Feb-2 Apr-3 Jun-4 Aug-5 Oct-6 Feb-9 Apr-1 Jun-11 Aug-12 Feb-16 Dec-1 Dec-2 Dec-3 Dec-4 Dec-5 Dec-6 Richard Farr Jim McGovern U.S. Trading European Trading Chief Market Strategist Market Strategist Tourmaline Partners Tourmaline Europe (484) 436-4764 (484) 436-4629 (23) 32-73 +44 2-3142-832 JOLTS FOR JULY June 8, 216 The job openings rate was at a record high in March, and the quits rate--the share of employees voluntarily leaving their jobs--has moved up and in March stood close to its pre-recession levels. The increase in the quits rate is a sign that workers are feeling more confident about the job market and are likely receiving more job offers. - Janet Yellen, Federal Reserve Bank Chair, 6/6/16 FAST FACTS ABOUT TODAY S ECONOMIC DATA: U.S. Job Openings at record levels and Quits at pre-recession levels. U.S. Credit continues to grow in April. China Trade Balance improves but exports still down Y/Y. JOLTS REPORT SHOWS JOB OPENINGS AT RECORD HIGH IN APRIL, SUGGESTING JULY RATE HIKE: According to the Labor Department s Job Openings and Labor Turnover Survey (JOLTS), there were 5.788 million job openings on the last business day of April. This is an increase of +118k M/M and matches the highest level on record (also 5.788 million in July 215). Furthermore, when you compare this to the employment data from the Bureau of Labor Statistics, there were 1.37 unemployed persons per job opening in the U.S. (1.4 previously), which is the lowest level since May 21! The bad news is that total hires plunged -198k to 5.92 million. Total separations declined -18k to 4.988 million; therefore, the net turnover worsened -9k to +14k. Note that Quits slipped -34k to 2.746 million, but remain at pre-recession levels. Janet Yellen likes to monitor the quits rate because it s a sign that workers are feeling more confident about the job market and are likely receiving more job offers. The Job Openings rate increased to 3.9% versus 3.8% previously, the Separations rate was unchanged at 3.5%, and Hires rate fell to 3.5% (3.7% prior). 6, Number of Job Openings (in s) Source: BLS JOLTS Survey 5. Job Openings, Hires, & Separation Rates Source: BLS JOLTS Survey 5, 4.5 Hires Rate Job Openings Rate 4, 4. Separations Rate 3.5 3, 3. 2, 2.5 1, 2. 1.5 FOR INSTITUTIONAL INVESTOR USE ONLY. PLEASE DO NOT FORWARD. SEE DISCLOSURE APPENDIX FOR IMPORTANT DISCLOSURES.
Jan-2 Jul-2 Jan-3 Jul-3 Jan-4 Jul-4 Jan-5 Jul-5 Jan-6 Jul-6 Jan-7 Jul-7 Jan-8 Jul-8 Jan-9 Jul-9 Jan-1 Jul-1 Jan-3 Jul-3 Jan-4 Jul-4 Jan-5 Jul-5 Jan-6 Jul-6 Jan-7 Jul-7 Jan-8 Jul-8 Jan-9 Jul-9 Jan-1 Jul-1 Dec-1 Dec-2 Dec-3 Dec-4 Dec-5 Dec-6 7. Unemployed Persons Per Job Opening Source: Bureau of Labor Statistics 6. 5. 4. 3. 2. 1. - CONSUMER CREDIT UP +$13.4 BILLION M/M IN APRIL: Yesterday, the Federal Reserve released its report on consumer credit for the month of April, showing overall consumer credit increased a seasonally-adjusted +$13.42 billion to a record $3,61.54 billion. Thus, credit has increased for the 56 th consecutive month, up +$892.3 billion during that time. Total credit increased +6.2% Y/Y and up +4.5% annualized rate. In April, non-revolving credit increased +$11.77 billion to $2,65.5 billion (+7.2% Y/Y and +5.4% annualized rate) and revolving credit increased +$1.65 billion M/M to $951.49 billion (+6.2% Y/Y and +2.1% annualized rate). $3, $25, $2, $15, $1, $5, $ -$5, -$1, -$15, -$2, Credit Monthly Change (SA) Source: Federal Reserve (in Millions $) 17.5% 15.% 12.5% 1.% 7.5% 5.% 2.5%.% -2.5% -5.% -7.5% -1.% -12.5% Credit (Revolving vs. Non-Rev., SA) Source: Federal Reserve Y/Y Change in Revolving Y/Y Change in Non-Revolving Y/Y Change in Total Cons. Credit 2
Composite Index Purchase Index Furthermore, on a not-seasonally adjusted basis, consumer credit increased +$15.88 billion in April to $3,59.39 billion. In the month, government loans increased for the 5 th consecutive month (+$2.89 billion to $1,31.86 billion). Also, non-government loans increased +$12.98 billion, led by increases in loans from Depository Institutions and Credit Unions. Month MONTHLY CHANGE IN CONSUMER LOANS - NOT SEASONALLY ADJUSTED (in Millions) Loans Owned by Federal Gov't* Credit NOT Owned by Federal Gov't Source: Federal Reserve by Depository Institutions by Finance Companies Loans Owned by Nonfinancial Businesses by Credit Unions $ 4,66.46 $ 21,142.33 $ 2,842.42 $ (3,88.88) $ 594.69 $ 4,596.85 $ 26,644.82 $ (16,659.4) $ (16,397.45) $ (3,64.7) $ (833.23) $ 4,15.3 Feb-16 $ 4,16.65 $ (17,841.2) $ (12,11.87) $ (7,154.65) $ (531.95) $ 1,616.35 Mar-16 $ 4,478.74 $ 7,74. $ 5,956.35 $ (533.75) $ (257.25) $ 3,142.3 Apr-16 $ 2,894.65 $ 12,981.11 $ 1,514.24 $ (2,433.72) $ 74.12 $ 4,934.32 U.S. MORTGAGE APPS REBOUNDED +9.3% AS RATES SLIP: According to the Mortgage Bankers Association, the Composite Index of U.S. Mortgage Applications rebounded +9.3% last week to 52.4. Thus, mortgage applications are up +29.9% Y/Y (versus +28.8% Y/Y previously). The increase last week was widespread, as the Purchase Index increased +11.7% W/W and +16.6% Y/Y (+14.5% Y/Y prior). Also, the Refinance Index increased +7.4% W/W and +42.3% Y/Y (versus +41.7% Y/Y prior). Note that the average 3 year mortgage rate fell -2 basis points to 3.83%. 11 1 Weekly Mortgage App. Index Source: Mortgage Bankers' Assc., Bloomberg Composite Purchase Index 3 275 9 8 25 7 225 6 2 5 4 175 3 15 3
Jun-8 Jun-9 Jun-1 Jun-11 Jun-12 Jun-13 Jun-16 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 (in 1's of barrels) CRUDE OIL INVENTORIES DOWN -3.23 MILLION BARRELS LAST WEEK: The EIA reported that U.S. Crude Oil inventories fell for third consecutive week, down -3.226 million barrels to 532.476 million barrels last week. Note that Cushing Oil Inventories fell -1.363 million barrels and Imports fell -134k barrels; however, Distillate inventories increased +1.754 million barrels and Gasoline inventories increased +1.1 million barrels. Conversely, U.S. Crude Oil Production increased for the first time in 13 weeks, up +1k barrels per day to 8.745 million barrels/day. Nonetheless, production is down -9.% Y/Y. Note that last week, Baker Hughes reported that the U.S. Oil & Gas Rig count increased for the first time in 41 weeks, up +4 to 48 (still a -79% decline from its recent peak in 214). The increase was led by the U.S. Horizontal Crude Oil Rig count (+5 to 319). 1, U.S. Crude Oil Production (1 barrels/day) Source: U.S. Department of Energy, Bloomberg 55, U.S. Crude Oil Inventories Source: U.S. EIA, Bloomberg 9,5 5, 9, 45, 8,5 4, 8, 35, 7,5 3, 3 275 25 225 2 175 15 125 1 75 5 Baker Hughes Oil & Gas Rig Count Source: Baker Hughes Inc., Bloomberg US North America WTI Price $16. $14. $12. $1. $8. $6. $4. 25 $2. 4
Jan-4 Oct-4 Jul-5 Apr-6 Jan-7 Oct-7 Jul-8 Apr-9 Jan-1 Oct-1 Apr-12 Apr-15 Jan-4 Oct-4 Jul-5 Apr-6 Jan-7 Oct-7 Jul-8 Apr-9 Jan-1 Oct-1 Apr-12 Apr-15 CHINA TRADE BALANCE IMPROVED TO $5 BILLION IN MAY: China s National Bureau of Statistics reported that China s trade surplus improved by +$4.42 billion to $49.98 billion in May ($45.56 billion prior). In the month, China s exports increased +$8.3 billion to $181.6 billion. However, China Exports are down -4.1% Y/Y (versus -1.8% prior). On a cumulative Y/Y basis, China exports improved to -7.3% versus -7.6% prior. Furthermore, China imports increased +$3.88 billion to $131.8 billion, which is a decline of -.4% Y/Y (-1.9% Y/Y prior), which is the best pace since October 214. Overall, cumulative trade increased $38.7 billion to $1,41.13 billion (-8.6% vs. -9.8% previously). Note that exports to the US declined -12.% Y/Y (versus -9.3% prior), exports to Japan declined -5.6% Y/Y (- 11.8% prior), and exports to the EU declined -2.1% Y/Y (+3.2% prior); however, Exports to Russia increased +29.1% Y/Y (+17.3% prior). Furthermore, China s Crude Oil imports increased +38.7% Y/Y to 32.24 million metric tons in May! 25 CHINA TRADE DATA (in Billions $) Sources: China Bureau of Statistics, Bloomberg 35 CHINA OIL IMPORTS (in mtons) Sources: China Bureau of Statistics, Bloomberg 2 Exports Imports 3 25 15 2 1 15 5 1 5 U.K. INDUSTRIAL PRODUCTION JUMPED +2% M/M IN APRIL: According to the U.K. Office for National Statistics, the Index of Production jumped +1.98% M/M in April. In fact, this is the largest monthly gain since July 212. As a result, output in the U.K. rebounded +1.57% Y/Y (-.3% Y/Y previously). In the month, Manufacturing output increased +2.39% M/M (led by Transportation output-up +4.69% M/M), Utilities output increased +.97% M/M, and Energy output increased +.51% M/M. Conversely, Mining output declined -.29% M/M. BRAZIL CPI UP FOR THE 119 TH MONTH IN A ROW: According to the IBGE, the Brazilian Price Index increased for the 119 th consecutive month (but who s counting?), up +.78% M/M in May. More importantly, CPI increased +9.32% Y/Y, which is a slight acceleration versus +9.28% Y/Y prior. Brazil s inflation rate remains in single digits just in time for the Olympics! In May, there were notable increases in Housing prices (+1.79% M/M), Healthcare (+1.62%), Food & Beverage prices (+.78% M/M), and Clothing (+.91% M/M). DISCLOSURE APPENDIX This publication is for Institutional Investor use only and not for distribution to the general public. The comments herein are based on the author s opinion at a particular point in time and may change at any time without notice. Merion Capital Group does not guarantee the accuracy or completeness of the information contained herein. Merion Capital Group is a FINRA-registered broker-dealer. Merion Capital Group shares in the commissions for trades that are executed through Tourmaline Partners, LLC, a FINRA-registered broker-dealer. This report is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment, or undertake any investment strategy. It does not constitute a general or personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual investors. Past performance is not a guarantee of future performance. All investments involve risk, including the loss of all of the original capital invested. 5