The Consumer Price Index (CPI) report for November arrives on Friday. An increase in gasoline prices will be amplified by the seasonal adjustment. Some CPI components that were running hot may cool off a little, but higher rents (which, by construction, show up with a lag in the CPI) are likely to put upward pressure on inflation over the next several months.
Happy Monday. Good Luck out there this week.
Global Spotlight
Biden and Putin meet via video conference. U.S. President Joe Biden and Russian President Vladimir Putin will likely participate in a video call early this week amid rising tensions in eastern Ukraine. Putin has recently spoken of “legal guarantees” and “concrete agreements” barring NATO expansion eastward against the backdrop of Russia’s positioning of tens of thousands of additional troops near Ukraine’s border in recent months.
Germany has a new chancellor. The Bundestag will appoint Social Democratic Party leader Olaf Scholz as German chancellor Dec. 8, ending Angela Merkel’s 16-year run in power.
Erdogan visits Qatar. Turkish President Recep Tayyip Erdogan on Dec. 6-7 will visit Qatar to discuss bilateral and regional issues. Turkey and Qatar are both important strategic Sunni powers active in a handful of conflicts in the broader region, including in Libya and Afghanistan.
Vietnam holds an economic forum. Hanoi will hold the Vietnam Economic Forum 2021 on Dec. 5, during which top government committees will review the country’s economic policies from 2020-2021 and consider new policies to help Vietnam recover from COVID-19 and its associated manufacturing disruptions.
Stratfor.com
Economic Calendar
Briefing.com has a good U.S. economic calendar for the week. Here are the main U.S. releases.
In his congressional testimony, Fed Chair Powell noted that “factors pushing inflation upward will linger well into next year” and “with the rapid improvement in the labor market, slack is diminishing and wages are rising at a brisk pace.” The Fed’s Beige Book reported “robust demand for labor but persistent difficulty in hiring and retaining employees,” while price hikes were “widespread” across sectors. Facing an increased risk of persistently high inflation, the Fed is expected to reduce (“taper”) its monthly pace of asset purchases quicker and begin raising rates sooner than was expected.
In addition, uncertainty about the omicron variant weighed against stock market sentiment.
The Nonfarm payrolls rose by 210,000, vs. a median forecast of +550,000. The shortfall likely reflected the usual noise in the numbers, but the unemployment rate fell to 4.2% from 4.6%, showing tighter labor market conditions. The November ISM surveys showed continued strength, with ongoing concerns about the hiring and retention of workers, supply chain delays, and rising input costs. Claims for unemployment benefits are down to pre-recession, pre-covid 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 42.6%. Excluding the energy sector, the Y/Y earnings estimate is 34.2%.
- Of the 495 companies in the S&P 500 that have reported earnings to date for 21Q3, 81.0% 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 17.0%. Excluding the energy sector, the growth estimate is 13.6%.
- During the week of Dec. 6, 7 S&P 500 companies are expected to report quarterly earnings.
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Market Macro Technicals
The Thanksgiving week and week after proved to be the pull back that we indicated when the SP 500 was at ~4750. The market pulled back to the 4550 area, back to the 20 week moving average (on the chart below). The RSI and is trading in the middle, of the range and the MACD does not show a reversal, yet.
With the market trading in this range, I am looking for more support building before jumping back as a Bull.
