Enis’s Macro Wrap – Economic Data’s Many Moods

by Enis October 4, 2012 7:56 am • Commentary

I showed the extreme drop in Durable Goods Orders in one Chart of the Day post last week.  It was the second largest drop in the data set.  But ex-transport orders were close to flat.  The phenomenon of volatile macroeconomic data has remained, despite a bull market surpassing 3.5 years in duration.  The data has rapidly shifted between quite positive and quite negative for several years now.

We have posted in the past about possible seasonal factors playing a part in exacerbating seasonally adjusted economic data volatility.  But it’s not just seasonal factors causing this volatility.  The Challenger U.S. Job Cut Announcements Year Over Year Percent Change is a monthly data release, not widely watched.  Here is the 10 year chart:



Today’s release shows a 70% drop in job cut announcements vs. September 2011.  But Sept 2011 job cut announcements were 200% higher than Sept 2010!  There are no seasonal factors at play here.  It’s the same month, measured year over year.  And yet, the data series seems totally spastic, fluctuating between extreme highs and lows.

In contrast, look at the stability of the data set between 2003 and 2007.  There are little squiggles around the 0% line.  No extreme data points, no rapid fire shifts from euphoria to depression back to euphoria.

The mere volatility of business conditions has made this a unique market to trade.  I see little on the horizon to take us back to the old days of less volatile data.

Markets overnight:

  • Asia was mixed, with most markets ending in the green by the close.  Europe opened higher, moved into the red, but has recovered to around flat, with all eyes on the ECB meeting this morning
  • SPX futures have been in the green all session, up between 0.2 and 0.5% overnight
  • The dollar and Treasuries are both weaker, while commodities are higher (including oil +1% after yesterday’s beating).  Today is the first day all week where all risk-on indicators are firing in the same direction
  • In addition to the ECB pre-open, FOMC minutes will be released at 2pm EDT today.
  • MAR reported last night, beating estimates on N. American strength, stock up 2.5% pre-market