Week of December 9 - 13, 2019

Maureen Kelliher, CFA

Maureen Kelliher, CFA

December 18, 2019


Weekly Macro Updates

Initial Jobless Claims (Dec 7) 214k est., 252k actual, 203k prior
Continuing Claims (Nov 30) 1678k est., 1667k actual, 1698k prior
CPI YOY (Nov) 2.0% est., 2.1% actual, 1.8% prior
CPI Ex Food & Energy YoY (Nov) 2.3% est., 2.3% actual, 2.3% prior
Real Average Hourly Earnings YoY (Nov) 1.1% actual, 1.4% prior: R+
PPI Final Demand YoY (Nov) 1.3% est., 1.1% actual, 1.1% prior
PPI Ex Food & Energy YoY (Oct) 1.7% est., 1.3% actual, 1.6% prior
Import Price Index YoY (Nov) -1.2% est., -1.3% actual, -3.0% prior
Household Change in Net Worth (3Q) $574B actual, $1862b prior: R+
Retail Sales Ex Autos and Gas (Nov) 0.4% est., 0.0% actual, 0.2% prior: R+
Retail Sales Control Group (Nov) 0.3% est., 0.1% actual, 0.3% prior
Markit US Manufacturing PMI (Dec P) 52.6 est., 52.5 actual, 52.6 prior
Markit US Services PMI (Dec P) 52.0 est., 52.2 actual, 51.6 prior
NAHB Housing Market Index (Dec) 70 est., 76 actual, 71 prior: R+

 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

There were numerous economic releases last week including a number of inflation gauges.  Core CPI for the last 12 months came in as expected at 2.3% whilst the headline number was a bit higher than forecast at 2.1%.  Wholesale prices however continued to moderate, with final demand PPI over the last year unchanged at 1.1% while core PPI fell to 1.3% well below expectations of 1.7%.  Year-over-year import and export prices continued to soften as well, both down -1.3%.  The week’s biggest disappointment was November retail sales.  Sales were expected to be up 0.4% for the month but sales less autos and gas were flat and control group sales (considered the best gauge of consumer spending) increased only slightly.  On the other hand, the recent pick-up in home sales drove the home builders’ sentiment Index its highest level since 1999. 

Global markets got a boost from several fronts last week, including the UK election that ensured Britain will finally leave the EU, no change in interest rates by the US Federal Reserve and US/China trade talks that showed progress.  Thus, for the week, the S&P 500 Index climbed 0.8% and the Dow Jones Industrial Average rose 0.5%.  The week’s rally was broad-based, as only two sectors–media and real estate–did not participate.  With good news on both the trade front and Britain, international markets rejoiced.  For the week, developed foreign markets jumped 1.7% and emerging markets surged 3.6%.  With short rates advancing but longer-dated yields retreating, bonds also rallied last week.  All segments of the bond market joined-in, as the Barclay’s US Aggregate Index and 10-year municipals bonds gained 0.3%, US corporate bonds rose 0.6% and high yield bonds increased 0.8%.