Last night’s US data has upset markets. It was too good.
The US Markit PMI jumped to 54.7:
The more important and widely followed ISM rocketed as well:
New orders, employment, output all powering. As I’ve said before, the productive economy bounces out of shutdown nicely.
The U.S. Census Bureau of the Department of Commerce announced today that construction spending during October 2013 was estimated at a seasonally adjusted annual rate of $908.4 billion, 0.8 percent above the September estimate of $901.2 billion. The October figure is 5.3 percent above the October 2012 estimate of $863.1 billion.
…Spending on private construction was at a seasonally adjusted annual rate of $625.7 billion, 0.5 percent below the September estimate of $629.0 billion. ‘
..In October, the estimated seasonally adjusted annual rate of public construction spending was $282.7 billion, 3.9 percent above the September estimate of $272.2 billion.
And this is the ongoing problem. The housing market is still slowing for both existing home prices and new construction on rising interest rates. Last night’s data showed again that if taper is coming then rates will move higher. Bonds fell sharply and yields jumped 1.5% to 3.87 on the 30 year. Weakening housing growth will hit retail and reports on the closely watched “Black Friday” splurge suggested just that. From Bloomie:
Urban Outfitters Inc. lost 3.8 percent as retail spending fell on the weekend after Thanksgiving for the first time since 2009. EBay (EBAY) Inc. climbed 1.9 percent as a report showed online spending on Black Friday rose to a record. Newmont Mining Corp., the world’s second-largest gold producer, slipped 3.8 percent as the precious metal’s price declined. 3M Co. lost 3.5 percent after Morgan Stanley downgraded the stock.
…“It seems like a sleepy day after Thanksgiving, nothing exciting going on,” Frank Ingarra, head trader at Greenwich, Connecticut-based NorthCoast Asset Management LLC, said by phone. His firm oversees about $1.8 billion. “Investors are probably waiting to see if there’s any news from the Fed later in the month and trying to get a read on retail sales.”
…U.S. retailers are coming off the first spending decline on a Black Friday weekend since 2009. Purchases at stores and websites fell 2.9 percent to $57.4 billion during the four days beginning with the Nov. 28 Thanksgiving holiday, according to a survey commissioned by the National Retail Federation.
“I would have expected Thanksgiving weekend sales to be stronger, given how well financial markets have done,” Scott Clemons, chief investment strategist at Brown Brothers Harriman Wealth Management, which oversees $22 billion, said by phone. “We’re skeptical that the price movement in stocks this year has been supported by fundamentals, so we’re lightening up.”
Stocks fell a little, the US dollar rose a little, but gold was smashed 2.5% and looks headed for its lows and the Aussie lost all of its gains from yesterday.
Taper on today. A good employment report will set the cat amongst the pigeons.
