While the wailing and gnashing of teeth over the preoccupation of Brexit dominated headlines, a lot of data was released in the US which once again pointed to my long argued position that a recession is on its way. So what was released last week?
Leading Index expected (E) 0.1%, Actual (A) -0.2%
Durable Goods orders for May -0.5% (E), -2.2% (A)
Capacity Utilisation in May 75.2% (E), 74.9% (A)
Chicago Fed Nat Activity Index in May 0.11 (E), -0.51% (A)
New Home Sales MoM 1.6% (E), -6.0% (A)
Initial Jobless Claims 270k (E), 259k (A)
Intel to cut 12,000 jobs (11% of its workforce) over next 12 months
Class 8 on highway Book-to-Build ratio in May 5.2 months from 5.3 and 6.6 in April and Feb respectively. Build rates down 30%.Makers expect more production cuts. Fitch affirms Navistar’s (International Trucks) CCC credit rating. Revenue now 40% below the FY2011 peak and falling. This year is forecast to be the 5th straight net loss.
Brexit will continue to dominate the headlines. The disunity among EU leaders is already showing. Schulz & Juncker are already at odds with Merkel over the decision. It is a telling sign of the state of fracture. Hollande has already hoisted the flag of concern. We must be vigilant not to overlook the underlying market data that has been deteriorating pre-Brexit.