Richmond Fed Index - Record High

Richmond Fed Index - New Record It appears manufacturing activity in September was strong based on the regional Fed indexes and the Markit flash reading. There could be weakness in the service sector as was shown in the flash Markit reading. As you can see from the chart below, the Richmond Fed manufacturing index hit…

Brent Oil Hits The Highest Level Since November 2014

Brent Oil Price Increase Drives Inflation Expectations The worst sectors were real estate and consumer staples as they fell 1.89% and 1.5%. The best ones were energy and tech which increased 1.47% and 0.31%. As you can tell, oil prices and interest rates affected stocks on Monday. Brent oil peaked at $81.39 which was its…

Inflation Forecasted To Rise Above Fed’s 2% Target

Inflation - Weak Services Push Composite Flash PMI Lower The flash September composite PMI from Markit was weak because the service sector missed estimates sharply. The composite PMI was 53.4 which missed estimates for 55 and the prior report of 55. This was below the lowest estimate of 53.8. This shows Markit is restarting its…

Stock Investors Are Showing Extreme Greed

Stock Investors - Slight Selloff On Friday The optimism about the trade war is way overdone. New tariffs make it more likely there will be an economic slowdown in late 2018 and early 2019. The stock market is also way overbought even after the mild decline on Friday. The Dow was the only index that…

Communication Services - New Sector Starts Monday

Communication Services - Strong Thursday Rally The stock market rallied strongly again Thursday as the S&P 500 increased 0.78%, the Nasdaq increased 0.98%, and the Russell 2000 was up 0.43%. As you can see from the chart below, the Dow was the last of the 4 major indexes to reach a new record after the…

Leading Indicators Record High & Strong Philly Fed Index

Leading Indicators - Record High The August Conference Board leading indicators were up 0.4% month over month which missed the consensus for 0.5% growth. The July Conference Board leading index was revised to show 0.7% growth instead of 0.6% growth. Even though the leading index is supposed to lead the economy, they are laggards in…

Hourly Earnings Growth Is Positive Again

Hourly Earnings Growth - Real Wage Growth Is Positive Again Inflation missed estimates as CPI fell from 2.9% year over year to 2.7%. Hourly earnings growth was 2.9% which was a cycle high. Therefore, it’s not surprising real wage growth switched from negative to positive in August. As you can see from the chart below,…

Fund Managers Are Bullish On American Stocks

Fund Managers - Bearish Emerging Markets, Bullish On America The Chinese economy seems in a tailspin. Fund managers surveyed by Merrill Lynch expect global growth to fall in the next 12 months. As you can see from the chart below, the September z-score on American stocks is the highest at 1.3. The recent sell off…

Trade War? Stocks Rally Sharply

Trade War Potentially Simmers Down It's shocking how the trade war situation worked out. The futures market looked weak on Monday night. It seemed inevitable that China would match the tariffs President Trump announced. However, that’s not what happened. China announced it would tax $60 billion worth of American goods between a 5% and 10%…

Consumer Sentiment - Highest Since March

Consumer Sentiment Strong The University of Michigan consumer sentiment report showed consumer sentiment was 100.8 in the preliminary September reading. This beat the average estimate for 97 and last month’s reading of 96.2. It also beat the highest estimate which was 99. This report showed the most optimism since March 2018. Other than that, this…

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