Week of December 2 - 6, 2019

Maureen Kelliher, CFA

Maureen Kelliher, CFA

December 11, 2019

2019

Weekly Macro Updates

Initial Jobless Claims (Nov 30) 215k est., 203k actual, 213k prior
Continuing Claims (Nov 23) 1660k est., 1693k actual, 1642k prior
Wards Total Vehicle Sales (Nov) 16.90m est., 17.09m actual, 16.55m prior
ADP Employment Change (Nov) 135k est., 67k actual, 121k prior: R-
ISM Non-Manufacturing Index (Nov) 54.5 est., 53.9 actual, 54.7 prior
Trade Balance (Oct) -$48.5b est., -$47.2 actual, -$51.1b prior: R+
Factory Orders Ex Trans (Oct) 0.2% actual, -0.3% prior: R-
Change in Nonfarm Payrolls (Nov) 180K est., 266k actual, 156K prior: R+
Two-Month Payroll Net Revisions (Nov) 41k
Change in Private Payrolls (Nov) 178k est., 254K actual, 163K prior: R+
Unemployment Rate (Nov) 3.6% est., 3.5% actual, 3.6% prior
University of Michigan Sentiment (Dec P) 97.0 est., 99.2 actual, 96.8 prior
Consumer Credit (Oct) $16.000b est., $18.908b actual, $9.579b prior: R+
NFIB Small Business Optimism (Nov) 103.0 est., 104.7 actual, 102.4 prior
 

 Strong or Improving
 Inconclusive or lacking trend
 Weak or declining
R+ Revised up
R- Revised down

Directional change based on general
long-term tends.

Capital Market Implications

After a tepid jobs report from ADP last Wednesday, the Friday release of BOL’s change in nonfarm payrolls for November was a nice holiday gift.  The number of jobs created last month, at 266,000, was much greater than anyone had anticipated while revisions were healthy as well–up an additional 41,000 over the previous two months.  The unemployment rate ticked down to 3.5% and the underemployment rate also improved to 6.9% versus its previous level of 7.0%.  Although the report was boosted by workers returning from the GM strike, that didn’t account for the surge in private payrolls for the month which increased 254,000.  The jump in November jobs dovetailed with recent weekly jobless claims, suggesting the consumer remains in solid shape.  Indeed, surveys of consumer sentiment rebounded this month and consumer credit expanded more than expected.  All of which bodes well for holiday sales.  

Last Friday, investors rejoiced over the outsized gains in jobs and sent stocks higher for the day.  Market action during the previous four sessions however had been lackluster, which left stocks little changed overall.  For the week, the S&P 500 Index eked out a gain of 0.2% while the Dow Jones Industrial Average ended flat.  Action within the sectors of the index was more mixed though.  Two major sectors, healthcare and financials, climbed nearly 1.0% but technology, retail and industrial stocks all sank, off between -0.5% and -1.0%.  International markets were the week’s best performers, as developed foreign markets rose 0.4% and emerging markets surged 0.9%.  With the Federal Reserve expected to be on hold at their upcoming FOMC meeting, interest rates held steady last week and bonds prices barely fluctuated.  For the week, the Barclay’s US Aggregate Index and US corporate bonds fell slightly while 10-year municipal bonds gained slightly.  High yield bonds continued to improve and closed out the week up 0.4%.