Next week, the economic calendar will report most of the reports on Wednesday due to a shortened trading week. Thanksgiving week is generally a trend following week and reports this week generally do not disrupt the market. The Federal Open Market Committee (FOMC) will release their minutes form the Nov 2 and 3 meeting. This generally shows the points where individual members agree and disagree about the pace of tapering. I will be looking for discussion of raising short term interest rates; a leg that is keeping the market chugging along.
Happy Monday. Good Luck out there this week.
Global Spotlight
Lockdowns return to Europe. On Nov. 22, Austria will become the first EU country to introduce a full lockdown since early 2021 amid a rapid increase in COVID-19 cases.
An Emirati-Turkish meeting. Abu Dhabi’s crown prince and UAE de facto ruler Sheikh Mohammed bin Zayed Al Nahyan will possibly meet with Turkish President Recep Tayyip Erdogan on Nov. 24 in what would mark the Emirati leader’s first trip to Turkey in a decade.
Xi chairs a China-ASEAN summit. Chinese President Xi Jinping on Nov. 22 will host a summit to commemorate the 30th anniversary of China-Association of Southeast Asian Nations relations.
Chile holds general elections. The country’s first round of presidential and congressional elections will occur Nov. 21. The vote will provide a key indicator of the political and economic direction of the country for the following four years, and comes as Chile reconsiders its longtime pro-market policies.
Regional elections in Venezuela. Venezuela on Nov. 21 will hold a vote for most state governors, mayors and city council members. The elections are not, however, expected to be democratic given that the country’s authoritarian President Nicolas Maduro has committed election fraud before to maintain power.
Stratfor.com
Economic Calendar
Briefing.com has a good U.S. economic calendar for the week. Here are the main U.S. releases.
Last Week, retails sales rose 1.7% from September to October and up 16.3% YoY. Department Stores were up 2.2% and 27.6% YoY and sales of electronics and appliances rose 3.8%, 18.4% YoY. Industrial Production rose 1.6% in October, following a decline in September. Manufacturing output rose 1.3% led by a 11% rebound in motor vehicle production. I look at Capacity utilization as a key indicator of inflation pressure, It still remains below its long term average. Single Family building permits rose 2.7%, but still down from last year and pre pandemic levels.
Briefing.com
Last Weeks Numbers
Review Last weeks numbers here.
Earnings
Source I/B/E/S data from Refinitiv
Aggregate Estimates and Revisions
- 21Q3 Y/Y earnings are expected to be up 42.3%. Excluding the energy sector, the Y/Y earnings estimate is 34.0%.
- Of the 474 companies in the S&P 500 that have reported earnings to date for 21Q3, 80.8% have reported earnings above analyst estimates. This compares to a long-term average of 65.8% and prior four quarter average of 84.7%.
- 21Q3 Y/Y revenue is expected to be up 16.9%. Excluding the energy sector, the growth estimate is 13.5%.
- During the week of Nov. 22, 12 S&P 500 companies are expected to report quarterly earnings.
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Market Macro Technicals
I am toying with an idea on a chart that shows on a long-term perspective what level the market is. I have put this together with some ideas I have been reading about. This Chart is what I have been using over the last 3 years to indicate when I should be raising cash or raising equity exposure.
This is chart is a Weekly SPX chart looking back 5 years. I try to keep it very simple (located in Red), 1. BBand where price of the SPX is trading outside of the 3 standard deviation from the 50 moving average. (overextended) 2. MACD is high and crossing to the downside. 3. Williams %R is high with a point lower. To me this indicates that it is time to raise cash or wait till the next dip or correction to deploy money.
On the flip side (green), the Pandemic low and the 2018 taper tantrum were good entry points in the market. The money is made on the entry not the exit, just like real estate.
