Dow climbed 166, advancers over decliners 5-2 but NAZ dropped 193. The MLP index rose 3+ to the 173s & the REIT index advanced 2+ to the 492s. Junk bond funds fluctuated & Treasuries saw buying. Oil went up 1+ to the 72s & gold soared 33 to 1797.
AMJ (Alerian MLP index tracking fund)
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Weekly jobless claims ticked higher to 206K from the previous week's revised tally of 188K, rising above the pandemic low as the economic recovery remains uneven. The forecast expected claims to total 200K. Continuing claims, which track the total number of unemployed workers collecting benefits, fell to 1.85M, a pandemic low. Yesterday, Federal Reserve Chair Jerome Powell, confirmed many Americans are deciding to remain home for reasons including fears about the omicron variant along with lack of childcare & eldercare options. The latest JOLTS report on job openings sits at a record 11M while the number of people quitting their jobs fell slightly in Oct to 4.2M, from 4.4M in Sep, the 3rd-highest number of monthly resignations on record. Despite the strong labor market, policymakers see unemployment dropping to 3.5% next year.
Jobless claims ticked up by 206,000
The ECB further cut its bond purchases but vowed to continue its unprecedented monetary policy support for the euro zone economy into 2022. The ECB left its benchmark refinancing rate unchanged at 0%, while the rate on its marginal lending facility remained at 0.25% & the rate on its deposit facility was kept at -0.5%, in line with expectations. Bond buying under its €1.85T ($2.19T) Pandemic Emergency Purchase Programme, (PEPP) which is due to end next Mar, will be cut next qtr as the scheme winds down. However, bond buys under the Asset Purchase Programme (APP) will be ramped up to serve as a quantitative easing bridge thru the end of the PEPP, having continued at a monthly pace of €20B in conjunction with the PEPP until now. “The Governing Council judges that the progress on economic recovery and towards its medium-term inflation target permits a step-by-step reduction in the pace of its asset purchases over the coming quarters,” the ECB said. “But monetary accommodation is still needed for inflation to stabilise at the 2% inflation target over the medium term.” The ECB said its decisions will enable the Governing Council to maintain flexibility & optionality in its monetary policy decisions in view of the current economic uncertainty facing the 19-member common currency bloc. Inflation across the euro zone hit a record high of 4.9% in Nov, while the new Covid-19 omicron variant is spreading across the Continent & the delta strain has already forced several European economies back into partial lockdowns.
European Central Bank cuts pandemic bond buying, but pledges further stimulus
Deloitte's latest quarterly survey of Fortune 500 chief financial officers shows a less optimistic outlook for the US economy in 2022 than just a few months ago, citing concerns over inflation across the board. The firm's Q4 poll, which included 130 CFOs, found that 45%, expect North America's economy to fare better next year – down from 54% who believed in Q3 that things would be rosier a year from now. "While our CFO Signals survey found CFOs expecting consumer spending and business investment to grow, they also expect increases – often substantial – in various cost inputs, including talent/labor, supply materials and inflation," Deloitte's national managing partner of its global & CFO chief financial officer program, Steve Gallucci, said. Gallucci added, "In addition, 76% of CFOs indicated their organizations will raise prices for a substantial portion of their products/services to offset inflation." Financial execs overwhelmingly told Deloitte they have raised their expectations for capital spending year-over-year along with domestic wage & salary expenditures, with 97% of respondents saying they anticipate "their investments in talent and labor to substantially increase in 2022." At the same time, the CFOs largely responded that the North American economy is in a decent spot at present, with 72% of them telling Deloitte it was "good," slightly down from the 78% who said the same in Q3. But the survey found a "gloomier" outlook for economies across the board for 2022. "CFOs appeared gloomier – albeit to varying degrees – about the economies of North America, Europe, China, Asia excluding China, and South America," the analysis reads.
CFOs dial back economic expectations: Deloitte
Investors were encouraged by what the Fed said yesterday & the jobless claims data today was a bonus. However negative thinkers are buying safe haven gold & Treasuries.
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