2018 Volatility Returns -A year that produced new all-time-highs as wells as historic drawdowns.

Drawdown 1- 1/26/2018 – 2/6/2018 SPX 2930 – 2581 Drawdown – 10.01%

Drawdown 2- 9/20/2018 – 12/24/2018 SPX 2930 – 2351 Drawdown -19.76%

Low to High 2/11/2016- 9/20/2018 SPX – 1829 – 2930 Gain – 60.1%

Peak to Peak 5/21/2015 – 9/20/2018 SPX 2130 – 2930 Gain – 37.55%

All figures are daily closing prices.

The two biggest items this week: Currently The US Government is partially shut down and the economy created 312k jobs last month and 3.64 million in 2018.

 

Fixed Income

FOMC December Statement Federal Reserve Dot Plots Dec 18 US Debt Measurement November Meeting Minutes US Corporate Debt Tops $6 Trillion

 

Global Bond Yields

 

Foreign Exchange Market

 

Energy Complex

Brent crude oil fell 40% from Oct3 to Dec 24th. $85.98 – $50.77

The Baker Hughes rig count showed a loss of 8 rigs this week. There are 1075 oil and gas rigs operating in the US. Up 151 over last year.

• Brent Crude Oil rose 7.18% this week closing at $57.34/bbl
• WTI Crude Oil gained 7.51% this week to close at $47.96/bbl
• Heating Oil rose 5.72% this week closing at $1.769/gallon
• Natural Gas dropped 14.16% this week closing at $3.044 per million BTUs
• Unleaded Gas rose 4.89% this week at closing at $1.348/gallon

 

Metals Complex

Silver, Palladium and Platinum all rose more than 3% this week.

• Gold rose 0.37% this week closing at $1285.80/oz
• Silver gained 3.11% on the week closing at $15.79/oz
• Palladium rose 3.34% this week closing at $1234.40/oz
• Platinum gained 3.25% this week closing at 8.22.0/oz
• Copper fell 0.77% this week closing at $2.648 /lb..

 

Employment Picture

December Jobs ReportBLS Summary – Released 1/4 – The US Economy added 312k nonfarm jobs in December. The revision for November was upward by 21k and the revision for October was upward 37k. Hiring highlights include Education and Health care +88k, Leisure and Hospitality +55k, Professional and Business Services +43k, Manufacturing +32k, and Retail Trade +24k.

• Average hourly earnings increased by 11 cents/ 0.4% in December y/y hourly earnings are up 3.2%.
• U3 Civilian unemployment rate edged upward by 0.2% to 3.9%. U6 unemployment rate remained flat at 7.6%.
• The labor force participation rate increased slightly from 62.9% to 63.1%.
• Average work week increased by 0.1 hour to 34.5 hours.

Weekly Unemployment Claims – Released Thursday 1/3 – In the week ending December 29th, initial claims were 231,000, an increase of 10,000 from the previous week’s revised level. The 4-week moving average was 218,750, an decrease of 500 from the previous week’s revised average.

Job Openings & Labor Turnover Survey – JOLTS Released Monday 12/10 – The number of job openings was a slight increase edging up by 0.1 million to 7.1 million on the last business day of October. Over the month, hires increased by 0.2 million to 5.9 million and separations declined slightly by 0.1 million to 5.6 million. Within separations, the quits rate saw a slight decline by 0.1 percent to 2.3 percent and the layoffs and discharges rate was unchanged at 1.1 percent.

Employment Cost Index – Released 10/31 – Compensation costs for civilian workers increased 2.8% for the 12-month period ending in September 2018 compared with a compensation costs increase of 2.5% in September 2017. Wages and salaries were up 2.9%, versus 2.5% for the 12-month period ending September 2017. Benefit costs increased 2.6%, versus 2.4% in September 2017. For private industry workers, compensation costs increased 2.9% year-over-year, versus 2.5% for the 12 months ending September 2017. Wages and salaries increased 3.1% year-over-year, versus 2.6% for the 12 months ending September 2017. Benefit costs increased 2.5%, versus 2.4% for the 12 months ending September 2017. This report is published quarterly.

 

This Week’s Economic Data

PMI Manufacturing ISM Index – Released 1/3 – December PMI decreased 5.2% to 54.1% from November’s reading of 59.3%. The New Orders Index was down 11% to 51.1%. The Production Index registered 54.3% down 6.3%.

U.S. Construction Spending – Released 1/3 -Not released on time due to gov’t shutdown) – Last month construction spending decreased slightly by 0.1% in October measuring at a seasonally adjusted annual rate of $1,308.8 billion. The October figure is 4.9% above the October 2017 estimate. Private construction spending was 0.4% below the revised September estimate.

 

Recent Economic Data

Chicago PMI – Released 12/28 – Chicago PMI decreased 1.0 point in December easing to 65.4, down from 66.4 in November. The Prices Paid indicator was down for the fifth consecutive month and by the largest margin in four years.

New Residential Sales – Released 12/28 – Not released yet due to gov’t shutdown. Last month sales of new single-family homes declined in October by 8.9% to 544k, seasonally adjusted. The median sales price of new homes sold in October was $309.7k with an average sales price of $395.0k. At the end of October the seasonally adjusted estimate of new homes for sale was 336k. This represents a supply of 7.4 months at the current sales rate.

Consumer Confidence – Released 12/27 – The Consumer confidence index declined in December. The Index now shows a reading of 128.1 down from 136.4 in November. Despite the decline in December and despite weakened expectations regarding job prospects and business conditions, consumer confidence levels still indicate the economy will continue to expand at a solid pace in the short run. Consumer Confidence remains at historically strong levels. Should consumers’ assessment of the current conditions soften further; the pace of economic growth is likely to decline. Back to back declines in Consumer Confidence reflect a growing concern of a moderating pace of economic growth in 2019.

Personal Income – Released 12/21 – Personal Income increased 0.2% in November according to the BEA. The majority of this increase was due to increases in wages and salaries and increases in farm proprietor’s income. Real PCE (the Feds preferred inflation gauge) increased 0.3%. Real disposable personal income increased 0.2%. Real Personal Consumption Expenditures (PCE) has risen 1.8% y/y.

3rd Estimate of 3rd Quarter GDP – Released 12/21 – According to the third estimate released by the Bureau of Economic Analysis, Real Gross Domestic Product (Real GDP) increased at an annual rate of 3.4% in the third quarter of 2018. This result is slightly lower by 0.1% from 3.5% seen in the second estimate. The general outlook of real GDP remains roughly the same. The third estimate data provided an upward revision to private inventory investment. Downward revisions were reflected in personal consumption expenditures (PCE) and exports.

Durable Goods – Released 12/21 – New orders for manufactured durable goods increased $1.9 billion or 0.8% to $250.8 billion in November. This increase follows two consecutive months of decline. Transportation equipment, up 2.9%, drove the increase by $2.5 billion to $87 billion.

Existing Home Sales – Released – 12/19 – Existing home sales increased 1.9% in November. Sales increased to a seasonally adjusted rate of 5.32 million. Sales are currently down 7.0% from one year ago. Housing inventory declined to 3.9 months of inventory and the existing homes for sale declined to 1.74 million. The median sales price for all types of homes was $257,700, up 4.2% year/y.

Housing Starts – Released 12/18 – New home starts in November were at a seasonally adjusted rate of 1.256 million; up 3.2% above October and down 3.6% from last November. Building Permits were at a seasonally adjusted rate of 1.328 million, up 5.0% compared to last month and up 0.4% over last year.

Industrial Production and Capacity Utilization – Released 12/14 – Industrial production rose just 0.6% in November. Manufacturing output was unchanged. Capacity utilization gained 0.4% to78.5%. Utilization is 1.3% below its long run (1972-2017) average.

Retail Sales – Released 12/14 – Retail Sales increased by 0.2% to $513.5 billion in November. Year over year retail sales increased 4.3%.

Consumer Price Index – Released 12/12 – The Consumer Price Index was unchanged in November after an increase of 0.3 percent in October. For the 12 month period the index rose 2.2 percent before seasonal adjustment.

Producer Price Index – Released 12/11 – The Producer Price Index for final demand saw an increase of 0.1% in November. Core PPI (less food and energy) increased 0.3%. Year over year the index for final demand rose 2.5%.

Consumer Credit – Released 12/7 – Total outstanding consumer credit increased by 25.4 billion in October. Nonrevolving credit accounted for the majority of the gain. This results in an annual rate of 7.75%.

US Light Vehicle Sales – Released 12/6 – U.S. light vehicle sales were at a seasonally adjusted annual rate (SAAR) of 17.40 million units in November versus a SAAR of 17.49 million units in October. The November run rate was down 0.7% from the SAAR of 17.52 million units for November 2017.

PMI Non-Manufacturing Index (ISM Services) – Released 12/6 – The ISM Non-Manufacturing Index registered 0.4% points higher than last month at 60.7%. This represents continued growth in the non-manufacturing sector, at a slightly faster rate.

U.S. Trade Balance – Released 12/6 – The trade deficit rose $0.9 billion in October to – $55.5 billion. Exports were $211.0 billion while imports were $266.5 billion.

Next week we will get data in the form of Consumer Credit, PMI ISM Services, US Light Vehicle Sales, JOLTS, and the US Trade Balance.

All sources linked HERE.