EconomyxAI · Sector Watch October 2009Released October 21, 2009 |
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Conditions index −0.07 avg of 11 sectors, −2 to +2 |
| Outlook index −0.07 sectors with an outlook |
| Districts growing 4/12 per National Summary |
| Positive momentum 6/11 sectors improving |
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This release in brief The read | ■ | Released October 21, 2009, with information collected before October 13, 2009. | | ■ | Reports indicated stabilization or modest improvement in many sectors, often from depressed levels, led by residential real estate and manufacturing; gains outnumbered declines but were small or scattered. | | ■ | Consumer spending stayed weak in most districts, and new vehicle sales fell in nine districts after cash-for-clunkers ended, though New York City retailers were ahead of plan. | | ■ | Most districts said manufacturing was stronger, with auto restocking lifting auto, parts and steel output in Cleveland, Richmond and Chicago; commercial real estate was weak or deteriorating in every district. | | ■ | Credit quality kept eroding with rising delinquencies, but the first-time homebuyer credit supported mortgage lending; wage and price pressures stayed subdued. |
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Sector prospects Where the 3–12 month view points Strongest prospects Industrials
XLI
▶ Steady | +0.29 |
| Information Technology
XLK
▶ Steady | +0.15 |
| Materials
XLB
▶ Steady | +0.13 |
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| Weakest prospects Real Estate
XLRE
▼ Turning down | −0.50 |
| Financials
XLF
▶ Steady | −0.38 |
| Consumer Discretionary
XLY
▼ Turning down | −0.32 |
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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 | Industrials
XLI | | +0.29 | Leaning Favorable | +0.53 | +0.23 | ▶ +0.46 | | 2 | Information Technology
XLK | | +0.15 | Neutral | +0.61 | +0.00 | ▶ −0.02 | | 3 | Materials
XLB | | +0.13 | Neutral | +0.17 | +0.00 | ▶ +0.17 | | 4 | Consumer Staples
XLP | | +0.02 | Neutral | +0.09 | +0.00 | ▶ +0.03 | | 5 | Communication Services
XLC | | +0.01 | Neutral | +0.05 | +0.00 | ▶ +0.05 | | 6 | Utilities
XLU | | −0.02 | Neutral | +0.00 | +0.00 | ▶ +0.00 | | 7 | Energy
XLE | | −0.05 | Neutral | −0.03 | +0.00 | ▶ +0.01 | | 8 | Health Care
XLV | | −0.12 | Neutral | −0.06 | +0.00 | ▶ −0.45 | | 9 | Consumer Discretionary
XLY | | −0.32 | Leaning Unfavorable | −0.71 | −0.04 | ▼ −0.26 | | 10 | Financials
XLF | | −0.38 | Leaning Unfavorable | −0.65 | −0.52 | ▶ +0.17 | | 11 | Real Estate
XLRE | | −0.50 | Leaning Unfavorable | −0.80 | −0.50 | ▼ −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 | | +0.00 |
Stabilization or modest improvement in many sectors from depressed levels; St. Louis still declining. | Labor markets weak or mixed with occasional pockets of improvement; layoffs slowing. | | Inflation Pressure (higher = headwind) | | +0.50 |
Little or no price or wage pressure; materials prices rising moderately. | Loan demand weak; credit quality eroding; Chicago and San Francisco credit access improved. | Contacts expect slight gains and modest growth over the next six months; New York increasingly optimistic. |
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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 | | Health CareXLV | +1 | · | · | · | +1 | · | · | · | · | · | · | −1 | | FinancialsXLF | −1 | −1 | · | −1 | · | −1 | · | −1 | −1 | −1 | −1 | · | | Consumer DiscretionaryXLY | −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 | · | | EnergyXLE | · | · | · | −1 | · | −1 | · | · | +1 | · | · | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | · | −1 | −1 | −1 | · | −1 | · | −1 | · | −1 | −1 | −1 | | MaterialsXLB | · | · | · | +1 | · | · | +1 | · | · | · | · | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Industrials +1 Most districts Manufacturing generally stronger; auto restocking. Why it matters: Industrials turn positive broadly. | Real Estate −1 All districts Commercial real estate weak or deteriorating everywhere. Why it matters: Real Estate negative. | Information Technology +1 San Francisco Manufacturing firmed; IT products improving. Why it matters: Largest IT weight. | Consumer Discretionary −1 Nine districts New vehicle sales fell after clunkers ended. Why it matters: Discretionary negative. | Financials −1 Most districts Credit quality eroding; delinquencies rising. Why it matters: Financials negative. | Materials +1 Cleveland, Chicago Steel production up on auto demand. Why it matters: Materials positive. |
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Twelve Fed districts District roundup Boston Flat Outlook ▲ Slow, with signs of improvement; slow recovery expected in 2010. |
| New York Flat Outlook ▲ Scattered signs of a pickup. |
| Philadelphia Flat Outlook ▲ Little change. |
| Cleveland Flat Outlook ▲ A few signs of improvement; recovery fragile. |
| Richmond Growing +0.5 Outlook ▲ Mixed or improving; manufacturing leading. |
| Atlanta Contracting −0.5 Outlook ▲ Pulled back somewhat in September. |
| Chicago Growing +0.5 Outlook ▲ Improved marginally; decline has ended. |
| St. Louis Contracting −1.0 Outlook ▶ Declined further. |
| Minneapolis Flat Outlook ▲ Steady with signs of recovery. |
| Kansas City Growing +0.5 Outlook ▲ Expanded slightly. |
| Dallas Flat Outlook ▲ Little changed; scattered improvement. |
| San Francisco Growing +0.5 Outlook ▲ Picked up slightly. |
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Where the signal is thin or split Divergences to watch | Industrials — broad manufacturing recovery is the first +1 broad reading since 2007.
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| | FINANCIALS vs REAL ESTATE: commercial real estate credit remains the main drag.
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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 |