Market Brief – Thursday 11/14/19

In overnight trading, the global economy continues to worsen. Japan’s GDP growth fell from +1.8% Q2 to +0.2% Q3 from a year ago. Australia, which has the most indebted households in Asia, lost -19k jobs in October with -10.3k being full-time jobs and -8.7k part-time jobs.

China’s fixed-asset investment, which measures the total change in non-rural capital investments, slowed to +5.2% from a year ago in October, its lowest level since 1998. China’s October industrial production slowed to +4.7% from a year ago and retail sales fell to +7.2% from a year ago. China’s massive currency injections aren’t working.

Germany narrowly avoided a technical recession as its Q3 GDP growth on a quarterly basis rose to +0.1% but and to +1.0% from a year ago. Great Britain retail sales fell -0.1% in October and held at +3.1% from a year ago while excluding food and energy, retail sales fell -0.3% and slid to +2.7% from a year ago.

U.S. investors continue to believe tariffs are inflationary, but October’s Producer Price Index fell to its lowest level in three years. Producer prices rose +0.4% in October but slowed to +1.1% from a year ago. Excluding food and energy, producer prices rose +0.3% in October and slowed to +1.6% from a year ago.

Bloomberg’s Consumer Comfort Index fell by its largest amount since 2008 as consumer’s view of the economy, personal finance and buying intentions all fell last week.

The Department of Energy reported crude oil inventories as Crude: +2.219mm (+1.649mm expected), Cushing: -1.229mm, Gasoline: +1.861mm (-1.167mm expected), and Distillates: -2.477mm (-950k expected). Crude oil traded higher after the report. With the Keystone pipeline being offline, it took more than 4 million barrels out of Cushing, which suggests Cushing builds should have been closer to +2.8mm.

Auto-loan delinquencies, or loans that are 90-days or more past due, rose to an all-time high of $62 billion in the third quarter according to the New York Fed. Serious delinquencies rose to 4.71% of the total $1.32 trillion pool of automobile loans but remain below their 2009 peak of 5.27%. One in five subprime auto loans is delinquent.

Stock prices were flat in early trading as investors remain hopeful that trade optimism will drive stock prices higher. Treasury yields gapped lower for the second night in a row and continued to fall in early trading following the crude inventory report.

The New York Fed accepted bids of $73.593 of overnight dollar loans and $30.7 billion of 9-day dollar loans as the Fed’s intervention appears to have no effect on the dollar liquidity shortage.

The Cass Freight Index, which tracks monthly freight expenditures and shipment volumes, fell -3.9% in October and -5.9% from a year ago as it has now contracted for the eleventh month. The Cass Freight Index validates the decline in Durable Goods: New Orders, which have also contracted for several months in a row.

Treasury yields failed to break another support level but closed lower today, as investors bought stocks and sold bonds on trade hopes on news that both sides are trying to get a “Phase One” trade deal on paper. Oil and gas producing stocks traded lower after crude oil inventories rose for the second week. While the other major indices didn’t, the S&P 500 managed an all-time closing high.