Fed officials pushed back on the markets’ aggressive rate cut projections.

  • Bostic:


Source: Reuters   Read full article


  • Goolsbee:


Source: @economics   Read full article


  • Williams:


Source: CNBC   Read full article

Nonetheless, the market is still pricing in some 140 bps of rate cuts next year.



US Economy


  • US manufacturing output climbed last month, spurred by the conclusion of the UAW strike.
  • Excluding vehicle production, US industrial output has been deteriorating over the past two years.
  • The NY Fed’s regional manufacturing index (the first such report of the month) dipped back into contraction territory this month.



  • Staff reductions accelerated.



  • At the national level, the US manufacturing PMI from S&P Global surprised to the downside amid soft demand.



  • However, service firms are reporting growth.



  • Mortgage rates are down sharply from the peak (2 charts).


Source: Mortgage News Daily



  • The NAHB homebuilder sentiment index showed a modest improvement this month, driven by a pullback in mortgage rates.
  • Asking prices for newly-listed homes are well above last year’s levels.



  • CoreLogic sees home price appreciation running below 3% next year.
  • Over 41% of household income now goes into mortgage payments for recently purchased homes.



  • The proportion of mortgage-free homes has been rising.



  • At the national level, the World Economics SMI index remains in growth mode.



  • The stock market is pricing in a sharp rebound in US manufacturing activity.



  • The Cleveland Fed’s median CPI measure remains elevated.



  • Consumer confidence jumped this month, boosted by the stock market rally and cheaper gasoline.
  • Existing home sales remained soft last month, but firmer mortgage applications point to an uptick.
  • Despite the pushback from Fed officials, the market is pricing in over six 25 bps rate cuts next year.



Market Data


  • Historically, commodity bull markets have occurred alongside weak real S&P 500 returns.



  • US growth stocks appear stretched versus value stocks, which may point to a decade of weak relative returns.



  • Office construction starts:



  • 72% of S&P 500 members have underperformed the index this year.



  • Finally, here is a look at US stock market cycles over the past 60 years.



Great Quotes


“The most dangerous words in investing is ‘This time it’s different” – Sir John Templeton


Picture of the Week


Christmas Tree in Castle Square, Old Town, Warsaw Poland




All content is the opinion of Brian Decker