The yield curve hasn't been mentioned in a while since the Fed took steps to re-steepen it but the 3 month/10 yr spread is quietly at the most narrow since December 3rd at just 18 bps. For reference, it was December 12th when the US and China announced a trade deal in principle that we know was signed on January 15th. Worth watching again. 3 MONTH/10 YEAR YIELD …
Claims
Initial jobless claims totaled 211k, 3k less than expected and up from 205k last week (revised up by 1k). This drops the 4 week average to 213k from 217k and that is the least since late September. Continuing claims, delayed by a week and a few weeks removed from the highest level since April 2018, fell by 37k. Bottom line, while claims have likely bottomed in …
Another sentiment gauge/Virus fears continue
Here is another market sentiment gauge that has reached extreme levels, the AAII measure of individual investors. Bulls rose 3.8 pts to 45.6 and that happens to be the most since October 4th, 2018 and February 2018 before then. Bears fell 2.7 pts to 24.8, 4 pts off the lowest since April 2019. Bottom line, the bull boat is standing room only. AAII BULLS AAII …
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Housing, home price gain accelerates
Existing home sales in December, likely reflecting mostly contract signings in the September thru November time frame, totaled 5.54mm annualized, above the estimate of 5.43mm and up from 5.35mm in November. That’s the most since February 2018 when mortgage rates were 60 basis points higher. Combining this sales pace and the sharp reduction in the number of homes …
Sentiment/Who’s buying negative yielding bonds?/Some data
As seen in the Citi Panic/Euphoria sentiment index which has risen to a hair below Euphoria, today's Investors Intelligence index is up to just below euphoria as well. Bulls rose to 59.4%, the highest since October 3rd 2018 when it was above 60% (considered euphoric) and that is up from 57% last week. All came from the Correction side as Bears were steady at 17.9% …
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The best soothsayer
For those who try to predict where markets will be 12 months from now, however difficult and silly a guess, throw out all your models and historical references and just measure the mood at Davos this week and do the opposite. It worked perfectly the last two years as each year ended exactly opposite of the Davos mood in which it began. We've been looking at the …
One thing I forgot
I forgot to add this to the Negative side: 15)Job openings in November fell to 6.8mm from 7.36mm and that is the least amount since February 2018. …
China/Fastenal/Other
The main story today is the China data reported that was pretty much in line with expectations. Growth in Q4 magically grew by 6% y/o/y, the same pace as in Q3 but which is the slowest since at least the early 1990's. For all of 2019, growth was 6.1% with consumption making up just below 60% of it. The data for December specifically was this: Retail Sales up 8% y/o/y …
Some data
Core retail sales in December rose .5% m/o/m, one tenth more than expected but offset by a 2 tenths downward revision to November to -.1%. So call it about a push relative to expectations. Because of the late Thanksgiving, it is really best to merge the November and December data points and core sales grew by 4.4% y/o/y and 4.2% y/o/y ex auto's and gasoline. Pretty …
A few things
Like I've said in the past, I wish the 10 yr Treasury yield could speak to us and say what they're thinking about the growth story because the yield just sits there and does nothing in light of this trade deal. On December 11th, the day before the deal was announced the 10 yr yield was at 1.79%. The next day upon the news, it jumped 10 bps to 1.89%. Today it's at …
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.