Thanksgiving Week

China and COVID:

S&P500 futures are down this morning as oil prices fall below $80 on concerns that China may tighten COVID curbs. China’s plan on relaxing its policies on COVID, may be having some second thoughts. Over the weekend, the capital locked down some districts.

In Guangzhou, a five-day lockdown, starting today, was ordered. The PBoC’s deputy governor added that China’s economic recovery was not solid yet.

With this, the dollar is rallying amid a slowing global growth outlook.

Equity markets fell last week, stalling under 4000 on the S&P500 and giving back some momentum after the prior week’s post-CPI surge. On the year, the S&P500 shows a -16.8% decline besting a -29% decline in the Nasdaq.

The Dow briefly recaptured the 34K level for a three-month high, with the Nasdaq and the S&P 500 also scoring fresh multi-month highs in the first half of the week.

The S&P 500 fell 0.7%, as consumer discretionary, banks and energy lagged. A non-stop chorus of Fed speakers hit the news outlets to dial back any overenthusiasm in the markets.

Last Week:

Last weeks economic data summary: The domestic economy sent mixed signals as the services-manufacturing divide widened more. The housing market is the weakest in years. Existing home sales fell 5.9% in October, or -28.4% from a year ago.

This matches the worst of the year-over-year slide seen in late-2007 and, outside of the pandemic freeze, is the weakest level of activity in over a decade. Homebuilder confidence is tanking alongside a sharp reduction in buyer traffic.

Building permits and new starts are trending lower, with both down in October. Mortgage rates (30-yr fixed) surged by roughly 400 bps on the year at one point in recent weeks, to above 7%.

Retail sales beat expectations across the board, while new jobless claims ticked lower, suggesting that the labor market continues to be tight. The Philly Fed Index hit its lowest level since the COVID crash. Industrial production and capacity utilization dropped in October.

Bond yields were mixed last week as the yield curve continued to invert more.

Interesting Articles:

https://www.nytimes.com/2022/11/20/climate/un-climate-cop27-loss-damage.html

https://www.axios.com/2022/11/18/bearish-bets-stock-market

 

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