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Steven Hansen
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Steven Hansen is an international business and industrial consultant specializing in turning around troubled business units; consults to governments to optimize process flows; and provides economic indicator analysis based on unadjusted data and process limitations.
My company:
Econintersect LLC
My blog:
Global Economic Intersect
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  • New Home Sales Bad In June - Should You Take This Information To The Bank?

    US Census seasonally adjusted data comes from another planet. Of all the government agencies - their take on the raw data hardly ever correlates to my view. And the data gathering anomalies with significant backward revisions make new home sales act like one is on a roller coaster.

    The headlines say new home sales declined from last month. The rolling averages smooth out much of the uneven data produced in this series - and this month there was an improvement in the rolling averages. The data was revised downward in the previous months making the bad headlines even worse than first glance.

    As the data is noisy, the 3 month rolling average is the way to look at this data. This data series is suffering from methodology issues. Econintersect analysis:

    • unadjusted sales growth accelerated 6.8 % month-over-month (after last month's revised deceleration of 16.6%).
    • unadjusted year-over-year sales up 18.4% (Last month was up 11.6%). Growth this month is on the high end of the range of growth seen last 12 months.
    • three month unadjusted trend rate of growth accelerated 0.2% month-over-month - is up 19.2% year-over-year.
    Unadjusted Year-over-Year Rate of Growth - Sales (blue line) and 3 month rolling average of Sales (red line)

    US Census Headlines:

    • seasonally adjusted sales down 6.8% month-over-month
    • seasonally adjusted year-over-year sales up 18.1%
    • market expected (from Bloomberg) seasonally adjusted annualized sales of 535K to 570K (consensus 550K) versus the actual at 482.

    The quantity of new single family homes for sale remains well below historical levels.

    Seasonally Adjusted New Homes for Sale

    The bottom line is that new home sales remain generally on an uptrend - and you just gotta ignore the roller coaster effects of the individual monthly releases.

    Other Economic News this Week:

    The Econintersect Economic Index for July 2015 strengthened partially reversing last month's decline. Still, the tracked sectors of the economy remain relatively soft with most expanding at the lower end of the range seen since the end of the Great Recession. Thinking through the reasons for this month's increase, it was the improvement in a few areas from terrible to marginal growth.

    The ECRI WLI growth index is now in positive territory but still indicates the economy will have little growth 6 months from today.

    Current ECRI WLI Growth Index

    The market was expecting the weekly initial unemployment claims at 275,000 to 300,000 (consensus 279,000) vs the 255,000 reported. The more important (because of the volatility in the weekly reported claims and seasonality errors in adjusting the data) 4 week moving average moved from 282,500 (reported last week as 282,500) to 278,500. The rolling averages generally have been equal to or under 300,000 since August 2014.

    Weekly Initial Unemployment Claims - 4 Week Average - Seasonally Adjusted - 2011 (red line), 2012 (green line), 2013 (blue line), 2014 (orange line), 2015 (violet line)

    (click to enlarge)

    Bankruptcies this Week: Privately-held Great Atlantic & Pacific Tea (aka A&P), AmeriResource Technologies, Corporate Resource Services

    Please visit our landing page for all analysis for the past week.

    Jul 25 7:42 AM | Link | Comment!
  • June Exports And Imports Continue To Suggest Weak Economic Conditions

    The data for this series continues to be weak. The year-to-date volumes contracting for both imports and exports. This continues to indicate weak economic conditions domestically and globally.

    Consider that imports final sales are added to GDP usually several months after import - while the import cost itself is subtracted from GDP in the month of import. Export final sales occur around the date of export. Container counts do not include bulk commodities such as oil or autos which are not shipped in containers. For this month:

     Acceleration Month-over-MonthChange from One Year AgoYear to Date vs. Previous Year3 Month Rolling Average vs. Average One Year AgoAcceleration 3 Month Rolling Average
    Imports-6.5%-4.7%-2.7%-1.8%-12.2%
    Exports-4.4%-9.6%-14.0%-8.8%+3.6%

    As the data is very noisy - the best way to look at this data is the 3 month rolling averages. There is a direct linkage between imports and USA economic activity - and the change in growth in imports foretells real change in economic growth. Export growth is an indicator of competitiveness and global economic growth.

    The continued underperforming of exports is not a positive sign for GDP as the year progresses.

    Unadjusted 3 Month Rolling Average for Container Counts Year-over-Year Change (comparing the 3 month average one year ago to the current 3 month average) - Ports of Los Angeles and Long Beach Combined - Imports (red line) and Exports (blue line)

    (click to enlarge)

    There is reasonable correlation between the container counts and the US Censustrade data also being analyzed by Econintersect. But trade data lags several months after the more timely container counts.

    Unadjusted Year-over-Year Change in Container Counts - Ports of Los Angeles and Long Beach Combined - Imports (red line) and Exports (blue bars)

    (click to enlarge)

    I continue to NOT find any evidence of a material improvement in the economic conditions.

    Other Economic News this Week:

    The Econintersect Economic Index for July 2015 strengthened partially reversing last month's decline. Still, the tracked sectors of the economy remain relatively soft with most expanding at the lower end of the range seen since the end of the Great Recession. Thinking through the reasons for this month's increase, it was the improvement in a few areas from terrible to marginal growth.

    The ECRI WLI growth index is now in positive territory but still indicates the economy will have little growth 6 months from today.

    Current ECRI WLI Growth Index

    The market was expecting the weekly initial unemployment claims at 265,000 to 295,000 (consensus 282,000) vs the 281,000 reported. The more important (because of the volatility in the weekly reported claims and seasonality errors in adjusting the data) 4 week moving average moved from 279,250 (reported last week as 279,500) to 282,500. The rolling averages generally have been equal to or under 300,000 since August 2014.

    Weekly Initial Unemployment Claims - 4 Week Average - Seasonally Adjusted - 2011 (red line), 2012 (green line), 2013 (blue line), 2014 (orange line), 2015 (violet line)

    (click to enlarge)

    Bankruptcies this Week: Berau Capital Resources Pte (chapter 15), Sino Clean Energy (SCEI), Sabine Oil & Gas,Walter Energy (fka Walter Industries), MIlagro Oil & Gas

    To view all analysis this week - [click here]

    Jul 18 7:18 AM | Link | Comment!
  • Trade Tells Me All I Need To Know - And It Is Not Good

    Trade is the canary in the gold mine. Imports tell you how well the domestic economy is doing. Exports tell you how the global economy is doing. Neither seems to be doing well.

    A quick recap to the trade data released this past week paints a negative picture. The general situation is that imports declined and exports declined. The unadjusted three month rolling average value of imports and exports decelerated month-over-month,. Many care about the trade balance (which grew marginally relative to last month), but trade balance simply has little correlation to economic activity. Less imports and less exports cannot be spun as economically positive.

    • Import goods growth has positive implications historically to the economy - and the seasonally adjusted goods and services imports were reported marginallydown month-over-month. Econintersect analysis shows unadjusted goods (not including services) growth deceleration of 1.3% month-over-month (unadjusted data). The rate of growth 3 month trend is decelerating.
    • Exports of goods were reported marginally down, and Econintersect analysis shows unadjusted goods exports growth deceleration of (not including services) 3.3% month-over month. The rate of growth 3 month trend is decelerating.
    Inflation Adjusted But Not Seasonally Adjusted Year-over-Year 3 Month Rolling Average - Goods Export (blue line) and Goods Import Excluding Oil (red line)

    (click to enlarge)

    • The marginal decrease in seasonally adjusted exports was due to aircraft. Import decrease was general.
    • The market expected a trade deficit of $-44.3 B to $-38.5 billion (consensus $42.7 billion deficit) and the seasonally adjusted headline deficit from US Census came in at a deficit of $41.9 billion.
    • It should be noted that oil imports were down 34 million barrels from last month, and up 11 million barrels from one year ago.
    • The data in this series is noisy, and it is better to use the rolling averages to make sense of the data trends.

    The headline data is seasonally but not inflation adjusted. Econintersect analysis is based on the unadjusted data, removes services (as little historical information exists to correlate the data to economic activity), and inflation adjusts. Further, there is some question whether this services portion of export/import data is valid in real time because of data gathering concerns. Backing out services from import and exports shows graphically as follows:

    Inflation Adjusted But Not Seasonally Adjusted Year-over-Year Change Goods Export (blue line), Goods Import Excluding Oil (red line), and Goods Import with Oil (yellow line)

    (click to enlarge)

    In general this is a rear view look at the economy - however, imports do have a forward vision of up to three months ahead of expected USA economic activity. It does not seem things are excellent on Main Street.

    Other Economic News this Week:

    The Econintersect Economic Index for July 2015 strengthened partially reversing last month's decline. Still, the tracked sectors of the economy remain relatively soft with most expanding at the lower end of the range seen since the end of the Great Recession. Thinking through the reasons for this month's increase, it was the improvement in a few areas from terrible to marginal growth.

    The ECRI WLI growth index is now in positive territory but still indicates the economy will have little growth 6 months from today.

    Current ECRI WLI Growth Index

    The market was expecting the weekly initial unemployment claims at 260,000 to 290,000 (consensus 276,000) vs the 297,000 reported. The more important (because of the volatility in the weekly reported claims and seasonality errors in adjusting the data) 4 week moving average moved from 275,000 (reported last week as 274,750) to 279,500. The rolling averages generally have been equal to or under 300,000 since August 2014.

    Weekly Initial Unemployment Claims - 4 Week Average - Seasonally Adjusted - 2011 (red line), 2012 (green line), 2013 (blue line), 2014 (orange line), 2015 (violet line)

    (click to enlarge)

    Bankruptcies this Week: London, U.K.-based Afren filed (Chapter 15), F-Squared Investments Inc.

    Please visit our landing page to a complete view of analysis this week.

    Jul 11 7:21 AM | Link | Comment!
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