My friend and Camp K veteran, Sam Rines ( Chief Economist at Avalon Investment and Advisory), has an excellent discussion on high frequency data and how critical it is in the current environment. He is kind enough to give us permission to share the entire piece entitled, "Timely Data Matters," with our readers.
Thank you, Sam and please stay safe and careful. -David
David R. Kotok
Chairman and Chief Investment Officer
Email | Bio
Bottomline: The pace of the economic landscape has made much of the official data less useful. This note gives an overview of the higher frequency data to watch to get a sense of when, how, and where the economy is turning.
- This is not a comprehensive list. If there is one you are watching not on the list, please share it.
- TomTom Traffic data, OpenTable restaurant traffic, and Google mobility reports have made appearances in this note.
- This note takes a look at others that are (mostly) publicly available.
- More pictures than words today with links to the data embedded in the charts or pictures.
There is little to be excited about with the economic data this week. Jobless claims are expected to decline from 6.65 million to 5 million (lower but not great) and consumer sentiment is set to fall dramatically. Those are telling us things we already know. So, let's look at the data that will give the sense to the turn in fortune.
While this note tends to focus on specific areas, the TomTom Traffic Index provides a look at most major metropolitan areas in the US, Asia, and Europe. This will help with getting a sense of the "getting back to work" and "where". Traffic data will be particularly useful for knowing where to dig into the data more. The nearly real-time nature of the data is exceedingly useful.
The OpenTable dataset was one of the first to show the extent of the sudden-stop on the global economy. It comes as no surprise that restaurants are seeing a 100% drop in seatings. Since they were closed-by-decree, the reopening will be a restart by decree. While the announcements will be public, this data will be incredibly useful in pinpointing the extent, pace, location of the recovery. Again, this note has primarily focused on specific areas within the data set. But it covers quite a bit of the developed world both in broad country swaths and down to the major metro areas. The daily with a day or two delay in updates makes it a timely source.
The Google Mobility Reports are down to the county level for the US and cover much of the globe. The caveat is timeliness. There is little indication of how often these reports will be updated, and whether there will be tweaks to the delivery mechanisms. The reports are in PDFs which make them clunky and difficult to parse. The mobility reports provide a view of where the greatest shift in behavior are occurring, and where to dig deeper elsewhere.
Admittedly, there are a million ways to track flights. But flightradar24 has a quick, simple dashboard of data updated daily with the number of tracked flights. Granted, it does not answer the question of how many seats are filled. The timeliness of planes in the air is indicative of the demand for seats as airlines will bring routes back as demand picks up. There are other useful blog posts on air traffic on the site as well.
Betting markets on the economy are intriguing for a couple of reasons. They are real money sentiment indicators that provide a real-time indication of the sentiment surrounding the economy. There is a betting market for "two consecutive quarters of negative growth in Trump's first term" and "5%+ GDP growth". Monitoring these does not necessarily provide deep insight into the ebbs and flows of the US economy. But it provides a glimpse of the sentiment around them. The more useful of the two is the 5%+ growth rate by the end of 2020, because of its signal about the perceived strength of an economic acceleration.
While initial jobless claims are released weekly and are therefore timely, jobless claims will not provide an indication of the strength of the rebound in employment. Enter the American Staffing Association Staffing Index which tracks temporary and contract employment changes on a weekly basis. That is not the entire employment spectrum, but it will give a peek into the pace of employment gains on the other side with more timeliness than the official data with its reference period oddities.
Lastly, the Bloomberg Weekly Consumer Comfort Index. The data is sliced and diced to show difference in political parties and incomes with personal finance questions and buying climate also tracked. Although, the data is not readily available, but it is written up weekly on the Bloomberg website. The University of Michigan publishes a more popular and followed index on a monthly basis. With a premium on recency, that should be discounted for the foreseeable future. It may not be readily available as a dataset outside of a Bloomberg terminal, but the weekly sentiment is far more useful than others at the moment (there are a few private, pay-for daily datasets such as the Rasmussen daily consumer confidence). Weekly releases with the detail is fine and strips out noise that might pollute the dataset
In normal times, economic data has a "memory" of sorts. And the monthly data provides insights into how it is evolving. For now, this is not the case. Timeliness has a premium.
As always, feel free to reach out with comments or questions. Also, please forward to anyone who might want to be on the list. Here is the sign-up page, and here is the archive.
Best
Sam
Samuel E. Rines
Chief Economist
Avalon Investment and Advisory
Direct: 713-358-6077
2929 Allen Parkway, Suite 3000
Houston, Texas 77019
[email protected]
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