“There is only one thing we say to Death: Not Today”
- Syrio, Game of Thrones
It’s okay to have fun in this game. And it was a fun week for the growth camp as the data, in microcosm, reflected the broader domestic macro reality of the last year.
So, on a sunny, 72o Friday in November, let’s quickly pause to bask in the week that was ….
OCT ended with the lowest monthly VIX ever. Then both personal income and household spending #accelerated in SEP alongside High Ticket Discretionary Consumption up +10% Y/Y.
The Dallas Fed Survey then jumped to 27.6, rounding out the Regional Fed releases and sending our composite Capex and New Orders Series higher (again) for the month. That would be enough for even the most discriminating RoC connoisseur … but, alas, it was only Monday.
… the steamroll picked right back up on TUE as the ECI reading for 3Q showed wage inflation making a new 10Y high; Home price growth (Case-Shiller) accelerated further, the Chicago PMI rose to an ostentatious 66.2 and Consumer Confidence just said “rip” and printed a 203-month high.
Humpday then proved another beauty for the rose colored glasses contingent as ADP printed +235K, the Markit PMI ticked higher and Vehicle Sales and Construction Spending both handily bested expectations. The ISM Mfg index then went down, but not really.
Thursday …. Challenger Job Cuts declined, Initial Jobless Claims continued to plumb new 40 years lows, Consumer Comfort (Bloomberg) increased and Labor Productivity accelerated for a 5th consecutive quarter, marking the fastest pace of growth in years.
The elusive Tax Reform package actually came out but everyone decided they were already sick of Thursday and closed equities slightly green.
Which, of course, brings us to …
Friday, and everyone’s favorite day for fabricated angst around employment ... which proved decidedly anti-angstful as the headline +262K gain was accompanied by a +90K positive revision to Aug/Sep and the collective re-realization that the labor market is what we already knew it was.
Oh yeah … and the ISM Services reading for October made a new 146-month high as Currently Activity and Employment both increased and New Orders held at 62.8.
With the advent of this week’s data our predictive tracking algorithm for U.S. Real GDP is tracking at +2.35% YoY, up +5bps QoQ and with upside risk.
The “red shoots” will come … but Not Today.
Have a great weekend,
-Hedgeye Macro
