Today’s US economic releases – housing starts and business survey data for the manufacturing sector – suggest that the macro headwinds are increasing. It’s premature to dismiss the numbers du jour, but the previously released reports in recent weeks – payrolls, retail sales, and industrial production – offer a sharply positive counterpoint. For the moment, the big picture for the US still looks encouraging, albeit slightly tarnished relative to what we knew 24 hours earlier. But before we consider the reasoning for maintaining a positive outlook on the US economy, let’s briefly review the latest figures and then move on to considering if today’s news add up to a genuine warning for the business cycle.
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Mr. Market can be an emotional fellow at times, confusing and confounding the casual observer who tries to make sense out of market action that can appear nonsensical at times… right now, for instance. Indeed, the US stock market has been tumbling since its Dec. 5 peak – a slide that’s unfolded amid an impressive run of US economic releases – the best, arguably, in several years. What gives? Judging by Mr. Market’s reaction of late, there’s danger on the horizon for the economy. The hard data, however, suggests otherwise. What the heck’s going on? Is Mr. Market off his meds again? Or is there some logic buried in the current macro-market mashup?
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● Eurozone PMI: a slight improvement for weak growth in Dec | Markit
● China PMI: Dec mfg activity shrinks for first time since May | Markit
● Japan PMI: Slow mfg growth continues in Dec | Markit
● German PMI: Private sector activity growth weakest in 18 months in Dec | Markit
● French PMI: Private sector output falls at slowest rate in 4 months | Markit
● UK Inflation Slows to Least Since 2002 as Oil Prices Drop | Bloomberg
● Russia makes drastic rate rise to 17% to stem rouble decline | BBC
● US Industrial Production Surges in Nov | CapSpec
● US home builder confidence eases slightly in Dec | NAHB