Foreigners stepped up their purchases of US Treasuries in August by $63.1B with almost all of it coming from private buyers while central banks bought for the first time since March. The complexion though reflects further reductions in the holdings of China and Japan but in August that was because T-bills rolled off more than their net purchases of longer term notes …
Sentiment/Sticker Shock/China/UK
After the recent selloff, bullish sentiment moderated further according to Investors Intelligence. Bulls fell to 51.9 from 56.3 last week and 61.8 in the week prior. The buy on the dip mentality (certainly worked for those who bought Monday) just won't die as none of the drop in the bulls in the past few weeks went to the Bear side. They all shifted to Correction …
Record job openings/Housing/IP
As of August there was a record number of job openings, totaling 7.14mm but the difficulty in filling them led to only a 71k person increase in hiring’s. The number of quitters fell but off a jump in July. The quit rate held at 2.4%. Bottom line remains that the supply of job openings is large but the supply of labor is not. The October NAHB home builder index rose …
Hey Italy, look at our budget
Italian bonds and stocks are rallying after the Italian cabinet blessed the 2019 budget which will expand to 2.4% of GDP next year vs an expected 1.8% this year. It then goes to the European Commission who needs to sign off. While this is below the 3% supposed restriction cap on European budgets (which is never followed) and Italy does plan to get this back towards 2% …
Inventory build ahead of higher taxes
Ahead of the tariff rate boost by January 1 on Chinese goods, we continue to see an inventory build ahead of that. Following last week’s 1% rise in wholesale inventories seen for August, today’s comprehensive business inventory build was .5% (wholesale makes up about 33%) as expected and July was revised up by one tenth to a gain of .7%. These first two months of Q3 …
Retail sales and manufacturing
Core retail sales in October taking out auto’s, gasoline and building materials, rose .5% m/o/m, one tenth more than expected but offset by the one tenth downward revision to August which puts that month unchanged. Sales ex auto’s and gasoline though were light as they were unchanged m/o/m vs the estimate of up .3% and August was revised down a tenth. Building …
As if the world wasn’t complicated enough
As if the investing world wasn't complicated enough to figure out we now have the Saudi Arabia situation. The potential oil impact is one thing, now we have to watch the flow of Saudi Arabian investment. SoftBank stock fell 7.3% in Japan as not only did Saudi Arabia invest $45b in the first Vision Fund, they committed just last week to invest another $45b in the 2nd …
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Succinct Summation of the Week’s Events – 10/12
Positives 1) President’s Trump and Xi plan a get together at the G20 meeting the end of November. 2) The September consumer price index rose .1% both headline and core and that was one tenth less than expected. The y/o/y gains moderated to 2.3% headline from 2.7% in August. The core rate was up 2.2%, the same as in August. Again, core goods deflation of .3% …
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Consumer confidence
The UoM October consumer confidence index fell about 1 pt to 99 from 100.1 last month. The estimate was for a modest gain to 100.5 and follows a 3.9 pt rise last month. It’s the 4th best print of the year. Both main components of the Current Situation and Expectations fell m/o/m. One year inflation expectations rose one tenth to 2.8% after falling by 3 tenths in …
FX/Other
On the Bloomberg story yesterday that Treasury Secretary Mnuchin's staff recommendation was that China wasn't manipulating its currency helped to lead to more weakness in the yuan. I can't let this opportunity to go in saying that declaring one a currency manipulator in a world of global currency manipulation by everyone is nonsense. I said the same when Geithner was …
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.