From Haver Analytics:
Total sales of light vehicles during September increased 4.5% (-1.6% y/y) to 17.76 million units (SAAR), and reversed most of August’s decline.
Auto sales increased 6.9% to 7.24 million units (-8.3% y/y) following a 4.5% drop. The rise reflected a 7.9% rebound (-8.8% y/y) in domestic car sales to 5.30 million units, following the prior month’s 4.8% decline. Imported car sales rose 4.4% (-6.8% y/y) to 1.94 million units, and made up August’s 3.7% shortfall.
Sales of light trucks improved 2.9% (3.6% y/y) to 10.51 million units after a 5.3% decline. Domestic light truck sales recovered 3.8% (0.9% y/y) to 8.85 million units after a 6.3% decline. Sales of imported light trucks were off 2.0% (+20.3% y/y) to 1.66 million units following a 0.4% improvement. Truck sales eased m/m to 59.2% of the light vehicle market, but remained up from 55.6% during all of last year.
Imports share of the light vehicle market of 20.3% compared to 19.8% during all of last year. Imports share of the passenger car market of 26.8% compared to 27.1% during all of 2015. Imports share of the light truck market rose to 15.8% from 14.0% last year, though that was lower than the 17.5% peak during May.
In the WSJ:
U.S. Auto Sales Slipped in September Light-vehicle sales sputtered in the U.S. last month despite generous Labor Day holiday deals, with most of the market’s biggest sellers reporting declines from the prior September amid an industry plateau.
Light-vehicle sales sputtered in the U.S. last month despite generous Labor Day holiday deals, with most of the market’s biggest sellers reporting declines from the prior September.
While the pace of sales remains historically strong, dealership traffic is cooling after more than six years of steady growth. General Motors Co., Ford Motor Co., Fiat Chrysler Automobiles NV and Honda Motor Co. posted declines. Toyota Motor Corp. and Nissan Motor Co. notched gains.
Industry competitors spent nearly $400 more on incentives per vehicle on average in September compared with a year earlier, and incentives of $3,888 per-unit sold on average topped the prior incentive-spending record for a single month set in December 2008, according to J.D. Power. The last time incentives-per-unit were this high, GM and Chrysler were appealing to Congress for bailouts and sales across the industry were sinking.
The industry is in better shape seven years later, particularly as buyers opt for heavier models that typically deliver bigger margins. The incentive-spending increase, however, wipes out the premium that auto makers are collecting as customers take advantage of low gasoline prices and shift toward pricier trucks and sport-utility vehicles.
(…) The average vehicle was marked down more than 10% during the month, TrueCar Inc. estimates, which exceeds what it typically has been and reflects ample inventory sitting on dealer lots. (…)
Including fleet sales, September volume slipped below 1.5 million for the first time since February, declining 0.5% compared with the prior year, according to Autodata Corp. The firm said the rate for seasonally adjusted annual sales was 17.76 million, among the highest for 2016 but far behind the SAAR of 18 million notched in September 2015.
Based on a preliminary estimate from WardsAuto, light vehicle sales were at a 17.65 million SAAR in September. That is down about 2% from September 2015, and up 4.3% from the 16.92 million annual sales rate last month.
Anyway, it still looks like a cyclical peak to me:
- “Baby You Can Drive My Car” …
…maybe even my truck:
Rising light truck sales have pulled up average transaction prices in recent years but we also seem to have reached a plateau, if not a peak on prices as well. Consumers have not been paying more during the last 12 months in spite of very generous incentives as RBC Capital illustrates:
The rate of expansion in the global manufacturing sector remained moderate during September. This was highlighted by the J.P.Morgan Global Manufacturing PMI™ posting 51.0, up slightly from 50.8 in August. The average reading of the headline PMI over the third quarter as a whole (50.9) was the highest since the fourth quarter of 2015, but remained below its long-run survey average (51.3).
September PMI data pointed to subdued growth in the US and Asia. The US PMI dipped to a three-month low, while readings for China and Japan moved only slightly back above the stagnation mark of 50.0. Downturns continued in France, South Korea, Turkey, Malaysia, Thailand, Myanmar and Brazil.
Conditions in Europe were slightly brighter in comparison. Faster expansion was signalled (on average) in the euro area, led by solid improvements in Germany, Austria and the Netherlands. The UK saw its rate of expansion accelerate to a 27-month high, while growth also picked up in the Czech Republic, Poland and Russia.
Global manufacturing production rose for the fourth successive month in September, underpinned by a further increase in new business. Output growth was a tick slower than in the prior month, whereas inflows of new work rose at a marginally quicker (yet still subdued) pace.
Part of the reason for the ongoing below long-run average expansions in new work and production was the continued lacklustre trend in international trade volumes. Although new export business rose for the third month running, the rate of increase was only mild (albeit slightly quicker than in August).
September spending averages $91 a day, identical to August
Spending had dropped from August to September in last six years
Spending typically rises from September to October
Americans’ daily self-reports of spending averaged $91 in September, unchanged from August, but the highest average for the month since 2008. The stability in September comes after wide swings during the summer months — when spending rose from June’s $88 average to an eight-year high of $100 in July, then fell to $91 in August. (…)
American consumers this year avoided the September slump in spending typically seen in recent years. That has helped keep average spending for the first nine months of 2016 the highest for any year since 2008. Spending patterns of the past decade for the months of October, November and December suggest that spending will increase even further.
However, there are some reasons to believe spending might not follow the normal pattern this year. While the relatively high level of September spending could indicate that Americans stayed in a buying mood even after the end of summer vacations and back-to-school shopping, it could also mean that the customary September-to-October rise in spending has already taken place. And although presidential elections generally do not affect consumer spending, Americans’ negative views about the two major-party candidates could affect consumer confidence and spending in ways not seen in 2008 or 2012.
(…) The buildup has stoked concerns over a glut of meat, poultry and other agricultural products in the U.S. Producers are on track to send a record number of hogs and chickens to slaughter this year, and beef production is rapidly increasing. Dairy farmers are spoiling excess milk in their fields as warehouses pile up excess cheese. Also, corn, soybean and wheat growers are preparing for a fourth consecutive year of bumper harvests this fall.
The U.S. Agriculture Department on Friday pegged the size of the nation’s hog and pig herdon Sept. 1 at 70.851 million head, the largest on record for that time of year.
The figure illustrates how producers responded to lofty prices and profitable margins at the start of the summer by breeding more animals—before a sharp drop in prices to multiyear lows reversed the economics for many farmers.
The U.S. hog herd is still growing, even as the profit potential for many producers evaporates and export demand begins to cool. (…)
In the week through Oct. 1, meatpackers produced 509.1 million pounds of beef, up 5.5% from the year-earlier period. Output has climbed 4.7% in 2016 over the volume produced by this time last year. (…)
The value of construction put-in-place fell 0.7% (-0.3% y/y) during August following a 0.3% July dip, revised from little change. (…)
From the WSJ:
A slowdown in the Manhattan apartment market deepened during the third quarter, and many brokers said uncertainty over the presidential election makes any imminent recovery unlikely.
The number of sales fell by 15.3% from the same quarter in 2015.
Particularly hard hit was sales volume for cooperative apartments, which fell 17.5%, according to a Wall Street Journal analysis of documents filed with the New York City Department of Finance.
Sales of lower-priced apartments, those that sell for less than $1 million, tumbled even more—22.2%. Brokers said these sales, which make up nearly half the Manhattan sales, were dampened by a shortage of supply of apartments in the lower price ranges.
The third quarter is typically the peak quarter for sales in Manhattan, but this quarter’s sales total was the lowest for a third quarter since 2011, when the real-estate market was still recovering from the financial crisis of 2008. The figures include all sales recorded as of two days before the end of each quarter. (…)
A survey of Corcoran brokers found that 40% said they had at least one buyer waiting until after Nov. 8 to buy, she said.
(…) brokers said, many sellers will have to cut asking prices in the months ahead to attract buyers. (…)
Bloomberg’s story differs in many respects:
Sales of previously owned condominiums and co-ops fell 20 percent in the third quarter from a year earlier as potential buyers grew cautious amid more choices, according to a report Tuesday from appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. There were 5,290 resale apartments on the market at the end of September, 53 percent more than the number available in late 2013, the lowest point for listings. (…)
Buyers agreed to pay more than the asking price in just 17 percent of all condo and co-op deals that closed in the third quarter, down from a record 31 percent a year earlier, according to Miller Samuel and Douglas Elliman. Consumers also are taking longer to make a decision. Previously owned properties that sold in the period spent an average of 72 days on the market, up from 67 days a year ago. (…)
Funnily (!), the same Corcoran Group quoted in the WSJ piece has a somewhat different story via BB:
Corcoran reported a 17 percent decline in completed apartment sales, with 3,418 homes trading hands in the third quarter. Contracts fell 18 percent to 2,589, the lowest in almost five years, indicating that sales will continue to be down.
So, is it the elections or just a general softening, if not peaking? And unlike the housing market across the USA, NY demand seems to be adversely impacted by rising inventory…
(…) Roughly $919.7bn was committed to property globally in the year to the end of June, excluding development land — 5.7 per cent below the total a year earlier, according to Cushman & Wakefield, the property adviser. (…) The decline in investment volumes was spread across regions and sectors, Mr Hutchings said. (…)
“We’re seeing an increased level of risk aversion compared with a year or two ago. Investors have gone back into their shell a bit,” Mr Hutchings said.
“The process began last summer  with the devaluation of the yuan, which made people more worried about what’s happening in China, and built up through European issues such as migration and Brexit, followed by the US elections. (…)
Two months before a referendum on reducing the power of the Senate, the country now pays the most to borrow compared with Spain since 2014 based on government bond yields. Prime Minister Matteo Renzi said previously he would quit if he lost the vote, making it effectively a judgment on his leadership, and polls show the outcome is too close to call. (…)
Polls show at least a third of Italians have yet to make up their mind on whether to vote for constitutional change on Dec. 4, but among those who have, the “No” side was edging ahead in recent surveys.
One by EMG Acqua for the La7 television channel published on Monday evening put “No” on 36 percent and “Yes” supporters backing Renzi on 31.4 percent. (…)
Road to stagnation? China Inc gets a break from lenders Profits at roughly a quarter of Chinese companies in a Reuters analysis were too low in the first half of this year to cover their debt servicing obligations, as earnings languish and loan burdens increase.
(…) Corporate China sits on $18 trillion in debt, equivalent to about 169 percent of China’s GDP, but few firms reported feeling the heat.
Instead, lenders are heeding Beijing’s call to support the real economy and so are rolling over company debt or granting repayment waivers, sometimes for years, specialist lawyers and investors said. (…)
“Premier Li has asked banks to rollover loans, especially for SMEs. That’s a clear reason why bond defaults are coming down,” said brokerage CLSA’s head of China strategy, Francis Cheung. (…)
Of course, onshore defaults could and will still rise – rating agency S&P Global says the credit quality of about 240 Chinese companies it rates is deteriorating more quickly than at any time since 2009.
The muted default situation “is an aberration given the sharp deterioration in credit risks,” it said in a research note. (…)
Debt is also growing – the China Beige Book reported the highest number of firms in three years took loans in the third quarter.
Already, profitability, as measured by return on equity (ROE), is the lowest in at least five years for the 93 Hong Kong-listed companies surveyed by Reuters, standing at 7.32 percent.
For 527 mainland listed companies, the median ROE stands at 5.07 percent, also the lowest in at least five years. Analysts generally consider a healthy ROE to be 15-20 percent. (…)
- Quicker drop in production volumes
- Rates of contraction in new orders, employment and buying levels remain sharp
- New export business plunges at quickest pace since May 2009
- Brazil continues to struggle with a significant credit contraction while default rates on household loans are rising. (The Daily Shot)
Source: Credit Suisse, @NickatFP, @joshdigga
(…) TrimTabs calculated that buybacks rebounded to $59.9 billion in September from a 3½-year low of $21.5 billion in August, but two-thirds of last month’s volume was due to a single buyback by Microsoft. The 39 buybacks rolled out last month was the lowest number in a month since January 2011. (…)
Underscoring the importance of buybacks to the recent rally was the latest note from Goldman’s David Kostin, who observed that foreign investors and mutual funds sold $46 billion and $19 billion of equities in 2Q 2016. In contrast, corporations and households purchased $174 billion and $87 billion, respectively.
Drilling down, “corporate buybacks will remain the largest source of US equity demand this year. However, we expect share repurchases will be lower in 2H 2016 vs. 1H given reduced repurchase authorizations and weaker buyback activity in 3Q.”
Our buyback desk estimates that gross share buybacks in 3Q 2016 will be 15% lower than in 2Q 2016. In addition, S&P 500 share repurchase authorizations equal $335 billion this year vs. $454 billion at the same time in 2015.
(…) The utilities sector of the S&P 500 lost 1.3% after falling 6.7% in the third quarter—its biggest quarterly drop since 2009. Utilities are still up 12% this year. Real-estate shares fell 1.8% Monday. (…)
El-Erian:“even if Deutsche Bank doesn’t threaten a Lehman moment, that doesn’t mean its troubles couldn’t have any systemic effects.”
(…) 3.Renewed concerns about European banks are likely to be yet another headwind to the region’s already-tentative growth prospects. Expect European financial institutions to become more prudent as they place balance-sheet robustness ahead of making loans, especially when it comes to lending to small- and medium-sized enterprises. History shows that such shifts cannot be easily compensated for by central banks and governments.
4. Because of the inherent interconnectivity of banking operations, the risk of equity and bond market contagion is greater than for most other sectors. In combination with the spread of hybrid securities, such as contingent convertible bonds that initially act as internal amplifiers, Deutsche Bank’s difficulties transmits volatility to other banks’ capital structure, potentially enlarging the group of institutions that attract short-sellers. In turn, this raises the possibility of broader market instability. (…)