Despite Chair Powell’s pushback, the market now sees some 130 bps of rate cuts in 2024.


Source: @financialtimes   Read full article



Here is the 2-year Treasury yield.



US Economy


  • The ISM Manufacturing PMI surprised to the downside, …



Source: Reuters   Read full article


… with US factory activity now contracting for thirteen consecutive months.



  • All ISM PMI components were below 50 last month.



  • Construction spending topped forecasts in October, boosted by residential construction.
  • Economy-wide corporate profits (including non-public companies) strengthened in Q3.



  • Factory orders declined in October.
  • The economic surprise index has been rolling over.



  • Real GDP growth consensus estimates have been revised higher.



  • The 30-year mortgage rate is approaching 7%.



  • October job openings surprised to the downside, suggesting that labor market imbalances continue to ease.



  • Treasury yields dropped in response to soft job openings data.



  • The ADP private payrolls report surprised to the downside, suggesting a slowdown in the labor market.
  • Home prices were up 5% vs. a year ago in October.
  • The Atlanta Fed’s GDPNow model estimate for the current quarter’s GDP growth is 1.2% (annualized), which is in line with economists’ forecasts.



Market Data


  •  Gold hit a record high.




  • The real gold price is still roughly 20% below its peak in 1980.



  • The stock market is showing signs of froth.
  •  The Dow is up for five weeks in a row.
  • The rally looks increasingly stretched.



  • There are not a lot of bearish retail investors left.



  • CTAs have turned very bullish.


Source: Goldman Sachs; @dailychartbook


  • And yet, corporate insiders are bearish.



  • Deeper yield-curve inversions mean larger market corrections in a recession.



  • Share buybacks have accelerated



  • The S&P 500 has not been this concentrated in decades.



  • The US corporate sector’s financial strength has been deteriorating by some measures.



  • This chart shows the number of US Chapter 11 bankruptcy filings.



  • The current yield curve inversion duration has been unusually long.



Great Quotes


“(Market) Predictions Are Difficult…Especially When They Are About The Future” – Niels Bohr


Picture of the Week


Neuschwanstein and Hohenschwangau castles, Bavaria Germany




All content is the opinion of Brian Decker