Brent aka Blacklion

Brent aka Blacklion

07-05-2022

16:59

I've run a weekend macro routine for a decade+ based on Anthony Crecenzi's work (recommend). This began using Excel free data, then imported to Updata Analytics, and now built in Bloomberg. This is a top-down process and I will share the screens. Please comment/criticize.

I start with Interest rates, central banks, treasury, etc.

After review rates, curves, etc. I go over the Fed Balance Sheet. The most important asset curve are all flattening as QE ended.

Fed BS Liabilities Reverse REPO another record 2.13T in the lower right. There are a LOT of reserves in the system that will buffer any credit event. similar to those that scared us in 2008 and spring 2020.

Bank Credit still very accommodative with real estate and consumer still printing ATH.

Monetary Base interesting that all 3 measures in the top row are below their peak.

U.S. Debt picture. Atrocious and We The People responsible for this mess.

After reviewing the big picture rates, etc. I move to Macro Indicators. This is a long list and scrolling them each week reveals trends early. What do you see here?

Start with GDP.

Personal Income & Expenditures. The difference on left is about back to pre-COVID levels.

Corporate Finance Gap. Notice the cycle at left and where we are.

Empire Fed Mfg Survey. Note where we are in the cycle and the bottom left 2 charts Prices Paid and Prices Received.

Empire Fed Bus. Leader Survey or Service Survey. Wages in lower left deserve a look.

Dallas Fed Mfg Survey. DFW is the fastest growing metroplex in the USA and Texas in general is an economic growth firestorm. Then look at where we are in the cycle and the blue 12month moving averages.

KC Fed Mfg Survey, not the moving averages and where we are in the cycle.

Chicago Fed NAI. This doesn't speak to me much. A lot of other folks think it is important so I monitor.

Richmond Fed is the last of the regional Fed surveys I track (missing Philly, San Fran, others). Again note where we are in the cycle and Prices Paid in lower left.

CPI top, PPI bottom. No comment required.

Inventory:Sales data. Huge divergence here that merits attention. Retail and Mfg Inventory levels top row C and R. The other 4 are ratios. We are seeing huge inventory builds masked by sales. $UA mentioned cnx orders due to excess inventory.

Retail Sales. Motor Vehicles top right made a lower high. Hard to say how much of this is demand decline or dearth of inventory. Automobiles adopting the Dell model of the late 90's.

Port of Long Beach. Inbound top left flirting with ATH as are empties lower right that will show up in trade balance data.

Port of LA loaded outbound containers upper right reflects on the trade imbalance issue for goods.

Shipment data. CASS indexes left and the rest are Container Indexes cc @ag_trader. CASS Shipments upper are middling, but Expenditures bottom ATH. Watch this space for signs of slowing that are anecdotally in the press. cc @TheStalwart

After the big macro picture I move to US Manufacturing. There are some things that could go in either Macro or Manufacturing.

First up ISM primary Mfg Indexes.

ISM Mfg 2ndary Indexes. Customer Inventory upper right is meaningful WRT the inventory sales data discussed earlier in the thread.

ISM Service Indexes, prices lower left ATH.

International Trade. A lot here. Imports top row, Exports middle row, Balance bottom row. I keep hearing this isn't a problem. IMO this is a problem and a big one.

Factory Orders top row, Durable Goods bottom. If we are possibly getting overstocked on inventory where do these trend?

Motor Vehicle Manufacturing still depressed owing to chip shortages.

Final Manufacturing page. Industrial Production left and Capacity Utilization right.

Energy is key to our economy and my favorite are to trade. This is all built in Updata Analytics @ChartsToday.

Start with Oil Production and Refining. Key is upper left production at a post COVID high, but long way to go to pre COVID levels. Some doubt we will get there.

Crude and Total Petroleum storage.

This is the $CL_F $DX_F correlation chart from bottom right of the previous page. This is important to understand in the short run it IS NOT an inverse correlation and widely variable.

Ultra Low Sulfur Diesel production and storage. This is making headlines right now. Note storage relative to 5Yr average in the lower left at decade record deficit.

RBOB Gasoline production and storage. Supply situation not as critical as ULSD, but still persistent deficit relative 5yr average in lower left. Also note exports in lower right. We are a global refinery.

Natural Gas 5-Region storage picture and lower 48 Continental USA bottom right. All storage deficits relative their 5Yr averages. Note: I need to work on my Nat Gas production data.

Baker Hughes Rig Counts. The rigs today are much more efficient than 10years ago when I was consulting on the drilling side so rig counts are not apples --> apples comparisons across the years.

After Energy I look at Employment. A ton of data here and back to Bloomberg.

Upper left is UI claims the rest is JOLTs. Arguably the strongest job market we've had this century.

ADP Employment. I fully acknowledge the lack of correlation to NFP and other sundry issues, but think it is important to look at non-government sponsored data.

BLS Employment Report main screen. Of note Labor Force Participation top center and employed top right both dipped slightly in this latest report. Not a trend, just a note.

BLS Unemployed data. Of note U3 rate bottom left and U6 bottom right. Labor Force Participation factors heavily here.

BLS Part Time and Overtime.

Labor Productivity (green) and Costs (magenta). Productivity waning per yesterdays report while costs moon, but the big issue IMO is lower right Real Hourly Wages. Employees costing more, but falling father behind.

Final Macro Screens are Real Estate. I don't think this is getting the attention it deserves. I think the fallout from this latest run up in housing could mirror 2008. Not necessarily in bank damage, but elsewhere.

Building Permits top and Starts bottom.

FHFA top NAHB bottom. The decline from peak of NAHB data is notable.

S&P Case Shiller. When this starts to decline, and it will, there will be problems perhaps for the largest single holder of MBS.

New Home Sales. Bottom right is supply and months supply. The month's supply just slightly more than half a year. Historically trending higher is problematic.

Construction Spending. Note Residential in the lower left ATH while Housing starts well below ATH. Great display of inflation and costs pressuring home builders. If prices decline how valuable are these expensive assets?

That's the weekend macro review. I am always tweaking and this week's project is add some MBA data. After scrolling these I look at CFTC COT data for 30ish markets using Updata then break down individual markets. If you are on Bloomberg I am happy to share. Thank You!

This is the book that got me started studying macro this way.



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