U.S. Leading Economic Indicators Hold Steady
The Conference Board’s Composite Index of Leading Economic Indicators was unchanged during August (1.1% y/y) following a 0.4% July increase, revised from 0.5%. The index has been trending sideways since late-last year.(…)
Performance amongst the components of the Leading Indicator index was decidedly mixed in August. Contributing positively to the were the readings for building permits, the average workweek, factory orders for consumer goods, consumer expectations for business/ economic conditions and the leading credit index. Offsetting these increases were initial claims for jobless insurance, the ISM new orders index, stock prices and the yield spread between 10-year Treasuries & Fed Funds. Factory orders for nondefense capital goods held steady.
Three-month growth in the leading index of 1.4% (AR) remained below the high of 9.1% in December 2017.
The Index of Coincident Economic Indicators increased 0.3% (1.6% y/y) during August following no change in July, revised from 0.2%. The rise reflected increases in each of the component series: personal income less transfer payments, nonagricultural payroll employment, industrial production and manufacturing & trade sales.
Three-month growth in the coincident index improved to 2.3% (AR) from a low of 0.4% in April and May.
The Index of Lagging Economic Indicators fell 0.3% (+3.0% y/y) in August following an unrevised 0.6% July increase. It was the first decline in three months. The average duration of unemployment retraced its July rise. The prime rate, the business I/S ratio and growth in factory sector unit labor costs also fell. Offsetting these declines were gains in the services CPI, the ratio of consumer credit outstanding-to-personal income and growth in C&I loans outstanding.
Three-month growth in the lagging index eased to 3.4%, but remained up from growth of 1.1% in May.
The ratio of coincident-to-lagging economic indicators is sometimes considered a leading indicator of economic activity. It rose slightly from July which was nearly the lowest level since early-1975.
Advisor Perspectives offers the best perspective on the LEI:
The 12-m m.a. of the 12-m rate of change has no false signals since 1960. It looks reasonably comfy at +3.2% but the LEI is only up 0.8% YoY in August. A flat LEI for the next 4 months would take the 12-m m.a. to +1.5%…
Home Sales Inch Up, Raising Hopes That Slump Is Easing August data suggest recovery could be under way in the housing market
Sales of previously owned U.S. homes rose 1.3% in August from July to a seasonally adjusted annual rate of 5.49 million, the National Association of Realtors said Thursday. (…) Annually, sales in August were up 2.6%, the second month of growth following 16 straight months of declines. (…)
Average fixed mortgage rates for 30-year loans were 3.73% in the latest week, down from close to 5% in November, according to Freddie Mac . Mortgage applications for home purchases have risen for three straight weeks, according to the Mortgage Bankers Association, and housing starts were up more than 12% in August. That marked the biggest monthly gain for new-home construction since 2007.
Significant headwinds remain. For one, the price of homes available for sale continues to rise. The median sales price in August was $278,200, up 4.7% from a year ago, marking the 90th consecutive month of price increases on an annual basis. The number of homes available for sale, meanwhile, fell in August. The shortage also has been propping up prices, Mr. Yun said. (…)
Good thing the South exists:
U.S.-China Talks Resume, With Chinese Officials Set to Visit U.S. Farm Belt
Talks between a Chinese delegation led by Liao Min, a vice minister for finance, and Deputy U.S. Trade Representative Jeffrey Gerrish began Thursday and are scheduled to continue Friday. The negotiations are expected to lay the ground-work for top-level negotiations between U.S. Trade Representative Robert Lighthizer, Treasury Secretary Steven Mnuchin and Vice Premier Liu He in October in Washington. An exact date for that meeting hasn’t been released. (…)
U.S. Agriculture Department Secretary Sonny Perdue said Thursday that Chinese officials will visit American farms next week as part of efforts to “build goodwill.” (…)
Saudi Arabia Set to Return to Normal Oil Production Levels by End of Month
Chip on the Shoulder: How China Aims to Compete in Semiconductors
(…) China’s bet on AI chips makes both technological and market sense, as it is viewed as a clean slate where Chinese companies have a shot at “overtaking competitors around the bend” (弯道超车). Traditional chips have powered everything from smartphones and laptops to televisions, but are starting to see their growth plateau as the consumer electronics market becomes saturated. AI chips, while making up just 1% of global semiconductor sales, are poised to experience robust growth over the next decade.
(…) AI chips come in different forms, including graphics processing unit (GPU), field-programmable gate array (FPGA), and application-specific integrated circuit (ASIC), among others. But it is the ASIC that offers China a shot to end its woeful record on manufacturing semiconductors. (…)
ASICs offer a relative “white space” in which China hopes to compete, for several reasons:
- Efficiency gains
ASIC chips are custom designed and optimized to handle a specific set of functions, so they tend to be significantly superior to general purpose chips in terms of efficiency. Some estimate that ASIC chips could be as much as 10 times more efficient than GPUs. Therefore, ASIC is viewed as the future and is projected to account for 70% of market demand, according to McKinsey.
- Low production cost
Custom designs require significant upfront costs, and those designs often require tweaking. But since the chip is designed for narrow functions rather diverse use cases, once the design is complete, its manufacturing cost can be a few cents per chip, much lower than that of FPGA or GPU.
Since all ASIC chips are custom-made, one company making ASIC chips does not preclude another from making their own. This also means there will likely be more push for vertical integration so that software and hardware makers can have their own chips made for their specific devices and functions.
In fact, Google, as well as more than a dozen Chinese startups, have started designing their own ASIC chips to improve the performance of their data centers and products, respectively. As production volume goes up, ASICs can achieve leverage the China market’s advantage in economies of scale.
- Market potential
AI-enabled chips will likely be found in a host of edge devices, such as smartphones, laptops, barcode scanners, cameras, sensors. This means the total addressable market for ASIC chips is significant. Although GPUs still make up the bulk of the AI chips market today, by 2025 more than half of these are projected to be ASIC.
AI technologies are poised to deliver additional global economic output of around $13 trillion by 2030. To ride the wave of the fourth industrial revolution, China seems to believe that the ASIC chip affords a unique opportunity to rid the chip on its shoulder.
FYI:
iOS 13, Apple’s Latest iPhone Update, Is Out—Just Be Cautious One suggestion: Wait until next week, when bug fixes are expected
(…) Throughout the past week, using iOS 13 on the new phones and an older XR, I’ve encountered minor but frequent bugs. The Messages app will sometimes flicker and the cursor can often get stuck; the Camera app periodically opens to a black screen and gets sluggish; apps—including those developed by Apple—have crashed unexpectedly.
Apple has acknowledged the bugs and says that it will release iOS 13.1 next Tuesday. This will include some additional features, such as the previously announced AirPod audio sharing, ETA-sharing in Maps, and improvements to AirDrop, and will also include bug fixes. It’s always good not to rush into an OS update. In this case, unless you don’t mind some bumps in the road, I suggest waiting until next week to do the download.
If you have automatic software updates turned on, you can turn it off by going to Settings > General > Software update and turning off Automatic Updates.