Good morning, you can enjoy today's The Macro Show with Macro & Housing analyst Christian Drake and Director of Sales Daryl Jones HERE and access the associated slides (once they become available) HERE.
HEDGEYE'S TOP 3 THINGS
Below are the top three things from Hedgeye CEO Keith McCullough’s Macro Notebook this morning:
1) EUROPE - The German macro-industrial Zeitgeist remains in Godot mode as German Industrial production cratered to -5.3% Y/Y to start 4Q. This comes on the heels of a deceleration in Germany factory Orders (-5.5% Y/Y), slowing Spanish Industrial Production (-1.3% Y/Y), and a further deceleration in Eurozone level employment and Retail Sales growth. As we highlighted yesterday, all the major economies in Europe are now tracking in either Quad 3 or Quad 4 for Q4-to-date.
2) JAPAN - The reporting of post sales tax hike spending data is beginning and its not good. Total Household Spending fell -5.1% Y/Y, following the cue from Retail Sales which sank to -7.1% Y/Y. Along with ongoing softness in the cyclical-industrial activity where Machine tool Orders remain down -17.4% Y/Y, domestic consumption is setting up to drive negative GDP growth in 4Q.
3) TRADE - “Improving Trade Balance to Support GDP” and “China processing Pork/Soy tariff waivers” are the Headlines. Under the headlines, the Trade Balance did improve from a GDP accounting perspective but it was for the wrong reason and due mostly to distortion. The “improvement” was almost exclusively a function of declining Import growth due to falling domestic demand and lower auto imports related to the auto strike. China, meanwhile - with pork prices up 100% Y/Y, driving headline inflation higher and somewhat constraining the monetary policy response to slowing growth - continues to act in its own self interest under the thin guise of good will trade gesturing.
What The Media Missed
Is New York City Housing Entering A Secular Decline?
While Hedgeye has a favorable outlook on the housing sector overall in the near-term, there are some troubling signs in a few metropolises around the U.S. – with New York City being one of the most auspicious examples.
In the clip HERE, Hedgeye Housing analyst Josh Steiner explains that New York has a glut of supply that has been growing since 2015, but slowing demand. New taxes from the SALT law changes, the new tiered structure of the New York state “mansion tax,” as well as the banning of anonymous purchases of property behind an LLC are also hampering real estate in the city.
“[Manhattan’s] resale dollar volume was in fact the worst quarter on record from a year-over-year standpoint over the last eight years,” Steiner explains of 3Q 2019 data, noting that it dropped nearly 34%.
“The trends are already not good. Home prices in New York City and Manhattan have already trended into negative territory on a trend that appears to have picked up momentum to the downside.”
Watch the full clip HERE for more.
