Two strong back to back weeks for the US Indexes does not make a strong market but it does how the Bulls have not fallen to sleep after a dip in price action in September. Where are we going from here after a strong finish to this past week’s action and great kick off to the Q3 Earnings with Bank Stocks?
Get me take in the current market action in this week’s round-up.
WEEKLY SOUND BITES:
- US Indexes built on the previous week’s gains, helped by some strong economic signals and positive earnings surprises. Global oil prices continued their climb to their highest level in over three years while supply chain issues continued to grab headlines in the form of warnings from retailers struggling to fill shelves ahead of the holidays. Investors also seemed comforted by evidence that the drag on the economy from the delta variant of the coronavirus was easing. On Thursday, the S&P 500 Index recorded its biggest daily gain since March following news that weekly jobless claims had fallen to 293,000, a new pandemic-era low.
- Evidence that supply pressures and inflation might be peaking seemed to be a major factor in stocks regaining momentum to end the week. On Wednesday, the Labor Department reported that core (less food and energy) consumer prices had risen 4.0% for the year ended in September—above the Federal Reserve’s long-term 2% inflation target, but in line with August and consensus expectations. Producer prices, reported Thursday, rose 0.5% for the month (8.6% for the year), down from the 0.7% rise in August and less than consensus forecasts. Wall Street’s momentum carried into Friday after the Commerce Department reported that retail sales had defied expectations for a decline and jumped 0.7% in September—although some of the increase was due to higher prices. We saw Copper prices rise over 11% this past week, the largest weekly gain since 2011.
- Investors may have been further reassured by the release of the minutes from the Fed’s September policy meeting, which revealed that officials believed current economic conditions justified keeping short-term interest rates at or near zero for the next couple of years. The U.S. Treasury yield curve flattened through most of the week. Short-term yields crept higher on growing expectations that the Fed will deliver a quicker policy response to combat inflation pressures. Meanwhile, concerns over the economic outlook caused longer-term yields to retreat.
- Industrial production in the eurozone fell in August due to supply chain bottlenecks and slowing global trade, Eurostat data showed. Output from factories, mines, and utilities fell 1.6% from July, when output increased by 1.4% sequentially. And over in the UK, GDP in August grew 0.4% month over month while headline unemployment fell to 4.5% in the three months ended August 31, continuing a decline from the five-year peak of 5.2% hit in November 2020. And over in Germany, they slashed their forecast for economic growth in 2021 to 2.4% from a previous estimate of 3.7%, as supply chain bottlenecks curb manufacturing output. However, they said economic conditions would improve toward year-end and raised their forecast for 2022 growth significantly to 4.8% from 3.9%
- IN Japan, the government retained its overall assessment for their economy as continuing to pick up, pointing to signs of recovery in private consumption, but it said that the pace of recovery was slowing due to the severe situation caused by the coronavirus pandemic.
- Investors in China have been spooked by a deepening energy crisis as cold weather swept into much of the country and power plants scrambled to stock up on coal, sending prices of the fuel to record highs. Oil and natural gas prices, which have also soared to multiyear highs, have also sent jitters across China, a net energy importer. China’s policymakers are being forced to choose between supporting the economy and further stoking producer prices, as the official producer price index jumped 10.7% in September from a year earlier, marking the biggest rise since the government began compiling the data in 1996.
Enjoy this week’s round-up;
Don’t Be A Rat Brain Trader – Be the Red Stripe Zebra !!