Closing Breadth

S&P 500 Sectors 

Nasdaq 100 Heat Map

I am signing off as I have a lot of option paper to manage at the expiration in thirty minutes.

Thanks so much for providing me with this platform today, this week, this year and over the last 24 years.

Enjoy the weekend.

Be safe.

From Peter Boockvar:

Succinct Summation of the Week’s Events:

Positives,

1)The October US PMI rose a touch from September to 54.3 from 54. Manufacturing remained below 50 but was up at 47.8 from 47.3. Services continue to hold everything up at 55.3 vs 55.2 but does not include retail. Also of note for both, "confidence in the longer, year ahead, outlook has improved as companies hope that a stabler post election environment is more conducive to growth. This is especially so in the manufacturing sector, where factories hope that the current soft patch in production and sales will reverse as the uncertainty caused by the political environment passes."

2)Off the mostly hurricane influenced lift in initial jobless claims in the prior two weeks, they fell back to 227k for the week ended 10/19, 15k below expectations and compares with 242k last week, 260k in the week before that and 225k before then. The 4 week average was 239k vs 237k last week.

3)The final October UoM consumer confidence index rose to 70.5 from 68.9 initially and up from 70.1 in September. While still well off its early 2020 highs, it is the highest since April. The internals were mixed as Current Conditions rose m/o/m but Expectations slipped a touch. One year inflation expectations were unchanged at 2.7% from September but off the preliminary 2.9% print. The 5-10 yr guess was 3% vs 3.1% last month. Spending intentions improved for a major household item and for home buying but fell for buying a vehicle.

4)New home sales totaled 738k in September, 18k more than expected and vs 709k in the month before, though revised down by 7k. The drop in mortgage rates in the month likely helped. Sales in the South drove about all of the upside and m/o/m gains. Prices are very volatile because mix is a huge driver. They were up 3.7% sequentially and 1.2% y/o/y. Months' supply was 7.6 months vs 7.9 in August and 7.6 in July.

5)In September, non-defense capital goods orders ex aircraft, aka core durable goods, rose .5% m/o/m, above the estimate of up .1% and after a .3% gain in August. The internals though were mixed as while orders rose for metals, both primary and fabricated, they fell for computers/electronics and machinery and saw no change for electrical equipment. After three months of declines, orders for vehicles/parts rose 1.1% m/o/m.

6)The October Philly non-manufacturing index rose to +6 from -6.1.

7)The October Richmond manufacturing index remained deeply negative but less so at -14 vs -21 in September. The KC regional index was -4 vs -8 in the month before.

8)The Shanghai to NY route saw prices fall by $343 w/o/w to $5,266. That's well off its high this summer of $9,612 but still almost double where they started the year at $3,074. Prices fell too with the Shanghai to Rotterdam and Shanghai to LA trips.

9)From Sonic Automotive: "Elevated used retail prices remain a challenge for consumers, contributing to affordability concerns amid the current interest rate environment. However, the return to normal seasonal trends in used vehicle wholesale pricing are positive for our business outlook. And when combined with potential further interest rate cuts should begin to benefit affordability and used vehicle sales volume in 2025."

10)From Tesla: What does Elon expect for 2025? "I do want to give some rough estimate, which is I think it's 20% to 30% vehicle growth next year. You know, notwithstanding negative external events, like if there's some portion, mature events like some big war breaks out or interest rates go sky high or something like that, then we can't overcome massive force majeure events. But I think with our lower cost vehicles with the advent of autonomy, something like 20% to 30% growth next year is my base case."

11)From Texas Roadhouse: "we believe the .9% menu price increase will allow us to maintain our value proposition and our traffic and mix levels. Additionally, we continue to see a steady to more positive outlook for inflation within commodities and labor. Commodity inflation driven by lower than forecasted beef costs was once again below our guidance in the third quarter...At this time, we are updating our full year commodity inflation guidance to less than 1%." Also, their October comps are tracking a bit better than September.

12)From IBM: "Technology spending remains strong. Businesses view technology as a source of competitive advantage, allowing them to scale operations, improve productivity, and drive growth.”

13)From Nucor: “several markets do remain quite healthy. For example, construction related to semiconductor factories, advanced manufacturing facilities, data centers and institutional buildings are still very strong.”

14)From GM: “We’ve been able to achieve these market share gains with significantly lower incentives than our competitors. For example, in the third quarter our US incentives were approximately 2.4 percentage points lower than the industry average, a gap that has widened from last year’s third quarter where we were 1 percentage point below the industry.”

15)From Robert Half: "While client budgets remain constrained and decision cycles extended, business confidence levels are improving, aided by continuing progress on inflation and the beginning of a global rate cutting cycle. This is reflected in our most recent weekly sequential results, which have been stable and consistent for the past 12 to 14 weeks."

16)From Fifth Third Bank: While there is no loan growth, on credit quality net charge offs and delinquency rates did tick down sequentially. They said, "Overall, we are not seeing any broad credit weakening across industries or geographies."

17)Only in the future we’ll we know if the deceleration in inflation is sustainable but some central banks are not waiting to find out. For now I’ll give the BoC a positive for the 50 bps cut but this becomes more precarious from here I believe in the dance between inflation and growth.

18)The October German IFO business confidence index to 86.5 from 85.4 (which matched the lowest since the Covid shutdowns) and that was above the estimate of 85.6. Both the Current Assessment and Expectations components were higher m/o/m. The always succinct bottom line from the IFO, "The German economy stopped the decline for the time being." With manufacturing, the current situation worsened but business was less pessimistic about the future. The service sector did see a bounce, "especially in logistics, tourism and IT." Trade "rose somewhat" but construction "worsened."

19)Australia's was little changed at 49.8 vs 49.6 with both components little changed with manufacturing at 46.6 and services at 50.6.

20)The bright spot around the world continues to be India with manufacturing at 57.4 and services at 57.9.

21)As we look to China to see if the policy steps to put a floor under their residential real estate market is gaining any traction, this is from the South China Morning Post, "Average weekly and monthly sales this month have risen substantially vs volumes before Beijing's September 24 rescue package...Transactions involving new homes in 15 Chinese cities surged 24% to 24,287 units last week from the preceding seven days, according to data tracked by the Lingping Real Estate Data research Institute. Secondary home transactions increased 20% to 20,724 units across 10 major cities, it added. This is a marked improvement over this year's average sales of 15,497 units per week leading up to Beijing's stimulus announcement late last month."

Negatives,

1)From the Fed’s Beige Book: In summary of the 12 Districts, "On balance, economic activity was little changed in nearly all Districts since early September, though two Districts reported modest growth." This was said of the biggest component of GDP, "Reports on consumer spending were mixed, with some Districts noting shifts in the composition of purchases, mostly toward less expensive alternatives."

2)Offsetting the still benign pace of firing's seen in initial claims and notwithstanding the two week jump, is the continued elevated level of continuing claims which rose to 1.897mm, up 28k w/o/w and that is the most since November 2021.

3)The main fly in the September durable goods orders was the 3 tenths drop in core goods shipments vs the estimate of no change which could trim a touch Q3 GDP estimates.

4)Air cargo rates rose again w/o/w and a blended average of both spot and contract are up 10% y/o/y with spot specifically higher by 19%.

5)The September US Architecture Billings Index held at 45.7, remaining well below 50 and very noteworthy was the drop in the multi family residential component which dropped to just 41.7 from 44. This follows what we saw last week with multi family housing starts which are dropping sharply. The AIA chief economist said "Despite recent rate cuts by the Federal Reserve, many clients remain on the sidelines with regard to proceeding on planned projects. And while new project opportunities also emerge, clients are cautious about which to pursue. Fortunately, architecture firms report backlogs of 6.4 months on average, which remain above pre-pandemic levels and are an indication that there is existing work in the pipeline."

6)Mortgage applications fell again with the rebound in mortgage rates. While they held flat at 6.52% on average according to Freddie Mac, purchases fell 5.1% w/o/w and refi's were down 8.4%.

7)September existing home sales continue to hover around 30 year lows at 3.84mm annualized. First time buyers made up 26% of purchases for a 2nd month and at the multi year lows as affordability challenges hurt them the most. Months’ supply rose to 4.3 from 4.2 and the median home price rose 3% y/o/y.

8)From Dow: "We continue to experience muted demand across some end markets and regions with the greatest pressure in Europe and China. Global manufacturing PMI's have been decelerating over the past three months and consumer spending remains pressured by persistent inflation. That said, we're monitoring the impact of rate cuts in the US and Europe, as well as recent stimulus plans in China to boost economic activity, which could provide some positive momentum for 2025."

9)From MSC Industrial: "Looking ahead to fiscal 2025, the year begins with a continuation of the challenging outlook we faced in fiscal 2024. Conditions remain soft, as evidenced by IP readings, particularly for our top manufacturing end markets, the majority of which are contracting. Automotive and heavy truck, primary metals, fabricated metals and machinery and equipment are all weak." Some more, "Aerospace remains positive in the quarter, but forward looking expectations have been tempered due in part to the recent strikes in the sector."

10)From Genuine Parts: “continued softness in market conditions across our global geographies negatively impacted our sales growth in the quarter relative to our expectations, with the most pronounced impacts in Europe and our global industrial business. The weaker demand environment continues to be impacted by interest rates, combined with persistent cost inflation and election and geopolitical uncertainty. These factors are impacting our customers, most notably with tightened budgets and reduced spending for capital projects in our industrial business and reduced spending in general maintenance and discretionary categories across our automotive segment.”

11)From Mohawk Industries: "Global conflicts, political uncertainty and inflation are weighing on consumer confidence and discretionary spending around the world. Short term macroeconomic conditions remain unpredictable and we do not anticipate an industry improvement this year. Demand remains weak, and each of our product categories and markets face unique economic situations. Our mix is impacted by consumers trading down and by new construction outpacing the higher value remodeling channels."

12)From UPS: "In the third quarter, we faced a macro environment that was slightly worse than we expected. In the US, online sales slowed and manufacturing activity was lower than we anticipated. This slowdown in manufacturing activity was also true outside of the US as we continue to see lower industrial production weigh on volume in certain geographies."

13)From Whirlpool: "I want to acknowledge what has been and will, at least in the near term, remain a challenging macro environment in the US. Consumer confidence remains low and is impacted by the uncertainty ahead of the upcoming elections. Despite the recent interest rate cut by the Fed, the US housing market is still constrained by elevated mortgage rates. As a result of this environment, demand in the US has shifted significantly toward lower margin replacement driven purchases and the higher margin discretionary demand continues to be weak due to historically low existing home sales."

14)From Sherwin Williams: “In our pro architectural business, demand remains variable by end market, with no impact to date from recent interest rate cuts. North American DIY demand remains weak driven by inflation and higher consumer debt levels. In our industrial businesses, demand remains choppy by end market and region.”

15)From MMM: “These results reflect end-market trends that were largely in line with expectations, including mixed industrial markets, strong growth in electronics, a decline in automotive OEM build rates and continued softness in consumer retail discretionary spending.”

16)From Nucor: “While the broader US economy continues to be resilient, decreased steel demand from several of our end use markets along with higher import volumes has put pressure on our margins throughout the year. The Federal Reserve’s recent actions are a good start, but it will likely take more time, more rate relief and looser lending conditions before we start to see the flow through effect in the construction, industrial and consumer durables market that are so impactful to steel demand.”

17)From Coca Cola: On the US consumer, "there's a set of consumers exhibiting value seeking behavior. Whether they're looking for combo deals when they're away from home, particularly quick service restaurants, whether they're looking for getting lower price point purchases of beverages, whether that's a smaller pack size or a smaller number of packs in a multi pack...But there's just this. There's also strong purchasing power in other segments of the marketplace, which is somewhat self-setting. I mean, witness the strong momentum, for example, in Fairlife."

18)From American Express: "I think when you look at the overall spending, organic spending in our customer base is not as robust as it was in a more robust environment. And that's what our cardholders do. What our cardholders will do is pull back slightly if they lose any confidence, see any sorts of signs of their own stress, but they will continue to pay their bills and that's why our credit numbers are so good."

19)From Ally Financial: "We continue to navigate a dynamic operating environment that includes volatility in interest rates and a consumer that has been strained by cumulative inflationary pressures. The unique environment has contributed to more volatility in our near term outlook, particularly on credit costs and margins."

20)From Texas Roadhouse: Good for the worker but on the cost front, "we are narrowing our full year 2024 labor inflation guidance to approximately 4.5%. For 2025, we are forecasting wage and other labor inflation of 4% to 5% with mandated increases representing as much as 1.5% of the increase." That’s about double the pre Covid trend.

21)From Pool: Highlighting the very mixed nature of its business and state of customer, "Our maintenance product offerings generated steady sales growth, while the discretionary portion of our business continued to experience impacts from a hesitant consumer. We see pressure on entry to mid level prospective pool buyers while demand for higher end pools remains resilient."

22)From Hilton: The company cited "softer than expected RevPAR performance" with 1.4% y/o/y RevPAR growth, "below our guidance range due to slower ramp in September following Labor Day, weather impacts, unfavorable calendar shifts, and ongoing labor disputes in the US."

23)From Winnebago: "So at this time, I cannot point to a significant material impact in retail volume nor wholesale volume solely related to the move by the Fed here recently. Concerning your question about recent retail activity, my only comment there would be that retail continues to be challenging. Sluggish would even be probably the right word in a comp y/o/y context. And we have not seen a meaningful change in overall retail conditions since the end of our fiscal year, including the open house period in late September."

24)From Kering: "The quarter was challenging marked by a worsening macro backdrop weighing on consumer sentiment. This translated into persistently weak traffic."

25)From O’Reilly Automotive: "Our comparable store sales increased 1.5% in the third quarter, as we faced broad based consumer pressures and a soft demand environment on both the professional and DIY sides of our business."

26)From IBM: After talking broadly about tech spending being strong, “However, a pause in discretionary spending is impacting our consulting business. This is due to economic uncertainty, which stems from several temporary factors, including geopolitical issues, upcoming elections, and the changing landscape of interest rates and inflation levels."

27)From Texas Instruments: "Our results continue to reflect the asynchronous market behavior that we've seen throughout this cycle...First, the industrial market was down low single digits as customers continue to reduce their inventory levels. The automotive market increased upper single digits, primarily due to strength in China. Personal electronics grew about 30%, enterprise systems was up about 20%, and communications equipment was up about 25% as the cyclical recovery continued in these three markets." Specifically with autos, "Our automotive revenue in China is at an all time high...Now the rest of the automotive market is different, okay? We are seeing continued weakness over there." With personal electronics, which includes PCs and smartphones, "it's still running at a lower level than the peak. It's running about 20% lower than the '21 peak. So there is still room to grow."

28)From Pulte: While business picked up when rates fell, “October has shown the highest web traffic, foot traffic, and lead volume of the year. However, the recent rise in interest rates has demonstrated a more typical seasonal selling pattern and incentives have remained elevated as a consequence.” And further on this last point, “I think buyer reaction to the movement in rates, both down and now up, again affirms that affordability remains a tough hurdle to get over for many potential homebuyers.”

29)The Tokyo October CPI (the precursor to the national figure) rose 1.8% y/o/y as expected but down from 2.1% in September. The core/core rate taking out both food and energy was also higher by 1.8% y/o/y but that was two tenths above the forecast and up from 1.6% in the month prior.

30)Japan's composite index fell back under 50 at 49.4 with manufacturing falling to 49 from 49.7 and services down to 49.3 from 53.1. S&P Global said "Firms often attributed the deterioration to a muted economy and subdued new order flows."

31)The October Eurozone PMI didn't move much at 49.7 vs 49.6 in September as expected with continued weakness in manufacturing and relative strength in services. S&P Global said "The Eurozone is stuck in a bit of a rut, with the economy contracting marginally for the 2nd month running...At the country level, it can be noted that the deterioration of the situation in France was met by a slight moderation in the decline in Germany."

32)The UK PMI held above 50 at 51.7 but down from 52.6 in the month before.

Updated Breadth

S&P 500 ETF Sectors Reverse

I covered some  (BAC) ,  (XLF)  and  (JPM) .

I plan to re-short on any rally.

I also took in some of my short Index calls.

Here, too, I will sell a rally.

I have a research meeting between 2-3 PM.

Radio silence.

There will be no "Things" today as I did very little trading.

I leaned into shorts this morning and I am now at my highest net short exposure in several months.

My largest sector focus (short) are financials.

From "Jazzy" Jeff:

JeffI

The rally continues. Just an extension of the last 100 years.

The folly of trying to beat the market while increasing one’s tax lowering one’s returns.

Imagine if we invested in the S&P 500 and used our productive time to improve humanity instead?

Shout out Ty to Dougie for finding the chart.

I ask myself this question when watching the parade of bullish commentators in the business media.

Back to the real world — and more divergences (and no broadening out):

*  (SPY)  +0.59%

*  (QQQ)  +1.37%

*  (IWM)  +0.32%

*  (RSP)  +0.04%

And, financials are moving lower by one to two percent...

Back... temporarily.

Our internet is out this morning.

I will try my best to post.

Volume

- NYSE volume 5% below its one-month average

- NASDAQ volume 13% above its one-month average

Breadth 

S&P 500 Sector ETFs 

% Movers

Nasdaq 100 Heat Map

Financials roll over, first...

Watching closely.

From Peter Boockvar:

Still trying to connect the dots and it's still not connecting/Overseas data

So many earnings calls to go through, so little time. And I'm still having a difficult time connecting the dots with what I'm hearing on these earnings calls and what I read in the Fed's Beige Book with the current estimates for Q3 GDP growth of around 3%.

From Dow:

These comments about their business in Europe was most interesting but I guess not surprising, "current market dynamics are impacting Europe, including continued soft demand, coupled with a persistent lack of long-term regulatory policies. This ongoing absence of clear, consistent, and competitive regulatory policy in Europe has resulted in many challenges for our industry. These challenges have been acknowledged in statements by EU government leaders, top economists, and our peers. And while a demand recovery in other parts of the world is expected to provide swift upside across the markets we serve, this alone is unlikely to be enough in Europe. Given these dynamics, we've begun a strategic revie of select European assets, primarily those in our polyurethanes business."

The overall macro view, "We continue to experience muted demand across some end markets and regions with the greatest pressure in Europe and China. Global manufacturing PMI's have been decelerating over the past three months and consumer spending remains pressured by persistent inflation. That said, we're monitoring the impact of rate cuts in the US and Europe, as well as recent stimulus plans in China to boost economic activity, which could provide some positive momentum for 2025."

From MSC Industrial, a distributor of many things into the US industrial/manufacturing customer:

"During fiscal '24, we faced a deteriorating environment in particularly our metalworking and heavy manufacturing end-markets, and compounded that softness with execution challenges in the technology area. Since our last call, I've been encouraged to see how our team has rallied despite further softening in the macro."

"Looking ahead to fiscal 2025, the year begins with a continuation of the challenging outlook we faced in fiscal 2024. Conditions remain soft, as evidenced by IP readings, particularly for our top manufacturing end markets, the majority of which are contracting. Automotive and heavy truck, primary metals, fabricated metals and machinery and equipment are all weak."

Some more, "Aerospace remains positive in the quarter, but forward looking expectations have been tempered due in part to the recent strikes in the sector."

From Mohawk Industries, the maker of flooring products like carpet, tile and wood:

"Global conflicts, political uncertainty and inflation are weighing on consumer confidence and discretionary spending around the world. Short term macroeconomic conditions remain unpredictable and we do not anticipate an industry improvement this year. Demand remains weak, and each of our product categories and markets face unique economic situations. Our mix is impacted by consumers trading down and by new construction outpacing the higher value remodeling channels."

From Pool who distributes pool supplied and equipment:

"Our maintenance product offerings generated steady sales growth, while the discretionary portion of our business continued to experience impacts from a hesitant consumer. We see pressure on entry to mid level prospective pool buyers while demand for higher end pools remains resilient." The bifurcated consumer in real time.

From Brunswick, the maker of boats, engines and other after market products:

They expect boat sales to be down 10% y/o/y in their final quarter of the year. "With the core retail selling season behind us and retail discounting levels remaining elevated, dealer reordering in some segments is slower than anticipated, leading most boat OEMs to maintain lower production rates."

"However, our aftermarket based engine parts, accessories and distribution businesses and Freedom Boat Club continue to perform well as boating participation remains strong."

From Sonic Automotive, the auto retailer for both new and used vehicles:

"Elevated used retail prices remain a challenge for consumers, contributing to affordability concerns amid the current interest rate environment. However, the return to normal seasonal trends in used vehicle wholesale pricing are positive for our business outlook. An when combined with potential further interest rate cuts should begin to benefit affordability and used vehicle sales volume in 2025."

Service and parts saw good same store sales growth of 7%.

From Texas Roadhouse, the full service steak restaurant where comps were strong, up 8.5% of which 3.8% was traffic and 4.7% was average check:

On the commodity and labor market side, "we believe the .9% menu price increase will allow us to maintain our value proposition and our traffic and mix levels. Additionally, we continue to see a steady to more positive outlook for inflation within commodities and labor. Commodity inflation driven by lower than forecasted beef costs was once again below our guidance in the third quarter...At this time, we are updating our full year commodity inflation guidance to less than 1%." Their 2025 guess and guidance is at 2% to 3%.

"We are narrowing our full year 2024 labor inflation guidance to approximately 4.5%. For 2025, we are forecasting wage and other labor inflation of 4% to 5% with mandated increases representing as much as 1.5% of the increase."

Lastly, their October comps are tracking a bit better than September.

From UPS:

"In the third quarter, we faced a macro environment that was slightly worse than we expected. In the US, online sales slowed and manufacturing activity was lower than we anticipated. This slowdown in manufacturing activity was also true outside of the US as we continue to see lower industrial production weigh on volume in certain geographies."

They did see improvement in their US domestic segment where volume growth was the best in more than three years. That said, "We continue to see customers shifting down from air to ground and some ground volume is shifting down to SurePost." I assume in order to save money.

And this is important, with respect to holidays, peak shipping and feedback from customers, "they continue to tighten up their forecast and we just received their last forecast on October 2nd. And their forecast has been tempered and we believe it's driven by a couple of factors. First, external forecast for the holiday season have come in." And that forecast is for 3% growth vs earlier in the year it was at 5%. "Part of this, we believe, is influenced by the tight compressed peak period. There are only 17 shipping days between Thanksgiving and Christmas Eve." And because of this tightness, customers might be more inclined to buy in store.

More, "So it will still be a good peak, but just not as dynamic as people thought at the beginning of the year."

From Whirlpool:

"I want to acknowledge what has been and will, at least in the near term, remain a challenging macro environment in the US. Consumer confidence remains low and is impacted by the uncertainty ahead of the upcoming elections. Despite the recent interest rate cut by the Fed, the US housing market is still constrained by elevated mortgage rates. As a result of this environment, demand in the US has shifted significantly toward lower margin replacement driven purchases and the higher margin discretionary demand continues to be weak due to historically low existing home sales."

Moving to the news of note from overseas. The Tokyo October CPI (the precursor to the national figure) rose 1.8% y/o/y as expected but down from 2.1% in September. The core/core rate taking out both food and energy was also higher by 1.8% y/o/y but that was two tenths above the forecast and up from 1.6% in the month prior.

In response, the 10 yr JGB yield was little changed but the 40 yr yield which is what we should all be watching now again as it retests the recent highs, fell 3 bps along with the global bond rally yesterday. The 10 yr inflation breakeven though was up by 2 bps to 1.30% which is the highest since September 10th while the yen is flat.

Governor Ueda will not raise rates at their meeting next week but will likely leave the door open for December. That they still have a benchmark rate of just .25% reflects how trapped the BoJ is because of all those years of no rates and all the debt accumulation that it encouraged at the sovereign level. We still find Japanese stocks attractive and remain long.

The one thing of note in Europe was the uptick in the October German IFO business confidence index to 86.5 from 85.4 (which matched the lowest since the Covid shutdowns) and that was above the estimate of 85.6. Both the Current Assessment and Expectations components were higher m/o/m.

The always succinct bottom line from the IFO, "The German economy stopped the decline for the time being." With manufacturing, the current situation worsened but business was less pessimistic about the future. The service sector did see a bounce, "especially in logistics, tourism and IT." Trade "rose somewhat" but construction "worsened."

Nothing really market moving here as the DAX, bunds and euro are flattish today. Germany's economy is at best flat lining too and at worst is in a slight recession for reasons we know like sluggish export markets, particularly China and a deep manufacturing recession, particularly in its auto sector.

From Peter Boockvar:

Container shipping and air cargo rates/Durable goods orders

Before I get to durable goods orders, I forgot to mention earlier that container shipping rates continue to drop ahead of the holidays and with port workers here back to work. The Shanghai to NY route saw prices fall by $343 w/o/w to $5,266. That's well off its high this summer of $9,612 but still almost double where they started the year at $3,074. Prices fell too with the Shanghai to Rotterdam and Shanghai to LA trips. Air cargo rates on the other hand were up slightly again w/o/w with average spot and contract rates up by 10% y/o/y worldwide with the former higher by 19%.

In September, non-defense capital goods orders ex aircraft, aka core durable goods, rose .5% m/o/m, above the estimate of up .1% and after a .3% gain in August. The internals though were mixed as while orders rose for metals, both primary and fabricated, they fell for computers/electronics and machinery and saw no change for electrical equipment. After three months of declines, orders for vehicles/parts rose 1.1% m/o/m.

The main fly was the 3 tenths drop in core goods shipments vs the estimate of no change which could trim a touch Q3 GDP estimates.

Bottom line, as stated here many times, core durable goods have been flat lining for 2 years now as it seems that a lot of spend on AI is taking share from other spending priorities and the overall pie is not really growing. To quantify, in August 2022, core durable goods orders totaled $73.9 billion. In today's figure for September 2024 they came in at $74.1 billion and yes, this is seasonally adjusted and in nominal terms.

No shift in Treasury yields in response as they sit exactly where they were just before the report.

Though bull markets "die hard," the market's broadening out has diminished over the last week as breadth is deteriorating.

Yesterday's Index stats were interesting and supportive of this assertion:

*  (SPY)  +0.25%

*  (QQQ)  +0.70%

*  (IWM)  +0.34%

*  (RSP)  +0.02% (equal weighted S&P Index)

Turning back to investor sentiment, the Short Range S&P Oscillator continues to have a neutral reading — at 0.95% vs. 0.58% the day earlier.

Upside:

-SAVE +16% (identified $80M in annual cost reductions that it will begin implementing in early 2025; will include workforce reductions; guides Q3 adj op margin above prior guidance)

-TPR +15% (FTC formally blocks deal with CPRI)

-DECK +13% (earnings, guidance)

-MGRC +13% (earnings)

-CNC +12% (earnings, guidance)

-WDC +12% (earnings, guidance)

-BAH +11% (earnings, guidance)

-DLR +10% (earnings, guidance)

-SKX +7.6% (earnings, guidance)

-TELA +6.6% (prices 12M shares and prefunded warrants at $2.25/shr in underwritten offering)

-APPF +5.2% (earnings, guidance)

-RMD +5.0% (earnings)

-LHX +4.4% (earnings, guidance)

-GNTX +4.2% (earnings, guidance)

-SXT +3.9% (earnings, guidance)

-LSB +3.6% (National Medical Products Administration (NMPA) in China Granted Phase III Clinical Trial Approval to Explore Simplified Regimens for YSJA Rabies Vaccine)

-COF +3.1% (earnings, guidance)

-SNY +3.1% (earnings, guidance)

-AON +3.0% (earnings, guidance)

-LYEL +2.8% (to acquire ImmPACT Bio and Prioritizes its Pipeline to Focus on Next-Generation CAR T-cell Therapies)

Downside:

-CPRI -48% (FTC formally blocks deal with TPR)

-COUR -22% (earnings, guidance)

-JOBY -15% (prices 40M shares at $5.05/shr in ~$202M underwritten offering)

-OLN -9.2% (earnings, guidance)

-HCA -8.4% (earnings, guidance)

-UHS -8.3% (earnings)

-TBBK -7.6% (earnings)

-TROX -7.0% (earnings, guidance)

-EBC -5.0% (earnings)

-TNET -4.3% (earnings, guidance)

-AN -4.1% (earnings)

-PIPR -3.3% (earnings)

-DXCM -2.8% (earnings, guidance)

As of 8:29 a.m. and their mini graphs:

As of 8:48 a.m.:

November begins the “Best Six Months” for the DJIA and S&P 500, and the “Best Eight Months” for NASDAQ. Small caps come into favor during November, but don’t really take off until the last two weeks of the year. November is the number-two DJIA and NASDAQ (since 1971) month. November is best for S&P 500 (since 1950), Russell 1000 (since 1979), and Russell 2000 (since 1979). Average performance in all year ranges from 1.8% from DJIA and S&P 500 to a solid 2.5% by Russell 2000.

November maintains its status among the top performing months as fourth-quarter cash inflows from institutions drive November to lead the best consecutive three-month span November-January. However, the month has taken hits during bear markets and November 2000, down –22.9% (undecided election and a nascent bear), was NASDAQ’s second worst month on record—only October 1987 was worse.

November remains a top performing month in presidential election years. DJIA has advanced in 11 of the last 18 election years since 1952 with an average gain of 2.3%. Significant DJIA declines occurred in 2008 (-5.3%) and 2000 (-5.1%). For S&P 500 November ranks best with a similar record to DJIA. NASDAQ, Russell 1000 and Russell 2000 are not as strong ranking #7, #2 and #3 respectively. Fewer years of data (13 for NASDAQ and 11 for Russell indices) combined with sizable losses in 2000 and 2008 drag down rankings and average gains when compared to DJIA and S&P 500. In 2020, all five indices advanced by over 10% led by an 18.3% gain by Russell 2000.

Looking back at the last eighteen presidential elections since 1952, the day before Election Day has a clear bullish bias. DJIA and S&P 500 have declined just three times and average gains of 0.57% and 0.48% respectively. NASDAQ and Russell 2000 are slightly weaker, but still bullish. Election Day (or the day after prior to 1980) leans bullish, but with a greater frequency of losses. Incumbent party victories are shaded in light grey and appear to have little to no impact on trading the day before or on/after Election Day. The end of election uncertainty is what appears to lift traders’ and investors’ spirits.

Monthly options expiration often coincides with the week before Thanksgiving, but not in 2024. DJIA posted ten straight gains 1993-2002 and has been up 20 of the last 31 weeks before Thanksgiving but has been down the six of the last seven. The Monday of expiration week has been streaky, but the net result since 1994 is 18 DJIA gains in 30 years with 13 advances occurring in the last 20 years. Options expiration day has a bullish bias, DJIA up 16 of the last 22, but four of the declines have come in the last eight years. The week after expiration has been a mixed bag recently. DJIA has been up seven of the last eleven after being down five of six from 2006 to 2011.

Being a bullish month, November has eight bullish days based upon S&P 500, with four occurring in the first five trading days of the month. Although historically a bullish month, November does have weak points. NASDAQ and Russell 2000 exhibit the greatest strength at the beginning and end of November. Russell 2000 is notably bearish on the 12th trading day of the month; the small-cap benchmark has risen just ten times in the last 40 years (since 1984). The Russell 2000’s average decline is 0.42% on the day. Recent weakness around Thanksgiving has shifted DJIA and S&P 500 strength to mirror that of NASDAQ and Russell 2000 with the majority of bullish days at the beginning and end of the month. The best way to trade Thanksgiving is to go long into weakness the week before the holiday and exit into strength just before or after.

Wolf Street howls about residential real estate.:

Inventory of New Spec Houses Spikes to Highest since 2009, Sales Grow as Builders Pile on Incentives and Trim Prices | Wolf Street

* Of an  (MSOS) -kind...

I have a research meeting between 8:30 a.m. and 9:30 a.m. this morning.

While I promised to deliver my updated market outlook earlier in the week, I have been too busy researching, trading/investing, etc. to accomplish that objective!

I will post my view early Monday morning... I hope!!

“Buy in October, and get yourself sober.”

- "Jazzy" Jeff Hirsch

Bonus — Here are some great links:

Halloween Trading Strategy

Is Peter Schiff Right About the Market's Peril? 

Bitcoin vs. Gold 

Dollar Rallies, Equities Resist 

Half a Year of Bulls

* My friend Mayor Toby...

KeyBanc downgrades Apple  (AAPL)  this morning.

Reports of weak Chinese sales has resulted in weakness in Apple  (AAPL)  shares (-$3) in premarket trading.

Sorry Jim, I have been shorting AAPL on any strength recently.

Yesterday the Capri  (CPRI)  merger with Tapestry  (TPR)  was opposed in the judicial process. 

Capri's shares fell by -45%.

I took a very small long position in Capri this morning in premarket trading at $22.37.

Here is a sum of the parts analysis (h/t Masterhedge) from my friends at Hedgeye:

I will be doing more research on Capri over the weekend...

I am selling off some more of my long Index positions:

*  (SPY)  at $580.49

*  (QQQ)  at $493.45