Equity markets were mixed on the month – domestic markets were strong while Developed International and Emerging markets were negative; equity market volatility (VIX) trended lower on the month – particularly post-election; P/E ratios remain elevated; all S&P sectors were up on the month – several sectors hit 1-year highs post-election; investor sentiment remains neutral as bullish sentiment has declined while bearish sentiment is on the rise; small caps outperformed large caps by a wide margin during the month; fixed income yields were rangebound on the month; corporate bond spreads remain very tight; the yield curve is essentially flat; consumer inflation (CPI) appears to be bottoming out – producer inflation (PPI) is back on the rise.
Leading Economic Indicators remain in a downtrend – manufacturer new orders were the largest negative contributor; the Citigroup Economic Surprise Index appears to be peaking out; Industrial Production remains weak; inventories continue to build; the New York Fed Business Survey had a large move higher; the ISM Manufacturing Index hit 48.4% in November from 46.5% suggesting the manufacturing sector is improving but remains in contraction; the ISM Services Index hit 56.0% in the latest reading from 54.9% suggesting the services sector is expanding at an accelerating rate;
Consumer confidence crept marginally higher in November – the 4th consecutive monthly increase; Retail Sales increased by +0.4% in the latest reading – better than consensus; consumer credit usage appears to have bottomed; auto sales appear to be picking up steam; the Savings Rate may be bottoming; housing starts and permits remain weak; new home sales are weakening; Home Builder Confidence remains in an uptrend; mortgage rates appear to be stabilizing – although they remain well off of recent lows; mortgage applications surged higher; publicly traded REITs appear to be bottoming; initial jobless claims are heading lower;
The Prime Rate is trending lower with Fed rate cuts; the national debt continues to trend higher; money supply growth is positive for the first time in 2 years; broad based commodity indexes are trending sideways; oil and gasoline prices are trending lower; Bitcoin is breaking out to new highs; precious metals are consolidating after a recent pullback; the US $ is breaking out to new 2-year highs.