It was not surprisingly November 9th when market sentiment began to inflect higher again, after already riding the wave of summer reopenings and the continuous pace of massive Fed interventions. In particular we know we've seen sentiment get very giddy over the last month as the Investors Intelligence figure saw Bulls rise above 60 and its spread to Bears above 40. …
Succinct Summation of the Week’s Events – 1/8
Positives 1)The December ISM services index rose to 57.2 from 55.9 and that was above an expected drop to 54.5. This is right in line with the 6 month average of 57.1. The breadth was the same as last month with 14 of 18 industries seeing growth and 4 seeing a contraction (leisure/hospitality and real estate/rental/leasing, likely office not surprisingly). …
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Jobs data
December payrolls declined by 140k vs the estimate of up 50k but this was mostly offset by an upward revision of 135k to the two prior months. The private sector shed 95k jobs vs the estimate of up 25k but November alone was revised up by 73k. The household survey said 21k jobs were added and when combined with a similar rise in the labor force, the unemployment …
The supply constraints
We've seen it in the rising Supplier Deliveries category (measuring slower deliveries) of the Markit PMI and the ISM and we've heard many times for many months about the supplier capacity constraints leading to clogging up of the supply chain and rising prices. Today the FT has an article saying "Car manufacturing hit by global semiconductor shortage" as they compete …
Harker, rates, inflation/ISM services
Treasury yields are at the highs of the day after Philly Fed President Patrick Harker (does not vote in 2021) joined Raphael Bostic (does vote in 2021) in saying that it is possible that by the end of 2021, the Fed could start tapering QE5. Now of course that seems like an eternity away but could become more of a reality as the year progresses and the economy further …
Claims/Almost record trade deficit
Initial jobless claims were little changed w/o/w at 787k vs 790k. That was a bit less than the estimate of 800k. Continuing claims fell again, to 5.07mm from 5.2mm and the estimate was for no change. Some of this was due to the expiration of benefits but we know they’ve since been extended again. The 4 week average for initial claims is now 819k vs 838k last week …
The Day After
There should be no mystery as to why the markets didn't care about what happened in the Capital yesterday, however disturbing, disgraceful, and embarrassing it was. It's because it has no bearing on the direction of the economy, earnings and interest rates. It's that simple. It was only a matter of time before other countries were going to express worry about the …
FOMC minutes
There was very little of interest in the FOMC minutes from the meeting three weeks ago in terms of gleaning any new lines of thinking. As we know the fed funds rate will remain at zero seemingly forever, the discussion on recalibrating policy, if necessary, was only focused on QE5. On this, the Fed is extremely vague on what metrics would result in a …
Markit’s measure of US services
Markit’s US services PMI for December was 54.8 vs the initial print of 55.3 and vs 58.4 in November. They said, “Rising virus case numbers took an increasing toll on the US economy in December, with business activity, order books and employment all growing at much reduced rates. The slowdown was especially steep in the service sector, where stricter social distancing …
ADP jobs #
ADP said the private sector shed 123k jobs in December instead of adding 75k as expected. November saw a slight revision to 304k from 307k. The dispersion was bifurcated as small and large businesses saw job losses while medium sized businesses added a net 37k people. The 18k person drop in goods producing was all in manufacturing which lost 21k. Construction added …
Peter is the Chief Investment Officer at Bleakley Advisory Group and is a CNBC contributor.