Hey Folks, markets continue to grind higher with a mixed market as of close this Friday. Keep in mind this upcoming week will be a big Thanksgiving Holiday week for America with all markets closed on Thursday and going for an early close on Friday at 2 PM ET.
Get me take on the current markets as we wind down the trading year.
Market Sound Bites:
US Indexes ended the week mixed as investors weighed strong economic and profits data against inflation fears, ongoing supply strains, and a rise in coronavirus infections in some regions. Growth stocks handily outpaced value stocks, helping lift the Nasdaq Composite to another record intraday high on Friday.
Retail sales jumped 1.7% in October, the biggest gain since March, while September’s increase was revised higher. Inflation was partly behind the increase—sales at gas stations rose 3.9%, for example—but early holiday shopping also appeared to be at work. Industrial production in October also rose much more than expected (1.6% versus around 0.7%), while a current measure of manufacturing activity in the New York region, reported Monday, came in well above expectations. Even given the sharp rise in Inflation, the US Consumers are still willing to spend. Retail Sales increased in Oct by 1.7% and is up over 16% for the year. But this willingness to spend may be curtailed after the very poor Consumer Sentiment falling to its lowest level in over a decade no doubt due to the rise in every day prices.
U.S. Treasury yields ended Thursday little changed relative to last week’s levels but decreased Friday morning on concerns that Germany could follow Austria in implementing another nationwide lockdown to fight COVID-19. Markets seemed to be on the lookout for the announcement of the next Federal Reserve Chair—in particular, whether the President would reappoint current Chair Jerome Powell or instead promote Fed Governor Lael Brainard, who is widely viewed as among the most “dovish” of Fed officials. Feds are concerned about inflationary pressures proving more sticky than transitory as a reason to discuss the ongoing Tapering it initiated this month in the amount of $15B and $15B in December. I suspect they will increase that amount starting in January while the markets are now forecasting a rate increase in the summer of 2022.
European countries began reimposing stricter restrictions—including stay-at-home orders and movement controls—to curb the spread of the coronavirus. Meanwhile, UK inflation hit the highest level in almost a decade in October, reaching 4.2% on an annual basis—up from 3.1% in September. Higher energy costs were a big part of the uptick in consumer prices.
In Japan, newly elected Prime Minister Fumio Kishida’s government approved a larger-than-expected stimulus package, with record fiscal support of around USD 490 billion. By carrying out the stimulus package with a sense of urgency, Kishida hopes to rebuild Japan’s pandemic-hit economy and put it on a growth path as soon as possible. Japan published its quarterly estimates of GDP showing the economy shrank 0.8% in the third quarter, equal to an annualized contraction of 3.0%. In addition, Japan’s exports rose 9.4% in the year to October, the slowest pace of growth since February. Given this outlook, the BOJ Governor Kuroda emphasized they need to persistently continue with powerful monetary easing.
And in China, data released at the start of the week showed that economic momentum stayed weak in October as the real estate downturn weighed on industry. Not surprisingly, prices for new and resold homes fell amid deeper contractions in construction starts and investment by developers. Housing sales also shrank 21.2% in October from September, while 52 of the top 70 cities recorded month-on-month price declines.
Enjoy this Week’s Round-Up;
Don’t Be A Rat Brain Trader – Be the Red Stripe Zebra !!
Trade Smart !
hpb
