Markit

Key Events In The Coming Pre-Holiday Week

The key economic releases this week are durable goods and GDP on Thursday. Chair Yellen’s speech on the labor market on Monday afternoon is also likely to garner considerable attention.

US Manufacturing PMI Hits 21-Month High (Despite Plunge In Industrial Production)

After mixed PMIs from Europe overnight (German/Eurozone Services down, Manufacturing up), US Manufacturing PMI (soft survey) rose very modestly in its preliminary December print to 21-month highs, which is entirely decoupled from industrial production hard data declining. However, the 54.2 level disappointed relative to 54.5 expectations, with export sales close to stagnation, which contrasted with the modest growth seen on average in the second half of 2016.

With All Eyes On The Fed, Stocks And Crude Slip, Bonds Rise

European stocks slipped from an 11 month high, Asian stocks and S&P futures were flat as caution pervades global markets before the Federal Reserve’s expected interest-rate hike on Wednesday. Treasuries slipped, after reaching the highest level in more than two years. Oil in New York slid to near $52 a barrel after API showed a build in inventories, and currencies of commodity-exporting nations fell. Gold headed for its biggest gain in a week.

With 65% of ATMs Nonoperational, Goldman Warns India Is "Returning To Barter System"

India continues to stagger from bad to worse followinhg Modi's demonetization. With just 35% of ATMs nationwide operational, Goldman warns the shortage of cash continues to incentivize the use of alternate payments, including extension of informal credit and a return to barter systems. Addtionally, the slowdown in activity is dramatically reflected in lower tax collections and discounts offered by luxury car companies.

Longest Winning Streak For Global Stocks Since September On Monte Paschi Bailout Hopes, ECB Optimism

Global stocks extended the longest winning streak since September, with Asia up 0.8% and Europe rising 0.7% while bonds and credit markets strengthened amid hopes that the European Central Bank will prolong quantitative easing, while optimism an Italian bailout of Monte Paschi will prevent European bank contagion, has pushed European financial stocks higher. US equity futures were little changed.

"Things Have Tapered Off" - US Services Economy Jumps To 13-Month Highs But New Orders Stall

After spiking to 2016 highs in September/October, the US Services economy slipped lower in November according to Markit with signs of margin squeezes appearing as input cost inflation hits a 15-month high, but prices charged remained flat, and payrolls growth remains weak (well below average). However, ISM reported a big beat, with Services at the highest since Oct 2015 (despite a drop in new orders).

Key Events In The Coming Weeks: Italy Aftermath, ECB, ISM, Consumer Confidence

The key economic releases this week are ISM non-manufacturing on Monday and University of Michigan consumer sentiment index on Friday. Away from the US economic calendar, initially focus will be on the Italian referendum result, which appears to have been mostly digested by the market as bullish. It will then shift quickly to a critical ECB meeting.

European Stocks Soar, US Futures, Euro Jump After Failed Italian Referendum

Another miraculous overnight recovery has eliminated all the bearish aftertaste from the failed Italian referendum. As Guillermo Sampere of MPPM EK put it: "After Brexit, it took three days for markets to shake it off, with Trump it took three hours, with Italy it took three minutes.The fast money, who expected markets to fall further with this outcome, are now covering their positions."

Schwarzman, Dimon, Fink Will Advise Trump How To Create Jobs

Donald Trump today announced that he is establishing the President’s Strategic and Policy Forum. The Forum will be called upon to meet with the President "frequently to share their specific experience and knowledge as the President implements his plan to bring back jobs and Make America Great Again. The Forum will be chaired by Stephen Schwarzman, Chairman, CEO, and Co-Founder of Blackstone." Its members also include Jamie Dimon and Larry Fink.

US Manufacturing Surges To 20-Month Highs Despite Employment, Export Orders Drop

Extending October's bounce, Markit's US Manufacturing PMI for November jumped to its highest since March 2015 with "signs of buoyant business conditions in the US manufacturing sector." ISM Manufacturing also rose to its highest since Feb 2015 and while overall orders rose, we note that the USD strength may be evident as export orders dropped and employment slowed.

Key Events In The "OPEC Is Optimistic About A Deal" Week

The key economic releases this week are consumer confidence on Tuesday, ISM manufacturing on Thursday, and the employment report on Friday. There are a few scheduled speaking engagements from Fed officials this week. The Beige Book for the December FOMC period will be released on Wednesday.