- All eyes on Powell today. Federal Reserve (Fed) chair Jerome Powell is slated to speak today in what some expect will be his most important speech since taking the helm in February. Markets expect a rate hike at the Fed’s December meeting. However, investors will be looking for signs of a more cautious approach going forward after comments from Powell in October suggested the Fed was not close to hitting the neutral rate for monetary policy. We expect that manageable inflationary pressures, the impact of the Fed’s ongoing balance sheet reduction, moderate economic growth and a higher U.S. dollar will support a continuation of gradual rate hikes.
- Consumers remain upbeat, drive record retail sales and strong GDP. A favorable economic backdrop, low unemployment, rising wages, and tumbling oil prices helping to spur a pickup in retail this holiday season. According to the National Retail Federation, sales from Thanksgiving through the end of the year are expected to come in at the high end of its 4.3-4.8% estimate for annual retail sales growth after a record number of Americans (165 million) shopped online and in stores from Thanksgiving Day through Cyber Monday. The NRF report coincided with the Conference Board’s monthly Consumer Confidence Index, which beat analysts’ expectations, but retreated from October’s 18-year high as consumers’ outlook for the next six months worsened. However, the data overall indicate that consumer spending, the largest component of U.S. gross domestic product (GDP), remains healthy, as evidenced by figures released this morning that showed the economy expanded at a 3.5% annual pace in the third quarter.
- Housing market struggles continue, but outlook may be improving. Recent reports suggest the U.S. housing market is in the midst of a broad slowdown as rising mortgage rates and elevated property prices continue to weigh on growth in the sector. S&P CoreLogic Case-Shiller’s 20-city property index showed home values continued to rise at a brisk pace in September (5.1%); however, growth was below levels seen in August (5.5%) and decelerated for the six straight month. Despite the negative trend, decelerating prices may encourage more buying activity in the months ahead as rising wages have a chance to narrow the gap, and a tentative pickup in building permits issued since bottoming in August may also bode well for the sector’s outlook.
- Earnings deliver again. We expected another strong earnings season, and corporate America delivered. Both revenue and earnings soundly beat expectations while companies’ outlooks have generally been upbeat even in the face of tariffs and building wage pressures. Trade is, of course, the elephant in the room as President Trump and Chinese President Xi prepare for their anticipated meeting at the G20 summit. The good news is that most companies have indicated that the impact has been limited, as we discuss in our latest LPL Research blog.
- LPL Market Signals Podcast. In our latest episode, listen to LPL Financial Chief Investment Strategist John Lynch and Senior Market Strategist Ryan Detrick discuss turkeys, crude oil prices, stressed credit markets, and Brexit. We will also be taking a break this week from our regular recording schedule due to the Thanksgiving holiday. Please tune in the next week when we will return to our normal recording schedule. We hope you had a Happy Thanksgiving. Subscribe to the free Market Signals podcast series on iTunes, Google Play, Spotify, or wherever you get your podcasts!
- Wholesale Inventories (Preliminary, MoM, Oct)
- Retail Inventories (MoM, Oct)
- GDP Report (Revised, Q3)
- New Home Sales MoM (MoM, Oct)
- Core PCE (Oct)
- FOMC Meeting Minutes (November)
- Tokyo CPI Report (Nov)
- China Manufacturing PMI (Nov)
- China Composite PMI (Nov)
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