Monday marked the all-time closing high for the S&P 500 (3855) but by Friday, investors didn’t have much to celebrate as the week closed on a decidedly negative tone. There is much to be celebrated as the vaccine rollout is starting to ramp up while new cases and hospitalizations are starting to come down in earnest. The seven day average of new cases topped out at 249.8k on January 4th and has been steadily falling.
7-Day average of new cases down to 158k after peaking in early January at 249k. John Hopkins – New cases
There’s a lot of positive things to look at right now but the markets are focused on the negative: Valuation concerns, earnings pressure, a downbeat tone from the federal reserve and hedge fund liquidations caused by the GameStop saga that we’ve watched play out over the last two weeks.
The Baker Hughes rig count gained 6 this week. There are 384 oil and gas rigs operating in the US – down 406 over last year.
Brent Crude Oil lost 0.25% this week closing at $55.10/bbl
WTI Crude Oil lost 0.13% this week to close at $52.20/bbl
Heating Oil gained 1.28% this week closing at $1.60/gallon
Natural Gas gained 4.40% this week closing at $2.56 per million BTUs
Unleaded Gas gained 0.50% this week closing at $1.55/gallon
Metals Complex
Gold lost 0.32% this week closing at $1850.30/oz
Silver gained 5.31% on the week closing at $26.91/oz
Palladium lost 6.63% this week closing at $2208.40/oz
Platinum lost 2.91% this week closing at $1079.20/oz
Copper lost 1.93% this week closing at $3.56/lb
Employment Picture
Employment Cost Index – Released 1/29/2021 – Compensation costs for civilian workers increased 0.7% for the 3-month period ending in December 2020. The 12 month period ending on December 2020 saw compensation costs increase by 2.5%. The 12 month period ending December 2019 increased 2.7%. Wages and salaries increased 2.6 percent over the year and increased 2.9 percent for the 12-month period ending in December 2019. Benefit costs increased 2.1 percent for the 12-month period ending in December 2020. In December 2019, benefit costs increased 1.9 percent. This report is published quarterly.
Weekly Unemployment Claims – Released Thursday 1/28/2021 – Initial jobless claims for the week ending January 23rddecreased 67k to 847k. The 4-week moving average was 868k, an increase of 16.25k.
Job Openings & Labor Turnover Survey JOLTS – Released 1/12/2021 – The U.S. Bureau of Labor Statistics reported the number and rate of job openings was little changed at 6.5 million on the last business day of November. Over the month, hires were little changed at 6.0 million and separations increased to 5.4 million. Within separations, the quits rate was unchanged at 2.2%. The layoffs and discharges rates increased to 1.4%.
November Jobs Report – BLS Summary– Released 1/8/2021 – The US Economylost 140k nonfarm jobs in December and the Unemployment rate was unchanged at 6.7%. Average hourly earnings increased 23 cents to $29.81. Hiring highlights include +161k Professional and Business Services, +121k Retail Trade, and -498k Leisure and Hospitality.
Average hourly earnings increased 23 cents to $29.81.
U3 unemployment rate was unchanged at 6.7%. U6 unemployment rate declined to 11.7%.
The labor force participation rate was unchanged 61.5%.
Average work week declined 0.1 hour to 34.7 hours.
This Week’s Economic Data
Links take you to the data source
Chicago PMI– Released 1/29/2021 – Chicago PMI increased to 63.8 points in January. This is the highest level since July 2018 and marks seven consecutive months above the 50-mark following a full year under it. Among the main five indicators, Production saw the largest monthly gain, followed by New Orders. Employment recorded the biggest decline.
Personal Income– Released 1/29/2021 – Personal income increased $116.6 billion or 0.6 percent in December according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $111.6 billion or 0.6 percent and personal consumption expenditures (PCE) decreased $27.9 billion or 0.2 percent.
New Residential Sales– Released 1/28/2021 – Sales of new single-family homes increased 1.6% to 842k, seasonally adjusted, in December. The median sales price of new homes sold in December was $355,900 with an average sales price of $394,900. At the end of December, the seasonally adjusted estimate of new homes for sale was 302k. This represents a supply of 4.3 months at the current sales rate.
Advance Estimate of 4th Quarter 2020 GDP – Released 1/28/2021 – Real gross domestic product (GDP) increased at an annual rate of 4.0 percent in the fourth quarter of 2020, according to the advance estimate released by the Bureau of Economic Analysis. The third quarter of 2020 saw an increase of 33.4 percent in real GDP. The increase in real GDP reflected increases in exports, nonresidential fixed investment, personal consumption expenditures (PCE), residential fixed investment, and private inventory investment that were partly offset by decreases in state and local government spending and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.
Durable Goods– Released 1/27/2021 – New orders for manufactured durable goods in December increased for the eighth consecutive month up $0.4 billion or 0.2% to $245.3 billion. Machinery led the increase rising $0.8 billion or 2.4% to $33.2 billion.
Consumer Confidence– Released 1/26/2021 – The Consumer confidence index increased 2.53% in January following a decline in December. The Index now shows a reading of 89.3, up from 87.1 in December.
Recent Economic Data
Links take you to the data source
Existing Home Sales– Released 1/22/2020 – Existing home sales increased in December. Sales increased 0.7% to a seasonally adjusted rate of 6.76 million in December. Sales are currently up 22.2% from one year ago. Housing inventory sits at 1.07 million units. Down 16.4% over last month. Down 23% over last year. Unsold inventory sits at an all-time low 1.9 month supply. The median existing home price for all housing types was $309,800.
Housing Starts– Released 1/21/2021 – New home starts in December were at a seasonally adjusted annual rate of 1.669 million; up 5.8% above November and 5.2% above last December’s rate. Building Permits were at a seasonally adjusted annual rate of 1.709 million, up 4.5% compared to November and up 17.3% over last year.
Retail Sales – Released 1/15/2021 – U.S. retail sales for December decreased 0.7% to $540.9 billion. U.S. retail sales are up 2.9% year/y.
Industrial Production and Capacity Utilization – Released 1/15/2021 – In DecemberIndustrial production increased 1.6%. Total Industrial production is still 3.3% below its pre-pandemic February level. Manufacturing increased 0.9%. Mining increased 1.6%. Utilities increased 6.2%. Total industrial production was 105.7% of its 2012 average which is 3.6% lower in December than a year ago. Total capacity utilization increased 1.1% to 74.5% in December which is 5.3% below its long-run average.
Producer Price Index– Released 1/15/2021 – The Producer Price Index for final demand increased 0.3% in December. PPI less food and energy increased 0.5% in December.
Consumer Price Index –Released 1/13/2021 – The Consumer Price Index increased 0.4% in December. Core CPI, which excludes food and energy was also up 0.1%. The monthly changes left total CPI up 1.4% year-over-year and core CPI up 1.6%.
Consumer Credit– Released 1/8/2021 – In November, consumer credit increased at a seasonally adjusted rate of 4.4%. Revolving credit decreased at an annual rate of 1.0%, while nonrevolving credit increased at an annual rate of 6.1%. Total Outstanding consumer credit is currently at $4.179 trillion.
U.S. Trade Balance–Released 1/7/2021 –According to the U.S. Census Bureau of Economic Analysis, the goods and services deficit increased in November by $5.0 billion to $68.1 billion. November exports were $184.2.0 billion, $2.2 billion more than October exports. November imports were $252.3 billion, $7.2 billion more than October imports. The goods and services deficit increased $73.6 billion or 13.9% year-to-date, from the same period in 2019. Year – over – year exports and imports decreased $372.3 billion or 16.1% and decreased $298.7 billion or 10.5% respectively.
PMI Non-Manufacturing Index (ISM Services)– Released 1/6/2021 – Economic activity in the non-manufacturing sector grew in December for the seventh consecutive month. ISM Non-Manufacturing registered 57.2 percent, which is 1.3 percentage points above the adjusted November reading of 55.9 percent.
PMI Manufacturing ISM Index – Released 1/4/2021 – December PMI increased 3.2% to 60.7% from November’s reading of 57.5%. The New Orders Index was up 2.8% from November’s reading of 65.1% to 67.9%. The Production Index registered 64.8%, up 4.0%.
U.S. Construction Spending– Released 1/4/2021 – Construction spending increased 0.9% in November measuring at a seasonally adjusted annual rate of $1,459.4 billion. The November figure is 3.8% above the November 2019 estimate. Private construction spending was 1.2% above the revised October estimate at $1,098.6 billion. Public construction spending was 0.2% below the revised October estimate at $347.6 billion.
US Light Vehicle Sales – Released 12/17/2020 – U.S. light vehicle sales were at a seasonally adjusted annual rate (SAAR) of 15.552 million units in November.
Next week we get data on U.S. Construction Spending, PMI Manufacturing, ISM Services, the U.S. Trade Balance, Consumer Credit, and the December Jobs Report.
All-Time Highs Followed by a Sharp Decline
Monday marked the all-time closing high for the S&P 500 (3855) but by Friday, investors didn’t have much to celebrate as the week closed on a decidedly negative tone. There is much to be celebrated as the vaccine rollout is starting to ramp up while new cases and hospitalizations are starting to come down in earnest. The seven day average of new cases topped out at 249.8k on January 4th and has been steadily falling.
7-Day average of new cases down to 158k after peaking in early January at 249k. John Hopkins – New cases
Hospitalizations are coming down- now back under 100k for the first time since Dec 1st. Covid Tracking- Currently Hospitalized
There’s a lot of positive things to look at right now but the markets are focused on the negative: Valuation concerns, earnings pressure, a downbeat tone from the federal reserve and hedge fund liquidations caused by the GameStop saga that we’ve watched play out over the last two weeks.
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Table of Contents
Fixed Income
12/16/20 FOMC Statement FOMC Minutes Credit, Liquidity and Balance Sheet Federal Reserve Dot Plots US Debt Measurement US Corporate Debt Tops 7 Trillion Treasury.gov yields FOMC Policy Normalization Statement Longer Run Goals August 2020
Global Bond Yields
Daily US Treasury Yields
Foreign Exchange Market
Energy Complex
The Baker Hughes rig count gained 6 this week. There are 384 oil and gas rigs operating in the US – down 406 over last year.
Metals Complex
Employment Picture
Employment Cost Index – Released 1/29/2021 – Compensation costs for civilian workers increased 0.7% for the 3-month period ending in December 2020. The 12 month period ending on December 2020 saw compensation costs increase by 2.5%. The 12 month period ending December 2019 increased 2.7%. Wages and salaries increased 2.6 percent over the year and increased 2.9 percent for the 12-month period ending in December 2019. Benefit costs increased 2.1 percent for the 12-month period ending in December 2020. In December 2019, benefit costs increased 1.9 percent. This report is published quarterly.
Weekly Unemployment Claims – Released Thursday 1/28/2021 – Initial jobless claims for the week ending January 23rddecreased 67k to 847k. The 4-week moving average was 868k, an increase of 16.25k.
Job Openings & Labor Turnover Survey JOLTS – Released 1/12/2021 – The U.S. Bureau of Labor Statistics reported the number and rate of job openings was little changed at 6.5 million on the last business day of November. Over the month, hires were little changed at 6.0 million and separations increased to 5.4 million. Within separations, the quits rate was unchanged at 2.2%. The layoffs and discharges rates increased to 1.4%.
November Jobs Report – BLS Summary – Released 1/8/2021 – The US Economy lost 140k nonfarm jobs in December and the Unemployment rate was unchanged at 6.7%. Average hourly earnings increased 23 cents to $29.81. Hiring highlights include +161k Professional and Business Services, +121k Retail Trade, and -498k Leisure and Hospitality.
This Week’s Economic Data
Links take you to the data source
Chicago PMI – Released 1/29/2021 – Chicago PMI increased to 63.8 points in January. This is the highest level since July 2018 and marks seven consecutive months above the 50-mark following a full year under it. Among the main five indicators, Production saw the largest monthly gain, followed by New Orders. Employment recorded the biggest decline.
Personal Income – Released 1/29/2021 – Personal income increased $116.6 billion or 0.6 percent in December according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $111.6 billion or 0.6 percent and personal consumption expenditures (PCE) decreased $27.9 billion or 0.2 percent.
New Residential Sales – Released 1/28/2021 – Sales of new single-family homes increased 1.6% to 842k, seasonally adjusted, in December. The median sales price of new homes sold in December was $355,900 with an average sales price of $394,900. At the end of December, the seasonally adjusted estimate of new homes for sale was 302k. This represents a supply of 4.3 months at the current sales rate.
Advance Estimate of 4th Quarter 2020 GDP – Released 1/28/2021 – Real gross domestic product (GDP) increased at an annual rate of 4.0 percent in the fourth quarter of 2020, according to the advance estimate released by the Bureau of Economic Analysis. The third quarter of 2020 saw an increase of 33.4 percent in real GDP. The increase in real GDP reflected increases in exports, nonresidential fixed investment, personal consumption expenditures (PCE), residential fixed investment, and private inventory investment that were partly offset by decreases in state and local government spending and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.
Durable Goods – Released 1/27/2021 – New orders for manufactured durable goods in December increased for the eighth consecutive month up $0.4 billion or 0.2% to $245.3 billion. Machinery led the increase rising $0.8 billion or 2.4% to $33.2 billion.
Consumer Confidence – Released 1/26/2021 – The Consumer confidence index increased 2.53% in January following a decline in December. The Index now shows a reading of 89.3, up from 87.1 in December.
Recent Economic Data
Links take you to the data source
Existing Home Sales – Released 1/22/2020 – Existing home sales increased in December. Sales increased 0.7% to a seasonally adjusted rate of 6.76 million in December. Sales are currently up 22.2% from one year ago. Housing inventory sits at 1.07 million units. Down 16.4% over last month. Down 23% over last year. Unsold inventory sits at an all-time low 1.9 month supply. The median existing home price for all housing types was $309,800.
Housing Starts – Released 1/21/2021 – New home starts in December were at a seasonally adjusted annual rate of 1.669 million; up 5.8% above November and 5.2% above last December’s rate. Building Permits were at a seasonally adjusted annual rate of 1.709 million, up 4.5% compared to November and up 17.3% over last year.
Retail Sales – Released 1/15/2021 – U.S. retail sales for December decreased 0.7% to $540.9 billion. U.S. retail sales are up 2.9% year/y.
Industrial Production and Capacity Utilization – Released 1/15/2021 – In December Industrial production increased 1.6%. Total Industrial production is still 3.3% below its pre-pandemic February level. Manufacturing increased 0.9%. Mining increased 1.6%. Utilities increased 6.2%. Total industrial production was 105.7% of its 2012 average which is 3.6% lower in December than a year ago. Total capacity utilization increased 1.1% to 74.5% in December which is 5.3% below its long-run average.
Producer Price Index – Released 1/15/2021 – The Producer Price Index for final demand increased 0.3% in December. PPI less food and energy increased 0.5% in December.
Consumer Price Index – Released 1/13/2021 – The Consumer Price Index increased 0.4% in December. Core CPI, which excludes food and energy was also up 0.1%. The monthly changes left total CPI up 1.4% year-over-year and core CPI up 1.6%.
Consumer Credit – Released 1/8/2021 – In November, consumer credit increased at a seasonally adjusted rate of 4.4%. Revolving credit decreased at an annual rate of 1.0%, while nonrevolving credit increased at an annual rate of 6.1%. Total Outstanding consumer credit is currently at $4.179 trillion.
U.S. Trade Balance – Released 1/7/2021 – According to the U.S. Census Bureau of Economic Analysis, the goods and services deficit increased in November by $5.0 billion to $68.1 billion. November exports were $184.2.0 billion, $2.2 billion more than October exports. November imports were $252.3 billion, $7.2 billion more than October imports. The goods and services deficit increased $73.6 billion or 13.9% year-to-date, from the same period in 2019. Year – over – year exports and imports decreased $372.3 billion or 16.1% and decreased $298.7 billion or 10.5% respectively.
PMI Non-Manufacturing Index (ISM Services) – Released 1/6/2021 – Economic activity in the non-manufacturing sector grew in December for the seventh consecutive month. ISM Non-Manufacturing registered 57.2 percent, which is 1.3 percentage points above the adjusted November reading of 55.9 percent.
PMI Manufacturing ISM Index – Released 1/4/2021 – December PMI increased 3.2% to 60.7% from November’s reading of 57.5%. The New Orders Index was up 2.8% from November’s reading of 65.1% to 67.9%. The Production Index registered 64.8%, up 4.0%.
U.S. Construction Spending – Released 1/4/2021 – Construction spending increased 0.9% in November measuring at a seasonally adjusted annual rate of $1,459.4 billion. The November figure is 3.8% above the November 2019 estimate. Private construction spending was 1.2% above the revised October estimate at $1,098.6 billion. Public construction spending was 0.2% below the revised October estimate at $347.6 billion.
US Light Vehicle Sales – Released 12/17/2020 – U.S. light vehicle sales were at a seasonally adjusted annual rate (SAAR) of 15.552 million units in November.
Next week we get data on U.S. Construction Spending, PMI Manufacturing, ISM Services, the U.S. Trade Balance, Consumer Credit, and the December Jobs Report.
Data Sources:
Bureau of Economic Analysis (BEA)
Congressional Budget Office (CBO)
U.S. Bureau of Labor Statistics (BLS)
Federal Reserve Economic Data (FRED Charts)
CME Fed Watch
U.S. Treasury – Yields
U.S. Census Bureau
Institute for Supply Management (ISM)
Weekly DOL Employment Data
BLS Monthly Jobs Report
JOLTS
US Energy Admin (EIA)
BLS Consumer Price Index CPI
BLS Producer Price Index PPI
Atlanta Fed GDPNOW
NY Fed Nowcast GDP
US Census Bureau Housing Starts
Consumer Credit
USCB Retail Sales
Construction Spending
Federal Reserve Dot Plots
NY Empire Index
Philadelphia Federal Reserve
P/E Ratio Data -Yardeni Research
Technical Analysis Info:
StockCharts.com – Financial Charts
Exponential vs Simple moving average
Other Links:
1973 Arab Oil Embargo
Hunt Brothers Silver
Long-Term Capital bailout
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