EconomyxAI · Sector Watch January 2016Released January 13, 2016 |
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Conditions index +0.11 avg of 11 sectors, −2 to +2 |
| Outlook index +0.21 sectors with an outlook |
| Districts growing 10/12 per National Summary |
| Positive momentum 3/11 sectors improving |
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This release in brief The read | ■ | Released January 13, 2016, with information collected on or before January 4, 2016. | | ■ | Activity expanded in nine districts; Atlanta and San Francisco moderate, seven modest, New York and Kansas City essentially flat, Boston upbeat. | | ■ | Most manufacturing sectors weakened outside motor vehicles and aerospace; the strong dollar and energy weakness weighed on exporters and oil suppliers. | | ■ | Real estate generally improved, lending improved with better credit quality, agriculture and energy weakened further amid warm weather and low prices. |
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Sector prospects Where the 3–12 month view points Strongest prospects Information Technology
XLK
▶ Steady | +0.66 |
| Real Estate
XLRE
▶ Steady | +0.43 |
| Consumer Discretionary
XLY
▼ Turning down | +0.29 |
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| Weakest prospects Energy
XLE
▼ Turning down | −0.66 |
| Materials
XLB
▶ Steady | −0.28 |
| Utilities
XLU
▶ Steady | −0.04 |
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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 | Information Technology
XLK | | +0.66 | Favorable | +1.03 | +0.73 | ▶ +0.30 | | 2 | Real Estate
XLRE | | +0.43 | Leaning Favorable | +0.85 | +0.51 | ▶ −0.12 | | 3 | Consumer Discretionary
XLY | | +0.29 | Leaning Favorable | +0.48 | +0.45 | ▼ −0.23 | | 4 | Health Care
XLV | | +0.28 | Leaning Favorable | +0.30 | +0.50 | ▶ −0.01 | | 5 | Communication Services
XLC | | +0.17 | Leaning Favorable | +0.40 | +0.00 | ▶ +0.20 | | 6 | Financials
XLF | | +0.17 | Leaning Favorable | +0.32 | +0.50 | ▼ −0.29 | | 7 | Consumer Staples
XLP | | +0.01 | Neutral | +0.00 | +0.00 | ▶ +0.06 | | 8 | Industrials
XLI | | −0.01 | Neutral | −0.17 | +0.12 | ▼ −0.29 | | 9 | Utilities
XLU | | −0.04 | Neutral | −0.03 | +0.00 | ▶ −0.20 | | 10 | Materials
XLB | | −0.28 | Leaning Unfavorable | −0.67 | +0.00 | ▶ −0.14 | | 11 | Energy
XLE | | −0.66 | Unfavorable | −1.33 | −0.55 | ▼ −0.23 |
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 |
Nine districts expanded, mostly at a modest pace; New York and Kansas City flat. | Labor markets continued to improve; tightening in four districts. | | Inflation Pressure (higher = headwind) | | +0.00 |
Price pressures minimal; commodity and energy prices falling. | Loan demand grew, credit quality improved, standards little changed. | Outlooks mostly positive in six districts; Philadelphia expectations weakened significantly. |
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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 | · | +2 | | Health CareXLV | · | · | · | · | · | · | · | · | · | · | +1 | +1 | | FinancialsXLF | · | · | +1 | · | · | +1 | · | +1 | · | · | · | +1 | | Consumer DiscretionaryXLY | +1 | −1 | +1 | +1 | · | +1 | +1 | · | +1 | −1 | · | +1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | +1 | | IndustrialsXLI | · | −1 | −1 | +1 | +1 | −1 | +1 | +1 | −1 | −1 | · | −1 | | Consumer StaplesXLP | −1 | · | · | · | · | · | · | +1 | · | · | · | · | | EnergyXLE | · | · | −1 | −1 | −1 | −1 | −1 | −1 | −1 | −2 | −2 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | −1 | · | · | · | | Real EstateXLRE | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | +1 | · | · | +1 | | MaterialsXLB | · | · | · | −2 | · | −1 | −1 | −1 | −1 | −1 | −1 | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Energy −2 Dallas Oilfield services remained depressed; drilling declined. Why it matters: Dallas carries the largest Energy weight. | Energy −2 Kansas City Energy contracted at a faster pace; expectations more negative. Why it matters: Second-largest Energy negative. | Information Technology +2 San Francisco Demand for server and cloud computing services rose further. Why it matters: SF carries 47% of IT weight. | Materials −2 Cleveland Steel prices fallen 40 percent year over year. Why it matters: Materials negative. | Industrials −1 New York, Philadelphia, Atlanta, Minneapolis, Kansas City, San Francisco Manufacturing activity declined. Why it matters: Nearly half of districts declined. | Energy −1 Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis Oil and gas suppliers' demand deteriorating. Why it matters: Broad Energy weakness. |
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Twelve Fed districts District roundup Boston Growing +0.5 Outlook ▲ Generally upbeat. |
| New York Flat Outlook ▼ Essentially flat. |
| Philadelphia Growing +0.5 Outlook ▲ Grow at a modest pace. |
| Cleveland Growing +0.5 Outlook ▶ Grew at a modest pace. |
| Richmond Growing +0.5 Outlook ▲ Strengthened modestly. |
| Atlanta Growing +1.0 Outlook ▲ Improving at a moderate pace. |
| Chicago Growing +0.5 Outlook ▲ Increase at a modest pace. |
| St. Louis Growing +0.5 Outlook ▲ Increased at a modest pace. |
| Minneapolis Growing +0.5 Outlook ▲ Grew modestly. |
| Kansas City Flat Outlook ▲ Flat in December. |
| Dallas Growing +0.5 Outlook ▲ Grew at a modest pace. |
| 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 dominate a broadly negative Energy matrix.
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| | Industrials — Six district declines including San Francisco and New York push weighted Industrials below zero.
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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 |