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OPINION

Indices Bolt At Renewed Stimulus Hopes

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.
AP Photo/Evan Vucci

Major indices bolted out of the gate largely on renewed fiscal stimulus hopes.  Since then, the virtual duel hearing with Steven Mnuchin and Jerome Powell has been so politicized the rally has lost some steam.

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It’s really a shame considering Congress has not acted in good faith in coming up with another fiscal push.  The $3.3 trillion House bill was outlandish and insincere just as the notion of a so-called skinny bill is not broad enough.

Meanwhile, more economic data is showing the rebound is stalling.

November ISM Manufacturing:

  • 57.5 actual
  • 58.0 estimate
  • 59.3 October 

Manufacturing is still growing, but at a slower pace, as new orders and production saw large percentage point declines. 

The red flag, however, comes from employment, which decelerated into contraction.  This news, ahead of the jobs report, is problematic.

ISM Components

Index

% Point

Change

Direction

Rate of Change

Trend* (Months)

Manufacturing PMI®

57.5

-1.8

Growing

Slower

6

New Orders

65.1

-2.8

Growing

Slower

6

Production

60.8

-2.2

Growing

Slower

6

Employment

48.4

-4.8

Contracting

Reversal

1

Supplier Deliveries

61.7

+1.2

Slowing

Faster

13

Inventories

51.2

-0.7

Growing

Slower

2

Customers’ Inventories

36.3

-0.4

Too Low

Faster

50

Prices

65.4

-0.1

Increasing

Slower

6

Backlog of Orders

56.9

+1.2

Growing

Faster

5

New Export Orders

57.8

+2.1

Growing

Faster

5

Imports

55.1

-3.0

Growing

Slower

5

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Construction Spending

 The October read came in stronger than expected, as the housing boom continues to pace construction spending higher. 

Private Residential

  • $637.1 billion +2.9% month to month +14.5% year to year

Private non-Residential

  • $456.6 billion -0.7% month to month -8.2% year to year

To see the chart, click here.

Great Start

This is a great start to December with all sectors higher lead by Financials.  It would be impressive if the market could pick up early momentum to find a way to rally back toward intraday highs into the close.

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