M Notes: Mon, 11-11

LAST WEEK:  

Markets:  Trump wins a second term, and the Markets go way up.   

S&P roller coaster last week:  Down, Up significantly, Up even more significantly, Up, and Up.

Factory orders:   The prior month’s orders (August) were revised downward from -0.2% to -0.8%.  September orders matched consensus, coming in at -0.5%.

Fed Balance Sheet:  $7.013 Trillion (last week… down -$16 Billion).  Reminder: their balance sheet was closer to $4 Trillion before the Pandemic.  

Fed Meeting:   The Fed’s FOMC lowered their interest rate 25 basis point (¼ point), down to 4.50% - 4.75%.  In his press conference Fed Chair Jerome Powell said the resilience of the U.S. economy was remarkable.  Powell acknowledged the continuance of strong economic activity, and that the Fed was on their way to a more neutral path.  He was non-committal on whether the FOMC would cut another ¼ point in December (but that’s likely).  It’s no secret that Powell and Trump are not exactly “friends”.  When asked if he would resign if Trump asked him to, Powell simply said, “No”.  The President picks the Fed Chair nominee, but the Senate approves them.  Powell has about 18 months left in his current 4-year term.  

ISM:  The Institute for Supply Management’s Service index rose from 54.9 up to 56.0 (consensus was for 53.5).  Two weeks ago, their Manufacturing index dropped from 47.2 down to 46.5 (the expected consensus was 47.6).  A number above 50 implies economic expansion, while a number below 50 implies contraction.  Services represents 70% of the U.S. economy, while Manufacturing represents 30% of the U.S. economy.  

Jobless claims:  The weekly number came in at 221,000.  The four-week average came in at 227,000.

National Debt:  $35.262 Trillion (last week… up +$19 Billion).  

Trade deficit:  The prior month’s Trade Deficit (August) was revised downward from -$70.4 Billion, down further to -$70.8 Billion.  The September Trade Deficit missed the -$83.9 Billion consensus, coming in lower at -$84.4 Billion.  

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THIS WEEK:

Focus of the week:  Inflation.   While the PCE is coming down, Consumer Inflation (the CPI) is expected to climb from 2.4% up to 2.6%.  Wholesale Inflation is also expected to climb, from 1.8% up to 2.3%.  

Calendar:   CPI (Wed); PPI, jobless claims (Thu); and retail sales (Fri).   

Earnings:  Earnings season continues.  Some of the companies reporting this week:   Alibaba, Applied Materials, AstraZeneca, Cisco, Disney, Home Depot, Sony, and Spotify.