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Payrolls and Politics Spark Stock Rebound

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Building on yesterday’s US market gains of 0.3%-0.4%, which came on the back of a stronger than expected ADP payrolls report (568K vs street 428K), overseas markets have been rebounding overnight as well. The particularly depressed Hang Seng popped 3.0%, while the Nikkei bounced 0.5%. European markets are also up solidly today with the Dax gaining 1.4% and the FTSE rising 1.1%.

Positive momentum has continued around the clock into early North American trading. US index futures are up 0.9% to 1.2% with NASDAQ futures leading the charge today. Providing an additional boost this morning have been reports that US Senators appear close to a deal to raise the debt ceiling by a small amount, enough to kick the can down the road for a couple of months and giving them more time to sort out bigger arrangements on spending. This would also, however, apparently set up December as the month for a potential showdown over the budget and infrastructure bills with the threat of a debt default or government shutdown potentially coming back to haunt investors then.

US weekly initial jobless claims were better than expected (326K vs street 348K). tomorrow brings the monthly US nonfarm payrolls (street 488K vs previous 235K) and Canadian employment (street 60K vs previous 90.2K), numbers. Investors may view these reports through two lenses, what they say about strength or weakness in the North American economy and whether they increase or decrease pressure on the North American central banks (particularly the Fed) to start/ accelerate or delay/slow their tapering programs. 

US earnings season starts in earnest next week but we are still seeing a few results here and there this week. Clothier Levi Strauss handily beat expectations ($0.48 vs street $0.37) and posted stronger than expected full year EPS guidance ($1.43-$1.45 vs street $1.33). Management indicated that it has encountered some supply chain disruptions but has been able to manage then by having a widely distributed production network. 

Disclaimer: SIA Wealth Management Inc. (SIAWM) specifically represents that it does not give investment advice or advocate the purchase or sale of any security or investment whatsoever. This information has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. None of the information contained in this document constitutes an offer to sell or the solicitation of an offer to buy any security or other investment or an offer to provide investment services of any kind. As such, advisors and their clients should not act on any recommendation (express or implied) or information in this report without obtaining specific advice in relation to their accounts and should not rely on information herein as the primary basis for their investment decisions. Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. SIAWM nor its third party content providers make any representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein and shall not be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon. Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.

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At SIA Wealth Management everything we do is based on Relative Strength Analysis. We evaluate the Relative Strength between asset classes giving us insight into money flows on a large scale, and from this select top ranked investments.

Colin Cieszynski, Chief Market Strategist
Market Commentary:

Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

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