The Latest Conference Board Leading Economic Index (LEI) for October is now available. The index rose 0.9 percent to 105.5. September was revised downward to 104.3 percent (2004 = 100). The latest number came in above the 0.6 percent forecast by Investing.com.
Following a 5-month stint in positive territory, the HSBC Flash China Manufacturing PMI shows Output contracts for the first time in six months.
There is plenty of data out today and it is generally reinforcing our three many thematic points: divergence, weak commodities, especially energy, and the slowing of the Chinese economy. This is helping the U.S. dollar and global bonds, but weighing on equities.
Russia and its redoubtable president, Vladimir Putin, have been much in the news lately. The latest flurry came when Putin was taken out behind the woodshed at the G20 conference in the Philippines last weekend over his recent moves to inject more Russian troops and arms into Ukraine.
As outlined on January 11th, we believed this year would again defy bearish forecasts and see instead: a positive gain for U.S. stocks, a strengthening dollar, lower commodity prices, and improving U.S. economic growth. Here’s how things have played out so far.
The topic of ‘currency war’ has been bantered about in financial circles since at least the term was first used by Brazilian Finance Minister Guido Mantega in September 2010. Recently, the currency war has escalated, and a ‘sanctions war’ against Russia has broken out.
Today’s housing data was broadly mixed, with Starts coming a shade below estimates and Permits a tad above consensus levels. The Starts weakness was primarily in the multi-family (or apartment buildings) category, which tends to be volatile on a month-to-month basis.
Last week brought new all-time highs in the three major U.S. stock averages (Dow Industrials, Transports, and S&P 500) nearly every day, continuing the remarkable winning streak that began a bit more than 4 weeks ago and shown below.
The latest foreign exchange fixing (forex) scandal, which led to a $4.3 billion bank settlement with American, British, and Swiss regulators reinforces the difficulties of effectively regulating the financial markets.
The US stock market has displayed a strong rally off the October lows and has seasonal tailwinds at its back. However, near-term caution may be advised since we are starting to see some negative divergences in market breadth and the credit markets, suggesting a pause or pullback may be in the works.