Thanks for reading my Diary.

I am calling it a day and a week.

Enjoy the weekend.

Be safe.

Peter Boockvar's Succinct Summation of the Week's Events

Positives

1)Within the BLS jobs report, there was a big rebound in the household survey of 747k after a drop of 348k in October. Combine this with a rise in the labor force of 532k after a decline of 201k last month and the unemployment rate fell to 3.7% from 3.9% which was the highest since January 2022. The all in U6 rate also dropped by 2 tenths m/o/m to 7%. The workweek was up .1 to 34.4 and has been between 34.3 and 34.4 for many months now which compares with the 5 yr average of 34.5. Hourly earnings grew by .4% m/o/m with a y/o/y gain of 4.0%, about as expected and combine this with hours worked and average weekly earnings were up by .6% m/o/m and 3.7% y/o/y. The participation rate and employment to population ratios both rose and job leavers as a % of unemployed, basically measuring quits, rose to 13.1% from 12.6%.

2)Initial claims were as expected at 220k vs 219k last week and brings the 4 week average to 221k from 220k and smooths out the Thanksgiving holiday. With respect to continuing claims, after rising to the highest level since November 2021 for the week ended 11/17, the 84k jump for that week gave back 64k of it for the week ended 11/24.

3)The December preliminary UoM consumer confidence index jumped to 69.4 from 61.3 and that was much better than the estimate of 62 and likely helped by the drop in one yr inflation expectations as the price of gasoline and other items are cheaper. Both Current Conditions and Expectations were higher m/o/m. One yr inflation expectations at 3.1% vs 4.5% in the month before is the least since March 2021. The 5-10 yr inflation guess was 2.8% vs 3.2% in November. Spending intentions were higher. With this index still 30 pts below its pre Covid level, the UoM also highlighted the cumulative impact of inflation over the past 3 years, "the share of consumer blaming high prices for eroding their living standards was little changed from last month; consumer still feel pinched by high prices."

4)The ISM services index for November was 52.7, up from 51.8 in October and that was a touch above the estimate of 52.3 and vs 53.6 in September and 54.5 in August. The 6 month average is now 53.2. Breadth improved as 15 of 18 industries saw growth while 3 saw a contraction. That compares with 12 saw gains in October and 5 reported a contraction. The bottom line from the ISM was this, "The services sector had a slight uptick in growth in November, attributed to the increase in business activity and slight employment growth. Respondents' comments vary by both company and industry. There is continuing concern about inflation, interest rates, and geopolitical events. Rising labor costs and labor constraints remain employment related challenges."

5)The Manheim wholesale used car index saw a 2.1% m/o/m drop in pricing in November though which Manheim said is a typical seasonal move. They are also expecting "less of a roller coaster in the new year" in terms of prices.

6)The continued drop in the average 30 yr mortgage rate to 7.17% did help to lift refi's by 14% w/o/w, which are still mostly cash outs. Purchases were flat after four weeks of gains.

7)There was a big rebound of $21.7b of C&I loans outstanding for the week ended 11/22 but because it was Thanksgiving week, and much earlier than usual, it's likely that this influenced the figure so we'll wait until next week to see to what extent.

8)From Walmart: "If we had been talking last spring or at the beginning of last year, I expected more softness by this time of the year than we're actually experiencing. And I think employment and other things have propped that up." The impact of cumulative inflation, the end of SNAP and resumption of student loan repayments are all headwinds "But there's also some positive things happening. So, all in all I look at this year and it's stronger than what I would've though this year that we're getting ready to wrap up. Next year's a different story. And I don't know what next year's gonna look like as credit balances go up, the balance sheet of the consumer is not in as good of shape as it was six to 12 months ago or a year ago. But we still may find that we're back to growth rates that look like 2018, 2019 in terms of total retail."

9)From Lulu: "this Black Friday was the single biggest day in company history with strength across our store and e-commerce channels... Despite an uncertain macro backdrop, our teams are executing at a high level, which contributed to our upside in Q3...we're happy with our start to the holiday season, but with nearly two-thirds of the quarter still in front of us, we remain prudent in our planning."

10)From Signet Jewelers: "Jewelry continues to be an important gifting category particularly among Gen Z with Black Friday weekend results in line with our expectations...Google searches for engagement rings are now 10% higher than last year, the first time they've exceeded the prior year in nearly two years. The percentage of couples moving to the engagement phase has improved by 5 points, a statistically significant movement over the last 18 months."

11)From Toll Brothers: "We have continued to see solid demand through our fourth quarter...Based on our non-binding deposit activity through the first five weeks of our first quarter, demand remains solid and consistent with normal seasonality. As we approach the start of the spring selling season in January, we are encouraged by the recent 75 bps drop in mortgage rates. With resale inventories at historic lows, buyers continue to be drawn to new homes, and we expect lower rates with lower inflation to add to this already solid demand."

12)As fully expected the BoC kept interest rates unchanged at 5.00%. The same with the RBA at 4.35%.

13)Japan reported its October wage data and base pay rose 1.4% y/o/y and while still running well below the pace of inflation, it is near the quickest pace since 1997.

14)Tokyo said its core/core November CPI came in at up 3.6% y/o/y, one tenth less than expected and down from 3.8% in October. Prices ex energy were up 2.3%, also one tenth under the forecast.

15)China's exports in November rose .5% y/o/y which was a touch better than expectations of no change.

16)China's private sector services PMI from Caixin for November rose to 51.5 from 50.4 and that was 1 pt above expectations. Caixin said the improvement was due to "a stronger upturn in total new business midway through the final quarter of the year" as the "market continued to heal." Also, "Optimism in the services industry rebounded. The downward trend of the gauge for service providers' expectations about future activity came to an end after four consecutive months of decline."

17)Hong Kong's PMI for November got back to 50 at 50.1 from 48.9. S&P Global referred to this as a sign of stabilization.

18)The November Singapore PMI rose to 55.8 from 53.7. S&P Global said "Central to the latest improvement in conditions was stronger demand growth. New business expanded at the fastest rate in six months, buoyed by marketing activities and rosier underlying demand conditions. Foreign demand, while still subdued, deteriorated at the softest pace since June and one that was modest overall." Also, "Forward looking indicators including the backlogs of work and future output indices also hinted at sustained growth heading into 2024."

19)After the BoK did nothing last week with policy, South Korea reported its November CPI and it rose 3.0% y/o/y vs the estimate of 3.1% and down from 3.2% last month.

20)The November Eurozone services PMI was revised up by .5 pt to 48.7 from its initial print seen a few weeks ago but still is below 50 for a 4th straight month. Regionally, "Spain's service sector maintained a moderate growth pace, France witnessed a rapid contraction, while Germany and Italy find themselves in the realm of stagnation. The contrasting dynamics show France, the 2nd largest economy, putting the biggest downer on the overall performance of the Eurozone's service sector."

21)The UK services PMI for November was revised up by .4 pt to 50.9 and that puts it back into expansion after 3 months below 50. Notwithstanding the gain, "survey respondents once again commented on a lack of willingness to spend among clients. Many firms noted that low levels of business and consumer confidence, alongside elevated borrowing costs, had constrained sales opportunities in November. Overseas markets continued to show resilience, with strengthening US demand often cited as a driver of increased new export orders."

22)The Swiss reported November CPI that was also below expectations at 1.6% vs the estimate of 1.9% and vs 2% in October.

23)Taylor Swift is Time's Person of the Year and that is certainly very well deserved.

Negatives

1)Payrolls grew by 199k in November which was 14k more than expected but the prior two months were revised lower by a total of 35k. Also, the private sector job gain of 150k was 9k under expectations after a job gain of just 85k in October. The service sector added 121k vs 95k in October and vs 178k in September. The goods side hired a net 29k after losing 10k in October and up 21k in September. The auto sector added back 30k after the end of the UAW strikes. Most of the job gains outside of the auto workers was in healthcare, government and leisure and hospitality.

2)ADP said the private sector added a net 103k jobs in November, 27k below expectations and October was revised down by 7k to 106k. The 3 month ADP average for the private sector is now 99k vs the 6 month average of 208k, the 12 month average of 215k and the 2022 average of 306k. With respect to pay, there was a one tenth drop in the y/o/y gains for 'job stayers' and 'job changers' to 5.6% and 8.3% respectively.

3)The number of job openings in October, thus somewhat dated, fell to 8.73mm, the least since March 2021. The hiring rate fell to 3.7% which matches the lowest since Covid shutdowns and compares with 3.9% in February 2020. The quits rate held at 2.3% for a 4th straight month, matching the lowest since September 2020 and was also 2.3% in February 2020.

4)The Cox Automotive Q4 Dealer Sentiment index fell to the lowest level since Q2 2020 for both franchised and independent dealers. According to their chief economist, "Franchised dealers panned their fourth quarter market, and the typically optimistic industry for the first time in survey history had an even worse outlook for the quarter ahead...This is taking pessimism to a whole new level."

5)S&P Global's services PMI is just above 50 at 50.8. They said, "The latest PMI data point to a further cooling of inflation pressures, but the surveys also signal only modest economic growth and near stagnant employment, with the risk of the expansion losing further momentum as we head towards 2024."

6)The November auto sales figure seen late last Friday totaled 15.32mm at a seasonally adjusted annualized rate (SAAR). That was below the estimate of 15.5mm but up from 14.14mm in November 2022 and that's because of more inventory on lots that has created more customer options.

7)The November Logistics Managers Index fell to 49.4, back under 50, down 7.1 pts m/o/m. "November's dip was largely triggered by a decline in inventory levels which is attributable to Q4 holiday sales and the subsequent dips in warehousing capacity and transportation capacity and slowdown in warehousing utilization and transportation utilization...Essentially, November's decline seems to have come because firms are selling off inventories quickly."

8)From Old Dominion Freight: "The decrease in our November revenue reflects continued softness in the domestic economy."

9)From Dollar General: "During our most recent survey work, our customer continues to tell us they are feeling significant pressure on their spending, which is supported by what we see in their behavior. Based on these trends and what we see in the macroeconomic environment, we anticipate customer spending may continue to be constrained as we head into 2024, especially in discretionary categories."

10)From RH: "While pleased with improved demand trends generated from the launch of our new RH Interiors and RH Contemporary collections, we experienced increased headwinds in early October when mortgage rates peaked above 8%, and the Hamas invasion of Israel triggered the war in the Middle East. With 82% of homeowners having mortgages below 5%, and 62% below 4%, we continue to expect the existing housing market to remain frozen until interest rates and/or home prices fall meaningfully. Additionally, the home furnishings market has become increasingly promotional, and we believe that will create a mix shift towards clearance products, pressuring gross margins. In light of the current market we are delaying the mailing of our RH Modern Sourcebook until the first quarter of fiscal 2024 when demand conditions will likely be more favorable."

12)From Chewy: "the softness that we called out last quarter that we started seeing in the July-August timeframe has persisted. We're seeing the impact of this softness most materially in the non-Autoship portion of our business (Autoship is a subscription service sending non-discretionary consumables and health products)...And primarily across highly discretionary components, some consumable components, this is related...making forecasting a little bit difficult across the macro that is keeping discretionary soft and overall spending patters a little bit opportunistic."

13)From AutoZone: Auto Zone said this in their call, "We do feel the low end consumer started pulling back on discretionary purchases...For the 2nd quarter, we expect our DIY sales to remain more difficult and our commercial sales trends to improve."

14)From Box: "Our guidance also accounts for the continued pressure on seat growth that we anticipate due to the macroeconomic environment as well as lower professional services revenue vs our prior expectations."

15)From Amex: "If you just go back in the 2nd quarter, we had 8% overall billings growth. Third quarter, it came down to 7%. And in October, everybody got a little bit skittish, and I think other people have said the same thing that growth wasn't as strong in October. And we didn't see growth in October like it was in the third quarter." He did say though after that November he saw "sort of what we looked like in the third quarter."

16)From BofA: After talking about Black Friday and Cyber Monday spend, "it's much more consistent with that money moving out of customer accounts with a lower growth, low inflation economy. And that's what you're seeing...The year to year growth rate ticking down, which doesn't sound good because it's still going up, but it's going up at a less high rate. You're seeing the way customers are spending, their money has leveled out." He referred to this as 'normalization.'

17)From Truist Financial: "And clients are generally...on the commercial side, generally more cautious, so no doubt about that. You can see some of that caution reflecting in loan demand. So a little more careful about the next addition to the truck fleet or the next warehouse of data center or whatever it may be in terms of those decisions. And I'm not so sure it's as much financing driven as it's just cautionary note about where the economy is." On the consume side, "it's also bifurcated. And the higher end consumer is still spending and still lots of discretionary activity, and you see that in hotel and air traffic and destination experiences, all those type of things. But the lower end consumer, however, we might define that, let's call it, $100,000 income and below...I think that consumer is going to start feeling a little more stress. You're seeing a little more credit card utilization, a little more delinquency. We saw some of the buy not-pay later come into some of the holiday sale. So that consumer is starting to feel that stress, and I think that's going to manifest itself in some way to what degree we can all speculate, but into next year."

18)Keep focused on what the BoJ does as ground is being laid for an end to NIRP, finally. This is good for the long term but bumpy road ahead for now.

19)Reflecting still soft domestic demand Chinese imports fell by .6% y/o/y vs the estimate of up 3.9%. Many imports too make it into eventual exports.

20)India's services PMI slipped but still remained well above 50 at 56.9 from 58.4.

Scott Galloway's No Mercy/No Malice... Firewater.

From Peter Boockvar:

Feeling good about the rate of change, still stressed by the price level

The December preliminary UoM consumer confidence index jumped to 69.4 from 61.3 and that was much better than the estimate of 62 and likely helped by the drop in one yr inflation expectations as the price of gasoline and other items are cheaper. Both Current Conditions and Expectations were higher m/o/m. One yr inflation expectations at 3.1% vs 4.5% in the month before is the least since March 2021. The 5-10 yr inflation guess was 2.8% vs 3.2% in November. This helped to lift the median percentage of those that expect family income to exceed inflation in the coming 5 yrs to 36.5% from 33.8%. It did touch 36.7% back in July.

Expectations for employment in the coming year fell 1 pt to 78 and continues to hover around the lowest since 2011. It stood at 105 in January 2020. The net income component was unchanged m/o/m.

On the gasoline side, this component fell to the lowest since September 2022, and of course a main driver in the drop in expectations for inflation. There also more people are expecting lower interest rates as they see the recent move over the past month.

Spending intentions improved with a 7 pt rise in those that think it's a good time to buy a vehicle. After falling 10 pts last month, intentions to buy a major household item rose by 12 pts. Intentions for home buying were up 3 pts but fell by 10 in November. The UoM said "Concerns over high prices of durable goods and vehicles waned modestly."

Bottom line, as stated above, this improvement in confidence was all about the "expected trajectory of inflation" said the UoM. Also, "There was a broad consensus of improved sentiment across age, income, education, geography, and political identification." This said, the UoM also highlighted the cumulative impact of inflation over the past 3 years, "the share of consumer blaming high prices for eroding their living standards was little changed from last month; consumer still feel pinched by high prices."

Further, the direction of the rate of change with inflation is certainly welcome for consumer sentiment but the reason why this index is still 30 pts below where it stood in February 2020 is because of the 20% rise in the cost of living, as measured by CPI over the past 3 years and as alluded to by the UoM. There is NO such thing as transitory inflation on the services side to state again, always offsetting historical goods price stability and deflation in tech. See below the long term chart in the CPI index.

While stocks are enjoying the report, Treasury yields don't typically respond to consumer confidence data and yields remain near their highs of the morning.

UoM Consumer Confidence



One yr Inflation Expectations



CPI Index, nothing transitory about this, only the rate of change that is up for debate

From Fred Washington:
Just wait until the consumer wakes up January 1st and starts to understand the gravity of how badly of a bind they are in with their credit cards and the cost of just about everything. My RE taxes jumped 30% this year alone. My Personal Property taxes on my vehicles - another 30% increase. Just received my Homeowners insurance renewal - you guessed it, 30% up (State rate increase - say what), Car Insurance up 20% (State rate increase - say what), the list goes on and on and on.... Bidenomics will put this country into a recession (if not depression) in '24. Bank on it.

* The yield on the 2- year US note is +14 basis points to 4.723%.

* The yield on the 10-year US note is +13 basis points to 4.258%.

* The yield on the long bond is +10 basis points to 4.347%.

These moves are not equity market friendly despite the animal spirits (FOMO) coupled with quant strategies that buy higher (and sell lower).

Taking a late lunch.

Back in an hour.

"Meshuganah is trump." (meaning: "Craziness is three-fold" in Yiddish)

- Grandma Koufax 

It was only a matter of time in which a synthetic product is created based on ODTE (zero days to expiration)options! 

Here it is... the Defiance Nasdaq 100 Enhanced Options Income ETFQQQY .

Its objective, per Defiance:

QQQY, the first put-write ETF using daily options (0DTE) to seek enhanced income for investors. Paid Monthly.

QQQY aims to achieve consistent and outsized monthly yield distributions for investors coupled with equity market exposure to the Nasdaq-100. QQQY is an actively managed exchange-traded fund ("ETF") that seeks enhanced income, constructed of treasuries and Nasdaq-100 index options. The strategy's objective is to generate outsized monthly distributions by selling option premium on a daily basis. The fund uses daily options to realize rapid time decay by selling in the money puts with 0DTE.

Investment Objective

The Fund's primary investment objective is to seek current income. The Fund's secondary investment objective is to seek exposure to the performance of the Nasdaq 100 Index (the "Index") subject to a limit on potential investment gains.

Occidental Petroleum price target lowered to $73 from $78 at JPMorgan 08:06 OXY JPMorgan lowered the firm's price target on Occidental Petroleum to $73 from $78 and keeps a Neutral rating on the shares. The firm continues to favor Canadian integrated oils despite a "more normal valuation gap." With strip Brent prices showing a modest step down in crude pricing in 2024, while downstream should also continue to moderate from 2022 peaks, this would suggest no significant commodity-based tailwinds for the group next year, the analyst tells investors in a research note. The U.S. group should be in a transitional year in 2024, with both majors expected to close significant acquisitions, while the prospect of further acquisition activity in the industry appears to be something of an overhang for the overall majors/large cap group as potential buyers, the analyst tells investors in a research note.

Cautionary comments from Danielle DiMartino Booth on the current state of the jobs market (and other "issues"):

It was with some relief that Bloomberg's Anna Wong, in previewing today's jobs data, stated that she, too, thinks the recession of 2023 will be dated as having started in October. Aside from myself, she's the only one I know to have made such a public declaration based on every labor market metric save initial jobless claims and nonfarm payrolls, flagging a contracting job market.

Ok, OK, OK...There is one more exception. As we've written since March 2023, when nationwide continuing jobless claims flipped into the positive (that's bad) year-over-year (YoY), the holdout state has been, and remains, Kentucky. Of all 51 states, including Washington D.C., it's the only one that's not succumbed to the indistinction of rising YoY continuing claims. Defying reason, we've asked ourselves, "Is there something in the water? Why the perfect track record in defiance of every other state?" The biggest employer there is Kentucky Fried Chicken, and we know that's finger lickin' good. But is that fried chicken so good to qualify an entire U.S. state as the holdout?

Digging a bit deeper, we found that while no single Kentucky employer has the same footprint as Colonel Sanders, many automakers have a sizable non-unionized presence in the business-friendly state. With that preamble, we highlight the national dueling phenomena of rising car inventories and falling used car prices. Both flag dwindling demand hitting an interest-rate sensitive sector, in keeping with the intent of the Federal Reserve's current policy stance.

What's to come, as the auto industry finally buckles, is rising joblessness in the last of the hold-out states (upper left chart). The Bluegrass State has reigned as the king of state job markets. From a low point (good) of -42.5% YoY on continuing jobless claims last March, Kentucky's claims are now a mere -5.1% YoY.

What will clinch Kentucky's succumbing to the fate of the rest of the nation is booze, particularly that which is amber in color, and not coincidentally, the hardest on your liver. In an announcement Wednesday, Brown-Forman, maker of Jack Daniels, announced that sales have been so abruptly arrested, they've wiped clean a 25-year growth streak hyper-charged by the pandemic.

Being in the holiday mindset, we're compelled to warn about a red flag being raised in online shopping trends. Per the Logistics Managers' Index, Warehouse Utilization has crumbled to its second-lowest, post-pandemic level (green bars). For corroboration, we aggregated Retail and Warehouse Job Cut announcements via Challenger, Gray & Christmas data, which have clearly gapped up after a reprieve (yellow line). While we can't deny the Amazonification of workers in this sector, something doesn't add up. Netting out Amazon to get a cleaner look into the holiday hiring economy, we see that, at 353,000 in the three months ended November 2023, job hiring announcements are the lowest on record.

Upon intaking the indefatigable message in the illustration, QI's Dr. Gates put his foot down: "Stop calling the turn in the labor market a 'normalization' already! It's time to take off the kid gloves. Challenger's seasonal private hiring announcements are below normal for a second straight year, and critically, below the pre-pandemic average (orange bars). Co-starring in the role of unequivocal affirmation, the breadth of occupations declining in Indeed job postings (purple line) is materially widespread and in need of a taller scale. There are many ways to identify these crystal-clear inflections. 'Normalization' ain't one of them."

Could inexplicable nonfarm payroll strength show up today? Between the end of the UAW strike and the conjuring of government jobs, we'd expect nothing less. That won't take away from reality. Despite Econ 101 teachings that the booze market is 'recession-proof,' U.S. consumers are imbibing so little, consumption is running 3.3% below trend (light blue line). That's on par with that of nonfarm payrolls' 3% post-pandemic deficiency (lilac line). Few would dare acknowledge that many of these jobs will be lost, and possibly never return, kind of like those Sweet 16 moments, whose memories fade as quickly as they're made.

A good one from "Meet" Bret Jensen:

Welcome to the Hotel California Dept.

'According to California's non-partisan Legislative Analyst's Office (LAO) report released Thursday, the state's budget deficit has grown exponentially in just a few months' time, up more than $54 billion from just $14.3 billion in June' 

Not exactly a sign of booming economy, tax revenues are badly lagging estimates. Some of this due to the outmigration happening in the once Golden State, for the first time since CA became a state. Some is due to declining economic activity. CRE has become a major drag on the economy as well. 

'Over the first nine months of the year, Los Angeles investors traded 40 properties for a total of $1.2 billion, which is a 77 percent decline compared to the same period last year, due to unfavorable lending conditions. Of the completed sales, properties traded on average for $325,294 per unit, down 25 percent compared to last year's figure.'

* At 10:38 AM...

-- NYSE volume 127M shares, 11% below its one-month average.

-- NASDAQ volume 1.45B shares, 6% above its one-month average.

Breadth

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Movers

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Heat Map

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 I eliminated both trading short rentals from yesterday --  (LULU) (loss) and (RH) (gain).

Brent crude oil is now +$2.05 -- at the day's high.

I have added to my energy longs.

If you own Paramount Global (PARA) or are considering buying the shares -- this is the most clear analysis of the company's financial predicament I have ever read.

Cowen lowers RH (RH) from $350 to $325.

My friend Peter Boockvar, chief investment officer with Bleakley Advisory Group, gives a thorough rundown on the latest jobs data: 

Payrolls grew by 199k in November which was 14k more than expected but the prior two months were revised lower by a total of 35k. Also, the private sector job gain of 150k was 9k under expectations after a job gain of just 85k in October. The service sector added 121k vs 95k in October and vs 178k in September. The goods side hired a net 29k after losing 10k in October and up 21k in September. The auto sector added back 30k after the end of the UAW strikes.

There was a big rebound in the household survey of 747k after a drop of 348k in October. Combine this with a rise in the labor force of 532k after a decline of 201k last month and the unemployment rate fell to 3.7% from 3.9% which was the highest since January 2022. The all in U6 rate also dropped by 2 tenths m/o/m to 7%.

The workweek was up .1 to 34.4 and has been between 34.3 and 34.4 for many months now which compares with the 5 yr average of 34.5. Hourly earnings grew by .4% m/o/m with a y/o/y gain of 4.0%, about as expected and combine this with hours worked and average weekly earnings were up by .6% m/o/m and 3.7% y/o/y. Finally we're seeing some REAL wage gains, albeit barely.

The participation rate ticked up by one tenth to 62.8% after falling by one tenth in October. The employment to population ratio did rose to 60.5% vs 60.2% and getting closer to the February 2020 print of 61.2%. Job leavers as a % of unemployed, basically measuring quits, rose to 13.1% from 12.6%. It was as high as 14.6% in July.

In terms of industry, manufacturing got back most of what it lost in October because of the end of the auto strikes. Construction hiring was barely something at 2k. On the service side, temp jobs resumed their job cuts and is negative in 9 out of the past 10 months. Leisure/hospitality added 40k, similar pace to October. Information added back 10k after losing 19k last month. Jobs were lost in retail (seasonally adjusted of course) and in professional business services. The financial sector added 4k after cutting 5k last month. Health and social assistance continues to be the steady eddy in hiring, adding 93k vs 75k in the month before. All the government hiring came at the state and local level.

The birth/death model added 4k which compares with +14k in November 2022 and a loss of 13k in November 2019 so no real influence here.

Looking at just the private sector, the 3 month job gain is 160k which compares with the ADP calculation at 99k. That's vs 138k for the BLS 6 month average, the 12 month average of 183k and vs the average in 2022 of 376k for the private sector.

Bottom line, if we include the downward revisions, the establishment survey was a bit less than expected but the household survey was much better. I can't square the two but as I highlighted yesterday, here are the signs of a job hiring slowdown we've seen, though the pace of firing's still remains historically low:

• Continuing claims near highest in two years.

• ADP 3 month private sector average of 99k vs the 6 month average of 208k and the 12 month average of 215k.

• Job openings thru October at lowest since March 2021.

• Those that said jobs were Hard to Get at highest since March 2021.

• Weakest employment component for mfr'g and services in S&P Global PMI since 2020. ISM services employment at 50.7 and manufacturing at 45.8.

• Job listings as measured by ZipRecruiter continues to drop.

On that fall in the unemployment rate, because of the big household survey figure offsetting a large rise in the size of the labor force, is what the US Treasury market is keying on this morning with the 2 yr yield at 4.68% vs 4.65% just before. The 10 yr yield is higher by 4 bps to 4.23% from right before the print hit. The dollar is rallying too.

As for the Fed, as we know they are doing nothing next week, this doesn't change anything but I do think that Powell will again, as he tried to do last week, push back on the market's giddiness over about 125 bps of cuts next year, even if they end up doing it anyway.

This table is a valuable resource for momentum-based short term traders:

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Upside:
- (MBI) +65% (announces extraordinary dividend of $8.00 a share to be paid by subsidiary National Public Finance Guarantee Corp.)
- (CURV) +17% (earnings, guidance; elevates Paula Dempsey to permanent CFO from Interim CFO, effective immediately)
- (NETI) +12% (Cadeler A/S and Eneti Inc. announce extension to Dec. 14 of the share exchange offer for all Eneti common shares outstanding and a new loan facility)
- (ALXO) +9.7% (Jefferies raised ALXO to Buy from Hold, price target: $18)
- (ALGS) +8.9% (ALG-055009 Phase 2a study expected to begin in 1Q24 for treatment of NASH; presents Positive Clinical Data at Hep-DART 2023 from Phase 1 Studies in HBV (ALG-000184) and NASH (ALG-055009))
- (CARR) +5.9% (confirms to divests Global Access Solutions unit to Honeywell for $4.95B all-cash)
- (BLUE) +4.6% (Morgan Stanley raised BLUE to Equal Weight from Underweight, price target: $7)
- (RBLX) +4.4% (reportedly Nicki Minaj created a Roblox account)
- (AVTR) +3.4% (to transition from three geographic segments to two to deliver $300M in run-rate savings by end of 2026; affirms FY23 guidance)
- (FSLR) +3.2% (Morgan Stanley raised FSLR to Overweight from Equal Weight, price target: $237)
- (PL) +3.1% (earnings, guidance)
- (RIOT) +2.9% (JPMorgan raised RIOT to Neutral from Underweight, price target: $12)
- (SMAR) +2.5% (earnings, guidance)

Downside:
- (HCP) -23% (earnings, guidance)
- (CDMO) -15% (earnings, guidance)
- (JOUT) -14% (earnings)
-GDHG -11% (downside momentum following announcement company intends to enter operating lease framework with top-tier Chinese amusement group)
- (CMTL) -9.0% (earnings, guidance)
- (RH) -8.5% (earnings, guidance)
- (GTES) -7.9% (files to sell 15 million shares in a secondary offering from selling stockholder Blackstone (BX) at $11.25 a share)
- (SWBI) -5.2% (earnings)
- (SPOT) -2.5% (CFO Paul Vogel to leave company, effective March 31, 2024)
- (HON) -2.4% (CARR confirms to divests Global Access Solutions unit to Honeywell for $4.95B all-cash)
- (CHRS) -2.2% (CFO resigns, effective Dec 31)
- (FIZZ) -2.0% (earnings)

Shorted more SPDR S&P 500 ETF (SPY) at $458.14 and Invesco QQQ Trust (QQQ) at $389.27.

Premarket movers

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Break in!

After the jobs report I remain concerned about prickly inflation (and services inflation and hours worked (etc.), in particular).

I am expanding my short exposure.

From Peter Boockvar:

Quick comment from ZIP CEO ahead of payrolls/Auto news/Retail comments/Other

Ahead of the payroll report today, Ian Siegel, the CEO of ZipRecruiter, was on CNBC yesterday and said this:

"If you look just at ZipRecruiter job postings data what you will see is that it continues to decline just as it has persistently declined for the past 18 months. We're all the way back to where we were pre Covid and continue to fall from there. However, the end of the year is a really unpredictable time to predict what the BLS will say when it comes out with its jobs report because there is so much seasonal hiring at this time of year and often a single job posting can in fact be used to hire a hundred or hundreds of individuals to fill a role for the next few months."

Also, "If you look at where we are relative to a year ago you've seen wages begin to flatten in new ZipRecruiter job postings, you see the number of new job postings that have a signing bonus as part of what they're offering down 25% from a year ago. And ZipRecruiter surveys of our employers, they are telling us that over half of them have lowered the the salary of at least one position they are currently advertising for."

We got some good and not good auto news yesterday.

The good was the Manheim wholesale used car index which saw a 2.1% m/o/m drop in pricing in November though which Manheim said is a typical seasonal move. They are also expecting "less of a roller coaster in the new year" in terms of prices.

The not good news was the Cox Automotive Q4 Dealer Sentiment index. According to their chief economist, "Franchised dealers panned their fourth quarter market, and the typically optimistic industry for the first time in survey history had an even worse outlook for the quarter ahead...This is taking pessimism to a whole new level."

Based on a breakeven score of 50, the franchised auto dealers index was 49 vs 57 in Q3 and that is the lowest figure since Q2 2020 during you know what. Independent dealers sentiment dropped to just 38 from 41 in Q3 and that too is the worst since Q2 2020.

Bottom line according to Cox, "We're seeing a notable decline in sentiment."

Let's touch on the consumer earnings commentary again as we saw more retailers report.

From Dollar General:

The drop of 1.3% in comps in Q3 "was driven by a decline in average transaction amount, primarily driven by units, and included declines in all four product categories. From an overall monthly cadence perspective, same store sales growth was very similar in all three months of the quarter. However, I'm pleased to note that customer traffic was positive in Q3. After starting the quarter slightly negative, traffic turned positive in the middle period and improved sequentially each period of the quarter. Notably, customer traffic and same store sales continue to improve in November, which although early in the quarter, we believe reflects early traction from our work on getting back to the basics here at Dollar General."

Also, "During our most recent survey work, our customer continues to tell us they are feeling significant pressure on their spending, which is supported by what we see in their behavior. Based on these trends and what we see in the macroeconomic environment, we anticipate customer spending may continue to be constrained as we head into 2024, especially in discretionary categories."

On inventories, "total non-consumable inventory decreased approximately 15% compared to last year and decreased 19% on a per store basis." Also, "we have seen an uptick in recent weeks on promotional activity." And lastly, shrink remains a big problem.

From Gary Friedman's shareholder letter at RH:

"While pleased with improved demand trends generated from the launch of our new RH Interiors and RH Contemporary collections, we experienced increased headwinds in early October when mortgage rates peaked above 8%, and the Hamas invasion of Israel triggered the war in the Middle East."

"With 82% of homeowners having mortgages below 5%, and 62% below 4%, we continue to expect the existing housing market to remain frozen until interest rates and/or home prices fall meaningfully. Additionally, the home furnishings market has become increasingly promotional, and we believe that will create a mix shift towards clearance products, pressuring gross margins. In light of the current market we are delaying the mailing of our RH Modern Sourcebook until the first quarter of fiscal 2024 when demand conditions will likely be more favorable."

From the earnings call, "I think the broader industry is back to pre-Covid pricing and promotions, and it'll be there forever now. Once you turn that on, you can't go back" and it is why RH is trying to stay away from many of the promotions and sales as Friedman called it a drug that many retailers can't shake.

From Lululemon:

"this Black Friday was the single biggest day in company history with strength across our store and e-commerce channels."

"Despite an uncertain macro backdrop, our teams are executing at a high level, which contributed to our upside in Q3...we're happy with our start to the holiday season, but with nearly two-thirds of the quarter still in front of us, we remain prudent in our planning."

They did mention that in the men's business, "when we look at the macro category within North America, we do see that he is spending less in apparel in general."

"And then in terms of inventory management, so we ended the quarter down 4% in inventory, it was lower than our expectation of high single to low double digit increase."

Retailers generally speaking seem to have gotten in control of inventories after the lessons they learned last year.

From Broadcom and shifting gears to tech briefly:

"Overall, while infrastructure software remains very stable, semiconductor is continuing the cyclical slowdown at enterprises and telcos that we have been seeing over the past six months. However, hyperscalers remained strong."

Overseas, yesterday's yen rally was the single biggest percentage move since a day in January 2023 and it is down a touch today after that bounce. JGB yields though continue higher with the 10 yr JGB yield up 1 bp and the 40 yr yield up 3.7 bps. The Nikkei sold off for the 4th day in 5 this week after doing so too last week. We still find Japanese stocks attractive even if the BoJ gets out of NIRP. Bond yields are rising in Europe and again in the US after that Japanese rate move over the past two days.

Japan reported its October wage data and base pay rose 1.4% y/o/y and while still running well below the pace of inflation, it is near the quickest pace since 1997. Whether it is done in a few weeks or early next year, I believe NIRP is about to disappear. There remains, only in Japan, about $206b left of negative yielding bonds after peaking at around $18 trillion a few years ago.

Base Pay in Japan y/o/y

Almost back to zero with negative yielding bonds

* Thursday's market was led by a spectacular move in Mag7 as overall breadth improved

* The Mag7 was responsible for much of the market's gain:

* Overall market volume was subdued:

* This morning crude (+$1.49) and yields (+5 basis points) are higher -- nonetheless, stock futures are unconcerned as The Bull Market in Complacency continues

* Sentiment has a way of following price -- the S&P Short-Range Oscillator stands at 5.57% vs. 4.84%

* "Let's (continue to) be careful out there."

* TGIF!

"I don't care if Monday's blue
Tuesday's grey and Wednesday too
Thursday, I don't care about you
It's Friday, I'm in love"

- The Cure, "Friday I'm in Love" 

"The stock market will do whatever it has to do to embarrass the greatest people to the greatest extent possible." - Wally Deemer

"Workin' on our night moves Trying to lose the awkward teenage blues Workin' on our night moves In the summertime And oh the wonder Felt the lightning And we waited on the thunder Waited on the thunder."

- Bob Seger, "Night Moves"

This daily Futures feature is like inside baseball. I try to show you and write about what I believe thoughtful hedge fund managers are looking at when they awake -- let's call it our normal routine -- setting the stage for their strategy for the day. The market is a complicated mosaic and the more info you have, the better trader and investor you will be!

The market (and money) never sleeps -- and neither do I, it appears! I have previously described the importance that overnight futures trading hold for me here. It is a guidepost to my strategy in the regular trading session. Moreover, the overnight/early morning futures hold opportunities as they are (1) inefficient, though liquid and (2) it seems fear and greed are often exaggerated outside the regular trading session. I frequently try to capture those efficiencies by trading actively both in the pre- and after-market sessions.

Here are brief observations I wanted to highlight and provide a summary of overnight price movements in various asset classes:

* Stock futures were unchanged throughout most of the overnight session in one of the most narrow trading ranges that I can remember. S&P futures peaked at +4 and bottomed at -7. Nasdaq futures peaked at +5 and bottomed at -49. At 6:52 a.m. ET, S&P futures were -3 and Nasdaq futures were -35.

* The S&P Short-Range Oscillator moved further to less overbought at 5.57% vs. 4.84%.

* The VIX is now at 13.14, a gain of +0.08.

* The U.S. dollar is higher against the yen, euro and sterling.

And...

* Treasury yields are broadly higher this morning. The 2-Year Treasury yield is +5 basis points at 4.627% and the 10-Year is also +5 basis points at 4.18%. Over there, the yield on the 10-Year U.K. Gilt bond is +6 basis points.

* Overnight, the inversion of the 2s/10s Treasuries curve is slightly higher at -45 basis points. Real rates remain quite elevated; the 10-year is still over 2 in real terms.

* Commodities are mostly higher. Brent crude is +$1.36 to $75.39.

* Gold is flat at $2,046 after the recent spate of volatility.

* The newest shiny object, Bitcoin, is resuming its climb, now $400 to $43.7k

Here is a synopsis of some of my columns I believe were important, or in the event you were out for the day and/or did not read my Diary. The principal intent is to review the logic of my market moves and other factors:

Early Morning Action

Bow Wow! (As expected, Chewy (CHWY) missed - I bought under $17 on the gap lower)

Bearish Microeconomic Fodder (from Liz Ann)

Just Wishin' and Hopin'

Is Housing About to Hit a Wall?

Here were Thursday's trades:

* Covered Paramount Global (PARA) for a small gain.

* Reduced Nike (NKE)

JPMorgan eyes the NFP report:

We believe that nonfarm employment increased by 150,000 in November while the unemployment rate held at 3.9%. While this expected job growth would match the monthly change reported for October, we think the headline readings will mask what would be a decelerating underlying trend for job growth. The UAW strike reduced the October employment count by about 30,000 and we expect these job losses to be mostly recovered in November. We also think that the end of the SAG-AFTRA strike will boost the employment data for November. The BLS's strike report indicates that about 25,000 striking manufacturing workers returned to work in the November reference period (about 5,000 UAW strikers were still on strike during that period) and that about 16,000 entertainment-related workers also returned to work in that period (which should show up in the information services employment grouping). With an expected solid gain in manufacturing jobs, we believe the employment in the goods sector jumped 45,000 in November. We expect the private service sector to show slowing net hiring in November even with some positive "strike effects," with 60,000 jobs added in November. We already have seen the trend in private service sector job growth moderate throughout much of the past couple of years and we generally expect continued softening over time. We also see continued weakness in indicators related to temp help hiring and we expect the trend in transportation employment to continue to head lower, in part because the seasonal factors expect a big ramp up in hiring for the holiday season that might not be matched by the actualized hiring. For the public sector, we expect another solid gain in employment in November, with 45,000 jobs added that month.

· The UAW strike may also have depressed the average workweek given that the workweek for the manufacturing sector hit its lowest level since the early stages of the pandemic in October (the workweek specific to motor vehicle and parts manufacturing was not as unusually low in October, but it did drop during the month). We look for some rebound in the November data, with the average workweek for the private sector ticking back up to 34.4 hours in November, reversing the decline reported for October. With our expectations for job growth and the workweek, we believe the aggregate hours index increased 0.4% in November. There are continued signs of tightness in the labor market but also some signals that this tightness has moderated to some degree. We therefore expect a decent 0.3% increase to be reported for average hourly earnings in November, but we look for the related year-ago measure to continue sliding, reaching 4.0%oya in November.

· For the household survey, we believe the unemployment rate held at 3.9% between October and November. The change in household survey employment was very weak in October (-348,000) and we look for at least a partial rebound in November to help keep the unemployment rate unchanged, even if there is some increase in unemployment as well. We think the participation rate might move up a little after declining in October, but after rounding we expect an unchanged reading at 62.7%.

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From J.P. Morgan Research:

2024 Year Ahead Outlook

By Global Research

Click here for the full document and disclaimers

In this report, we present the Global 2024 Year-Ahead Outlook from the J.P. Morgan Research department. We also provide summaries and links to individual year-ahead reports that our department produced for every asset class, sector and region - in total ~100 reports published over the past few weeks.

We started out 2023 with low expectations for global growth and elevated fears of recession, but China's reopening, large fiscal stimulus in the US and Europe, and residual strength of US consumers stabilized growth. Various themes also sparked market optimism (e.g. AI, luxury goods, weight-loss drugs, expectation of Fed rate cuts, cryptocurrency, etc.) resulting in risk markets delivering broadly positive performance.

As we approach 2024, we expect both inflation data and economic demand to soften, as the tailwinds for growth and risk markets are fading. Overall, we are cautious on the performance of risky assets and the broader macro outlook over the next 12 months, due to building monetary headwinds, geopolitical risks and expensive asset valuations.

As you navigate increasingly complex markets, J.P. Morgan Global Research is looking forward to continuing our partnership, providing investment insights and ideas in 2024 and beyond.

From JPMorgan:

US: Futs are flat ahead of NFP today. Pre-mkt, MegaCap Tech are outperforming following yesterday's strong rally. Notably, AMD +76bp and GOOG +34bp. On Cmdtys, oil is higher; Ags are mixed; base metals are higher post China's Politburo meeting. Bond yields are modestly higher. USD bounced back modestly this morning as Yen stabilized. All eyes on NFP today: Feroli sees NFP to print 150k vs. 183k survey vs. 150k prior and UR to stay at 3.9% vs. 3.9% survey. The team sees the job losses from UAW strikes to be mostly recovered in November.

and...

EQUITY AND MACRO NARRATIVE: Yesterday, GOOG/L and AMD added 5% and 10% respectively post their AI events: almost all MegaCap Tech rallied over 1% following the release (MSFT +58bp). Ron Adler, JPM Head of US Cash Equity Trading, tells us that "this market remains hypersensitive to positioning while news (fundamentals) is experiencing a delayed reactions (e.g., GOOGL, AMD, Fintech)." He expects the "overall tape will remain choppy for the next week or so (and intra-sector dispersion will remain), as it seems traders are looking towards next Friday's rebal/expiry as the last real liquidity event of the year." Today, all eyes on NFP release: Feroli has a below-street estimation of 150k vs. 183k survey vs. 150k prior.

Boroden on oil:

I shorted RH (RH) and Lululemon (LULU) .

All good here:

Wolf Street howls about the Fed's balance sheet.