So at 10:15am when I highlighted how oversold the market was with a 7 day RSI of 9 when the SPX was at about 4280, it got as low as 8 when we bottomed at 4223 around 12:30pm and it closed at 16, but still oversold. The 14 day RSI closed at 28 after getting to 22 at 10:15am and 20 at 12:30pm. Bottom line, it’s only one technical indicator but it at least worked …
US PMI/SPX RSI
The January Markit US manufacturing and services composite index fell to 50.8 from 57 with most of the decline driven by a nearly 7 pt decline in services to just above 50 at 50.9. Manufacturing slipped 2.7 pts to 55. Markit is blaming the supply side and omicron for the weakness. Specifically with services Markit said, “labor shortages, employee absences and the …
All else is of course not equal
Everyone is out with their Fed predictions, both in 2022 strategy pieces and ahead of the meeting this week. Most though are 'all else equal' analysis in response to the current high levels of inflation but we know historically there is always an equal and opposite reaction, for every action, as one of Newton's laws say. The reaction of course is not just where …
Succinct Summation of the Week’s Events – 1/21
Positives 1)The January Philly index rose to 23.2 from 15.4 and that was 4 pts better than expected. Looking at the coming 6 months, the business outlook got back what it lost last month. Inflation expectations grew further. For prices paid, the outlook jumped by 22.6 pts to the highest since 1988. For those received, expectations rose 7.7 pts to a 5 month high. …
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High yield/Bitcoin/Some data
Well at least right now, the notable market damage is still mostly contained to stocks and obviously the most overvalued ones but there is a small shift going on. As I said before, watching high yield is necessary when looking for contagion and any economic repercussions of the changing macro landscape and worries about the inflation stressed consumer. The yield to …
Home sale closings
Existing home sales in December, measuring contract signings mostly in the late summer and into the fall, totaled 6.18mm, down 30k from November and below the estimate of 6.42mm. Blame high prices and little inventory. The median price rose 15.8% y/o/y and months’ supply fell to just 1.8 from 2.1 in the month prior. That is the lowest on record dating back to the …
Claims data/Philly beats NY
Initial jobless claims jumped to 286k from 231k in the week prior and that was well worse than the estimate of 225k. Smoothing out the influence of the holidays, the 4 week average rose by 20k to 231k. Delayed by a week, continuing claims totaled 1.635mm, about 70k more than expected and up from 1.55mm in the week prior. Bottom line, the trip to the 200k level in …
ECB vs the Germans/Some data/Sentiment
Not that it should be a surprise but the possible more aggressive approach by the Fed in reversing its policy is not going to influence what the ECB is going to do according to ECB president Lagarde. She said today in an interview, "The cycle of the economic recovery in the US is ahead of that in Europe. We thus have every reason not to act as rapidly and as brutally …
Starts and Permits
Housing starts in December totaled 1.7mm, 50k more than expected and up from 1.678mm in November. The upside was all in multi family as single family starts fell by 17k m/o/m. Multi family was up by 51k m/o/m to the highest since February 2020 at 530k. Of note was the permit print of 1.873mm, 170k higher than forecasted and up from 1.717mm in November. Again, …
Rising up the scale
What is noteworthy about the higher labor expenses that JPMorgan, Citi, and Goldman talked about in their earnings calls is that the wage gains are now reaching the upper echelons of the pay scale and it's not just a minimum wage and leisure and hospitality influence. Goldman CEO David Solomon said yesterday "There is real wage inflation everywhere in the economy, …
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.