The Empire Manufacturing Index, a measure of activity in the New York region, unexpectedly declined to 6.3 in November from 10.5 in October, compared to the Bloomberg forecast of an increase to 13.5. However, a reading above zero denoting expansion. The report marks the fifth-straight month of expansion, as employment growth accelerated but the expansion in new orders decelerated.
Another Covid-19 vaccine on track (Nov 16, 2020)
Moderna Inc. (MRNA $98) rallied after announcing that preliminary analysis of Phase-3 trial results of its COVID-19 vaccine candidate met statistical criteria with a efficacy rate of 94.5%. MRNA said based on these interim safety and efficacy data, it intends to submit for an Emergency Use Authorization (EUA) with the U.S. Food and Drug Administration (FDA) in the coming weeks and anticipates having the EUA informed by the final safety and efficacy data. MRNA also said it plans to submit applications for authorizations to global regulatory agencies.
Moderna's announcement comes after last Monday's news from Pfizer Inc. (PFE $37) and its partner BioNTech SE (BNTX $92) of their investigational COVID-19 vaccine that also showed a 90%+ efficacy rate. PFE and BNTX traded lower.
The news bolstered a recent rotation into cyclically-natured and value stocks that have underperformed the high-flying mega-cap growth stocks and equities that had benefitted from the shift to a work-from-anywhere standard of living that was ushered in by the pandemic.
Retail sales miss, import prices subdued (Nov. 17, 2020)
Advance retail sales for October increased 0.3% month-over-month (m/m), below the Bloomberg forecast of a 0.5% increase following September's downwardly-adjusted 1.6% gain. Last month's sales ex-autos rose 0.2% m/m, compared to expectations of a 0.6% rise and September's negatively-revised 1.2% gain. Sales ex-autos and gas were up 0.2% m/m, compared to estimates of a 0.6% increase, and September's reading was adjusted downward to a 1.2% rise. The control group, a figure used to calculate GDP, ticked 0.1% higher m/m, south of projections of a 0.5% increase and versus September's negatively-adjusted 0.9% increase.
The Import Price Index dipped 0.1% m/m for October, versus expectations of a flat reading, and compared to September's downwardly-revised 0.2% gain. Compared to last year, prices were down 1.0%, versus forecasts of a 0.8% decrease and a slight recovery from September's negatively-revised 1.4% fall.
Industrial production and housing data upbeat (Nov 17, 2020)
The Federal Reserve's industrial production rose 1.1% m/m in October, just above estimates of a 1.0% gain, and versus September's favorably-revised 0.4% decrease. Manufacturing output rose solidly and utilities production jumped, while mining output declined. Capacity utilization increased to 72.8% from the prior month's upwardly-revised 72.0% rate, compared to forecasts of 72.3%. Capacity utilization is 7.0 percentage points below its long-run average, but 8.6 percentage points north of the low set in April.
The National Association of Home Builders (NAHB) Housing Market Index showed homebuilder sentiment in November unexpectedly improved to another record high, jumping to 90, versus forecasts calling for it to match October's 85 level. A level north of 50 depicts positive conditions. The index notched a record high for the third month in a row and the NAHB noted that this reflects that housing is a bright spot for the economy. "However, affordability remains an ongoing concern, as construction costs continue to rise and interest rates are expected to move higher as more positive news emerges on the coronavirus vaccine front," the NAHB added.
Housing construction activity data mixed, mortgage applications dip (Nov. 18, 2020)
Housing starts for October rose 4.9% month-over-month (m/m) to an annual pace of 1,530,000 units, above the Bloomberg forecast of 1,460,000 units, and compared to September's upwardly-revised pace of 1,459,000 units. However, building permits, one of the leading indicators tracked by the Conference Board as it is a gauge of future construction, came in flat m/m at an annual rate of 1,545,000, south of expectations of 1,567,000 units.
The MBA Mortgage Application Index dipped by 0.3% last week, following the prior week's 0.5% decline. The modest decline came as a 1.8% drop in the Refinance Index more than offset a 3.5% gain in the Purchase Index. The average 30-year mortgage rate ticked 1 basis point (bp) higher to 2.99%.
Weekly initial jobless claims (Nov. 19, 2020)
Weekly jobless claims came in at a level of 742,000 for the week ended November 14th, above the Bloomberg estimate of 700,000 and the prior week's upwardly-revised 711,000 level. The four-week moving average declined by 13,750 to 742,000, while continuing claims for the week ended November 7th fell by 429,000 to 6,372,000, below estimates of 6,400,000. The four-week moving average of continuing claims dropped by 525,000 to 7,054,500.
Leading Economic Indicators (Nov. 19, 2020)
The Conference Board's Index of Leading Economic Indicators (LEI) for October rose 0.7% month-over-month (m/m), matching September's unrevised gain and expectations. The LEI has been positive for six-straight months after the plunges in March and April, due to positive contributions from ISM new orders, jobless claims, stock prices, credit conditions and the interest rate spread.
Existing homes sales increase (Nov. 19, 2020)
Existing home sales unexpectedly increased in October, rising 4.3% m/m to an annual rate of 6.85 million units—the fifth-straight monthly gain—versus expectations of a decline to 6.47 million units from September's modestly-revised 6.57 million rate. Existing home sales are up 26.6% y/y.
Manufacturing indexes mixed (Nov. 19, 2020)
The Philly Fed Manufacturing Index declined but remained solidly in expansion territory (a reading above zero) for November, decreasing to 26.3 versus estimates of a decline to 22.5 from October's 32.3 level. New orders, shipments and delivery times all fell but continued to depict expansion, while employment growth accelerated.
The November Kansas City Fed Manufacturing Activity Index dipped but remained at a level depicting expansion (a reading above zero). The index declined to 11 from October's 13 reading, matching forecasts.
Crude Oil Reports (Nov 19, 2020 and Nov. 20, 2020)
U.S. crude oil stocks remained near or above their 5-year range, as reported by the EIA on Nov. 19.
Total active drilling rigs in the U.S. fell by 2 rigs to 310, Baker Hughes says in its latest survey.
U.S. oil rigs fell by 5 to 231, while gas rigs added 3 to 76 and 3 rigs remain classified as miscellaneous.
The total count remains 61% below year-ago levels.
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