"Air cargo’s peak season is off to a disappointing start, with demand down 3.5% in October," said Alexandre de Juniac, director general and chief executive of IATA. "Demand is set to decline in 2019 overall – the weakest annual outcome since the global financial crisis. It has been a very tough year for the air cargo industry." -- Rachelle Harry, Aircargo News
The Commerce Department said the trade deficit tumbled 7.6% to $47.2 billion, the smallest since May 2018, as both imports and exports of goods declined. It was the second straight monthly fall in the trade bill and the percent drop was the biggest since January. -- Lucia Mutikani, Reuters
ISM uses five components, each weighted evenly at 20% — new orders, production, employment, supplier deliveries and inventories.
IHS uses a weighted average that gives greater importance to new orders (30%), output (25%) and employment (20%), and lower weighting to suppliers’ delivery times (15%) and stocks of purchases (10%). -- Dion Rabouin, Axios
I don't know that comparing ISM to IHS ("Markit") is all that useful. Yes, Markit appears to lead ISM, recently (perhaps now, and certainly during May and June of 2018), but the S&P 500 has shown itself to be little-affected in the near term, by the transition in trend, in either ISM or Markit.
I track manufacturing ISM against the S&P 500 for a "big macro picture" data point, but as you can see from this monthly chart, the two do not move in lock-step. That being said, I like to be aggressive in the S&P 500 when the manufacturing ISM is rising, and not-so-aggressive when it is falling. If Markit is truly leading the ISM data, we should see a corresponding rise in the ISM, for December (which will be released in January). Does that seem likely, though? It does not to me, but let's let the data do the talking.
The month of November began with a bang, as the market gapped-up to open at 3,050.7 on the first trading day of the month, closing the session at 3,066.9 for a gain of 1% over October’s 3,037.6 close. The S&P 500 continued nearly unabated, to an intraday high of 3,127.6 on 19 November, before pulling-back nearly 1% to close at 3,103.5 on 21 November. The index would proceed to close November at 3,141.0 after hitting 3,154.3 on 27 November. For the month, the S&P 500 gained 3.4% which equaled its 2016 November performance. Quite a month!
Recent history has not been nearly as kind to the S&P 500 in December, as it has been in November. The index gained 1.8% in 2016, 0.9% in 2017 and -9.2% last year. The 10-month moving average currently sits at 2,932.1 or 7% below November’s close, while the 3-month moving average is 2.9% below November’s close at 3,051.8. Both moving averages are rising.
We will get the manufacturing PMI on Monday. The market really wants to see another increase, so anything over October’s 48.3 number is going to be good news. We have not seen two consecutive months of manufacturing PMI increases since May and June of 2018 (and three consecutive increases since 2017!).
We start all over again on Monday, so enjoy your Black Friday and have a fantastic weekend!
October started with a bang, as the S&P 500 sold off 36 points from the 30 September close. Then, the next day, the index continued to shed another 52 points, closing at 2,887.6 - a loss of 3% in just the first two days of the month. The next day, 3 October, the index would put in its low for the month at 2,855.9 and it was all (mostly) up hill, from there. The S&P 500 closed the month of October at 3,037.6 for a gain of 2% over September's close and a new all-time high.
November has been a good month for the S&P 500, with gains of 3.4% in 2016, 2.8% in 2017 and 1.8% in 2018. The 10-month moving average currently sits at 2,888 or 5% below October's close, while the 3-month moving average is 2% below October's close, at 2,980. Both moving averages are rising.
At the macro level, manufacturing PMI put-in its first increase since March, rising to 48.3 from September's 47.8 level. If the S&P 500 is going to rally into the end of 2019, manufacturing PMI will need to continue this trend in November.
Warren Buffett’s cash hoard of +$125 billion continues to be a considerable impediment of growth, rather than our previous hard expectation of a valuable call option on opportunity in the hands of one of the most elite capital allocators extant. Thumb-sucking has not cut the Heinz mustard during the Great Bull Market of 2009 – 2019. -- Wedgewood Partners Third Quarter 2019 Client Letter (.pdf)
Hedge funds...ownership of FAANG names have fallen by $23.4 billion since the beginning of 2018 through the end of the second quarter of this year, while they have added $13.6 billion to SaaS names -- Chris Matthews, MarketWatch
Everybody is trying to replicate Microsoft's success in SaaS.
The almost singular answer seems to be employer-sponsored retirement plans - 80% of the 56 million households who own mutual funds buy them through these plans, according to the Investment Company Institute. -- Nick Ravo, WSJ
The mid-size Silicon Valley company where I work, has its 401K at Fidelity. Normally, I do not keep any money in the "401K" option, since Fidelity has an investment option called Brokeragelink, where you can buy and sell stocks and ETFs, just like a regular brokerage account. Recently I transferred some money from Brokeragelink, back into the regular 401K account, and I had to choose from 30-some mutual funds. Wow! There was only three funds with "ETF-like" expense ratios of less than 0.10%. Everything else, nearly 30 mutual funds, had expense ratios closer to 0.90%.