Cass Freight Index Experiences Worst August Since 2010, Lower Than In Recession (2008)

The Cass Corporation Freight Index – Shipments index slumped in August, to the lowest level for August since 2010. And it was even lower than August 2008 during The Great Recession.

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The index measures North American freight volumes.

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Of course, August 2009 was the lowest on record since 1999.

It looks like truckers now have the opportunity to stop and rest at the Tomahawk Hotel and Casino.

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Six months of telling Tomahawk stories. Guess now  you know why. 

About That Existing Home Sales Report .. EHS Actually Rose By 6% In August

According to the Wall Street Journal, Sales of previously owned homes fell 0.9% from a month earlier to an annual rate of 5.33 million, the National Association of Realtors said Thursday.”

But that figure quoted by the National Association of Realtors (and repeated by the venerable Wall Street Journal) is based on SEASONALLY ADJUSTED sales.

Would you believe that existing home sales rose by 6% in August? See David Stockman’s analysis here.

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This is a closer view since the crash of home prices and the financial crisis.

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Note that seasonal factor. Existing home sales (using raw or non seasonally adjusted data) usually peaks in June of every year, or these is a dual-peak in June and August.

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“Economists surveyed by The Wall Street Journal projected home sales would reach a rate of 5.46 million in August.”

The actual print was 5.41 million using raw data. Using seasonally adjusted data, existing homes sales SAAR was only 5.33 million.

Existing home sales inventory did fall in August. And is back at pre-bubble levels of 2001.

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So, the August existing home sales report for August (NSA) was actually positive relative to the seasonally-adjusted figure.

Or as Maxwell Smart said, “Missed it by that much.”

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Stagnation Nation: Dow Drops -131 Points, Down -218 Points Since ECB Meeting

It was another day of volatility in the equity markets. The Dow Jones Industrial Average fell -131 points.

Ever since the European Central Bank meeting on September 8, the DJIA has lost 218 points, despite a brief respite from The Fed with a no increase signal.

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This is not that surprising given The New York Fed’s downgrading of its Q4 GDP forecast to 1.22%.

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Hardly a positive development for the US Economy.

April Ludgate does NOT approve.

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Election Surprise! NY Fed Downgrades Q4 GDP Growth To 1.22%

In what amounts to a election quarter surprise, The New York Fed just downgraded their “real-time” GDP forecast for Q4 to … 1.22%.

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Here is the chart from The NY Fed:

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Not a good trend!

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So, the Q4 GDP forecast from The Fed on New York is on target for a continuation of uber-slow growth at 1.2%, the YoY GDP growth for Q2 2016.

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New York Big Winner In 2015 Real Median Household Income Derby, Virginia and Maryland Big Losers

Back to the phenomenal Real Median Household Income report from the US Census Bureau for 2015. If you call, it rose by the most in history, +5.2% from 2014 to 2015.  Particularly when the Bureau of Economic Analysis’ Disposable Personal Income (DPI) per household grew by only 2.8% from 2014 to 2015.

Bear in mind that the Census Bureau changed its measure of household income in 2014 to make income growth look better. Starting in 2014, the Census Bureau began to “collect the value of assets that generate income if the respondent is unsure of the income generated.” And the government started to use “income ranges” as a follow-up for “don’t know” or “refused” answers on income-amount questions.

In other words, just guess your household income.

One of the interesting factoids of the 2015 measure of Real Median Household Income is that New York state came out as the biggest winner growing at 6.7% from 2014 to 2015.

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While Washington DC area states Maryland and Virginia saw declines, particularly in Virginia (someone better tell Governor Terry McAuliffe!).

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New Jersey, the home of numerous Wall Street commuters, rose 4.7% from 2014 to 2015. Connecticut, also the home of number Wall Street commuters and hedge funds, rose 3.8%. Both lower than the national growth rate of 5.2%, and less than New York.  And if we look at the stock market and The Fed’s asset purchases, we can see why New York is the big winner in Real Median Household Income derby, brought to you be the Federal Reserve of New York.

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You can look up other states at FRED.

We can dispel the notion that it was growth in household size that generated the historic spike in 2015 Real Median Household Income.

Here is permanent voting member on The Fed’s Open Market Committee (FOMC) Bill Dudley. Actually, it is the President of The New York Fed itself, not Dudley. But since he has been on the FOMC since January 2009 (and prior to 2007, a managing director at Goldman Sachs), he might as well be a permanent voting member.

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*Thanks to Farragut some valuable input on the Census Bureau!

Italy’s Banca Dei Paschi May Need Gov’t Bailout (US Equities ALMOST Back To ECB Flush)

It has been quite a ride in the US stock market since the last European Central Bank meeting. In fact, after The Fed’s inaction yesterday, US stock markets levitated, almost getting to back to where they were before ECB Chief opened his mouth.

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The “on the ropes” European banks like Banca Dei Paschi Siena, Royal Bank of Scotland and Deutsche Bank all have taken a beating after the ECB meeting on September 8th. But experienced some relief when The Fed did nothing … again.

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But now there is talk of Italy’s Banca Dei Paschi Siena needing a government bailout (at 0,392, that is not a surprise).

Nothing has been the same since the financial crisis for the European banking system.

Paschis jump on it (government bailout)!

The Morning After: World Sovereign Yields Mostly Decline After Fed Holds Tight

It is the morning after The Federal Reserve held tight on raising their key rate, The Fed Funds Target rate (which has only been raised ONCE since 2006 and that was at last December’s FOMC meeting).

The implied probability of an interest rate change remains about 60% for the December meeting, according to Fed Funds Futures data.

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While the implied probability of a rate hike from the European Central Bank remains at zero for 2016 and 2017. The ECB’s deposit rate is currently at -0.40%.

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So while markets think that The Fed will ultimately raise their target rate in December, the reaction in the global sovereign market is … underwhelming.

Germany’s 10 year Bund yield dropped around 5.5 basis points.

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France, Italy and UK’s 10 year sovereign yield also fell in the 7-9 basis point range.

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While DoubleLine’s Jeffrey Gundlach thinks the US Treasury 10 year yield will rise above 2% by the end of 2016, there appears to be downward pressure on sovereign yields after The Fed hesitate.

“Wasn’t my optimism about a Fed hike later this year (after the Presidential election) sufficient?”

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