G-20 Meeting – Very Strong November Empire Fed Report
Before going into the G-20 Meeting, let’s go over some stats from the November Empire Fed Report.
Not every manufacturing survey from the Fed was weak in November. The first example of this is the Empire Fed report. It came in at 23.2, which beat estimates for 20. Also, it was above the high end of the expected range which was 22.2. It was above October’s report of 21.1.
New orders index fell slightly from 22.4 to 20.4. It’s still close to the highest reading in 5 years. Shipments were up 1.7 points to a new 5 year high of 28.
Inventories were up sharply from 0.8 to 10.1. That would suggest the supply chain isn’t running hot.
However, the decline in delivery time from 5 to 4.4 and the increase in unfilled orders from -8.4 to 0 suggest otherwise.
Just like the Philly Fed report, inflation remained almost unchanged. The prices paid index was up 2.5 to 44.5 and the prices received index was down 1.2 to 13.1. Those changes are bad for margins.
The employment market turned sharply positive.
Number of employees index increased 5.1 points to 14.1 and the average workweek increased 9 points to 9.2. The 6 month forward index also improved.
As you can see from the chart below, expected capex in the NY Fed and Philly Fed reports increased. Philly Fed reading is higher even though it had a weaker report. Empire Fed capex reading increased 8.8 points to 24.8 and the technology spending index increased 10.5 points to 19.7.
Overall forward index increased 4.6 points to 33.6 and the new orders index was up 4.6 points to 39.7.
G-20 Meeting – Big Meeting Between Presidents Trump and Xi
The biggest potential positive catalysts for stocks are the Fed becoming dovish and America making a trade deal with China.
On the latter issue, President Trump and Chinese President Xi Jinping will be meeting at the G-20 meeting of the world’s developed economies.
