Jay Powell is making a mess of things inside and outside the halls of the Federal Reserve. In an interview, that was more about the need for an independent central bank than the method to the rate policy madness. I thought the Fed should have cut 50 basis points (bps) based on the financial conditions of the bottom 75% of households and a rapidly weakening labor market.  

Powell has never articulated the reasons for the first two rate cuts, but he says the economy is in good shape.

There were few places to hide during the session. Energy (XLE) and Financials (XLF) eked out thin gains, but Industrials (XLI) were rocked by anxiety that the Trump administration would severe or reform cozy relationships between independent contractors and government agencies.

Reducing government spending will mean jettisoning a wasteful and bloated workforce. Defenders of big government point to statistics like the size of federal government workers concerning the overall employment picture, suggesting it’s a drop in the bucket. Others suggest it's not very large, but that’s disingenuous. Add in contractors and grant workers, and the workforce doubles.

Red Wave

The red wave sparked the rally, but nobody liked the red wave we got yesterday. It's still a great post-election period, but I will point out that even low Beta names are making huge moves, especially to the downside.

It was just tough sledding and selling sparked widespread profit-taking.

Today’s Session

A lot of economic data was out this morning, and it was all coming in ahead of the Wall Street consensus. Although there are bright spots, this doesn’t mean they are good news. The biggest surprise came from the Empire State (NY Fed) Manufacturing Survey, which surged to 31.2 from -11.90.

Note: most surveys came after the election, which has a lot to do with the turnaround.

Overall results from economic data releases.

Retail Sales

Retail sales components mostly beat, although core missed the Street. Several components that speak to discretionary spending and consumer confidence were lackluster.  The real story for retail sales was the revisions to September.

• Headline: 0.8 from 0.4
• Ex-autos: 1.2 from 0.7
• Control group: 1.2 from 0.7

It's going to be flattish open, but let's be cautious.

Comments

Postage stamps are up 36% since Biden took over. My mailman drives a 2024 electric mail truck. When the temperature gets below zero, will I get my mail on time? Marlin Lloyd on 11/15/2024 3:15:54 PM

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