The Thanksgiving holiday and a shortened trading day Friday left a good amount of market data points crammed into three days.  A general sense of trade optimism maintained market buoyancy and the heavy economic calendar turned in some fairly encouraging numbers. The S&P 500 tacked on roughly 1% on the week with best performance coming from small caps and growth-oriented sectors. Oversupply concerns dragged down oil and commodity markets while interest rates and the USD made no material moves.

Market Anecdotes

  • The week began with China indicating a willingness to crack down on IP theft, then closed with a bill signing backing protesters in Hong Kong. China threatened retaliation but markets promptly filed the symbolic bill under the ‘bluster’ category.
  • China’s finance ministry assigned a new quota last week of $142b for local government bond issuance targeting infrastructure projects.  Slow growth and mounting issues have policy makers in the unenviable position of balancing material risks with firm stimulus.
  • The holiday shopping season kicked off with early signs of a healthy consumer.  Adobe Analytics reported online sales +15% on Thanksgiving and +19% on ‘Black Friday’.
  • Outflows from equity mutual fund and ETFs in October marked the eighth consecutive month of outflows and the third highest monthly outflow since the GFC.

Economic Release Highlights

  • Headline PCE for October was 1.31% and the core PCE of 1.6% again remained below the Fed’s target.
  • Consumer spending of 0.3% in October represents an eighth consecutive monthly increase while income remained flat.
  • Third quarter U.S. GDP was revised higher, from 1.9% up to 2.1%.
  • China’s manufacturing PMI registered 50.2, the first expansionary reading in six months.  Nonmanufacturing also rose from 52.8 to 54.4.
  • November consumer confidence came in at 125.5, an upbeat reading despite a fourth consecutive monthly decline.
  • October durable goods orders rose 0.6%, handily outpacing consensus calls for a -1.6% decline.  The headline number was boosted by a sharp uptick in defense spending.
  • Case Shiller HPI registered YoY growth of 2.1% (20 city) and 3.2% (national) through September.
  • October pending home sales fell 1.7% MoM, due in part to slightly higher mortgage rates and thin inventory of product on the market.