Market Matters
The biggest headline this week was the drop in oil prices, as prices for May WTI contracts traded negative. The large drop in oil prices weighed down the equity market, along with more dismal economic data due to the shut down in the economy. While US companies are reporting Q1 earnings, the markets are looking for any clues on how the coronavirus has impacted the economy and most importantly when states can start opening for business.
Durable Goods Orders
March Durable Goods Orders fell by -14.4%, now the largest 1-month decline, and lower than estimates of a drop of -11.9%. Within the headline number was a fair amount of noise with non-defense aircraft orders falling -296%, defense aircraft orders rising +64%, with motor vehicle and parts orders down -18.4%. When we look at items ex-transportation, orders were only down by -.2% versus expectations of a drop of -6.8%, while core capital goods orders rose by +.1% in March from February’s revised loss of -.8%. Specifically, core capital goods shipments (excluding defense items and aircraft), which feeds into the totals for business investment, fell just -.2% versus expectations for a -7% decline. Orders of those same items, which is an indicator of future shipments, were expected to drop -6.7%, but increased by +.1%. Most categories, excluding the transportation items, did not drop as dramatically and orders for electrical equipment/appliance/components rose +1.5%.
Consumer Sentiment
The Univ. of Michigan Consumer Sentiment fell to 71.8 in its final read for April, down from 89.1 back in March, but up +.8 points over the pre-liminary survey results. The bulk of the improvement came from a +1.9 point revision to the current conditions index to 74.3, while the expectations index was revised higher by only +.1 to 70.1.
Initial Jobless Claims
Initial jobless claims for the week ending April 18th rose another 4.427mln, bringing the five-week total up to 26.423mln. This is down -810k from the prior week’s downwardly revised 5.237mln and down 2.44mln from the peak of 6.867mln. Continuing claims, which lag by a week, rose by 4.064mln to 15.976mln from 11.912mln. Given the number of unemployed who have already reported in the March household report, the claims data now point to the unemployment rate rising as high as 18.4%. It took only 5 weeks for the U.S. economy to wipe out all the job gains it added over the past 11 years. Combined with the last 4 jobless claims reports, the number of Americans who have filed for unemployment over the previous 5 weeks is 26.54mln. This number now exceeds the 22.442mln positions added to payrolls since November 2009.
New Home Sales
New Home Sales for March were down by -15.4% to a 627k selling rate, coming in mostly with consensus. This is now the largest monthly decline since July 2013. February’s pace was revised modestly lower from the prior 765k to 741k. Back to the March data, sales for new homes are now down -9.5% year over year. Within the other details, the median price for a new home sold in March was $321,400, down -2.6% from a median price of $330,100 in February, however, that figure is still up by +3.5% versus a year ago in March. By region, sales fell by -41.5% in the Northeast, down -38.5% in the West, down -8.1% in the Midwest, and down -.8% in the South. Finally, there were 330k new homes on the market in March, up from the 324k in February. At the sale pace in March, it would take 6.4 months to clear supply, up from the 5.2 months in February
