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We’re Flying with Eyes Partially Closed into Turbulent Markets & Economy

January 27, 2019

We’re Flying with Eyes Partially Closed into Turbulent Markets & Economy

But for the markets: “No Data is Good Data”

“NOTICE: Due to a lapse in federal funding this website is not being updated,” it says in big lettering against a bright red background at the top of the data sites of the Department of Commerce.

This morning, the Commerce Department was supposed to release crucial data for the housing market: sales and inventories of new single-family houses (“new home sales”). This includes sales and inventory figures, how many months of supply there was, and the median sales price of the new houses that sold. Today’s release would have been for sales that closed in December. But the Commerce Department is part of the shutdown, and no data was released.

This makes it the second month in a row that we have not seen national data on new home sales. The last month for which we received data was for October, released on November 28. And it was very lousy. So thank God that there is no data, because homebuilder stocks that had gotten battered by a series of lousy data have surged during the absence of data.

This morning, we were also supposed to get the report by the Commerce Department on “durable goods” with crucial data on orders and shipments in the manufacturing sector. But no.

This morning, we were also supposed to get the report on steel imports from the International Trade Administration, but it is part of the Commerce Department. The US is the largest steel importer in the world, and given all the hullaballoo about the tariffs on steel imports, it would be good to know for the industry and data watches alike what is going on. But there is no data on steel imports.

 …click on the above link to read the rest of the article…

Canada Pauses Reporting Trade Data, Blames US Shutdown

January 17, 2019

Canada Pauses Reporting Trade Data, Blames US Shutdown

Statistics Canada said today the release of their monthly trade statistics will be delayed indefinitely due to the current shutdown of the U.S. government.

“Trade statistics without Canada’s exports to the United States have limited use as a current economic indicator, as these exports represent approximately 75% of Canada’s total exports.”

The U.S. shutdown “has a direct impact on Statistics Canada’s ability to compile, produce and publish Canadian international merchandise trade data, as Statistics Canada will not receive data on Canada’s exports to the United States for the duration of the shutdown”

Publication of December 2018 trade data won’t occur as scheduled on Feb. 5, 2019.

The agency says it will delay the release of trade statistics “until the USCB resumes normal operations and a new joint release date is negotiated with the USCB as per the data exchange agreement”

The question is – why should a US shutdown affect Statistics Canada’s ability to track its own imports and exports? Is there some ‘negotiated’ agreement between the trade partners to ensure that the data is manipulated just right (so as to avoid the glaring errors that are so evident between China and Hong Kong for instance).

Historically they can’t quite agree…

Cowen: Shutdown Brings “More Default Risk Than The Market Realizes”

January 22, 2018

Cowen: Shutdown Brings “More Default Risk Than The Market Realizes”

Echoing almost verbatim the bleak outlook on the US government  shutdown laid out by Goldman on Friday in which the bank said the government closure could last “up to a few weeks” and become dangerous once it approaches the timing of the debt ceiling, Cowen’s senior policy analyst Jaret Seiberg writes on Monday morning that the danger of an impasse that would preclude reaching a deal to raise the debt ceiling, which the government will hit in March “is a bigger worry than a government shutdown that lasts several days or a week.”

According to Seiberg – who calls Trump an “unpredictable negotiator” over spending bill – pushing the spending bill into the debt ceiling time-line may make a package “even more politically toxic,” especially since Republicans may have more objections to raising the debt ceiling than Democrats;

On the other hand, the Cowen strategist sees little impact to financials and housing from a short government shutdown, as most housing programs will function, financial system oversight remains:

  • Fannie, Freddie will continue to operate; Ginnie Mae will continue to ensure principal/interest payments are made to investors; FHA can continue to approve insurance for loans, but those that require staff review might get delayed; if shutdown extends into weeks there may be problems
  • Fed, FDIC, OCC will continue to monitor banks; SEC will furlough employees, but key systems are governed by contracts

Finally, Pantheon’s Ian Shepherdson agrees: should the government closure extend into March, then all bets are off:

In the worst case scenario, the budget impasse could drag on, via a series of stopgap measures, until March, perilously close to the point where the debt ceiling has to raised or suspended, as was the case from November 2016 through March last year.

…click on the above link to read the rest of the article…

David Stockman On CNBC: ‘We’re On The Fiscal Titanic”

October 1, 2015

David Stockman On CNBC: ‘We’re On The Fiscal Titanic”

A government shutdown would force Congress to address fiscal issues before they reach unmanageable levels, a former Reagan administration official contended Wednesday.

“We’re on the fiscal Titanic and we’re going to hit something hard and immovable one of these days,” said David Stockman, director of the Office of Management and Budget from 1981 to 1985, in a CNBC “Closing Bell” interview.

The House of Representatives and Senate on Wednesday passed a last-minute stopgap spending bill that will keep the federal government open through Dec. 11 pending President Barack Obama’s signature. But another budget battle will likely ensue then, as Congress remains divided over federal funding for women’s health organization Planned Parenthood.

Read MoreHouse passes legislation to avoid shutdown

Many in Congress have opposed a shutdown, as a government closure can put some federal employees temporarily out of work or delay their pay. Stockman contends it could have a positive effect by making lawmakers address spending and debt issues.

He called for entitlement and defense spending reform. He also argued that easy monetary policy from central banks has made lawmakers less likely to address the deficit.

Still, Stockman did not clearly outline why a shutdown would force lawmakers to make significant budget changes.

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