Morning Minutes

Powell Rally Continues as Investors Digest Data

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Stocks and commodities capped off November with a big rally into the close, sparked by comments from Fed Chair Powell who suggested the US central bank could potentially start to slow the pace of interest rate increases as soon as this month’s meeting. This came on the heels of a series of disappointing economic reports out of the US that included worse than expected ADP payrolls, Chicago PMI and Pending Home Sales reports.

Building on gains of 2.2% to 4.4% for US indices yesterday, led by the NASDAQ, US index futures have been climbing again this morning, particularly on today’s US economic news. Core PCE inflation, the Fed’s favorite measure, continued to improve (5.0% as expected vs previous 5.2%), and weekly jobless claims came in better than expected (225K vs street 235K).

On this news US index futures are currently trading up 0.1% to 0.4%. Over in Europe, the Dax is up 1.0% while the FTSE is up 0.1%. In commodity action, WTI crude oil is up 1.9%, Natural Gas is up 3.1% and copper is up 0.7%. The US Dollar is in retreat again today, losing 2.3% against Gold and 1.0% against the Euro.

This morning, Manufacturing PMI reports have been coming out from around the world. While relatively close to expectations, European Manufacturing PMI numbers have been consistently running between 45.0 and 50.0, indicative of a moderate contraction. Canadian Manufacturing PMI is due at 9:30 am EDT (street 49.3). US ISM Manufacturing PMI (street 49.8 vs previous 50.2), New Orders (street 48.0), and Prices Paid (street 47.5) are all due at 10:00 am EDT, along with US construction spending (street -0.3%).

Canadian bank earnings numbers were mixed again today. CIBC, for example, missed on earnings ($1.39 vs street $1.72) but raised its dividend and also increased its loan loss provision from a year ago. TD Bank beat the street on earnings ($2.16 vs street $2.05), while Bank of Montreal fell slightly short of expectations ($3.01 vs street $3.07). Wrapping up bank earnings week in general, earnings were mixed, strength in traditional banking helped to offset weakness in capital markets, two of the big six banks raised dividends, but the majority raised loan loss provisions.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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