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The Lombardy Region of Italy
Wants to Vote on Independence...
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Echoing the sentiments of the Catalans in Spain, the wealthy Lombardy region wants to vote on greater autonomy in Italy, specifically to get a better return on its tax Dollars.
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The Lombards are annoyed that they pay so much in taxes and get little in return. Since the financial crisis, the wealthy region, which includes Milan, has been economically carrying the rest of the country. They're fed up, and want to change their tax-sharing arrangement with the federal government.
If either the Lombards or Catalans are successful ... where should the trend stop? Urban citizens pay more than rural citizens, so should cities break away? And there are always wealthy zip codes. Perhaps they should be independent. Of course, all such discussions assume that pesky items like national defense, trade agreements, and currency considerations take care of themselves.
While these 2 areas might be in the headlines, they aren't alone. Scotland is poised to break away from the United Kingdom as the Brexit gets closer, and the Flanders have been restless in Belgium forever. As the ebb and flow of independence movements start to weigh on the Euro along with moves by the Federal Reserve.
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Nielsen Can Now Measure
Netflix Viewers ...
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The television rating firm has developed a method for estimating how many people watch shows on Netflix, and for how long.
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What is real interesting here is how Nielsen accomplishes this feat.
The company creates an "audio footprint" of what viewers watch, and then compares it to available programming. The only way to create such a footprint is to listen to, and capture, what happens in your living room ... yes EVERYTHING! This reminds me of the Samsung smart televisions that automatically recorded every sound and sent it to Samsung for analysis. The company claimed it helped refine voice recognition, which makes sense, but it still means that they recorded everything in your living room, or wherever you have on your television ... Creepy to say the least ... there goes the privacy of your living room.
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Housing Starts Down -4.7% in September ... Partially Due
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Dropping from an annualized rate of 1.183 Million to 1.127 Million, housing starts fell below the lowest estimate.
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Given that the Southeast, including Texas and Florida, accounts for 25% of housing starts ... it's no wonder that with the hurricanes this number would be off. But ... the numbers were drifting lower in August before the storms. Interestingly, housing starts fell
20.2% in the Midwest and
-9.2% in the Northeast last month.
The September slump was fairly evenly split between multifamily housing starts, off
-5.1%, and single-family starts, down
-4.6%. It looks like housing starts will end the year about where they started, which means that new home construction won't drive the economy higher.
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Existing Home Sales Up
0.7% in September,
Down -1.5% for the Year ...
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Sales handily beat an expected loss of 0.9% last month, helped by strong results in Houston.
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In a weird twist, existing home sales jumped 4% in the Houston area as investors piled into the market looking for bargains. Even with this unexpected bump, residential real estate remains sluggish. With just a few months left in the year, we're on pace for lower sales than 2016, even though prices are a touch higher, up 4.2%.
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Industrial Production up
0.3% in September...
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Manufacturing increased 0.1%, only the 2nd positive reading in 5 months. Mining, which includes energy, rose 0.4% and utilities climbed 1.5%.
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Hurricane Harvey took a bite out of the energy sector at the end of August, but it didn't last long. Interestingly ... with all the new car buying ... it hasn't yet translated into more auto production, even though cars are flying off the lots. It looks like some of that extra production sitting on dealer lots found a new home without the "glut" affecting future layoffs ... can you even say ... thank goodness for small favors?
Overall, the report suggests that manufacturing remains tepid, as it's been all year, and the energy sector is gaining some ground.
I expect these numbers to perk up a bit over the next few months, as consumers replace items lost in the hurricanes, but it won't last long, probably until the middle of the 1Q of 2018.
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This Week's Events Reviewed
In Next Digest
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The week of October 22 brings reports on durable goods, new home sales, and the 1st estimate of 3Q GDP.
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The Demographic & Economic Digest provides an excellent opportunity for timely dialogue. I value your opinion and feedback and would love to hear from you. What do you think?
Sincerely,
Bob
Robert A. Hardies, CFP, MS, ATP
Financial & Portfolio Advisors, Ltd.
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