Do you remember the dramatic loosing of Financial conditions at the end of 2023?
The lagged effect of this massive loosening is now hitting and is supporting the US economy (and this NOT doing The Fed's job...). Indeed, US economic surprises keep surprising on the upside. The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2024 is 4.2 percent (!!!) on February 1, up from 3.0 percent on January 26
While the US economy remains very resilient, many consumers continue to struggle and need to find ways to keep their purchasing power
Pay rent or parents
The performance differential between Nasdaq 100 (Tech) and Russell 2000 (us small-caps) is extreme.
Yet the earnings gap between Mega Cap Tech Stocks and Small Caps has widened to all an all-time high. Source: Barchart
BREAKING: US NFP at 353k way above the estimated 185k, Wages came in hotter than expected +4.5% YoY vs +4.1% expected.
The December jobs report has been revised UP, showing 333,000 jobs added rather than the 216,000 originally reported. This breaks a 10-month trend of downward revisions in the reported jobs number. Meanwhile, average hourly earnings in January rose 0.6%, DOUBLING expectations. Unemployment rate held flat MoM at 3.7% (the Street was anticipating 3.8%). Note that according to the Household survey, the number of employed people dipped by 31k MoM, so US Non-farm-payroll report is not as hot as at 1st sight. Source: Bloomberg, HolgerZ
The Fed's balance sheet is now at its lowest level since March 2021, down $1.3 trillion from its peak in April 2022.
How much more QT is needed to unwind the massive QE from March 2020- April 2022? $3.5 trillion. Source: Charlie Bilello
If you cannot afford your rent, you are in good company.
According to Harvard University, half of all renters in the United States are paying more in rent than they should. That is defined as using up more than 30% of your income. The good news is rent is coming down in most of the country. The median asking rent is just above $1,700, which is down $63 from its peak in July 2022. That number is going to vary from city to city, but even in Manhattan, rents dropped for the first time in more than two years in November. https://lnkd.in/e_dmjidG
The US Treasury will hold some of its largest-ever debt auctions in the coming three months in an effort to fill the yawning federal budget deficit.
The Treasury said on Wednesday it would increase the size of auctions at most maturities for the next three months, with two-year and five-year auctions hitting record sizes. The five-year auction in April, for $70bn, would be the biggest ever for debt with a maturity of two years or more. The US has been increasing its borrowing over the past few quarters, as the gap between government spending and tax revenue has grown. The federal deficit stood at $1.7tn last year. Source: FT https://lnkd.in/eSyQHXu9
Multiple small us banks tumbled high-single and double digits.
There is a silver lining though -> the market quickly remembered that it was precisely the bank crisis last March that sparked a powerful Fed response (BTFP), and a violent rally, and we got the same thing today as stocks slingshot sharply higher closing 1.1% higher... Source: www.zerohedge.com
