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We’re Flying with Our Eyes Partially Closed into Turbulence

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Published : January 28th, 2019
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Category : Editorials

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.

The Labor Department is still open, so at least we get those reports, including the monthly jobs report, weekly unemployment claims, the data around the consumer price index, etc.

Last week, we were supposed to get the preliminary data on retail sales for December, which would have given us some insights into the crucial holiday selling season, how consumers were holding up their end of the bargain to keep the economy moving along. But no data.

Last week, we were also supposed to get data from the Commerce Department on business inventories and housing starts, but no. Both are very important data points for the economy and the calculation of GDP.

We were also supposed to get data on international capital flows from the Treasury Department – the trove of data in the “Treasury International Capital” release. This includes the amounts of US Treasury securities that central banks of each country bought or sold. China and Japan, the two largest holders with a combined $2.1 trillion of Treasuries, have been net sellers. But someone has to buy because the Treasury Department is issuing an enormous amount of new securities to fund the ballooning deficits. This is data we closely watch because a lot depends on it. But no data.

And with the Treasury Department being shut down, there is no monthly “budget” of US government receipts and outlays. So we didn’t get that either.

Before then, we missed the “wholesale trade data,” including wholesale inventories which are ballooning and need to be watched. Rising inventories add to GDP, but when they balloon and get to the point that companies are starting to reduce orders to bring down those inventories, it triggers a downturn in the goods-based sector, including manufacturing. But no data.

No data on construction spending (Commerce Department), an important element in GDP.

And the trade deficit data, good lordy, just when trade has been near the top of our collective argue-list. And we’re flying blind about our trade data. The last data set was released on December 6, which showed that the goods and services deficit rose to $55.5 billion in October, with imports rising and exports falling.

We are also supposed to get data from the US Commodity Futures Trading Commission, including weekly “commitments of traders” data on positioning of currency, commodities, and financial contracts. The last weekly data was for the week through December 18.

Farmers and ag commodities traders rely heavily on a large amount of data from the US Agriculture Department. This includes the monthly report, “World agricultural supply and demand,” the last one of which (40 pages of mostly tables of detailed ag data) was released on December 11. But now, no data.

And soon the biggie: No GDP? On January 29, the Bureau of Economic Analysis is supposed to release its first estimate of GDP for the fourth quarter, but the BEA is shut down and will not update its data releases “until further notice,” as it says. But even if it reopens its shop beforehand, will its people have enough time to put the data together for the GDP report?

And another biggie: On January 31, the Commerce Department is supposed to release the data set for “personal income and outlays” for December. This is the all-important consumer spending data. Consumer spending accounts for about 70% of GDP.

It’s OK if this data blackout lasts a week or two. But now we’re starting to fly in this turbulent economy with our eyes partially closed.

And there are decision makers who rely on this pile of data, including the Fed. It has said a million times that it is “data dependent.” It has access to a lot of data, but a portion of the data that it is “dependent” on has been delayed and is not available for its next meeting on January 29-30.

There are positive aspects too: For example, in terms of the markets, it seems, no data is good data. The less data, the better. Keep your eyes firmly closed and have faith. 

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