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