Market Update: Thursday, December 7, 2017


Market Recap

Overnight & This Morning

  • Mixed session for equities. S&P 500 down four straight sessions. Government funding bill in focus as Dec. 8 deadline looms. Dow -0.2%, S&P 500 flat, Nasdaq +0.2%, Russell 2000 Index -0.5%.
  • Technology (-0.8%) rebounded to lead sector performers. Consumer staples, utilities also outperformed, offering defensive tone; energy (-1.3%) biggest decliner.
  • Treasuries stronger. Some curve flattening. 10-year yield -0.01% to 2.33%.
  • Commodities – WTI crude -2.9% to $55.97/bbl. after bigger-than-expected gasoline build; gold +0.1% to $1267/oz. despite modest gain in U.S. dollar.
  • Economic data today includes jobless claims (236K vs. 240K consensus, 238K prior) and October consumer credit. Monthly jobs report due out tomorrow (195K consensus).


Macro Notes

  • Tax reform bill goes to conference. We continue to expect the House and Senate to successfully reconcile their bills and get a version to President Trump by year end. It is debatable how much of the news is priced in and details are not final, but based on intra-market movements, our sense is that there still may be more tax-related gains and intra-market rotation to come when the final bill is passed into law and digested by the marketplace.
  • Don’t fear a shutdown. We expect a short-term resolution by the end of the week to extend government funding and avoid a shutdown. Neither party wants to be blamed for a shutdown, but the fact that Republicans likely need Democratic votes introduces risk. Even if the government does shut down temporarily, we would not expect it to impact tax reform or have meaningful market or economic impact; which would be consistent with history. Areas of potential compromise include immigration, defense, ACA, children’s health insurance, and the expiration date (Dec. 22, or Dec. 30, or a string of deals to get past New Year’s).
  • U.S. dollar facing headwinds and tailwinds. As noted in our Outlook 2018: Return of the Business Cycle, our U.S. dollar forecast for 2018 is modestly bullish. We believe global monetary policy dynamics, interest rate differentials, and potential U.S. fiscal policy impacts will propel the greenback higher versus major foreign currencies, particularly the euro and yen. However, the dollar faces headwinds, including the possibility that global interest rate differentials close because monetary policy divergences are priced in. The synchronized global economic expansion could also be dollar negative as growth has broadened out globally.


Click Here for our detailed Weekly Economic Calendar


  • Challenger Job Cuts (Nov)
  • Weekly Jobless Claims (Dec 2)
  • Household Change in Net Worth (Q3)
  • Consumer Credit (Oct)
  • Germany: Industrial Production (Oct)
  • France: Trade Balance (Oct)
  • Italy: Unemployment Rate (Q3)
  • Bank of Italy: Report on Balance Sheet Aggregates
  • Japan: GDP (Q3)
  • Japan: Leading Index (Oct)
  • Japan: Eco Watchers Survey (Nov)
  • China: Trade Balance (Nov)
  • China: Imports & Exports (Nov)


  • Change in Nonfarm, Private & Manufacturing Payrolls (Nov)
  • Unemployment Rate (Nov)
  • Average Hourly Earnings (Nov)
  • Average Weekly Hours (Nov)
  • Labor Force Participation & Underemployment Rates (Nov)
  • Wholesale Inventories (Oct)
  • Wholesale Trade Sales (Oct)
  • Germany: Trade Balance (Oct)
  • Germany: Current Account Balance (Oct)
  • Germany: Imports & Exports (Oct)
  • France: Industrial Production (Oct)
  • UK: Industrial Production (Oct)
  • UK: Trade Balance (Oct)
  • UK: Nat’l Institute of Economic & Social Research GDP Estimate (Nov)
  • BOE: Inflation Next 12 Months
  • China: CPI & PPI (Nov)

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