EconomyxAI · Beige Book Sector Monitor February 2009Released March 4, 2009 |
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Conditions index −0.98 avg of 11 sectors, −2 to +2 |
| Outlook index −1.11 sectors with an outlook |
| Districts growing 0/12 per National Summary |
| Positive momentum 4/11 sectors improving |
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This release in brief The read | ■ | Released March 4, 2009, with information collected before February 23, 2009. | | ■ | National economic conditions deteriorated further; ten of twelve districts reported weaker conditions, and Philadelphia and Chicago said their economies 'remained weak.' | | ■ | Deterioration was broad based with only basic food production and pharmaceuticals as exceptions; consumer spending firmed slightly from a dismal holiday season but travel fell sharply. | | ■ | Manufacturing fell in every district, with Cleveland factory output down about 25 percent year over year; Manhattan home sales fell 60 to 65 percent and commercial real estate weakened significantly. | | ■ | Credit quality fell across loan categories and availability stayed tight, though commercial paper and bond markets 'improved significantly'; wage pressures eased everywhere and a significant pickup is not expected before late 2009. |
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Sector prospects Where the 3–12 month view points Strongest prospects Consumer Staples
XLP
▶ Steady | −0.17 |
| Utilities
XLU
▶ Steady | −0.42 |
| Health Care
XLV
▶ Steady | −0.46 |
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| Weakest prospects Industrials
XLI
▶ Steady | −1.23 |
| Real Estate
XLRE
▶ Steady | −1.23 |
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All 11 GICS sectors, ranked Sector scoreboard | # | Sector | −1 0 +1 | Score | Signal | Now | Outlook | Mom. |
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| 1 | Consumer Staples
XLP | | −0.17 | Leaning Unfavorable | +0.45 | −1.00 | ▶ +0.09 | | 2 | Utilities
XLU | | −0.42 | Leaning Unfavorable | +0.00 | −1.00 | ▶ +0.00 | | 3 | Health Care
XLV | | −0.46 | Leaning Unfavorable | −0.02 | −1.00 | ▶ −0.16 | | 4 | Communication Services
XLC | | −0.52 | Unfavorable | −0.15 | −1.00 | ▶ −0.03 | | 5 | Financials
XLF | | −0.77 | Unfavorable | −1.22 | −1.00 | ▶ +0.46 | | 6 | Information Technology
XLK | | −0.90 | Unfavorable | −1.53 | −1.00 | ▶ +0.07 | | 7 | Materials
XLB | | −0.90 | Unfavorable | −1.27 | −1.00 | ▶ −0.04 | | 8 | Consumer Discretionary
XLY | | −1.03 | Unfavorable | −1.69 | −1.00 | ▶ +0.23 | | 9 | Energy
XLE | | −1.13 | Unfavorable | −1.52 | −1.27 | ▶ −0.34 | | 10 | Real Estate
XLRE | | −1.23 | Unfavorable | −1.86 | −1.50 | ▶ −0.06 | | 11 | Industrials
XLI | | −1.23 | Unfavorable | −1.95 | −1.40 | ▶ −0.13 |
Prospect Score blends current conditions, district outlooks, momentum, a sector-specific macro tilt and margins. Now = weighted current conditions; Outlook = n/a when too few districts gave one; Mom. = change vs the average of the two prior releases. |
National Summary, scored −2 to +2 Macro backdrop | Overall Economic Activity | | −2.00 |
Ten of twelve districts weaker; deterioration broad based. | Unemployment risen in all areas; layoffs and hiring freezes; wage reductions. | | Inflation Pressure (higher = headwind) | | +1.00 |
Upward price pressures very limited; discounting widespread; food an exception. | Credit tight and quality falling, but improved liquidity in commercial paper and corporate bond markets. | Prospects for near-term improvement poor; significant pickup not before late 2009 or early 2010. |
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Current conditions in each Fed district District by sector | BOS | NY | PHL | CLE | RIC | ATL | CHI | STL | MIN | KC | DAL | SF |
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| Information TechnologyXLK | −1 | −1 | −1 | −1 | −1 | −1 | −1 | −1 | · | · | −2 | −2 | | Health CareXLV | +1 | · | · | · | +1 | · | +1 | · | −1 | · | · | −1 | | FinancialsXLF | −1 | −2 | · | · | −1 | −1 | −1 | −1 | −1 | · | −2 | −1 | | Consumer DiscretionaryXLY | −1 | −2 | −1 | −1 | −1 | −2 | −2 | −2 | −2 | −2 | −1 | −2 | | Communication ServicesXLC | · | −1 | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | −2 | −2 | −2 | −2 | −2 | −2 | −2 | −1 | −2 | −2 | −2 | −2 | | Consumer StaplesXLP | · | · | +1 | · | +1 | · | +1 | · | · | · | · | +1 | | EnergyXLE | −1 | −1 | −1 | · | −1 | −1 | −1 | −1 | −1 | −2 | −2 | −1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | −2 | −2 | −1 | −1 | −1 | −2 | −2 | −2 | −2 | −2 | −2 | −2 | | MaterialsXLB | −1 | −1 | −1 | −2 | −1 | −1 | −1 | −1 | −2 | −1 | −2 | −1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Industrials −2 All districts Manufacturing fell in all districts; Cleveland output down 25 percent. Why it matters: Industrials at the bottom. | Energy −2 Dallas 'Unprecedented' decline in rig count. Why it matters: Large Energy weight. | Real Estate −2 New York Manhattan sales down 60-65 percent. Why it matters: Large Real Estate weight. | Information Technology −2 San Francisco, Dallas Computer and semiconductor output and orders down. Why it matters: IT pulled lower. | Consumer Discretionary −2 San Francisco Retail 'anemic' with double-digit declines; tourism down sharply. Why it matters: Largest Discretionary weight. | Financials −2 New York, Dallas Higher delinquencies; CRE lending 'dropped off a cliff.' Why it matters: Financials negative. |
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Twelve Fed districts District roundup Boston Contracting −1.5 Outlook ▼ Continues to slow; staffing revenue down 20-50 percent. |
| New York Contracting −2.0 Outlook ▼ Weakened noticeably; tourism down substantially. |
| Philadelphia Contracting −1.0 Outlook ▼ Remained weak; outlook improved somewhat. |
| Cleveland Contracting −2.0 Outlook ▼ Weakened further; factory output down 25 percent. |
| Richmond Contracting −1.5 Outlook ▼ Declined further; refinancing a bright spot. |
| Atlanta Contracting −1.5 Outlook ▼ Weakened further; commercial real estate 'decidedly more negative'. |
| Chicago Contracting −1.0 Outlook ▼ Remained weak; recovery seen in 2010. |
| St. Louis Contracting −1.5 Outlook ▼ Weakened further. |
| Minneapolis Contracting −1.5 Outlook ▼ Broad-based downturn continued. |
| Kansas City Contracting −2.0 Outlook ▼ Continued to deteriorate; rig counts at five-year lows. |
| Dallas Contracting −1.5 Outlook ▼ Weakened further; 'unprecedented' rig count decline. |
| San Francisco Contracting −1.5 Outlook ▼ Slowed further; housing markets moribund. |
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Where the signal is thin or split Divergences to watch | Financials — credit-market liquidity improved even as bank loan quality fell.
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| | Health Care — pharmaceuticals one of the few bright spots.
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How to read this. Each Fed district’s report is scored −2 (strong contraction) to +2 (strong expansion) for each GICS sector, then weighted by the district’s share of that sector’s activity. The Prospect Score blends current conditions (25%), district outlooks (35%), momentum (20%), a sector-specific macro tilt (10%) and margin pressure (10%). The Beige Book describes regional activity, not earnings or valuations. Weights and sensitivities are illustrative. This newsletter is for information only and is not investment advice. Source: Federal Reserve Beige Book · Scored by EconomyxAI |