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Recordings of Recent Webinars and a Look at Expanded Volatility

 

Recordings of Recent Webinars and a Look at Expanded Volatility

Here are a few topics and resources on this post-election morning:

*  I think it’s fair to say that most people–myself included–did not expect the election outcome.  One result of the surprise is that realized volatility has gone through the roof during overnight trade in the ES futures.  I use a measure of “event volatility”, which is the price movement of bars that are based upon either volume or price movement.  This is a “pure” measure of volatility, which tells us the volatility per unit of volume or price change.  Note in the chart above that we’ve spiked on the event volatility measure.  We’re now at levels last seen at the January/February and Brexit lows.  In general, high event volatility has been associated with intermediate-term market bottoms, not tops.

*  The resulting huge rise in realized volatility means that not only are we seeing above average volume, but each unit of volume is moving the market twice as much as just a few days ago.  That’s a double barreled effect, and it’s extremely relevant for sizing positions.  Easy to underestimate the amount of risk you’re actually taking.

*  Here is a link to a recording of the webinar I gave for the SMB Options Tribe re: best trading practices of successful traders.  I’ve been impressed by the work of the Tribe…they emphasize ways of trading options that don’t involve being glued to screens daily.

*  Here is a link to a recording and podcast of the webinar I gave for the LockeInYourSuccess group re: the best psychological practices of successful traders.  John Locke has developed a number of options trading models that might be of interest to traders.  He recently announced an interesting affirmation challenge for traders.

*  The best way to use these webinar recordings is to pick out one idea from each that is worth working on as a goal, so that you’re not just listening passively to a presentation, but actively learning and moving yourself forward.

Further Reading:  Volume and Volatility and What They Mean for Trading

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Published at Wed, 09 Nov 2016 13:52:00 +0000

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Wall Street jumps after Trump wins White House

 

U.S. President elect Donald Trump arrives to address supporters with his son Barron and wife Melania at election night rally in Manhattan, New York, U.S., November 9, 2016.REUTERS/Brendan McDermid

U.S. stocks rose sharply on Wednesday in a dramatic turnaround from deep overnight losses as Wall Street digested the upset presidential election victory of Republican Donald Trump.

The Dow Jones industrial average .DJI rose 255.27 points, or 1.39 percent, to 18,588.01, the S&P 500 .SPX gained 23.52 points, or 1.1 percent, to 2,163.08 and the Nasdaq Composite .IXIC added 57.58 points, or 1.11 percent, to 5,251.07.

(Reporting by Noel Randewich; Editing by James Dalgleish)

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Published at Wed, 09 Nov 2016 09:42:31 +0000

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Wall Street rise as traders bet on Clinton election win

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By geralt from pixabay

Wall Street rise as traders bet on Clinton election win

By Noel Randewich

U.S. stocks rose for a second straight session on Tuesday as investors bet Democratic candidate Hillary Clinton would win the U.S. presidential election.

Wall Street sees the former secretary of state as a status quo candidate lending stability to the markets, while Republican candidate Donald Trump’s stances on foreign policy, trade and immigration are less certain.

Data company VoteCastr, which is providing real-time election information through news outlets, including Slate, showed Clinton with an early lead among voters in Florida, a must-win state for Trump.

Several investors said VoteCastr’s data pushed stock prices higher, although many questioned its accuracy.

Clinton has a 90 percent chance of defeating Trump, according to the final Reuters/Ipsos States of the Nation poll released on Monday.

“The market’s betting that a Clinton victory will lift the cloud of uncertainty we’ve been facing the last two weeks,” said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles. “We’re basically back to where we were last week. The market had gotten oversold.”

After starting the session at a slight loss, the Dow Jones industrial average .DJI ended up 0.4 percent at 18,332.43 points and the S&P 500 .SPX gained 0.38 percent to 2,139.53 points. The Nasdaq Composite .IXIC added 0.53 percent to 5,193.49 points.

The CBOE Volatility index .VIX, dubbed Wall Street’s “fear gauge,” reversed an early increase and dipped 0.9 percent after having notched its biggest one-day drop since late June on Monday.

The iShares MSCI Mexico Capped ETF (EWW.P), known of late as the “Trump ETF,” climbed 1.75 percent. The ETF is viewed as a barometer of Trump’s chances of winning the election since his policies are considered negative for Mexico.

Clinton was on track to win 303 votes in the electoral college to Trump’s 235, clearing the 270 needed for victory. She also leads Trump by about 44 percent to 39 percent in the popular vote, according to the Reuters/Ipsos poll.

The S&P 500 has surged 2.6 percent since the FBI said on Sunday it would not press criminal charges against Clinton over her use of a private email server, an announcement seen as improving her chances at the polls.

Shares of Smith & Wesson Holding (SWHC.O) rose 2.15 percent. Its sales have benefited in the past from fears among gun owners of increased gun control.

Aetna (AET.N) and Anthem (ANTM.N) jumped more than 2.7 percent. Both health insurers have gained from the Affordable Care Act, which Clinton has vowed to extend.

Advancing issues outnumbered declining ones on the NYSE by a 1.32-to-1 ratio; on Nasdaq, a 1.21-to-1 ratio favored advancers.

The S&P 500 posted 22 new 52-week highs and three new lows; the Nasdaq Composite recorded 60 new highs and 86 new lows.

About 7.0 billion shares changed hands on U.S. exchanges, above the 6.7 billion daily average over the last 20 sessions.

(Additional reporting by Yashaswini Swamynathan and Tanya Agrawal in Bengaluru, and Dion Rabouin, Sinead Carew and Lewis Krauskopf in New York; Editing by Dan Grebler and James Dalgleish)

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Published at Tue, 08 Nov 2016 21:04:42 +0000

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Tuesday: Election Day, Job Openings

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by MIH83 at pixabay

Tuesday: Election Day, Job Openings

by Bill McBride on 11/07/2016 08:07:00 PM

 A few truths: Trump lies repeatedly, he knows nothing about economics, and he is a disgusting person (his comments were not locker room comments). And his threat to jail his political opponent will be discussed and criticized for centuries.

Back in May, I wrote A Comment on Litmus Test Moments. I gave an example of some litmus test moments (issues that will come back and haunt people if they were on the wrong side – like the housing bubble). I argued that rejecting Trump will be a “litmus test” in the future.Send a message to the future! It is important that Trump loses and loses badly. You will feel better about yourself in a few years when you can honestly say you didn’t vote for Trump.  It will be even better if you can point to a public post opposing Trump written before the election (twitter, Facebook, blog, etc).  You will thank me later.

Tuesday:
• At 6:00 AM ET, NFIB Small Business Optimism Index for October.

• At 10:00 AM, Job Openings and Labor Turnover Survey for September from the BLS. Jobs openings decreased in August to 5.443 million from 5.831 million in July. The number of job openings were up 3% year-over-year, and Quits were up 4% year-over-year.

• All day, U.S. Presidential Election. The forecasts of all key analysts and economists assume Ms. Clinton will be the next President (my forecasts also assume a Clinton presidency). So if Trump is elected, expect some market volatility as forecasts are revised.

Read more at http://www.calculatedriskblog.com/2016/11/tuesday-election-day-job-openings.html#TRTHHFqkwKSGDB7b.99

by Bill McBride on 11/07/2016 08:07:00 PM

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Published at Tue, 08 Nov 2016 01:07:00 +0000

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Wall Street soars as investors see higher chance of Clinton win

U.S. Democratic presidential nominee Hillary Clinton greets people at a campaign office in Seattle, Washington, U.S. October 14, 2016. REUTERS/Lucy NicholsonU.S. Democratic presidential nominee Hillary Clinton greets people at a campaign office in Seattle, Washington, U.S. October 14, 2016. REUTERS/Lucy Nicholson

Wall Street soars as investors see higher chance of Clinton win

 

By Noel Randewich

Wall Street surged on the eve of the U.S. presidential election, with Democratic nominee Hillary Clinton’s prospects brightening after the FBI said it would not press criminal charges against her over the use of a private email server.

U.S. stocks on Monday racked up their biggest one-day percentage gain since March 1, while a volatility measure recorded its biggest drop since late June.

The iShares MSCI Mexico ETF (EWW.P), known of late as the “Trump ETF,” soared 5.12 percent and notched its best day in more than five years. The exchange-traded fund is viewed as a barometer for expectations that Republican Donald Trump could win the election since his policies are considered negative for Mexico.

The FBI said on Sunday it stood by its July finding that Clinton was not guilty of criminal wrongdoing, after announcing on Oct. 28 it was reviewing additional emails relating to her use of a private server while secretary of state.

While polls last week showed Trump had been closing the gap, at least five major polls on Monday showed Clinton still had the lead in the race for the White House.

Wall Street had closed lower for nine days in a row through Friday, its longest losing streak in more than 35 years.

Investors have tended to see Clinton as a more status quo candidate. On the other hand, Trump’s stance on foreign policy, trade and immigration has unnerved the market.

“Markets like certainty and predictability,” said Jeff Carbone, co-founder of Cornerstone Financial Partners in Charlotte, North Carolina. “I don’t see another 5 percent bump on a Clinton win, but I could see a 5 to 7 percent pullback on a Trump win.”

The Dow Jones industrial average .DJI jumped 2.08 percent to end at 18,259.67 points and the S&P 500 .SPX surged 2.22 percent to 2,131.52. The Nasdaq Composite .IXIC added 2.37 percent to 5,166.17.

The CBOE Volatility index .VIX, Wall Street’s so-called fear gauge, tumbled 17 percent, its biggest one-day drop since June 28, just after Britain voted to leave the European Union.

The financial sector’s .SPSY 2.6 percent rise led the gainers among the 11 S&P sectors. Investors expect a Clinton victory would not hinder a potential interest rate hike by the Federal Reserve next month.

Biogen (BIIB.O) jumped 6.72 percent after the drugmaker and Ionis Pharmaceuticals (IONS.O) announced positive interim trial data. Ionis shares soared 18.39 percent.

Advancing issues outnumbered declining ones on the NYSE by a 4.65-to-1 ratio; on Nasdaq, a 4.03-to-1 ratio favored advancers.

The S&P 500 posted 13 new 52-week highs and no new lows; the Nasdaq Composite recorded 66 new highs and 81 new lows.

About 7.0 billion shares changed hands on U.S. exchanges, above the 6.7 billion daily average over the last 20 sessions.

(Additional reporting by Yashaswini Swamynathan in Bengaluru; Editing by Bernadette Baum and Meredith Mazzilli)

 

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Published at Mon, 07 Nov 2016 22:50:02 +0000

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Dollar jumps against yen, euro as FBI clears Clinton

 

Light is cast on a U.S. one-hundred dollar bill next to a Japanese 10,000 yen note in this picture illustration shot February 28, 2013.REUTERS/Shohei Miyano/Illustration/File Photo

Dollar jumps against yen, euro as FBI clears Clinton

By Dion Rabouin | NEW YORK

The dollar rose on Monday after the FBI decided that U.S. Democratic presidential nominee Hillary Clinton will not face criminal charges, which was seen as a boost to her chances of winning Tuesday’s contest with Republican rival Donald Trump.

The greenback gained 0.75 percent against a basket of currencies .DXY after getting hammered last week when FBI Director James Comey said the agency was looking at another large batch of Clinton emails, strengthening chances of a Trump victory, an outcome that was seen as likely to send shock waves through financial markets.

The Federal Bureau of Investigation said late Sunday it stood by its earlier finding that no criminal charges were warranted against Clinton for her email practices. The announcement sent the dollar surging against the yen JPY=, euro EUR= and pound, and gave a jolt to the Mexican peso MXN=.

“It’s all the election. It’s all the Comey letter,” said Joseph Trevisani, chief market strategist at Worldwide Markets in Woodcliff Lake, New Jersey, referring to the currency moves.

“Markets want continuity and essentially they want what they have priced in and both point towards Clinton. That’s why markets are reacting to anything that boosts Clinton’s chances by taking back some of the selloff from the past week or so.”

Despite wide-ranging political worries from a Trump victory to the possibility of a Democratic sweep of the U.S. presidency, Senate and House of Representatives, markets now look confident the U.S. will continue with the status quo, analysts said.

“It’s going to be a tight race, but the market appears to be pricing in a Clinton victory,” with the Republicans likely to control the House and the Democrats likely in control of the Senate, said Peter Ng, senior FX trader at Silicon Valley Bank in Santa Clara, California.

Trump’s stance on immigration, foreign policy and trade have made the Mexican peso a proxy for his election chances.

Boosted by the FBI’s decision, the peso rose as much as 2.5 percent on Monday, on pace for its largest one-day percentage gain since Sept. 27, to hit a 12-day high of 18.55 per dollar.

The dollar rose 1.4 percent to 104.58 yen JPY=. It declined to 102.550 against the safe-haven Japanese currency last week as polls showed the U.S. presidential race tightening.

The euro EUR= fell 0.9 percent against the dollar to $1.1035. Sterling GBP=also slipped against the dollar, falling 1 percent to $1.2390.

(Additional reporting by Patrick Graham and Yumna Mohamed in London; Editing by Jeffrey Benkoe and Diane Craft)

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My Trading Journal: 30 Day Trading Journal

Published at Sun, 06 Nov 2016 21:56:02 +0000

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Schedule for Week of Nov 6, 2016

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Schedule for Week of Nov 6, 2016

by Bill McBride on 11/05/2016 10:05:00 AM

 This will be a light week for economic data.

The key event will be the US election on Tuesday.

—– Monday, 7th —–

10:00 AM ET: The Fed will release the monthly Labor Market Conditions Index (LMCI).

2:00 PM ET: the October 2016 Senior Loan Officer Opinion Survey on Bank Lending Practices from the Federal Reserve.

3:00 PM: Consumer credit from the Federal Reserve.  The consensus is for a $18.7 billion increase in credit.

—– Tuesday, Nov 8th—–

6:00 AM ET: NFIB Small Business Optimism Index for October.
Job Openings and Labor Turnover Survey

10:00 AM: Job Openings and Labor Turnover Survey for September from the BLS.

This graph shows job openings (yellow line), hires (purple), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

Jobs openings decreased in August to 5.443 million from 5.831 million in July.

The number of job openings (yellow) were up 3% year-over-year, and Quits were up 4% year-over-year.

All day, U.S. Presidential Election. The forecasts of all key analysts and economists assume Ms. Clinton will be the next President (my forecasts also assume a Clinton presidency). So if Trump is elected, expect some market volatility as forecasts are revised.

—– Wednesday, Nov 9th —–

7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

10:00 AM: Monthly Wholesale Trade: Sales and Inventories for July. The consensus is for a 0.2% increase in inventories.

—– Thursday, Nov 10th —–

8:30 AM ET: The initial weekly unemployment claims report will be released.  The consensus is for 263 thousand initial claims, down from 265 thousand the previous week.

—– Friday, Nov 11th —–

10:00 AM: University of Michigan’s Consumer sentiment index (preliminary for November). The consensus is for a reading of 87.1, up from 87.2 in October

Read more at http://www.calculatedriskblog.com/2016/11/schedule-for-week-of-nov-6-2016.html#hMbbCUr6Wgw4Up4i.99

by Bill McBride on 11/05/2016 10:05:00 AM

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Published at Sat, 05 Nov 2016 14:05:00 +0000

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Trade Deficit at $36.4 Billion in October

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http://pixabay.com/en/users/Peggy_Marco
By Peggy_Marco from Pixabay

Trade Deficit at $36.4 Billion in October

by Bill McBride on 11/04/2016 12:55:00 PM

 Earlier from the Department of Commerce reported:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $36.4 billion in September, down $4.0 billion from $40.5 billion in August, revised. September exports were $189.2 billion, $1.0 billion more than August exports. September imports were $225.6 billion, $3.0 billion less than August imports.

The trade deficit was larger than the consensus forecast of $38.9 billion (expect a small upward revision to Q3 GDP).

The first graph shows the monthly U.S. exports and imports in dollars through September 2016.
 

U.S. Trade Exports ImportsClick on graph for larger image.

Imports decreased and exports increased in September.

Exports are 14% above the pre-recession peak and up 1% compared to September 2015; imports are down 1% compared to September 2015.

It appears trade might be picking up a little.

The second graph shows the U.S. trade deficit, with and without petroleum.
 

U.S. Trade DeficitThe blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

Oil imports averaged $39.02 in September, down from $39.38 in August, and down from $42.72 in September 2015.  The petroleum deficit has generally been declining and is the major reason the overall deficit has declined a little since early 2012.

The trade deficit with China decreased to $32.4 billion in September, from $36.3 billion in September 2015. The deficit with China is a substantial portion of the overall deficit, but the deficit with China has been declining.

Read more at http://www.calculatedriskblog.com/2016/11/trade-deficit-at-364-billion-in-october.html#HlGfDgljgdqcKdiw.99

by Bill McBride on 11/04/2016 12:55:00 PM

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Published at Fri, 04 Nov 2016 16:55:00 +0000

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FRBNY 4th Quarter GDP Nowcast 1.6% vs. GDPNow 3.1%

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tags
By HendoBe from Pixabay

FRBNY 4th Quarter GDP Nowcast 1.6% vs. GDPNow 3.1%


In sharp contrast to a GDPNow forecast of 3.1 percent for 4th quarter GDP, the FRBNY Nowcast Model estimates 4th quarter GDP at a mere 1.6 percent.

November 4, 2016: 4th Quarter Nowcast Highlights

  • The FRBNY Staff Nowcast stands at 1.6% for 2016:Q4.
  • Overall positive news during the last two weeks pushed the nowcast for Q4 up 0.2 percentage point.
  • Manufacturers’ shipments and ISM manufacturing survey data had the largest positive contributions in the last two weeks.

FRBNY 4th Quarter GDP Nowcast

November 4, 2016: 4th Quarter Nowcast Detail

FRBNY 4th Quarter GDP Nowcast Details
Larger Image

Mish Comments

The GDPNow Forecast rose from 2.1% to 3.1% since the last estimate.  0.8 percentage points was due to auto sales.

The FRBNY Nowcast report does not even factor in auto sales.

Also note that exports added 0.019 percentage points to Nowcast, but 0.06 percentage points to GDPNow.

Once again it’s not the data per se that drives either forecast, rather, it’s the data vs. what the model predicted.

Regardless, there is a massive difference in how these models see things right now.

At least one of these models is way wrong.


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Michael “Mish” Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Visit http://www.sitkapacific.com/ to learn more about wealth management for investors seeking strong performance with low volatility.

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Published at Fri, 04 Nov 2016 16:35:44 +0000

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October Employment Report: 161,000 Jobs, 4.9% Unemployment Rate

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https://pixabay.com/en/users/geralt-9301/
By geralt from PixabayOctober Employment Report: 161,000 Jobs, 4.9% Unemployment Rate

October Employment Report: 161,000 Jobs, 4.9% Unemployment Rate

by Bill McBride on 11/04/2016 08:42:00 AM

From the BLS:

Total nonfarm payroll employment rose by 161,000 in October, and the unemployment rate was little changed at 4.9 percent, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in health care, professional and business services, and financial activities.

The change in total nonfarm payroll employment for August was revised up from +167,000 to +176,000, and the change for September was revised up from +156,000 to +191,000. With these revisions, employment gains in August and September combined were 44,000 more than previously reported.

In October, average hourly earnings for all employees on private nonfarm payrolls rose by 10 cents to $25.92, following an 8-cent increase in September. Over the year, average hourly earnings have risen by 2.8 percent.
emphasis added

Payroll jobs added per monthClick on graph for larger image.

The first graph shows the monthly change in payroll jobs, ex-Census (meaning the impact of the decennial Census temporary hires and layoffs is removed – mostly in 2010 – to show the underlying payroll changes).

Total payrolls increased by 161 thousand in October (private payrolls increased 142 thousand).

Payrolls for August and September were revised up by a combined 44 thousand.

Year-over-year change employmentThis graph shows the year-over-year change in total non-farm employment since 1968.

In October, the year-over-year change was 2.36 million jobs.  A solid gain.

The third graph shows the employment population ratio and the participation rate.
 

Employment Pop Ratio, participation and unemployment ratesThe Labor Force Participation Rate decreased in September to 62.8%. This is the percentage of the working age population in the labor force.   A large portion of the recent decline in the participation rate is due to demographics.

The Employment-Population ratio decreased to 59.7% (black line).

I’ll post the 25 to 54 age group employment-population ratio graph later.
 

unemployment rateThe fourth graph shows the unemployment rate.

The unemployment rate decreased in October to 4.9%.

This was slightly below expectations of 170,000 jobs, however job growth for August and September were revised up – and there was solid wage growth. A solid report.

I’ll have much more later …

Read more at http://www.calculatedriskblog.com/2016/11/october-employment-report-161000-jobs.html#akOMlWB6OZp9TQsG.99

by Bill McBride on 11/04/2016 08:42:00 AM

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Published at Fri, 04 Nov 2016 12:42:00 +0000

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Asia shares slip, dollar shaky as investors anxious before U.S. election

 

Pedestrians are reflected in an electronic board showing the graph of the recent fluctuations of the Tokyo Stock Exchange Stock Price Index (TOPIX) outside a brokerage in Tokyo, Japan, May 28, 2015.REUTERS/Yuya Shino

Asia shares slip, dollar shaky as investors anxious before U.S. election

Asian shares slipped on Friday and the dollar nursed losses in a week marked by growing uncertainty about the outcome of the U.S. presidential election.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slipped 0.4 percent after brushing its lowest levels since early August. It looked set for a loss of 1.7 for the week.

Investors have been unnerved in recent days by signs that the presidential race between Democrat Hillary Clinton and Republican Donald Trump may be tightening just days before Tuesday’s vote.

That anxiety has rippled across global financial markets as investors ponder hedging the possible ramifications of a Trump presidency, overshadowing other events including Friday’s U.S. employment report for October.

“This negative sentiment is also spilling over into Europe’s markets as they also slip back as the weaker U.S. dollar pushes up the pound and the euro, as we look again at the potential for another negative open this morning,” wrote Michael Hewson, chief market analyst at CMC Markets in London.

CMC expects Britain’s FTSE 100 .FTSE, France’s CAC 40 .FCHI and Germany’s DAX <.GDAXI to all open down moderately lower.

According to the latest Reuters/Ipsos States of the Nation project, Clinton, who is seen as the status quo candidate by markets, maintained her narrow lead over Trump.

But several swing states that the Republican challenger must win shifted from favoring Clinton to toss-ups, offering Trump a possible route to victory.

“Even if opinion polls show that Clinton is maintaining a lead, anything can happen at the last minute, something the Brexit outcome taught us,” said Norihiro Fujito, senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities, referring to Britain’s surprising vote in June to leave the European Union.

Trump, a political novice, has campaigned to clamp down on immigration, rethink trade relations and slap high tariffs on imported goods. Some fear his election would pose risks for global trade and growth.

On Wall Street on Thursday, U.S. stocks sagged, with the S&P 500’s .SPX eighth straight losing session marking its longest streak since the 2008 financial crisis. A slump in Facebook shares (FB.O) and the U.S. election jitters sapped investor confidence.

Japan’s Nikkei stock index .N225 slid 1.3 percent, reopening after a public holiday on Thursday and catching up to losses in the previous global session. It was down 3.1 percent for the week, the biggest weekly drop in four months, dragged down by the resurgence of the perennial safe-haven yen.

The dollar clawed back some lost ground against the yen, rising 0.2 percent to 103.19 JPY= and pushing away from the previous session’s one-month low of 102.54 yen, though still down 1.5 percent for the week. The euro EUR= edged down 0.1 percent to $1.1097 EUR=, up about 1 percent for the week.

The dollar index, which tracks the greenback against a basket of six rival currencies, inched up 0.1 percent to 97.244 .DXY, down 1.1 percent for the week and not far from a more than three-week low of 97.041 struck overnight.

The nonfarm payrolls report due later Friday is expected to show employers added 175,000 jobs in October, according to the median estimate of 106 economists polled by Reuters. [ECONUS]

U.S. data on Thursday showed that services industry activity cooled last month amid a slowdown in new orders and hiring, while planned job cuts by U.S.-based employers dropped 31 percent to a five-month low.

That underscored the labor market’s healthy fundamentals, though more Americans filed for unemployment benefits last week.

The pound was a stand-out performer overnight, rising to a nearly one-month high of $1.2494 GBP= on Thursday after a British court ruled that the government needs parliamentary approval to start the process of leaving the European Union. That could potentially delay Prime Minister Theresa May’s Brexit plans.

The pound also got a boost from the Bank of England, which scrapped its plan to cut interest rates and ramped up its forecasts for growth.

Sterling was last up slightly at $1.2465, poised to gain 2.3 percent for the week.

Oil prices took back some ground after settling down more than 1 percent on Thursday as investors reacted to a record weekly surge in U.S. crude inventories and remained skeptical that OPEC will actually implement its planned output curbs.

U.S. crude CLc1 added 0.3 percent to $44.79 per barrel. Brent crude LCOc1 also rose 0.3 percent to $46.47.

(Additional reporting by Ayai Tomisawa; Editing by Shri Navaratnam and Kim Coghill)

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Published at Fri, 04 Nov 2016 06:40:05 +0000

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Friday: Employment Report, Trade Deficit

calculator-1680905_1280by stevepb from pixabay

Friday: Employment Report, Trade Deficit

by Bill McBride on 11/03/2016 08:08:00 PM

 From Matthew Graham at Mortgage News Daily: Mortgage Rates Drift Higher Ahead of Jobs Report

Mortgage Rates were slightly higher today, keeping them in line with the weakest levels in just over 5 months. “Weakness” is relative, however. Apart from the past 5 months, and a few months in 2012, today’s rates would rank among all-time lows. Day-to-day movement hasn’t been extreme for the past few days, with most lenders continuing to quote 3.625% on top tier conventional 30yr fixed scenarios, and merely making small adjustments to the upfront costs depending on market movement.
emphasis added

Friday:
• At 8:30 AM ET, Employment Report for October. The consensus is for an increase of 178,000 non-farm payroll jobs added in October, up from the 156,000 non-farm payroll jobs added in September. The consensus is for the unemployment rate to decline to 4.9%.

• Also at 8:30 AM, Trade Balance report for September from the Census Bureau. The consensus is for the U.S. trade deficit to be at $38.9 billion in September from $40.7 billion in August.

by Bill McBride on 11/03/2016 08:08:00 PM

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Published at Fri, 04 Nov 2016 00:08:00 +0000

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Relief Rally Coming: Election Implications?!

Relief Rally Coming: Election Implications?!


The SPX is attempting to rally this morning and we had those strange up blips up in the aftermarket yesterday on the SPY to 213.10, but earlier this week saw one that went to 215.53 and it did not work as it has in the past.

Ideally, we see a market top today +/- 2 TD’s. The last three 8 TD cycles (+/- 2) ran 6+6+10. We have another trine on Nov 5th, the last two (Oct 30 & Nov 1) knocked the market down after holding it up slightly on very strange internal e-wave patterns that normally suggest higher prices (the problem with interpreting bearish abc waves).

The moon is in Sagittarius and many lows are formed in Sagittarius especially around Capricorn turns (today). Scorpio sun sq’s the moon in Aquarius Sunday through Tuesday and that usually means selling. We may have an irregular bottom forming next week around election, but a rally into November 15th looks to be the case and as high as the upper 2190’s or low 2200’s.

Bradley turns are helio-geo Nov 1-3 top (obviously inverted), helio-geo Nov 13-15 (bottom, inverted again it looks to be a top & full moon the 14th) and then helio-geo-geo-helio Nov 24, 25, 28, 29 (top but again inverted likely). The last one is a HUGE turn in many ways and may well represent the 10/20/40 week low (ideal low due Nov 28). Dec 1 is a trine as is Nov 26 so….

We had positive divergences forming later in the day yesterday and also today, so a relief bounce is expected perhaps on the jobs report (non-farm payrolls 11/4). Already, the fear index and P/C ratio are screaming fear and this kind of behavior is found near bottoms. The astros tell us more selling early next week though (election jitters?).

Speaking of the election, I thought that the stock market was supposed to rally if Hillary won??? But then we get a huge sell-off from the 15th down to the 28th??? Does that mean early on, people think Hillary won, but then she doesn’t???

Overall, the bigger picture suggests Wave B of a larger Y (X arrived on Feb 11, 2016) wave due on or near Nov 28 (SPX 1950?) and again a double bottom on Dec 20 (per the TLC white line on the chart). If this chart is correct, we see much higher prices into the end of Feb 2017 out of the Dec 20 low.

Wave Z of B could be the big one everyone is expecting here in November and could occur as early as late April 2017 or as late as early October 2017 if Wave Z falls in ABC fashion. We could easily see the SPX down into the mid to upper 1600’s depending on where it where Wave Z terminates. Out of Wave B comes the final Wave C rally into 2018 before the expected horrendous crash (worst since 1929-32). The market tends to run an approximate 88 year cycle, which is four 22-year generational cycles (Sept 1929 + 88 years = late 2017). The 88-year cycle is not perfect, but it is close.

Benner’s Cycle along with McClellan’s work on peak oil price (2008) +10 years pick market tops and that is 2018. The low expected is 2020/21 based on one Benner’s Cycle last seen 2000/2003 and 1984-87 before that (Harry Dent agrees with 2020 for the low); after this coming bottom, 2037-40, which is near the 60/62 year K cycle top in gold due 2040-42 (post WWIII inflation?).

Last week I predicted GDX would hit 26.02 by Friday this week and then a pull back. Yesterday saw 25.93 and an engulfing cloud and today what appears to be a bearish harami. Gold seems to be going opposite the stock market right now so we are likely to see a relief rally Friday (or today into Friday) and a sell-off in gold.

This weekend and forward, I’ll draw up larger charts looking at the bigger picture. Wow! These are crazy times!

SPX Rising Wedge Daily Chart
Larger Image


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Brad Gudgeon

Brad Gudgeon
BluStar Market Timer

BluStar Market Timer Investment Philosophy: The stock market is currently in a technical Elliott Wave Bear Market Rally. It has been exhibiting A-B-C type waves instead of the normal 5 Waves since the market topped in 2000. According to “The Original Works of R.N. Elliott”, we are due for a move down to about the S&P 500 442/443 area in the next few years. In my opinion, this is no longer a buy and hold market, but a traders’ market. We mainly swing trade the market with funds and ETF’s, but otherwise trade according to the market’s disposition and to the traders’ discretion. For the year 2014, BluStar Market Timer is rated #1 according to Timer Trac. http://www.blustarmarkettimer.info

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U.S. services sector slows; jobless claims rise

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FILE PHOTO — A man rubs his eyes as he waits in a line of jobseekers, to attend the Dr. Martin Luther King Jr. career fair held by the New York State department of Labor in New York April 12, 2012. REUTERS/Lucas Jackson/File Photo
By Lucia Mutikani | WASHINGTON

U.S. services industry activity cooled in October amid a slowdown in new orders and hiring, suggesting a moderation in economic growth early in the fourth quarter.

Other data on Thursday showed planned job cuts by U.S.-based employers dropped 31 percent to a five-month low last month. That underscored the labor market’s healthy fundamentals, though more Americans filed for unemployment benefits last week.

The mixed reports came a day after the Federal Reserve offered a fairly upbeat assessment of the economy and signaled it could raise interest rates next month.

“While the services report was weak, it is not nearly weak enough to disrupt Fed plans to hike in December. It is consistent with a softer pace of economic growth,” said Andrew Hollenhorst, an economist at Citigroup in New York.

The Institute for Supply Management (ISM) said its non-manufacturing index fell 2.3 percentage points to a reading of 54.8 percent in October. A reading above 50 indicates expansion in the services sector, which accounts for more than two-thirds of the economy.

It said respondents’ comments remained mostly positive about business conditions and the overall economy, but added that “several” had highlighted uncertainty about the impact of the Nov. 8 U.S. presidential election.

Services industries reported a slowdown in new orders and employment, as well as demand for exports.

The new orders sub-index dropped 2.3 percentage points to 57.7, while a measure of services sector employment decreased 4.1 percentage points to 53.1. A sub-index for export orders fell 1.0 percentage point last month.

Thirteen services industries including information, professional, retail and finance reported growth in October. The five industries reporting contraction included education, public administration and arts, entertainment and recreation.

The economy grew at a 2.9 percent pace in the third quarter after expanding at a 1.4 percent rate in the April-June period.

Separately, the Labor Department said on Thursday that initial claims for state unemployment benefits increased 7,000 to a seasonally adjusted 265,000 for the week ended Oct. 29, the highest level since early August.

It was still the 87th straight week that claims remained below 300,000, a threshold associated with a healthy labor market. That is the longest stretch since 1970, when the labor market was much smaller.

“U.S. jobless claims remain supportive of labor market improvement,” said Michael Gapen, chief economist at Barclays in New York.

The Fed on Wednesday held interest rates steady but said its monetary policy-setting committee “judges that the case for an increase in the federal funds rate has continued to strengthen.”

The U.S. central bank is widely expected to increase its overnight benchmark interest rate in December, but the decision could depend on the outcome of next week’s election.

The tightening of the race between Democratic candidate Hillary Clinton and her Republican rival Donald Trump has rattled financial markets. The Fed raised borrowing costs last December for the first time in nearly a decade.

U.S. financial markets were little moved by the data, with traders focused on the race for the White House.

The dollar stabilized from multi-week lows against a basket of major currencies after a poll showed Clinton holding on to a narrow lead over Trump. U.S. stocks were a bit weaker, while prices for longer-dated U.S. government bonds fell.

LAYOFFS DECLINE

Last week’s claims report has no bearing on October’s employment report, which is scheduled for release on Friday, as it falls outside the survey period.

According to a Reuters survey of economists, nonfarm payrolls likely increased by 175,000 last month after rising by 151,000 in September. The unemployment rate is seen slipping one-tenth of a percentage point to 4.9 percent.

Expectations of an upbeat October employment report were supported by a report on Thursday from global outplacement consultancy Challenger, Gray & Christmas showing employers announced 30,740 job cuts last month, down from 44,324 in September.

Job cuts in October were concentrated in the computer industry, where employers announced 4,792 layoffs. Most of the computer job cuts came from HP Inc, which laid off another 4,000 workers last month. That was in addition to the 30,000 job cuts the company announced in 2015.

In another report, the Labor Department said nonfarm productivity, which measures hourly output per worker, rose at a 3.1 percent annual rate, the fastest pace in two years. The increase ended three straight quarters of decline.

Despite the rise, the trend in productivity remains weak.

A fifth report from the Commerce Department showed new orders for manufactured goods increased for a third consecutive month in September. Unfilled orders at factories, however, fell for a fourth straight month.

Manufacturing, which accounts for about 12 percent of the economy, has been hurt by a strong dollar and weak global demand. Production has also been undermined by the collapse in oil drilling activity in the wake of the plunge in oil prices.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

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S&P, Dow futures flat; Facebook weighs on Nasdaq

 

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S. October 31, 2016.REUTERS/Brendan McDermid

S&P, Dow futures flat; Facebook weighs on Nasdaq

By Tanya Agrawal

U.S. stocks steadied in late morning trading on Thursday, with the S&P 500 on track to break its longest losing streak in five years, although a fall in Facebook’s shares capped gains.

Facebook (FB.O) fell as much as 5.5 percent to a more than three-month low of $120.12 after the social media giant warned that revenue growth would slow this quarter. The stock was the biggest drag on the S&P and the Nasdaq.

Tension in markets, rattled by U.S. election nerves, also eased after a UK court ruling that parliament must approve a government decision to trigger Brexit.

The S&P 500 ended lower on Wednesday for a seventh straight session as the Federal Reserve signaled it could hike interest rates in December and the uncertainty surrounding the U.S. election.

The U.S. central bank held interest rates steady, but said the economy had gained steam and job gains remained solid. Policymakers also expressed more optimism that inflation was moving towards their 2 percent target.

Investors have been unnerved by the signs that the U.S. presidential race between Democrat Hillary Clinton and Republican Donald Trump was tightening just days before the vote.

While some polls put Trump ahead on Tuesday, an average of polls compiled by the RealClearPolitics website showed Clinton retaining a slight lead. A Reuters/Ipsos daily tracking poll released late on Wednesday showed Clinton ahead by 6 percentage points among likely voters.

“Stocks are going to be more volatile and will move sideways with a slight downward bias until next week because the election seem incredibly tight and there’s a lack of political visibility,” said John Brady, managing director at R.J. O’Brien & Associates in Chicago.

“The market is nervous and in the short-term people will move to the sidelines.”

At 11:10 a.m. ET the Dow Jones industrial average .DJI was up 32.53 points, or 0.18 percent, at 17,992.17.

The S&P 500 .SPX was up 2.46 points, or 0.12 percent, at 2,100.4.

The Nasdaq Composite .IXIC was down 6.61 points, or 0.13 percent, at 5,098.96.

Eight of the 11 major S&P 500 sectors were higher, with the telecommunications index’s .SPLRCL 0.86 percent rise leading the advancers.

Twenty-First Century Fox (FOXA.O) rose 6.7 percent to $27.65 after it reported first-quarter profit that topped Wall Street expectations. The stock was among those that powered the S&P and the Nasdaq.

 

Fitbit (FIT.N) sank as much as 30.3 percent to a record low of $8.93 after the wearable fitness device maker’s revenue forecast for the key holiday shopping quarter fell well below estimates.

American International Group (AIG.N) fell 4.6 percent to $57.74 after the insurer’s quarterly profit missed expectations.

Advancing issues outnumbered decliners on the NYSE by 1,600 to 1,184. On the Nasdaq, 1,322 issues rose and 1,237 fell.

The S&P 500 index showed two new 52-week highs and 12 new lows, while the Nasdaq recorded 23 new highs and 111 new lows.

(Reporting by Tanya Agrawal; Editing by Anil D’Silva)

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Published at Thu, 03 Nov 2016 11:26:42 +0000

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Thursday: Unemployment Claims, ISM non-Mfg Index

 

Thursday: Unemployment Claims, ISM non-Mfg Index

by Bill McBride on 11/02/2016 07:16:00 PM

 From Tim Duy at Fed Watch: Fed Remains On The Sidelines, Excerpt:

As expected, the Federal Reserve left policy unchanged this month. The statement itself was largely unchanged as well. …

We get two employment reports before the December meeting; for the Fed to stay on the sidelines yet again, we probably need to see both reports come in weak. The first one – for October – comes Friday morning. ADP estimates that private payrolls will be up 147k – not surging, but still easily sufficient for the Fed to justify a rate hike. If this comes to pass, we would probably need a deluge of soft numbers to keep the Fed on hold again.

Bottom Line: Fed is looking past the election to the December meeting for its second move in this rate hike cycle. Probably need some unlikely softer numbers to hold them back again

. Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released.  The consensus is for 255 thousand initial claims, down from 258 thousand the previous week.

• At 10:00 AM, Manufacturers’ Shipments, Inventories and Orders (Factory Orders) for September. The consensus is a 0.2% increase in orders.

• Also at 10:00 AM, the ISM non-Manufacturing Index for October. The consensus is for index to decrease to 56.1 from 57.1 in August.

Read more at http://www.calculatedriskblog.com/2016/11/thursday-unemployment-claims-ism-non.html#3ksEkLyCZzd3Ti5O.99

by Bill McBride on 11/02/2016 07:16:00 PM

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Update: The Endless Parade of Recession Calls

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By WikiImages from Pixabay

Update: The Endless Parade of Recession Calls

by Bill McBride on 11/02/2016 10:42:00 AM

 It was almost a year ago that I wrote: The Endless Parade of Recession Calls. In that post, I pointed out that I wasn’t “even on recession watch”. Here is a repeat of that post with a few updates in italics.

Note: I’ve made one recession call since starting this blog.  One of my predictions for 2007 was a recession would start as a result of the housing bust (made it by one month – the recession started in December 2007).  That prediction was out of the consensus for 2007 and, at the time, ECRI was saying a “recession is no longer a serious concern”.  Ouch.

For the last 6+ years [now 7+ years], there have been an endless parade of incorrect recession calls. The most reported was probably the multiple recession calls from ECRI in 2011 and 2012.

In May of [2015], ECRI finally acknowledged their incorrect call, and here is their admission : The Greater Moderation

In line with the old adage, “never say never,” [ECRI’s] September 2011 U.S. recession forecast did turn out to be a false alarm.

I disagreed with that call in 2011; I wasn’t even on recession watch!

And here is another call [last December] via CNBC: US economy recession odds ’65 percent’: Investor

Raoul Pal, the publisher of The Global Macro Investor, reiterated his bearishness … “The economic situation is deteriorating fast.” … [The ISM report] “is showing that the U.S. economy is almost at stall speed now,” Pal said. “It gives us a 65 percent chance of a recession in the U.S.

Here is the report Pal is referring to from the Institute for Supply Management: November 2015 Manufacturing ISM® Report On Business®
ISM PMIClick on graph for larger image.

Here is a long term graph of the ISM manufacturing index [from last November].

The manufacturing sector has been weak, and contracted in the US in November due to a combination of weakness in the oil sector, the strong dollar and some global weakness.  But this doesn’t mean the US will enter a recession.

The last time the index contracted was in 2012 (no recession), and has shown contraction a number of times outside of a recession.
ISM PMI[Here is an update through October 2016. Manufacturing was weak due to the sharp decline in oil investment, but now the ISM index is showing expansion again.]

Looking at the economic data, the odds of a recession in 2016 are very low (extremely unlikely in my view).  [a recession in 2017 is very unlikely]. Someday I’ll make another recession call, but I’m not even on recession watch now.

[Still not on recession watch!]

Read more at http://www.calculatedriskblog.com/2016/11/update-endless-parade-of-recession-calls.html#bVQlsOgEhIC9Ol4T.99

by Bill McBride on 11/02/2016 10:42:00 AM

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U.S. Light Vehicle Sales increase to 17.9 million annual rate in October

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car-718781_1280By niekverlaan from Pixabay

U.S. Light Vehicle Sales increase to 17.9 million annual rate in October

by Bill McBride on 11/01/2016 02:30:00 PM

 Based on a preliminary estimate from WardsAuto (estimate for Ford), light vehicle sales were at a 17.9 million SAAR in October.
That is down about slightly from October 2015, and up 1.3% from the 17.65 million annual sales rate last month.

From Erin Sunde at WardsAuto October 2016 U.S. LV Sales Thread: Automakers Hit 17.9 Million SAAR

U.S. automakers delivered 1.36 million light vehicles last month, resulting in 17.90 million SAAR, the highest SAAR of any month this year. The daily sales rate of 52,458 over 26 selling days was 15-year high for the month, beating prior-year by 1.5% (28 days).

Ford postponed reporting due to a fire at its headquarters.

Vehicle Sales
Click on graph for larger image.

This graph shows the historical light vehicle sales from the BEA (blue) and an estimate for October (red, light vehicle sales of 17.90 million SAAR from WardsAuto).

This was above the consensus forecast of 17.7 million SAAR (seasonally adjusted annual rate) and the best sales month for 2016.

The second graph shows light vehicle sales since the BEA started keeping data in 1967.
Vehicle SalesNote: dashed line is current estimated sales rate.

Sales for 2016 – through the first ten months – are up slightly from the comparable period last year.

After increasing significantly for several years following the financial crisis, auto sales are now moving mostly sideways …

Read more at http://www.calculatedriskblog.com/2016/11/us-light-vehicle-sales-increase-to-179.html#otvud67ucUB1eK3T.99

by Bill McBride on 11/01/2016 02:30:00 PM

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Published at Tue, 01 Nov 2016 18:30:00 +0000

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Wednesday: FOMC Announcement, ADP Employment

trend-1445445_1280by geralt from pixabay

Wednesday: FOMC Announcement, ADP Employment

by Bill McBride on 11/01/2016 08:47:00 PM

 A few excerpts from a piece by Goldman Sachs economists Zach Pandl and Jan Hatzius

• We expect the statement [the] FOMC meeting to remain relatively upbeat about US growth prospects … However, the committee is very unlikely to raise the funds rate. …

• To keep markets on notice for a possible rate hike in December, we expect the statement to indicate that the committee is considering action “at its next meeting”—although this is a close call. The statement will likely again say that risks to the economic outlook are “roughly balanced”.

• A statement along these lines should keep the committee on track to raise the funds rate at the December meeting. We see a 75% chance of an increase, roughly in line with market expectations. The remaining uncertainty relates to incoming economic data and financial conditions … conditional on decent data and stable markets, a December rate hike looks very likely.

Wednesday:
• At 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

• At 8:15 AM, The ADP Employment Report for October. This report is for private payrolls only (no government). The consensus is for 170,000 payroll jobs added in October, up from 154,000 added in September.

• At 2:00 PM, FOMC Meeting Announcement. No change to policy is expected at this meeting.

Read more at http://www.calculatedriskblog.com/2016/11/wednesday-fomc-announcement-adp.html#7LPeBtsxqGvqe4I2.99

by Bill McBride on 11/01/2016 08:47:00 PM

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Published at Wed, 02 Nov 2016 00:47:00 +0000

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U.S. consumer spending ends third-quarter with strong momentum

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arrows-1574173_1280By geralt from Pixabay

U.S. consumer spending ends third-quarter with strong momentum

By Lucia Mutikani
| WASHINGTON

U.S. consumer spending rose more than expected in September as households boosted purchases of motor vehicles and inflation increased steadily, which could bolster expectations of an interest rate hike from the Federal Reserve in December.

The Commerce Department said on Monday that consumer spending, which accounts for about 70 percent of U.S. economic activity, increased 0.5 percent after dipping 0.1 percent in August. Last month’s rise in consumer spending offered a fairly strong handoff from the third quarter to the current quarter.

The report was published ahead of the start of the Fed’s two-day policy meeting on Tuesday. The U.S. central bank is not expected to raise rates at this meeting, which comes about a week before the Nov. 8 presidential election, but is expected to do so in December.

“The latest data should be of comfort to the Fed. Spending continues to underpin growth and, combined with positive developments on the labor market and inflation, should enable the Fed to tighten policy in December,” said Greg Daco, head of U.S. macroeconomics at Oxford Economics in New York.

Economists had forecast consumer spending rising 0.4 percent last month. When adjusted for inflation, consumer spending rose 0.3 percent after falling 0.2 percent in August.

The spending figures were incorporated into last Friday’s report on third-quarter gross domestic product. Consumer spending increased at a 2.1 percent annual pace after advancing at a robust 4.3 percent rate in the prior period.

A separate report on Monday showed factory activity in the U.S. Midwest hit a five-month low in October amid declining production and weak growth in new orders. The report from the Institute for Supply Management-Chicago suggests prolonged weakness in manufacturing as the sector continues to deal with the aftermath of a dollar rally and lower oil prices.

U.S. stocks were trading marginally higher as investors showed caution ahead of next Tuesday’s elections. The dollar .DXY rose against a basket of currencies, while U.S. Treasury yields fell.

INFLATION TICKING HIGHER

Consumer spending combined with a spurt in soybean exports and a turnaround in inventory investment to boost economic growth to a 2.9 percent pace in the third quarter. The economy grew at a 1.4 percent rate in the April-June quarter.

Rising wages due to a tightening labor market should help support consumer spending. With consumer spending firming, inflation continued to gain steadily last month. The personal consumption expenditures (PCE) price index increased 0.2 percent after a similar gain in August.

In the 12 months through September the PCE price index rose 1.2 percent, the biggest gain since November 2014, after advancing 1.0 percent in August.

Excluding food and energy, the so-called core PCE price index rose 0.1 percent after advancing 0.2 percent in August. In the 12 months through September the core PCE rose 1.7 percent after a similar increase in August.

The core PCE is the Fed’s preferred inflation measure and is running below its 2 percent target.

“Overall inflation is accelerating as energy prices and the U.S. dollar have stabilized since the spring. Stronger wage growth from the tight labor market will also help push up inflation over the medium term,” said Gus Faucher, deputy chief economist at PNC Financial in Pittsburgh.

Consumer spending last month was lifted by a 1.3 percent surge in purchases of long-lasting manufactured goods such as automobiles. Spending on services rose 0.3 percent.

Personal income increased 0.3 percent in September after rising 0.2 percent in August. Wages and salaries advanced 0.3 percent after edging up 0.1 percent the prior month. Savings fell to $797.8 billion from $820.5 billion in August.

(Reporting by Lucia Mutikani; Editing by Paul Simao)

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Published at Mon, 31 Oct 2016 16:30:58 +0000

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