Unemployment Claims Drop to Lowest Level Since September 2022
In the week ending January 13, initial jobless claims were at a seasonally adjusted level of 187,000, a decrease of 16,000 from the previous week’s revised figure. The latest reading is lower than the forecast of 207,000 and marks the lowest level for initial jobless claims since September 2022.
The 4-week moving average was 203,250, a decrease of 4,750 from the previous week’s revised average.
The dash line is 2019 average:
- Jobless Claims (LEADING Indicator!!!) posts its 2nd strongest reading since the 1960s!! Yet, #economists continue to discuss “landing.” (@RBAdvisors)
Single-Family Trending Up as Multifamily Downshifts
Total housing starts declined 4.3% to a 1.46 million-unit pace in December. A monthly drop in starts was widely expected given November’s surprising surge in activity that looks to have been a result of unseasonably warm weather pulling forward activity into the month. The payback in December occurred from a dip in single-family starts, while multifamily starts registered a solid gain.
Through the monthly volatility, multifamily construction is moving to a lower gear as apartment market fundamentals soften. By contrast, single-family construction still looks to be improving on trend as builders become more optimistic about future sales on account of lower mortgage rates and brightening economic growth prospects. Although multifamily construction looks set to remain sluggish, another solid gain in single-family permits during December and a jump in builder confidence suggest single-family activity should continue to gradually march higher in coming months.
China’s Travelers Stay Home, Draining $130 Billion From Global Tourism
Chinese travelers, once the biggest spenders on overseas trips, have been staying close to home since the country reopened its borders 12 months ago from the Covid-19 pandemic.
Outbound airline capacity from China stood at about 60% of 2019 levels during the fourth quarter, based on figures from aviation analytics firm Cirium. That’s a much slower recovery than in the US or UK — something that has disappointed airline executives, tourism officials and luxury store owners alike.
Chinese travelers made 170 million trips outside of its borders in 2019, according to the China Outbound Tourism Research Institute. The $248 billion they lavished on items from plane tickets to hotel rooms and designer brands made up 14% of the globe’s foreign-travel spending, based on World Travel and Tourism Council data.
The Chinese pullback has erased $129 billion from global tourism, a loss being felt from Taipei noodle shops to Paris boutiques. China’s network of international airline routes has retracted by 43%, according to Cirium. Forty-five foreign destinations are no longer served by direct flights at all. (…)
With the economy struggling, Chinese officials have prioritized local tourism over distant trips – adding duty-free shopping on the island of Hainan, for example, and opening new concert venues. The government has also pushed travel to a handful of spots like Saudi Arabia, a key partner in China’s One Belt One Road initiative. (…)
Carriers in the US, Canada and the European Union, for example, can no longer traverse Russia — making flights with Asia longer, costlier and less attractive. (…)
China’s Mutual Funds Implode at Fastest Pace in Five Years as Stocks Sink Fund closures quicken as assets shrink, redemptions rise
About 240 local mutual funds were liquidated last year, according to Bloomberg-compiled data dating back to 2014. That’s the most since 2018, when stricter asset management rules triggered a major industry shakeup. Among the closed funds, four out of five had a stock-focused mandate, which was a record.
The trend has continued into this year, with another 14 funds already liquidated and two dozen more warning of imminent closures, according to Bloomberg calculations of official data.
China’s mutual fund industry is confronting a double whammy as the country’s stock selloff intensifies, with the surge in product closures coinciding with a plunge in the amount of new subscriptions to a decade-low. The fund liquidations have accelerated the downward spiral in the world’s second-largest stock market, forming a vicious cycle as retail investors abandon their once-preferred product for the safety of cash. (…)
Actively managed mutual funds, once a favored investment tool among Chinese retail investors, are fast losing their appeal: a gauge of stock-focused mutual funds has declined 7.7% this year, according to China Securities Index Co. Meantime, investors also are falling out of love with exchange-traded funds that drew record subscriptions last year but now suffer a supply glut, said Morningstar’s Li. (…)
“The market also is aware that there has been a lot of redemption. There are funds that were set up three years ago and now we have come to the end of that lockup,” said Nicholas Yeo, head of China equities at abrdn at a briefing Thursday. “So there is a concern about short-term pressure on selling and that’s why domestic investors are not willing to go into the market right now.”
Also:
Asian fund managers have cut their allocation to China by 12 percentage points to a net 20% underweight, the lowest in more than a year, according to the latest Bank of America survey.
Managers of benchmark-tracking funds have sold a net $300 million of shares traded in mainland China and Hong Kong this month, according to a Morgan Stanley analysis. That’s a reversal from the last half of 2023, when they bought $700 million on a net basis even as stock indexes declined.
FYI from Ed Yardeni:
The S&P 500 Semiconductors stock price index jumped to another record high (chart). It is back to the pre-pandemic uptrend. The industry’s forward earnings is at a record high too. The forward P/E is also high at 25, up from 15 in early October 2022. Chips aren’t cheap, but they are hot.
