The Secular Advisor – October 19, 2015

Economy – Additions & Updates

Additions – confidence, retail sales  

Updates – employment, housing, gdp forecast  

Asset Allocation – Additions & Updates

Additions – none

Updates – us sector fundamental ranks, us sector allocations

Economic Summary

Employment – the JOLTs report revealed that in August, the number of job openings tumbled by the biggest monthly drop since March of ’09., year over year trend: advancing  

Housing – average rents are up 3.7% YoY, rising double the pace of core inflation, and at the highest pace since ’07, year over year trend: advancing  

Confidence – University of Michigan Consumer Sentiment rose from 89.0 to 92.1, bouncing after 3 straight months lower, year over year trend: advancing  

Retail Sales – retail sales (ex Autos) dropped 0.3% in September, the 2nd drop in a row, the biggest drop since January. and it’s 7th miss in the last 10 months, year over year trend: recessionary 

Q3 GDP Forecast – 0.9%, year over year trend: receding

Employment

The JOLTs report (Yellen’s favorite employment metric) revealed that in August, the number of job openings tumbled by 298k to 5.37 million, the biggest monthly drop since the 301k drop in March of 2009.

Housing

Average rents are up 3.7% YoY, rising not only double the pace of core inflation, but at the highest pace since ’07.

The real (inflation adjusted) story is that most American rent and their inflation-adjusted income has not kept up with inflation-adjusted renter housing costs.

Confidence

University of Michigan Consumer Sentiment rose from 89.0 to 92.1, bouncing after 3 straight months lower. Both current situation and futures expectations rose. The Fed’s Bill Dudley previously noted this consumer confidence data is a must-watch for The Fed in its rate-hike decision-making.