Has Santa decided we’ve all been bad and take off for the month of December, or, will he rally and show up on time as he is seasonal tendency? Get my take on the current state of the markets and where to from here.
WEEKLY SOUND BITES:
US Indexes had a volatile week with the major equity indexes pulling back on news that the Feds could curtail its monthly asset purchases at a faster rate and fears the emergence of the omicron variant could weigh on global economic growth and contribute to supply chain disruptions.
Nonfarm payrolls increased by 210,000 sequentially in November—well below the 546,000 positions added in October and less than half of analysts’ consensus estimate. However, the Bureau of Labor Statistics also revised its estimate of the number of jobs created in October to 546,000 from 531,000 and the September increase in nonfarm payrolls to 379,000 from 194,000. The unemployment rate improved by 40 bps relative to October, falling from 4.6% to 4.2%. Average hours worked also ticked up.
Fed Chair Jerome “Power Ranger Boom Boom” Powell acknowledged in testimony before Congress that inflationary pressures, while still expected to abate over the next year, had become broad enough and remained elevated for long enough that the central bank may consider accelerating the pace at which it tapers its monthly bond purchases.
Core eurozone bond yields fell, as negative headlines concerning the omicron variant outweighed hawkish comments from Federal Reserve officials. A renewed surge in COVID infections prompted Germany, Austria, Spain, Portugal and Spain among others to tighten restrictions on those unvaccinated against the coronavirus. Mandatory vaccinations and more restrictive lockdowns all help to drive the European Economy lower. Inflation in the eurozone also accelerated to its highest level since the single currency was introduced in 1999. Consumer prices rose an annualized 4.9% rate in November, up from 4.1% in October, as energy costs surged. Euro area retail sales rose 0.2% in October, after dropping 0.4% in September, as consumers spent more on nonfood purchases data showed. Meanwhile, consumer sentiment weakened for a second consecutive month in November.
Japan’s stock markets registered losses for the week, with concerns about the spread of the omicron variant of the coronavirus and the country’s decision to close its borders to foreign nationals weighing on sentiment. Prime Minister Fumio Kishida announced the border closure on November 29, and it came into effect the following day, which was when the first infection of the omicron variant was confirmed in Japan. Industrial production rose 1.1% in October from the previous month, with the motor vehicle industry the largest contributor to the increase. The unemployment rate unexpectedly edged lower, to 2.7% in October, amid labor market tightness, while October’s 1.1% month-on-month rise in retail sales likely reflected a recovery in demand following the easing of coronavirus restrictions.
Chinese stocks recorded a weekly gain despite a resurgence of U.S.-China tensions after Chinese ride-hailing app Didi said it would delist its U.S.-listed shares from the NYSE. In economic news, China’s factory activity unexpectedly rose in November for the first time in three months as surging raw materials prices and power rationing eased. The official manufacturing Purchasing Managers’ Index (PMI) rose to 50.1 in November from 49.2 in October. Credit analysts believe China’s government could issue some kind of policy response to help the ailing property sector as the effects of recent defaults start to spread from the offshore high yield bond markets into Chinese investment-grade bonds and eventually the domestic economy.
Enjoy This Week’s Round-Up;
Don’t Be A Rat Brain Trader – Be the Red Stripe Zebra!!
Trade Smart!
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