“Men take more pains to mask, than mend.” – Benjamin Franklin, Poor Richard’s Alamanack
Winding up MarketWeek with its last edition of 2013, it’s time for my usual end-of-year departure from the standard format. This time it’ll be wishes for the new year.
I wish that in 2014:
1) The stock market doesn’t keep up the speculative fever of 2013, because that will inevitably lead to another big collapse. I’m all in favor of markets soaring on earnings or economic recovery, but the moonshine of zero rates and cheap money leads to unpleasant hangovers.
2) The extension for long-term unemployment benefits gets immediately restored. A million-plus people are about to go into the ditch.
3) The Federal Reserve doesn’t get cold feet and reverse the taper.
4) Congress gets its act together next month for the debt ceiling, and gives up its endless string of one-act dramas every few months.
5) Europe doesn’t keep stalling until it’s too late.
6) Japan’s success in devaluing the yen doesn’t lead to a currency war.
7) Banks aren’t able to gut the Volcker Rule.
8) We bring more manufacturing jobs back to the U.S.
9) They learn to pronounce “affluent” and “ebullient” on CNBC. “Affluent” has its accent on the first syllable, while “effluent” – which has a far different meaning, and is often mistakenly vocalized instead – is the one that gets accented on the second. Even NPR has fallen victim to this. As for “ebullient,” it’s stressed on the second syllable – “e-BULL-yent” and NOT “EB-yoo-lent.”
10) My readers have a happy and prosperous New Year!
The Economic Beat (holiday edition)
The report of the short week was personal income and spending for November. Year-on-year personal income growth is 2.3%, while real disposable personal income is up a whopping 0.6%. Real spending is up 2.6% over the same period. Perhaps I should wish for better growth in real income, too.
Durable goods orders were up 3.5%, and the year-on-year rate is up 10.9%. However, the latter is flattered by last year’s fourth quarter paralysis in the face of the potential default. The two-year annualized growth rate for business investment, for example, remained level at 3.5%.
New home sales continued their recovery, with the latest run rate at 464,000, seasonally adjusted. Despite the breathless headlines, the reality is that home sales for the year are going to be around 430,000, compared to 436,000 in the recession year of 1981, and the second half of 2013 is running about 10% ahead of the second half of 2012. That implies a struggle to get to 500,000 in 2014, or even the 485,000 total from 1970. The rate of price appreciation for existing homes moderated.
Weekly claims numbers remain volatile, but it’s mostly due to the struggle with holidays and seasonal adjustment factors. I don’t see anything unusual happening in the raw data – the labor market seems stable.
The Chicago Fed’s national activity index picked up and the three-month average is now positive. The Richmond Fed’s manufacturing index also improved. Next week will have many more manufacturing surveys reporting.
The calendar-changing week will also bring pending home sales, consumer confidence, construction spending and December car sales.
Happy New Year!