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Unlike the Chicago PMI which jumped in January the Institute of Supply Manufacturing Index remained in the negative column for a 4th month despite gaining .2 to 48.2.  Employment slipped deeper into the red while new orders increased to 51.5.  Prices continue to contract sharply at 33.5, well below the neutral reading for this series which is 50.

Personal Income increased a respectable .3% in December as the savings rate gained .2% to a 3-year high of 5.5%, spending increased just .1% and barely at that. The price change measuring PCE slipped .1% for the month but gained .6% from a year ago.  Despite near zero or zero interest rates that are designed to encourage speculating, oops I mean spending, consumers worldwide continue to increase their savings rate, just like us as the credit bust mindset swings from spend to save in the expected fashion.

Despite improving to a .1% gain on strong residential construction activity in December. Construction spending missed expectations substantially as the year ago change dropped to 8.2% as non-residential spending fell sharply to end the year.

US SP500 2015 Q4 Revenue growth by sector 2.1.16

With 40% of the Standard and Poors 500 index having reported so far the show me the money season isn’t going well. Blended revenues are down 3.5% from a year ago and are on track to fall for a 4th consecutive quarter.  If this trend holds revenues will slip 3.4% for all of 2015 recording the first annual revenue decline since 2009.  Earnings are tracking a 5.8% reduction and the 4th quarter will mark reduced earnings for a 3rd consecutive quarter.  Something that hasn’t happened since the depths of the previous crisis in 2009.  All this despite prodigious share buybacks that in fact speak volumes about the lack of end user, aka consumer demand as corporations pass on expanding capacity, or put another way supply, because there is already too much, buying company shares instead.

US SP500 2015 Q4 Earnings growth by sector 2.1.16

Thanks to FactSet and WolfStreet for the graphics.


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