The headline indices were so overbought that all the pullback did was essentially take them back to their 50 day moving averages. So now we'll have the buy the dip crowd make a stand and see what they're made of. Just maybe the groups left for dead over the past few years, like the commodity space, and other areas of cheapness will make a stand. SPX, 50 day is …
The one thing that NEVER changes
If there is one thing that NEVER changes it's human nature and when markets reach a euphoric stage, a change in trend is rarely far away. For purposes here I'll use the above 60 read in the Investors Intelligence survey and the 3x euphoric level in the Citi index of last week as a way of measuring that euphoria. You can also add in the multi year low in the put/call …
Succinct Summation of the Week’s Events – 9/4
Positives 1)In the August payroll report, the household survey said 3.76mm jobs were added and when combined with the labor force increase of 968k, the unemployment rate fell to 8.4%. The all in U6 rate fell to 14.2% from 16.5%. This was helped by those saying they are 'self employed' which rose by 251k and 'multiple jobholders' which rose by 182k. Census …
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ADP jobs report
ADP said 428k private sector jobs were created in August which was well below the estimate of 1mm while July was revised up slightly to 212k from 167k and June was revised up by 171k. The goods side added 40k with the balance of 389k coming from the service sector. Within goods, construction added 28k after losing 15k in the month prior. Manufacturing hired a net …
Sentiment/Yields/Stocks/Data
I will be taking the next few days off. Have a relaxing long weekend. According to Investors Intelligence the bullish sentiment continues to get more extreme. Bulls are now at 61.5 from 60 last week, the highest of the year. Anything above 60 is considered rarified air. Bears did tick up to 16.4 from 16.2 but its spread to Bulls of 45.1 is extraordinarily wide. …
US manufacturing
The ISM August manufacturing index was a touch above expectations at 56. The estimate was 54.8 and up from 54.2 in July. New orders rose to 67.6 from 61.5 and backlogs were higher too by almost 3 pts to 54.6. Maybe a lot of this is the need to replenish inventories which fell to 44.4, the lowest since January 2014 from 47 in July. Employment remained below 50 at 46.4 …
A few things
Ahead of the August ISM manufacturing index, we saw what happened last month overseas. China's private sector weighted Caixin manufacturing index rose a touch to 53.1 from 52.8 but that is above the estimate of 52.5. Caixin said production and new orders rose and export sales rose for the 1st time this year. Employment was little changed and was a bit below 50 while …
Extreme sentiment gets more extreme/What value looks like
The Citi Panic/Euphoria index continue to get deeper into Euphoric land. To a point where it is almost now 3 times the level of the Euphoric threshold of .41. Call this ultra extreme bullishness and while it will only matter when it does, it usually eventually does. Warren Buffett didn't just get long Japan, he expressed his value credentials at the same time. …
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Succinct Summation of the Week’s Events – 8/28
Positives 1)The further reopening of the global economy was reflected in the July goods trade data where exports rose 11.8% m/o/m after a 14.3% rise in June. Imports jumped by 11.8% m/o/m after increasing 5.1% in June. On an absolute basis for perspective, exports totaled $115b vs $136b in July 2019 and vs $137b in February 2020. Imports were $194b vs $196b in …
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Chicago Mfr’g/UoM Consumer Confidence
The August Chicago manufacturing index was little changed from July slipping to 51.2 from 51.9. The estimate was 52.6. It’s the 2nd month in a row above 50 for the first time since May and June 2019. New orders rose to a one yr high but backlogs fell 1 pt and is still below zero. Inventories plunged by 9 pts, the lowest since March “indicating that companies continue …
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.