• S&P 500: +20.5% YTD
• Nasdaq Composite: +18.8% YTD
• Russell 2000: +15.8% YTD
• Dow Jones Industrial Average: +15.4% YTD

Once again, it was growth, especially in the comfort food of those trillion-dollar companies, that led the way while those hedging opted for defensive names. As a result, market breadth was bullish while volume tempered.

S&P 500 Index	+0.03%
Communication Services XLC	+0.50%
Consumer Discretionary XLY		-0.01%
Consumer Staples XLP	+0.53%
Energy XLE		-1.47%
Financials XLF		-0.57%
Health Care XLV	+0.03%
Industrials XLI		-0.38%
Materials XLB		-0.26%
Real Estate XLRE	+1.72%
Technology XLK	+0.03%
Utilities XLU	+1.31%

 

Market Breadth	NYSE	NASDAQ
Advancing	2,055	2,578
Declining	1,259	1,832
52 Week High	186	194
52 Week Low	19	52
Up Volume	2.11B	2.48B
Down Volume	1.73	1.63B

Less Fear but Far from Exuberant

The CNN Fear & Greed Index is edging higher but far from exuberant.

Today, we will get the latest on retail investors sentiment from the American Association of Individual Investors (AAll). The last reading became more cautious weeks ago when the market was tensing up ahead of the Jackson Hole, Wyoming speech.

I find it amazing that the Main Street sentiment (both as consumers and investors) remains in check -even overly cautious when the market is in rally mode to this degree, and home prices are rising at their fastest pace ever. 

Manufacturing Purchasing Managers’ Index (PMI ) climbed to 59.9 from 59.5, against the consensus estimate of 58.6.

Highlights:

• News Orders
• Production
• Inventories
• Prices

INDEX	Aug Index	Jul Index	% Point Change	Direction	Rate of Change	Trend* (months)
Manufacturing PMI®	59.9	59.5	+0.4	Growing	Faster	15
New Orders	66.7	64.9	+1.8	Growing	Faster	15
Production	60.0	58.4	+1.6	Growing	Faster	15
Employment	49.0	52.9	-3.9	Contracting	From Growing	1
Supplier Deliveries	69.5	72.5	-3.0	Slowing	Slower	66
Inventories	54.2	48.9	+5.3	Growing	From Contracting	1
Customers’ Inventories	30.2	25.0	+5.2	Too Low	Slower	59
Prices	79.4	85.7	-6.3	Increasing	Slower	15
Backlog of Orders	68.2	65.0	+3.2	Growing	Faster	14
New Export Orders	56.6	55.7	+0.9	Growing	Faster	14
Imports	54.3	53.7	+0.6	Growing	Faster	14
Overall Economy				Growing	Faster	15
Manufacturing Sector				Growing	Faster	15

The bad news is employment is shifting to contraction from expansion, decreasing to the lowest level since November 2020. Workers are in control and seeking better wages.

Seven industries reported employment growth for August:

Electrical Equipment, Appliances & Components; Furniture & Related Products; Primary Metals; Computer & Electronic Products; Machinery; Fabricated Metal Products; and Transportation Equipment.

Seven industries reported a decrease in employment for August:

Textile Mills; Paper Products; Printing & Related Support Activities; Nonmetallic Mineral Products; Petroleum & Coal Products; Food, Beverage & Tobacco Products; and Chemical Products.

Employment	% Higher	% Same	% Lower	Net	Index
Aug 2021	20.3	58.2	21.5	-1.2	49.0
Jul 2021	26.1	57.8	16.0	+10.1	52.9

EMPLOYMENT

ISM^®’s Employment Index registered 49 percent in August, 3.9 percentage points below the July reading of 52.9 percent. “The Employment Index returned to contraction territory after one month above 50 percent. Of the six big manufacturing sectors, three (Computer & Electronic Products; Fabricated Metal Products; and Transportation Equipment) expanded. Strong new-order levels, low customers’ inventories and expanding backlogs belied the reduction in employment strength. Survey panelists’ companies are still struggling to meet labor-management plans, but despite a contracting index, there were positive signs compared to recent months: An overwhelming majority of panelists indicate their companies are hiring or attempting to hire, with about 35 percent of comments — a decrease from previous months — expressing difficulty in filling positions. A significant number of panelists note increasing employee-turnover rates, continuing a trend evident in the comments in July,” says Fiore. An Employment Index above 50.6 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Of the 18 manufacturing industries, the seven reporting employment growth in August — in the following order — are: Electrical Equipment, Appliances & Components; Furniture & Related Products; Primary Metals; Computer & Electronic Products; Machinery; Fabricated Metal Products; and Transportation Equipment. The seven industries reporting a decrease in employment in August — listed in order — are: Textile Mills; Paper Products; Printing & Related Support Activities; Nonmetallic Mineral Products; Petroleum & Coal Products; Food, Beverage & Tobacco Products; and Chemical Products.

Employment	% Higher	% Same	% Lower	Net	Index
Aug 2021	20.3	58.2	21.5	-1.2	49.0
Jul 2021	26.1	57.8	16.0	+10.1	52.9
Jun 2021	26.6	54.1	19.3	+7.3	49.9
May 2021	20.8	61.1	18.0	+2.8	50.9

Portfolio Approach

We added to Consumer Staples yesterday in our Hotline Model Portfolio.

Today’s Session

Initial jobless claims came in at 340,000 just five thousand better than consensus and continuing also squeaked past consensus, but the total number of folks getting some kind of unemployment assistance actually edged higher, driven by pandemic insurance.  PAU +408,485 and PEUC +6,044.

Auto Sales

It’s no surprise US new auto sales are slumping, in large part to a lack of inventory.  August saw the fourth consecutive decline in sales -11.5% from July to 13.06 million SAAR (lowest since June 2020).

Ford (F) just announced its sales -33.1%. 

The chip situation is frustrating, but lots of autos have sold in the past year bringing the debt to $1.5 trillion and there’s still demand.

 

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