The preliminary numbers for the US economic profile in February are flashing a warning sign, according to Markit’s sentiment data for the manufacturing and services sectors. It’s premature to assume the worst just yet, in part because the nearly complete set of numbers for January still point to growth. Ditto for the Chicago Fed’s January reading of the trend. By contrast, there’s only a handful of data points available at the moment for February. But the early signals for this month suggest that forward momentum will continue to suffer. We’ll know more in the days ahead as new data arrives. Meanwhile, the macro trend appears headed for more deterioration. While we’re waiting for fresh figures, let’s get up to speed on where we stand at the moment for February.
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● New US home sales tumble in Jan on big decline in West | AP
● US Services PMI dips below neutral 50 mark in Feb | Markit
● US mortgage applications fell 4.3% last week | MBA
● Germany Gfk Consumer Confidence index ticks up | ForexLive
● ECB: Private Sector Lending, Money Growth Accelerated In Jan | MNI
● Brazil Receives Junk Rating From Moody’s | RTT
● China stocks tumble more than 6% on Thursday | Reuters

Financial stress in the US continues to trend upward, according to four benchmarks published by Federal Reserve banks. The numbers overall suggest that stress in the financial system is at the highest level in three to four years, depending on the index. One benchmark—the Cleveland Financial Stress Index—is currently signaling “significant stress” for the first time since early 2012.
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● US Consumer Confidence Index falls to 7-month low in Feb | MarketWatch
● Existing home sales in US rise to 6-mo high in Jan | NY Times
● US home prices rise 5.7% in Dec: S&P/Case-Shiller | CNBC
● Richmond Fed: manufacturing activity contracts in Feb | 24/7 Wall St
● Gallup’s US economic confidence index ticked up last week | Gallup
● Saudi oil minister: Oil production cuts won’t happen | CNBC
● Fed’s Fischer: data suggests “labor market has continued to improve” | Fed

US monetary liquidity in January contracted at the sharpest rate in decades, according to the real (inflation-adjusted) year-over-year trend in base money (M0). It’s debatable if this alone is a warning sign for the macro outlook, but it’s an indicator that just went ballistic.
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● Chicago Fed Shows Increase in US economic activity in Jan | 24/7 Wall St
● Flash US mfg PMI flashes warning sign for Feb | MarketWatch
● Germany’s Q4 Growth Confirmed At 0.3% | RTT
● German Business Sentiment Falls in Feb for 3rd straight month | Bloomberg
● Eurozone economy faltering due to US slowdown | VoxEU
● China’s Excess Production Intensifies Slowdown, Business Group Says | NY Times
● A New Breed of Trader on Wall Street: Coders With a Ph.D. | NY Times

US economic output in January posted a modestly stronger trend vs. the previous month, according to this morning’s update of the Chicago Fed National Activity Index. This macro benchmark’s three-month average (CFNAI-MA3) rose to -0.15 last month, matching The Capital Spectator’s projection that was posted on Friday.
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Stock markets around the world bounced last week, based on a set of proxy ETFs representing the major asset classes. Breaking with the recent bias for selling risk, global equities (along with REITs and US high-yield bonds) posted solid gains for the shortened four-day trading week in the US through Feb. 19.
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● Core US Consumer Prices Rise by Most in Over 4 Years | Bloomberg
● PMI: Eurozone Feb growth lowest in over a year | Markit
● PMI: Slowdown in German mfg contrasts with solid services growth in Feb | Markit
● PMI: Slow but stable mfg conditions in Japan in Feb | Markit
● Eurozone consumer confidence falls sharply in Feb | EC
● We Can’t Get the Recovery We Threw Away in 2009 | Brad DeLong

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