Friday was both the last day of the year and the two-year anniversary of the World Health Organization’s China office being informed of a number of pneumonia cases of an unknown etiology, detected in Wuhan. In those two years since the market experienced a peak to trough drop of 33% followed by a 113% rally off the lows. There have been many, many reasons not to be invested over the last two years, but if you were, you and your clients should be smiling.
Even though the last week of the year was down slightly, December still was the third best month of the year for the S&P 500, rising 4.36%. Treasuries on the other hand (US Agg) were down for both the month and the year. Treasury yields rose across the curve in 21’ with the 2-year yield +61 bps to 0.73%, the 5 year +33bps to 1.26%, the 10-year yield +59 bps to 1.52% and the 30-year yield +26 bps to 1.90%.
Be on the lookout for our client approved 2022 commentary, coming soon.
The Baker Hughes rig count was flat this week. There are 586 oil and gas rigs operating in the US – Up 235 over last year.
Metals Complex
Employment Picture
Weekly Unemployment Claims– Released Thursday 12/30/2021 – The week ending December 25th observed a decrease of 8k in initial claims currently at 198k. The four-week moving average of initial jobless claims decreased 7.25k to 199.25k. The record low on the 4-week is from May of 1969 at 179k.
Job Openings & Labor Turnover Survey JOLTS – Released 12/8/2021 – The U.S. Bureau of Labor Statistics reported the number and rate of job openings increased to 11.0 million on the last business day of October. Over the month, hires were little changed at 6.5 million and separations declined to 5.9 million. Within separations, the quits rate decreased to 2.8%. The layoffs and discharges rates were unchanged at 0.9%.
November Jobs Report–BLS SummaryReleased 12/3/2021 – The US Economyadded 210k nonfarm jobs in November and the Unemployment rate edged down to 4.2%. Average hourly earnings increased by 8 cents to $31.03. Hiring highlights include+90k Professional and Business Services, +50k Transportation and Warehousing, and +31 in Manufacturing.
Average hourly earnings increased by 8 cents to $31.03.
U3 unemployment rate declined 0.4% to 4.2%. U6 unemployment rate declined to 7.8%.
The labor force participation rate increased to 61.8%.
Average work week increased 0.1 hours to 34.8 hours.
Employment Cost Index – Released 10/29/2021 – Compensation costs for civilian workers increased 1.3% for the 3-month period ending in September 2021. The 12-month period ending in September 2021 saw compensation costs increase by 3.7%. The 12-month period ending September 2020 increased 2.4%. Wages and salaries increased 4.2 percent over the year and increased 2.5 percent for the 12-month period ending in September 2020. Benefit costs increased 2.5 percent over the year and increased 2.3 percent for the 12-month period ending in September 2020. This report is published quarterly.
This Week’s Economic Data
Links take you to the data source
Chicago PMI–Released 12/31/2021 – Chicago PMI increased to 63.1 points in December. Among the main five indicators, Production and New Orders and were higher. Order Backlogs, Employment and Supplier Deliveries fell across the month.
Recent Economic Data
Links take you to the data source
Personal Income – Released 12/23/2021 – Personal income increased $90.4 billion or 0.4 percent in November according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $70.4 billion or 0.4 percent and personal consumption expenditures (PCE) increased $104.7 billion or 0.6 percent.
Durable Goods– Released 12/23/2021 – New orders for manufactured durable goods in November increased $6.5billion or 2.5% to $268.3 billion. Transportation equipment led the increase raising $5.0 billion or 6.5% to $82.1 billion.
New Residential Sales –Released 12/23/2021 – Sales of new single-family homes increased 12.4% to 744k, seasonally adjusted, in November. The median sales price of new homes sold in November was $416,900 with an average sales price of $481,700. At the end of November, the seasonally adjusted estimate of new homes for sale was 402k. This represents a supply of 6.5 months at the current sales rate.
Existing Home Sales–Released 12/22/2021 – Existing home sales increased in November. Sales rose 1.9% to a seasonally adjusted rate of 6.46 million in November. Sales are currently down 2.0% from one year ago. Housing inventory sits at 1.11 million units. Down 9.8% from October’s inventory. Down 13.3% over last year. Unsold inventory sits at a 2.1-month supply. The median existing home price for all housing types was $353,900.
Consumer Confidence–Released 12/22/2021 – The Consumer confidence index increased in December following a modest gain in November. The Index now stands at 115.8, up from 111.9 in November.
Third Estimate of 3rd Quarter 2021 GDP – Released 12/22/2021 – Real gross domestic product (GDP) increased at an annual rate of 2.3 percent in the third quarter of 2021, according to the third estimate released by the Bureau of Economic Analysis. The third estimate is based on source data that are more complete than the data available for the second and advance estimates. Real GDP increased 2.0% in the advance estimate and 2.1% in the second estimate. The increase in real GDP in the third quarter reflected increases in private inventory investment, personal consumption expenditures (PCE), state and local government spending, and nonresidential fixed investment that were partly offset by decreases in residential fixed investment, federal government spending, and exports. Imports, which are a subtraction in the calculation of GDP, increased. The update primarily reflects upward revisions to personal consumption expenditures (PCE) and private inventory investment that were partly offset by a downward revision to exports. Imports, which are a subtraction in the calculation of GDP, were revised down.
Housing Starts–Released 12/16/2021 – New home starts in November were at a seasonally adjusted annual rate of 1.679 million; up 11.8% above October, and 8.3% above last November’s rate. Building Permits were at a seasonally adjusted annual rate of 1.712 million, up 3.6% compared to October, and up 0.9% over last year.
Industrial Production and Capacity Utilization – Released 12/16/2021 – In November Industrial production increased 0.5%. Manufacturing increased 0.7%. Utilities output decreased 0.8%. Mining output increased 0.7%. Total industrial production was 5.3% higher in November than a year ago. Total capacity utilization increased 0.3% to 76.8% in November which is 2.8% below its long run average.
Retail Sales– Released 12/15/2021 – U.S. retail sales for November increased 0.3% to $639.8 billion and retail sales are 18.2% above November 2020. U.S. retail sales for the September 2021 through November 2021 period were up 16.2% from the same period a year ago.
Producer Price Index–Released 12/14/2021 – The Producer Price Index for final demand increased 0.8% in November. PPI less food and energy also increased 0.8% in November. The change in PPI for final demand has increased 9.6% year/y.
Consumer Price Index –Released 12/10/2021 – Consumer prices rose 0.8% m/m in November following a 0.9% gain in October. Consumer prices are up 6.8% for the 12-month period ending in November marking the largest 12-month increase since the period ending June 1982. Core consumer prices increased 0.5% m/m in November following a 0.6% gain in October.
Consumer Credit–Released 12/7/2021 – Consumer credit increased at a seasonally adjusted annual rate of 4.6 percent in October. Revolving credit increased at an annual rate of 7.8 percent, while nonrevolving credit increased at an annual rate of 3.7 percent.
U.S. Trade Balance–Released 12/7/2021 – According to the U.S. Census Bureau of Economic Analysis the goods and services deficit decreased in October by $14.3 billion to $67.1 billion. October exports were $223.6 billion, $16.8 billion more than September exports. October imports were $290.7 billion, $2.5 billion more than September imports. Year to date the goods and services deficit increased $161.7 billion or 29.7%, from the same period in 2020. Year to date exports and imports increased $315.1 billion or 17.9% and increased $476.8 billion or 20.7% respectively.
US Light Vehicle Sales – Released 12/3/2021 – U.S. light vehicle sales were at a seasonally adjusted annual rate (SAAR) of 12.864 million units in November.
PMI Non-Manufacturing Index–Released 12/3/2021 – Economic activity in the non-manufacturing sector grew in November for the 18th consecutive month. ISM Non-Manufacturing registered 69.1 percent, which is 2.4 percentage points above the adjusted October reading of 66.7 percent.
PMI Manufacturing Index – Released 12/1/2021 – October PMI increased 0.3% to 61.1% up from October’s reading of 60.8%. The New Orders Index was 61.5% up 1.7% from October’s reading of 59.8%. The Production Index registered 61.5%, up 2.2%.
U.S. Construction Spending–Released 12/1/2021 – Construction spending increased 0.2% in October measuring at a seasonally adjusted annual rate of $1,598 billion. The October figure is 8.6% above the October 2020 estimate. Private construction spending was 0.2% below the revised September estimate at $1,245 billion. Public construction spending was 1.8% above the revised September estimate at $353 billion.
Next week we get data on the U.S. Construction Spending, Manufacturing PMI, Services PMI, U.S. Trade Balance, Consumer Credit, and the December Jobs Report.
Good Life Advisors – Talking Points – Week 52
Three Years In a Row for Equities
Friday was both the last day of the year and the two-year anniversary of the World Health Organization’s China office being informed of a number of pneumonia cases of an unknown etiology, detected in Wuhan. In those two years since the market experienced a peak to trough drop of 33% followed by a 113% rally off the lows. There have been many, many reasons not to be invested over the last two years, but if you were, you and your clients should be smiling.
Even though the last week of the year was down slightly, December still was the third best month of the year for the S&P 500, rising 4.36%. Treasuries on the other hand (US Agg) were down for both the month and the year. Treasury yields rose across the curve in 21’ with the 2-year yield +61 bps to 0.73%, the 5 year +33bps to 1.26%, the 10-year yield +59 bps to 1.52% and the 30-year yield +26 bps to 1.90%.
Be on the lookout for our client approved 2022 commentary, coming soon.
Table of Contents
Fixed Income
December FOMC Statement Credit, Liquidity and Balance Sheet Federal Reserve Dot Plots Dec 21′
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 was flat this week. There are 586 oil and gas rigs operating in the US – Up 235 over last year.
Metals Complex
Employment Picture
Weekly Unemployment Claims – Released Thursday 12/30/2021 – The week ending December 25th observed a decrease of 8k in initial claims currently at 198k. The four-week moving average of initial jobless claims decreased 7.25k to 199.25k. The record low on the 4-week is from May of 1969 at 179k.
Job Openings & Labor Turnover Survey JOLTS – Released 12/8/2021 – The U.S. Bureau of Labor Statistics reported the number and rate of job openings increased to 11.0 million on the last business day of October. Over the month, hires were little changed at 6.5 million and separations declined to 5.9 million. Within separations, the quits rate decreased to 2.8%. The layoffs and discharges rates were unchanged at 0.9%.
November Jobs Report – BLS Summary Released 12/3/2021 – The US Economy added 210k nonfarm jobs in November and the Unemployment rate edged down to 4.2%. Average hourly earnings increased by 8 cents to $31.03. Hiring highlights include+90k Professional and Business Services, +50k Transportation and Warehousing, and +31 in Manufacturing.
Employment Cost Index – Released 10/29/2021 – Compensation costs for civilian workers increased 1.3% for the 3-month period ending in September 2021. The 12-month period ending in September 2021 saw compensation costs increase by 3.7%. The 12-month period ending September 2020 increased 2.4%. Wages and salaries increased 4.2 percent over the year and increased 2.5 percent for the 12-month period ending in September 2020. Benefit costs increased 2.5 percent over the year and increased 2.3 percent for the 12-month period ending in September 2020. This report is published quarterly.
This Week’s Economic Data
Links take you to the data source
Chicago PMI – Released 12/31/2021 – Chicago PMI increased to 63.1 points in December. Among the main five indicators, Production and New Orders and were higher. Order Backlogs, Employment and Supplier Deliveries fell across the month.
Recent Economic Data
Links take you to the data source
Personal Income – Released 12/23/2021 – Personal income increased $90.4 billion or 0.4 percent in November according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI) increased $70.4 billion or 0.4 percent and personal consumption expenditures (PCE) increased $104.7 billion or 0.6 percent.
Durable Goods – Released 12/23/2021 – New orders for manufactured durable goods in November increased $6.5billion or 2.5% to $268.3 billion. Transportation equipment led the increase raising $5.0 billion or 6.5% to $82.1 billion.
New Residential Sales – Released 12/23/2021 – Sales of new single-family homes increased 12.4% to 744k, seasonally adjusted, in November. The median sales price of new homes sold in November was $416,900 with an average sales price of $481,700. At the end of November, the seasonally adjusted estimate of new homes for sale was 402k. This represents a supply of 6.5 months at the current sales rate.
Existing Home Sales – Released 12/22/2021 – Existing home sales increased in November. Sales rose 1.9% to a seasonally adjusted rate of 6.46 million in November. Sales are currently down 2.0% from one year ago. Housing inventory sits at 1.11 million units. Down 9.8% from October’s inventory. Down 13.3% over last year. Unsold inventory sits at a 2.1-month supply. The median existing home price for all housing types was $353,900.
Consumer Confidence – Released 12/22/2021 – The Consumer confidence index increased in December following a modest gain in November. The Index now stands at 115.8, up from 111.9 in November.
Third Estimate of 3rd Quarter 2021 GDP – Released 12/22/2021 – Real gross domestic product (GDP) increased at an annual rate of 2.3 percent in the third quarter of 2021, according to the third estimate released by the Bureau of Economic Analysis. The third estimate is based on source data that are more complete than the data available for the second and advance estimates. Real GDP increased 2.0% in the advance estimate and 2.1% in the second estimate. The increase in real GDP in the third quarter reflected increases in private inventory investment, personal consumption expenditures (PCE), state and local government spending, and nonresidential fixed investment that were partly offset by decreases in residential fixed investment, federal government spending, and exports. Imports, which are a subtraction in the calculation of GDP, increased. The update primarily reflects upward revisions to personal consumption expenditures (PCE) and private inventory investment that were partly offset by a downward revision to exports. Imports, which are a subtraction in the calculation of GDP, were revised down.
Housing Starts – Released 12/16/2021 – New home starts in November were at a seasonally adjusted annual rate of 1.679 million; up 11.8% above October, and 8.3% above last November’s rate. Building Permits were at a seasonally adjusted annual rate of 1.712 million, up 3.6% compared to October, and up 0.9% over last year.
Industrial Production and Capacity Utilization – Released 12/16/2021 – In November Industrial production increased 0.5%. Manufacturing increased 0.7%. Utilities output decreased 0.8%. Mining output increased 0.7%. Total industrial production was 5.3% higher in November than a year ago. Total capacity utilization increased 0.3% to 76.8% in November which is 2.8% below its long run average.
Retail Sales – Released 12/15/2021 – U.S. retail sales for November increased 0.3% to $639.8 billion and retail sales are 18.2% above November 2020. U.S. retail sales for the September 2021 through November 2021 period were up 16.2% from the same period a year ago.
Producer Price Index – Released 12/14/2021 – The Producer Price Index for final demand increased 0.8% in November. PPI less food and energy also increased 0.8% in November. The change in PPI for final demand has increased 9.6% year/y.
Consumer Price Index – Released 12/10/2021 – Consumer prices rose 0.8% m/m in November following a 0.9% gain in October. Consumer prices are up 6.8% for the 12-month period ending in November marking the largest 12-month increase since the period ending June 1982. Core consumer prices increased 0.5% m/m in November following a 0.6% gain in October.
Consumer Credit – Released 12/7/2021 – Consumer credit increased at a seasonally adjusted annual rate of 4.6 percent in October. Revolving credit increased at an annual rate of 7.8 percent, while nonrevolving credit increased at an annual rate of 3.7 percent.
U.S. Trade Balance – Released 12/7/2021 – According to the U.S. Census Bureau of Economic Analysis the goods and services deficit decreased in October by $14.3 billion to $67.1 billion. October exports were $223.6 billion, $16.8 billion more than September exports. October imports were $290.7 billion, $2.5 billion more than September imports. Year to date the goods and services deficit increased $161.7 billion or 29.7%, from the same period in 2020. Year to date exports and imports increased $315.1 billion or 17.9% and increased $476.8 billion or 20.7% respectively.
US Light Vehicle Sales – Released 12/3/2021 – U.S. light vehicle sales were at a seasonally adjusted annual rate (SAAR) of 12.864 million units in November.
PMI Non-Manufacturing Index – Released 12/3/2021 – Economic activity in the non-manufacturing sector grew in November for the 18th consecutive month. ISM Non-Manufacturing registered 69.1 percent, which is 2.4 percentage points above the adjusted October reading of 66.7 percent.
PMI Manufacturing Index – Released 12/1/2021 – October PMI increased 0.3% to 61.1% up from October’s reading of 60.8%. The New Orders Index was 61.5% up 1.7% from October’s reading of 59.8%. The Production Index registered 61.5%, up 2.2%.
U.S. Construction Spending – Released 12/1/2021 – Construction spending increased 0.2% in October measuring at a seasonally adjusted annual rate of $1,598 billion. The October figure is 8.6% above the October 2020 estimate. Private construction spending was 0.2% below the revised September estimate at $1,245 billion. Public construction spending was 1.8% above the revised September estimate at $353 billion.
Next week we get data on the U.S. Construction Spending, Manufacturing PMI, Services PMI, 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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