I'm certainly encouraged by what was said yesterday by the players negotiating a China-US trade deal and it seems pretty likely we'll get something substantive agreed upon. I guess the question then is whether the tariffs will immediately go away upon a deal rather than being used as part of the 'enforcement mechanism' that is being talked about. I of course want them …
Some data
The January Chicago PMI fell to 56.7 from 63.8 in December and that was below the estimate of 61.5. That’s the weakest print since January 2017 but because the monthly gyrations are so large, I’d rather average it out and the 3 month average is 61.3 vs the 6 month average of 61.5 and the 12 month average of 61.8. The press release has not been released on its website …
Last week was MLK related in claims
After touching a revised 200k last week, the lowest since 1969 and something I argued was due to the MLK weekend, claims rose by 253k this past week and that was well above the estimate of 215k. Smoothing out this noise puts the 4 week average at 220k from 215k last week and 221k in the week prior. Continuing claims jumped by 69k to the highest level since April. As …
Not a time to get complacent just because Powell…
While markets certainly heard what they wanted yesterday, the Fed still has at least another $500b of QT ahead of it this year which some equate to around 50 bps of rate increases. Thus, QT is only half way done. Also, if we do get to an eventual easing cycle, we know the Fed doesn't have much to deal with it and really won't be any help. Bottom line, as investors, we …
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A visual of the Fed
Kids, have all the candy you want
While the Fed is now ‘flexible’ in how it approaches this rate hike cycle and the run off of the balance sheet, they barely changed their assessment of the economy. They repeated “that the labor market has continued to strengthen and that economic activity has been rising at a solid rate. Job gains have been strong…Household spending has continued to grow strongly, …
Home sales
Pending home sales for December fell 2.2% m/o/m instead of rising by .5% as expected. That follows declines in 4 of the previous 5 months. The seasonally adjusted index is now at the lowest level since 2014. The West was the only area that saw a gain in sales from the prior month but still fell y/o/y. The NAR expressed the issues we all know that is afflicting the …
Private sector job adds
ADP said there were 213k private sector jobs created in January, 32k more than expected and compares with 263k last month (revised down by 8k). The main reason for the upside was because of a 68k job increase in the goods producing sector, the most since February 2018. The service side, about 80% of the economy, saw 145k jobs added which is below the 6 month average …
Remember what Bernanke told us/Overseas
As we await the FOMC statement and the Powell press conference with the state of the balance sheet being a key focus, I want to remind everyone what Ben Bernanke told us all in a Washington Post editorial in November 2010 about QE, just as QE2 was starting (and hinted at in August 2010) in explaining its impact. “Stock prices rose and long term interest rates fell …
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Consumer confidence
Sorry for late review of this data point. The January Conference Board Consumer Confidence index fell to 102.2 from 126.6 and that was about 4 pts less than expected and all to do with the 10 pt drop in the Expectations component as the Present Situation held steady. The headline index is at the lowest since July 2017 while the Expectations part fell to the weakest …
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.