NYSE released margin debt for November last week and it posted another new all-time high. However, the one-quarter moving average of margin debt as a percentage of total capitalization is still below the level it was at in April.
Read MoreThe ISM Manufacturing PMI and Markit Manufacturing PMI both indicate that manufacturing activity in the US continued to expand in December. Over the last few years, it has seemed that the US economy had picked up momentum in the 4th quarter, however, the economy then struggled to maintain it in the beginning of each year.
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Let’s take a quick tour of who had the best and worst performance in the light trading week last week. We will start bottom-up and work our way up to the aggregates (and as usual all aggregate data is equal-weighted).
Read MoreFrom 1960 to November 2007 (the 2007-2009 recession started December 2007 according to NBER), real personal consumption expenditures grew at just about 3.5% trend growth. In this recovery, consumption as only mustered a growth rate just above 2%. Is this another permanent downshift in consumption growth or will consumption ratchet back up?
Read MoreLast week, the two factors with the highest R-squared to the market were correlation with the Yen and beta. Interestingly, there has been a very clear relationship when looking at stocks with high or low correlation with the Yen over the past year.
Read MoreThe final revision for 3Q GDP surprised to the upside this morning as real GDP increased at an annualized rate of 4.1%. This is just the second time that real GDP has grown at a +4% clip in a quarter in the post-2008 recovery.
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Our factor scoring work is showing macroeconomic factors to be the main driver of stock price returns again this week as they hold seven of the top ten spots. This is unsurprising given the knock on effects from the Fed’s tapering decision on Wednesday.
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Gold isn’t taking tapering so well this morning. It is down about 3% so far and is at levels not seen since mid-2010. Meanwhile the USD is strengthening with the main casualty being the yen. With Fed tapering now a reality, the BOJ may be able to effectuate round 2 of its currency depreciation game.
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Over the last decade, a strengthening Yen has been associated with a steepening US Treasury yield curve, and the logic is pretty simple: when the Yen is strong, there is less competition for American producers, and this in turn stimulates nominal economic activity.
Read MoreThis has been a weak dominated by housing related data for the United States. We have seen a the NAHB HMI rise and housing costs boosting CPI and housing starts break a million but mortgage applications breaking down. Today we have existing home sales falling to an 11-month low in November.
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