Friday, December 14, 2018

Inflation Quiets Down

There have been rumblings of higher inflation recently, but here’s an indicator moving in the opposite direction. U.S. import prices fell by the most in more than three years in November, the Labor Department said yesterday. The cost of petroleum products tumbled, and a strong dollar weighed on prices of other goods,

All this points to subdued imported inflation in the near term. Overall, import prices dropped 1.6 percent last month, the biggest decline since August 2015, after a 0.5 percent increase in October. For the 12 months through November, import prices rose just 0.7 percent. That was the smallest annual increase in two years.

In related news, the Federal Reserve’s preferred inflation measure, the core PCE price index excluding food and energy, increased 1.8 percent on a year-on-year basis in October, after rising 1.9 percent in the prior month. That was its smallest gain since February.

Thursday, December 13, 2018

Small Businesses Slip a Step

A rare troubling sign for the economy: The NFIB Small Business Optimism Index fell in October. Just 29 percent of business owners surveyed said the next three months was a good time to expand, one point lower than last month’s reading.

The November decline was the third month in a row that the index had fallen. The seasonally adjusted reading of 104.8 is the lowest for this figure in seven months.

For October, reported job creation was unchanged, as 60 percent of businesses reported hiring or trying to hire, but 53 percent reported few or no qualified applicants for the positions they were trying to fill. Twenty-five percent of employers surveyed cited the difficulty of finding qualified workers as their top business problem.

Wednesday, December 12, 2018

Factories at Full Blast

Job openings have surged at U.S. manufacturers of durable goods from machinery to cars in recent months. New data out from the Labor Department suggests that, in particular, job openings for factories have reached an all-time high.

The job openings rate for the durable-goods manufacturing industry reached 4 percent in October, a record since they started keeping this data back in 2000. That’s up from 3.7 percent in September and 3.1 percent a year earlier. Total factory openings were 332,000, compared with about 8 million jobs in the sector.

Overall, the number of job openings in the U.S. rose slightly in October to just over 7 million, which is very close to a record high. Job openings had hit an all-time record of 7.3 million in August.

Tuesday, December 11, 2018

The Market's Roller Coaster

Yesterday was an object lesson in why it's never too wise to follow every single up and down of the market. Shortly after the opening bell, the Dow Jones Industrial Average plummeted more than 500 points, after British Prime Minister Theresa May announced that the Parliamentary vote on Brexit was being delayed, admitting that it would fail if the vote were held on schedule.

That started what looked like a rout. At their lowest points, the S&P had shed 50 points and the Nasdaq was down 81 points. But in the end, the Dow rose 34 points, the S&P gained 4 points, and the Nasdaq rose 51 points.

There was a similar story in tech. Shares of Apple initially fell after a Chinese court granted Qualcomm an injunction against the iPhone maker, but by the end of the day, the stock erased a more than 2 percent pullback to close 0.65 percent higher. Facebook shares rose 3.2 percent while Amazon, Netflix and Alphabet all rose more than 0.6 percent.

Monday, December 10, 2018

The Outlook From Big Business

Business CEOs are forecasting 2.7 percent U.S. GDP growth in 2019, according to the estimate released Friday by the Business Roundtable as part of its fourth-quarter economic outlook. While 80 percent of the CEOs surveyed expect sales will increase over the next six months, just a little over half (53 percent) expect capital spending and hiring (56 percent) will rise.

When asked about the greatest price pressures their companies face, 13 percent of the CEOs surveyed identified regulatory costs versus 40 percent two years ago. Far more identified labor costs (37 percent) and materials costs (20 percent) as the leading cost pressures for companies.

Not surprisingly, roughly 90 percent of the CEOs surveyed said that maintaining the 21 percent corporate tax rate, enacted in the 2017 tax cut bill, and easing regulations further will benefit business activity.

Friday, December 7, 2018

November's Jobs Report

The employment situation slowed a bit in November, according to numbers out this morning from the Bureau of Labor Statistics. The economy added 155,000 new jobs for the month, compared with an average monthly gain of 209,000 over the prior 12 months. Nevertheless, the headline unemployment rate remained at 3.7 percent for the third month in a row, the lowest it has been in 49 years.

Still, the economy is on track to produce the most new jobs since 2015. The U.S. has added an average of 206,000 jobs a month through the first 11 months of 2018, above the 182,000 pace during the same period last year.

For November, the increase in jobs was concentrated in health care, manufacturing and transportation. Health care providers hired 32,000 people, manufacturers added 27,000 workers and employment in transportation climbed by 25,000. Retail stores took on more workers for the first time in three months, adding 18,000 jobs. Employment fell slightly in government and in an energy industry reeling from lower oil prices.

Thursday, December 6, 2018

What Women Lack

Here's an unfortunate gender gap: Women invest 40 percent less money than men do, according to a Wealthsimple survey. The investment app Acorns found that 57 percent of women didn’t invest anything in 2017, compared to just 44 percent of men.

It's not that they don't have any money. Women on average have about $156,000 in investable assets, compared to more than $200,000 for men. And women are less likely to feel in control of their financial futures than men (65 percent to 70 percent) and are less likely to feel like they know what steps to take next (60 percent versus 68 percent.)

The result: U.S. financial services firms that still focus their attention on wooing men lose almost $800 billion in investable assets from women. All these figures come from Kantar’s “Winning Over Women” report, released on Tuesday.

Wednesday, December 5, 2018

The Trouble With Transports

The Dow Jones Transportation Average, often considered a bellwether ahead of the larger Dow Jones Industrial Average, suffered through its biggest-ever point drop yesterday. The Dow transports tumbled 476.37 points, or 4.4 percent, with all 20 of its components closing lower. The previous biggest-ever point decline had happened on October 10.

Many on Wall Street view the Dow Transports as a key economic indicator. That sub-index helps gauge how consumers and businesses are actually taking what companies are making.

Within the Dow Transports, the biggest drag yesterday was UPS, which sank 7.4 percent, its biggest decline since January 2015. FedEx fell by 6.3 percent, suffering its steepest decline since March 2013.

Tuesday, December 4, 2018

Santa Rally on Tap?

Stocks kicked off the first trading day of December with gusto, with the S&P 500, Nasdaq and Dow Jones industrial average all up by more than 1 percent. That sparked hopes for a so-called Santa rally: the traditional runup in the stock market from the last week of December through the first two trading days in January.

Since 1950, no other month has recorded a higher average return or has finished higher as often as December. Over the last 100 years, the Dow has averaged a gain of 1.55 percent in December, with gains 74 percent of the time.

It's even better the last two weeks of the year. For the S&P, the days during the Santa rally have gained 1.35 percent on average, with only one other seven-day period of the entire year sporting a better return. The seven days of Santa have been higher 77.6 percent of the time, making it the seven days of the year that are most likely to be higher

Monday, December 3, 2018

Remembering Bush

All the major financial markets will be dark on Wednesday to honor the memory of former President George H.W. Bush, who passed away late Friday at the age of 94. The New York Stock Exchange and the Nasdaq will both be closed for the day.

The day of a president's funeral has traditionally been a national day of mourning. Financial markets were closed, for example, Friday, June 11, 2004, after President Reagan died. After President Ford died on December 26, 2006, the markets were closed on January 2 of the following year, even though that meant they'd be dark for four straight days, including the New Year's holiday.

The NYSE has traditionally observed the death of former and sitting presidents by closing for an entire day, starting at the onset of the 20th century. Former President William McKinley's funeral was the first to be so honored on September 19, 1901.