Thursday, March 13, 2014

US key data March 13 , 2014 -- Retail sales beat expectations and jobless claim fall to the lowest levels since November 2013 , will the Fed step up the Tapering ? Big misses in China Industrial Production , Retail Sales and Fixed investment - will China increase liquidity to its economy ? Stay tuned !


Retail Sales Beat Following Sharp January Downward Revision: Control Group Decline Continues

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When retail sales last month came in far weaker than expected, it was the weather's fault. A month later, we find that the January retail sales were even weaker than expected, with the headline number revised from a -0.4% drop to -0.6%, the ex autos number revised from unchanged to -0.3%, and the ex autos and gas whose drop more than doubled from -0.2% to -0.5%. Oh well: one can't go back in time and force the algos to soar even more (since everyone knows bad news is great news). So how about February? Well, apparently it warmed up because despite expectations of a 0.2% increase in headline and ex auto and gas retail sales, the actual prints were 0.3% for both, beating by the tiniest of margins, yet net lower when adding the January revision. Of course, what happens in April, when the March data too is revised lower, is irrelevant - all that will matter is the current month numbers all of which recently seem to get an odd "optimism" boost that promptly fades away in no time.
Finally, let's ignore that the unadjusted February number was actually a decline from $390billion to $385 billion. Then again seasonal adjustments only matter these days when they are used to scapegoat.
For those curious just how much real "growth" there is in retail spending, here is the annual change in the control group, which excludes food, auto dealers, building materials and gas stations, and feeds directly into GDP: it rose 0.3% from January, even as January was sharply revised from -0.2% to -0.6%, meaning net impact on GDP for Q1 is negative!
As for the breakdown of sales by category, it would appear that in February Americans weren on a sporting goods, hobby book and music store buying spree, with the sales print up 2.5%, and the other notable increase was in non-store retailers, i.e. Internet Sales, up 1.2% which would make sense if one is trying to scapegoat the weather. There were sales declines in Electronics and Appliance stores, Food and beverage stores and General Merchandise stores: hardly the stuff of robust spending recoveries.

Finally, a bonus chart via @Not_Jim_Cramer - retail sales vs consumer confidence.





Initial Claims Beat; Drop To Lowest Since November

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On the heels of last week's surprise beat in jobless claims (amid all the weather turmoil), this week's initial claims beat by the most since November. Down 9,000 to 315,000, this is the best (lowest) claims data in over three-and-a-half months providing the Fed cover to continue Tapering as the number of people ofbenefits rolls overall dropped 48,000 to 2.86 million (lowest since December). In the big picture the trend of decreasing layoffs has stalled but shows no sign of improvement in the last 6 months.


Charts: Bloomberg



Futures Rise On Big Misses In Chinese Industrial Production, Retail Sales And Fixed Investment

It was another day of ugly overnight macro data, all of it ouf of China, with industrial production (8.6%, Exp. 9.5%, Last 9.7%), retail sales (11.8%, Exp. 13.5%, Last 13.1%) and fixed asset investment (17.9% YTD vs 19.4% expected) all missing badly and confirming that in a world of deleveraging, the Chinese economy will continue to sputter. Which is precisely what the "bad news is good news" algos needs and why futures levitated overnight: only this time instead of latching on to the USDJPY correlation pair, it was the AUDJPY which surged after Australia - that Chinese economic derivative - posted its third best monthly full-time jobs surge in history! One can be certain that won't last. But for now it has served its purpose and futures are once again green. How much longer will the disconnect between deteriorating global macro conditions and rising global markets continue, nobody knows, but sooner rather than later the central planner punch bowl will be pulled and the moment of price discovery truth will come. It will be a doozy.