And when October goes
The snow begins to fly
Above the smoky roofs
I watch the planes go by
The children running home
Beneath a twilight sky
Oh, for the fun of them
When I was one of them

When October Goes

-Barry Manilow

Perhaps because of the changing of the seasons and the inevitability of winter, there have been so many great but sad poems and songs written about the month of October. However, for investors this month, it felt like a gentle spring day that reflects renewal and vigor and hopefulness. The stock market was amazing with the three key indices that enjoyed big moves on the last day of October.

• Dow Jones Industrial Average +4.3%
• NASDAQ +3.6%
• S&P 500 +2.1%

Note: Big tech played such a huge role in the October rally; five names are responsible for 43% of all S&P 500 gains.

I pointed out that the Chicago Purchasing Managers Index (PMI) on yesterday’s Afternoon Note that there were so many other bullish factors, including consumer confidence (which came in well above Wall Street consensus) as it hit its highest level in almost 17 years, driven by improving confidence in business and the current jobs market:

• Consumer Confidence: 125.9
• Present Conditions: 109.1 from 103.0
• Expectations: 151.1 from 146.9
• Business “Good”: 34.5 from 33.4
• Jobs “Plentiful” : 36.3 from 32.7

Global Economy

It’s not just the domestic economy and the stock market that’s on fire. Around the world, there is a rising economic tide, which is great news for American companies, including Arch Coal (ARCH). 

Before the open, Arch posted financial results of revenue of $613 million against consensus of $550 million -earnings beat the Street by $0.73.  Management was confident enough in improving trends as they raised the company’s stock buyback program from $200 million to $500 million.

There were earnings from MasterCard (MA), always a good proxy for global consumers. All geographical regions saw great increases in constant currency (USD) than the United States.

In the United States, credit card use grew more than twice that of debit once again underscoring my thesis that consumers are more confident and making bigger purchases and willing to take on more debt. 

 

MasterCard Total Volume	Dollar (in billions)	Change (USD)
APMEA	$413	+8.5%
Canada	$41	+13.4%
Europe	$396	+17.6%
Latin America	$97	+17.3%
USA	$406	+6.1%
USA Credit	$198	+8.6%
USA Debit	$209	+3.9%

Everything seems to be moving in the right direction and clicking on all cylinders. Can Washington, D.C. and its dysfunctional leaders deliver? 

The GOP will present its tax plan, and try to get the ball rolling to meet President Trump’s goal of a bill by Thanksgiving and a signing ceremony before the end of the year.

Note: My prayers to all the victims of the downtown Manhattan car attack, which happened in the shadow of the Freedom Tower.  This is a stark reminder of how fragile life can be but also why we must be united as a nation despite our differences.  

Today’s Session

Equity futures are significantly higher this morning despite GOP leadership pushing its scheduled to unveil its tax plan by 24 hours amid significant in-fighting in differences on how to square the circle (read: cover deficit). 

The stock of the morning is US Steel, which posted strong financial results that saw sales +20.9% driven by flat-rolled steel, which enjoyed pricing power and maintained volume.  Tubular saw a huge price increase, $1.433 (per net ton) versus $1,049 a year ago, and shipments soared 185 (net tons) from 103 a year ago.

I continue to focus our investment thesis on physical building blocks of the economy and this report buttresses an array of trends and observations the nation is on the move.

Comments

Charles, all for your comment except for the "despite our differences". The mode of this terrorist attack by the Muslim jihadist is promulgated by ISIS. It is they who need to respect the "despite our differences". If the terrorists just leave us alone, we're good. Else, we will bring hell unto the earth. BLL KPP on 11/1/2017 10:18:14 AM

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