Since there’s so much data out this morning I’ll just bullet point most of the releases:
- Global PMI’s were “better than expected”. Most importantly, China was strong. This likely means the revenue story is intact. This is an equity positive. It will be important to keep tabs on the China story in the coming months to ensure that they don’t step on the breaks too hard.
- The ISM Manufacturing report disappointed just slightly at 56.6 vs expectations of 57. New orders came in at 56.6 while employment came in at 57.5. All in all it was a solid report despite being slightly lower than expectations.
- ADP report came in at 93K which was much higher than the 70K expected. This bodes well for Friday’s job’s report. The ADP has tended to lag the NFP headline figure so it would not be unreasonable to see a sizable print in Friday’s report.
- Challenger’s Layoff Report contradicts some of the strength in ADP with a surge in layoffs in November to 48,711. Although worse than expected it is still a minor uptick in the grand scheme of things and likely represents government cutbacks.
- The productivity and costs report shows continued margin expansion as productivity remains high at 2.3% and costs nudged down at -0.1%. This means the margin driven earnings expansion will likely continue into next quarter.
All in all we continue to have an environment that is low growth and conducive to better corporate profits. Though rife with risk the data for now looks solidly positive.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
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