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Weekly Vantage Point | 11.30.15

 
Stocks End Week Little Changed

November 30, 2015 – U.S. stocks ended mixed on Friday's shortened trading session, as global markets were rocked by an overnight 5.5% plunge on China's Shanghai Composite Index after Beijing officials placed three major Chinese brokerage firms under investigation. Authorities detained executives, investment managers, and a reporter, and they are probing for securities violations relating to this past summer's 30% market plunge. A jump in U.S. online sales together with an improved euro-area economic confidence survey, which reached a four-year high, helped moderate Wall Street jitters.

According to market research published by Adobe, a new record was set for 2015 Thanksgiving Day online sales, reaching $1.73B, up 25% over last year (57% done by mobile devices). That's a good set up for potentially the best Holiday shopping season sales since before the financial crisis. Gallup polls suggest American adults will spend $830 on Christmas and Hanukkah gift-buying, up from $720 last year, after cratering to $616 in 2008. The National Retail Federation said 103 million people shopped online over the four-day weekend as compared to 102 million visiting "brick-and-mortar" stores. In other key economic data last week, the U.S. manufacturing PMI for November slipped to its slowest pace in over two years, third quarter GDP growth was upwardly revised to 2.1% from 1.5%, personal incomes rose in October by the most in five months and household spending rose less-than-forecast.

For the week, the S&P 500 rose 0.08%, its smallest weekly change since July, the Dow Industrials fell 0.14% and the NASDAQ Composite gained 0.47%. The small-cap oriented Russell 2000 Index rose a fifth day, its longest rally since March. Five of the ten major sectors advanced during the week, led by Consumer Staples (+1.59%), Energy (+1.33%) and Healthcare (+0.75%). Utilities (-1.48%) and Technology (-0.87%) fell most among decliners. WTI crude oil futures capped a fourth weekly decline, albeit down mildly. Gold fell $20/oz. last week, falling to a fresh six-year low of $1,058, and capped its sixth weekly decline. WTI crude oil dipped just $0.13 on the week, ending at $41.77/bbl. Treasuries rose again last week, with the yield on 10-year Treasury notes down 4.2 basis points to 2.221%.

 
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Week’s Economic Calendar
 

Monday, November 30: Chicago PMI, Pending Home Sales, Dallas Fed Manufacturing;

Tuesday, December 1: PMI Manufacturing, ISM Manufacturing, Construction Spending;

Wednesday, December 2: ADP Private Payrolls, Productivity & Costs, Beige Book;

Thursday, December 3: Jobless Claims, Factory Orders, ISM Non-Mfg (Services Sectors);

Friday, December 4: November Non-farm Payrolls, U.S. Trade Deficit.

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Market Watch
Stocks 1-Wk MTD 3-Month YTD 1-Year
Dow Jones -0.14% 0.76% 6.87% -0.14% -0.16%
S&P 500 0.08% 0.76% 5.75% 3.48% 2.97%
NASDAQ 0.47% 1.65% 6.88% 9.45% 8.36%
Russell 3000 0.37% 1.02% 5.20% 3.06% 2.68%
MSCI EAFE -0.47% -1.27% 1.38% 0.83% -2.82%
MSCI Emerging Markets -2.02% -2.48% 2.04% -11.69% -16.43%
Bonds 1-Week MTD 3-Month YTD 1-Year
Barclays Agg Bond 0.14% -0.32% 0.23% 0.82% 1.08%
Barclays Municipal 0.19% 0.33% 1.49% 2.51% 3.17%
Barclays US Corp High Yield -0.14% -2.38% -2.02% -2.16% -3.75%
Commodities 1-Week MTD 3-Month YTD 1-Year
Bloomberg Commodity 0.40% -7.23% -7.54% -22.24% -30.97%
S&P GSCI Crude Oil -0.45% -10.47% -2.00% -21.70% -43.42%
S&P GSCI Gold -1.87% -7.46% -5.91% -10.80% -11.81%
Source: MorningStar
Chart of the Week: Global GDP Growth May See Improvement
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View larger image »
 

Source: J.P. Morgan

J.P. Morgan's forecast of 4Q global GDP growth declined two-tenths this week, to a lackluster 2.2% seasonally-adjusted rate. Just two weeks ago, their estimate stood at 2.7%, and it was reduced due a 13.4%-point downward revision to India's 4Q GDP growth outlook. (Unfortunately, the statistics office's new methodology has made tracking India's quarterly GDP difficult.) In contrast to the 4Q global GDP growth forecast, J.P. Morgan continues to increase the 3Q number. This week, the 3Q global GDP growth estimate is 2.8%, up from only 2.4% at the start of October. This increase is also largely due to India's revisions and there are still about 10 countries that have yet to finalize their 3Q GDP outcomes.

In Figure 1, J.P. Morgan's "Nowcasting" projections are for global GDP to advance 2.5% on an annualized basis this quarter, the same reading as in the past three weeks. However, with the J.P. Morgan forecast moving down (Table 1), the Nowcaster is signaling upside risk for the current quarter. Moreover, the monthly Nowcast projections signal a stronger pace for global GDP growth at 2.7% for each month within this quarter-held back only by the weak trajectory from the prior quarter.

 
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