Succinct Summation of the Week’s Events
Positives:
1. Midterm elections are over! Markets liked the idea of divided government and gridlock, rallying strongly the day after. And even better, the robo calls, emails, commercials, and door bell rings will stop (until the Presidential Election in 2020).
2. November has seen stocks bounce off of recent lows, making up more than half of the October swoon;
3. There are 7 million+ job opening for the 3rd consecutive month;
4. October ISM services index fell 1.3 pts to 60.3 but that was 1.3 pts better than expected
5. Initial jobless claims at 214k was in line, little changed from last week.
6. QE is coming to an end in Japan; BoJ head Haruhiko Kuroda said this week, “Unlike in the past, Japan is no longer in a situation where a decisive, large scale policy is needed to overcome deflation.”
Negatives:
1. FOMC statement was uneventful in October, but rates are likely to be raised again in December.
2. There continues to be a shortage of qualified workers relative to openings, especially in technology and engineering professions.
3. Producer Price Index was hotter than expected with a 0.6% m/o/m; y/o/y gain is now 2.9
4. Mortgage rates rose again, up 4 bps w/o/w to 5.15% — the highest since April 2010;
5. Mortgage applications fell 4%; percentage of ARM volume rose to 7.8%Refi’s fell 2.5% w/o/w and are down 33% y/o/y.
6. Home Purchases fell 5% w/o/w and are flat y/o/y while the index level is at a two year low.
