EconomyxAI · Sector Watch February 2016Released March 2, 2016 |
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Conditions index +0.04 avg of 11 sectors, −2 to +2 |
| Outlook index +0.17 sectors with an outlook |
| Districts growing 8/12 per National Summary |
| Positive momentum 3/11 sectors improving |
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This release in brief The read | ■ | Released March 2, 2016, with information collected on or before February 22, 2016. | | ■ | Activity expanded in most districts; moderate in Richmond and San Francisco, modest in four others, slight in Philadelphia, mixed in St. Louis, flat in New York and Dallas, declining modestly in Kansas City. | | ■ | Manufacturing flat overall with weak energy demand a significant headwind and the dollar hurting exports; consumer spending rose in most districts. | | ■ | Residential sales rose nearly everywhere, loan demand increased slightly to modestly, and the energy sector contracted further. |
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Sector prospects Where the 3–12 month view points Strongest prospects Real Estate
XLRE
▶ Steady | +0.59 |
| Information Technology
XLK
▼ Turning down | +0.28 |
| Health Care
XLV
▶ Steady | +0.26 |
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| Weakest prospects | Materials
XLB
▶ Steady | −0.16 |
| Communication Services
XLC
▼ Weakening | −0.08 |
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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 | Real Estate
XLRE | | +0.59 | Favorable | +1.08 | +0.53 | ▶ +0.28 | | 2 | Information Technology
XLK | | +0.28 | Leaning Favorable | +0.40 | +0.73 | ▼ −0.61 | | 3 | Health Care
XLV | | +0.26 | Leaning Favorable | +0.25 | +0.50 | ▶ −0.04 | | 4 | Consumer Discretionary
XLY | | +0.25 | Leaning Favorable | +0.40 | +0.44 | ▶ −0.28 | | 5 | Financials
XLF | | +0.15 | Leaning Favorable | +0.26 | +0.50 | ▶ −0.27 | | 6 | Industrials
XLI | | +0.06 | Neutral | −0.03 | +0.17 | ▶ −0.06 | | 7 | Consumer Staples
XLP | | +0.01 | Neutral | +0.00 | +0.00 | ▶ +0.06 | | 8 | Utilities
XLU | | +0.00 | Neutral | +0.03 | +0.00 | ▶ −0.06 | | 9 | Communication Services
XLC | | −0.08 | Neutral | +0.00 | +0.00 | ▼ −0.42 | | 10 | Materials
XLB | | −0.16 | Leaning Unfavorable | −0.45 | +0.00 | ▶ +0.19 | | 11 | Energy
XLE | | −0.91 | Unfavorable | −1.55 | −1.00 | ▶ −0.42 |
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 | | +0.25 |
Most districts expanded but three flat or declining and several only slight. | Labor market conditions continued to strengthen with modest gains. | | Inflation Pressure (higher = headwind) | | +0.00 |
Prices generally flat; deflationary pressure in Dallas. | Loan demand up slightly to modestly; financial conditions tightened in Chicago. | Generally optimistic, though Chicago more pessimistic amid market turmoil. |
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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 | | Health CareXLV | · | · | · | · | · | · | · | +1 | · | · | · | +1 | | FinancialsXLF | · | · | −1 | +1 | +1 | +1 | −1 | +2 | · | · | · | +1 | | Consumer DiscretionaryXLY | · | · | +1 | · | +1 | +1 | +1 | · | · | −1 | −1 | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | · | −1 | −1 | +1 | −1 | +1 | +1 | · | +1 | −1 | −1 | · | | Consumer StaplesXLP | · | · | · | · | · | · | · | · | · | · | · | · | | EnergyXLE | · | · | −1 | −1 | −1 | −1 | −1 | −2 | −1 | −2 | −2 | −1 | | UtilitiesXLU | · | · | · | · | · | · | · | · | +1 | · | · | · | | Real EstateXLRE | +1 | · | · | +2 | +1 | +1 | +1 | +2 | +1 | −1 | +1 | +2 | | MaterialsXLB | · | · | · | −1 | · | · | · | −2 | −1 | −1 | −1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Energy −2 Dallas Equipment capacity utilization below 50 percent. Why it matters: Dallas carries the largest Energy weight. | Energy −2 Kansas City Borrowing bases being reduced; liquidity issues expected. Why it matters: Large Energy negative. | Energy −2 St. Louis January coal production 32 percent lower. Why it matters: Coal collapse. | Real Estate +2 San Francisco, Cleveland, St. Louis Strong growth in sales; occupancy rising. Why it matters: RE positive. | Industrials −1 New York, Philadelphia, Richmond, Kansas City, Dallas Manufacturing declined. Why it matters: Industrials flat. | Financials +2 St. Louis Generally strong growth in loan demand. Why it matters: Financials positive. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▲ Mixed month-to-month results. |
| New York Flat Outlook ▲ Generally flat. |
| Philadelphia Growing +0.5 Outlook ▲ Grown slightly. |
| Cleveland Growing +0.5 Outlook ▲ Grew at a modest pace. |
| Richmond Growing +1.0 Outlook ▲ Grew moderately. |
| Atlanta Growing +0.5 Outlook ▲ Continued to improve modestly. |
| Chicago Growing +0.5 Outlook ▶ Increase at a modest pace. |
| St. Louis Flat Outlook ▲ Mixed. |
| Minneapolis Growing +0.5 Outlook ▲ Grew modestly. |
| Kansas City Contracting −0.5 Outlook ▲ Declined modestly. |
| Dallas Flat Outlook ▶ Flat. |
| San Francisco Growing +1.0 Outlook ▲ Grew at a moderate pace. |
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Where the signal is thin or split Divergences to watch | Energy — Dallas and Kansas City -2 plus broad -1 readings drive Energy well below zero.
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| | Real Estate — San Francisco +2 lifts weighted RE.
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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 |