Morning Commentary
On the campaign trail, candidate Donald Trump rhetorically told audiences they would get tired of too much winning. Yesterday, that theory was tested in the stock market, which had difficulty maintaining gains after a series of amazing economic data.
First, the ADP reported 230,000 jobs created in September. The street was looking for 180,000.
Rev Up That Diesel
As you know, I have been pointing to the enormous amount of big rig truck orders, which have been on a blistering pace. That pace continued last month with the ten-best months of orders ever. According to FTR North America, Class 8 Truck Orders in September were 42,300, an increase of 92% from 2017 and (+206%) from 2016.
• 2016: 164,000
• 2017: 290,000
• 2018 YTD: 392,808
The sales of big rigs were the highest-ever quarter for sales:
``The economy is surging right now, putting stress on shippers to find trucks to deliver goods on time…demand, as indicated by the surge in orders, will be even stronger next year.''
-Don Ake, FTR
Then came the ISM Non-Manufacturing report, which came in significantly above Wall Street consensus. The employment part of the report reached an all-time record. Respondents are struggling to fill open positions by the end of the year to meet the demand.
All this winning finally caught up to the market after the 10-year Treasury yield tickled 3.18%, knocking the wind out of the market as the Dow gave up more than 100 points, and the S&P 500 actually slipped into the red.
All the major indices were about to bounce back but finished well off their highs. And market breadth was mixed with more bullish volume; still, not the kind of broad strength one would associate with another record day for the exchanges.
Market Breadth |
NYSE |
NASDAQ |
Advancers |
1,475 |
1,900 |
Decliners |
1,527 |
1,168 |
Market Breadth |
NYSE |
NASDAQ |
New Highs |
73 |
49 |
New Lows |
262 |
112 |
Market Breadth |
NYSE |
NASDAQ |
Up Volume |
2.2 billion |
2.1 billion |
Down Volume |
1.3 billion |
862.5 million |
Too Much Enthusiasm? No!
Whenever the market is making new highs, the knee-jerk criticism is that there is too much optimism or irrational exuberance. However, that simply isn’t my own personal experience, or what certain surveys suggest.
Today’s Session
Overnight, the 10 Year U.S. Treasury yield hit 3.23% pressuring equities and creating additional anxiety the day ahead of the big jobs report. Initially, jobless claims edged down 8,000 to 207,000. All evidence points to a potentially significantly higher jobs numbers from the consensus at the start of the week.
On that note, there are extenuating factors, and modeling between ADP and BLS is different, but the macro drivers are the same.
Comments |
Good news indeed economy growing fast.Thanks to Trump. Timothy Classen on 10/4/2018 10:05:41 AM |
I believe that most professionals and investors are Keynesian and more than a few members of the Fed do not get that the velocity of money has been crushed and is a long way from inflation exploding to the upside. That fear is borne in a belief that the Fed will HAVE to take aggressive action and hurt economic growth. They still think this DESPITE the past many years of evidence to the contrary and the fact that interest rates keep rising and then falling back. The Fed has postponed how many interest rate increases of a quarter point now? These Keynesian's do not get that the global currency exchange rates and the fed extraction are already doing the job and that is why the Fed action has been extended for so very long. They almost are doing to much and that is why rates rise and then fall back...IMHO. Bottom line - we will not have run away inflation and are headed for record growth numbers the likes of which we have never seen are about to begin and will make history. CHEERS! Ray Weldon on 10/4/2018 10:38:57 AM |
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