"Hard" Economic Data Slides To One Year Lows

Tyler Durden's picture

With 2017 EPS expectations at 2017 lows, 2017 GDP expectations at 2017 lows...

And real bond yields at 2017 lows, it should hardly be surprising that 'hard' economic data has collapsed to its lowest level in over a year.

 

What should be surprising is the equity market's desperate clinging to 'soft' survey data's high hope levels...

 

 

Asa Citi's Amir Amin notes, much of the repricing across asset markets post November’s election was as a function of faith-based "animal spirits" as opposed to economic fundamentals. Price action momentum in a number of markets seems to have now stalled, however.

What does potentially concern us is the gap between hard and soft data surprises in the US. For some time now we have been tracking this disparity in data, however more worryingly the hard-data surprise index has turned into negative territory.

But the hard vs. soft surprise index isn’t the only place we are seeing divergences.

The Atlanta Fed Nowcast languishes at 1.2%, not far from the 2016 lows. Meanwhile, the macro data index is at cyclical highs (right had chart above). We saw divergences like this (macro index making higher highs, Nowcast making lower lows), notably in 2012 but also to some extent in 2013. For equity markets, in 2012 a ~10% correction ensued, whilst in 2013, 2 smaller corrections of ~5% followed. Similarly, 2012 saw 10y UST yields fall ~90bps and ~50bps twice in 2013. Both occasions the Nowcast acted as a leading indicator.

Our fear now of course is despite rampant optimism in the US, the data just hasn’t delivered.

Unless we start seeing hard data momentum increase, our view on risk assets may not be as sanguine.
 

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Five Star's picture

More than just one year lows, industrial production is having its longest losing streak outside a recession since 1919

http://thesoundingline.com/chart-of-the-day-us-industrial-production/

Mr Blue's picture
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TheSilentMajority's picture

Hopium is now legal across all 50 states.

Last of the Middle Class's picture

As Obamacare scrounges every available penny in disposable income from millions of households just so they can maintain solvency and avoid "asset recovery" by the bankers, just what did anyone think the outcome would be. Obamacare is not only destructive of disposable income as it ruthlessly diverts wealth from one class to another, it forces the liquidation of assets in order to maintain any sort of cash flow in the family. Assets that families have worked generations in order to get some sort of leg up into the next socio economic class. In effect, Obamacare is the great equalizer. You must pay your neighbors health care before you're allowed to proceed to the American dream and gain something for yourself. And of course like any government program as you pay your neighbor's health care you will also pay a host of government/private industry middle men alont the way. Insurance companies that are exempt from any sort of competitive regulations, Pharmaceutical companies that price fix generic drugs that have been around for decades, and of course the obligatory government employees that have no function whatsoever other than to maintain politically correct regulations that strangle all competition.