signing the order , the Pres doesn’t have unilateral power to regulate tech firms/social media platforms 
  • President Donald Trump will hold a press conference to address China’s actions to tighten its grip on Hong Kong… And he is set to sign a measure that would punish Chinese officials for imprisoning more than one million Muslims in internment camps. China’s foreign ministry called U.S. actions so far “pure nonsense” and said Hong Kong is an internal matter. A revocation of Hong Kong’s favored status is considered a worst-case outcome of the press conference for investors. The U.S., Australia, U.K., and Canada released a joint statement Thursday criticizing China for breaking its international obligations regarding Hong Kong. Most observers do not see the U.S. putting sanctions on Chinese officials or pulling out of the Phase 1 trade deal that went into force earlier this year.(Pro Farmer)… US SEC. OF STATE POMPEO: TRUMP WILL MAKE A SERIES OF ANNOUNCEMENTS ON CHINA.(mizuho)
  • China Threatened military action to resolutely smash any attempt by Taiwan to become fully independent (BBG)
  • realDonaldTrump: I cannot stand back & watch this happen to a great American City, Minneapolis. A total lack of leadership. Either the very weak Radical Left Mayor, Jacob Frey, get his act together and bring the City under control, or I will send in the National Guard & get the job done right (ITC Markets)
  • The above tweet cause a response… Twitter hid a tweet from President Donald Trump on Friday, accusing him of breaking its rules by “glorifying violence” in a message that said looters at protests in Minneapolis would be shot.(reuters)…..  The feud continues
  • EU Core Inflation released earlier this morning .1 better than expected alleviating some of the deflation worries
  • CNN reporter Omar Jimenez and his camera crew were arrested on-air this morning while reporting on the increased police presence in Minneapolis. CNN’s live footage showed Jimenez asking officers where they would like the crew to move to in order to be out of the way before being placed under arrest, and CNN’s Josh Campbell said the police informed them they were being arrested because they were told to move and didn’t.(Reuters)

Markets:

 Main theme is dollar index 2-month lows, broke down outside of range. Less bad Inflation has Euro +.6%. Even with a weaker dollar stocks a bit saggy subtle risk Off   .Virus news taking a back seat to China, twitter and maybe Mnpls news. Gold +1%, Silver +2 Platinum +1.5 so a bid to proxy flight to safety products September treasuries bid Bunds A bit higher. let us see if any month activity shows up…All eyes on twitter and Trump Press conference No time given yet

Yield curve

Haven’t looked at yield curves in a while but with the breakout to upside in long end yields,its worth A look.I believe it was Feds Williams this week(Not Sure) that said rates could be a zero bound for the “medium term” in Fed or Economic Vernacular its 5-10 years.With that being known not much wiggle in short end of curve as near zero rates will hold things steady.Now longer end does use expected fed funds rate frop some of its pricing but not as much as short end. Pricing in higher inflation,stronger growth ,more stimulus?possibly or just a way to play the short end with rates so low?

2s 30s
5s 30s

Bonus charts,Dollar index DXY approaching the bottom of the range 98.27 a break below could be the catalyst for another leg higher in risk

Less bad Economic data

A view of Yesterdays and today’s Econ data,( top three points from Pantheon Macro)

• Mortgage Applications (5/22)/7:00 EDT The purchase index rose for a sixth straight week, soaring 8.6% to 281.6, up 8.4% year-over-year.

• Redbook Chain Store Sales (5/23)/9.00 EDT Sales growth jumped to -5.5% year-over-year, up from last week’s cycle low, -9.3%, and the least bad performance in six weeks.

• Richmond Fed Survey (5)/10:00 EDT The index jumped to a still-grim -27, from -53 in April (pantheon macro)

Durable Goods X trans -7.4 vs -15 expected, Proxy for Business Capex, orders and shipments of Non defense cap goods, also less bad then expected

KC Fed Manufacturing Activity -19 vs -21 expected but higher then ;ast months -30.

Pending home sales were ugly as people walked away from contracts thus losing Deposit (BBG) pending home sales month over month change the worst in 10 years. Pending home sales turn into existing home sales once contract signed.

Morning 5-28

From Mizuho …

More than 90% of the components in the S&P 500 are currently above their 50-day moving average. The past 11 times this happened, it was higher a year later 10 times and up nearly +16% on average. Overbought is not always bearish. (@RyanDetrick)

The S&P 500 fell 20.0% in Q1, for the worst Q1 in history. The S&P 500 is currently up 17.47% in Q2, which would be the best Q2 quarter in 82 years

The S&P 500 forward PE has risen to above 24, the first time since November 2000. Choose your own acronym: FOMO/MOMO/TINA

In March, Japanese investors bought $36.6 billion of agency debt, the most according to data going back to 1977. Japanese net buying of U.S. corporate bonds jumped to $2.3 billion in March, the most in eight years – Bloomberg.

  Trump to sign executive order on social media on Thursday – White House – Reuters. “Trump’s directive chiefly seeks to embolden federal regulators to rethink a portion of law known as Section 230, according to the two people, who spoke on the condition of anonymity to describe a document that could still evolve and has not been officially signed by the president. That law spares tech companies from being held liable for the comments, videos and other content posted by users on their platforms.” – WaPo …. Trump could narrow this rule so that Social media companies’ protection against such actions might decrease

China /HK

 Chinese lawmakers approved a proposal for new national security legislation in Hong Kong The resolution passed by China’s legislature would allow senior lawmakers in Beijing to write legislation to prevent and punish acts of separatism, subversion, terrorism and foreign interference in Hong Kong. The laws would then be promulgated by the city’s leader. The resolution would also allow mainland Chinese state-security agencies to operate officially in Hong Kong, according to the draft (Pro Farmer). Trump said U.S. will respond by weekend

Economy:

 Jobless claims will likely move above 40 Million over the last 10 weeks, in the markets eye if the trends continue lower not much attention is paid…. Weekly API oil numbers were bearish… Euro at 2-month highs. The Yuan Strengthening today yesterday’s price action almost took currency to an all-time low … Jobless, Durables, second look at GDP and Pending home sales unlikely to move the needle much

Markets:

 Nasdaq a bit heavy, Bunds unchanged, oil steady, NKY closed +2.3%, HK stocks -.72% Italy’s Mib +1.7% Dax +.5% Not a macro theme driving flows so far today each market resp0onding to their own worry or good news…. Watch out for Trump comments on Hong Kong Tech Companies and China

U.S. output Gap

U.S. nominal Output gap from the CBO .Just when the economy finally erased the negative output gap the Virus pushed economic activity below potential again. Horz Line =recession periods ,lets hope this downturn or recession is not as Deep or as long as the GFC because as you can see it took some 8 years to get output GAP positive.