The decline in oil prices—the US benchmark West Texas Intermediate as of Dec. 1 is down roughly 35% since the recent peak in June 2014 —has inspired bullish expectations for consumer spending and related investments. As the Washington Post noted earlier this week: “Tumbling oil prices are draining hundreds of billions of dollars from the coffers of oil-rich exporters and oil companies and injecting a much-needed boost for ailing economies in Europe and Japan — and for American consumers at the start of the peak shopping season.” The slide in energy prices is also “spurring U.S. mutual fund managers to pick up shares of restaurants, airlines, and retailers, all consumer stocks that have been among the worst performers in the stock market this year,” Reuters reported yesterday.
Continue reading →

● US service sector growth at three-month high: ISM | Reuters
● US Services PMI Tumbles For 5th Month As “Demand Weakens” | Zero Hedge
● Eurozone Retail PMI: Sales slide eases as Germany sees solid growth | Markit
● Germany Retail PMI rises to 5-mo high, but employment growth slows | Markit
● Fed Beige Book Shows ‘Widespread’ Job Gains Across U.S | Bloomberg
● Draghi & Co. face historic QE decision at Thursday’s ECB meeting | MarketWatch

US companies added 208,000 workers in November, according to this morning’s ADP Employment Report. The gain was a bit softer than the consensus forecast, but overall the labor market continues to show a solid rate of growth. “At this pace the unemployment rate will drop by half a percentage point per annum,” Mark Zandi, chief economist of Moody’s Analytics, said in the accompanying press release. “The tightening in the job market will soon prompt acceleration in wage growth.”
Continue reading →

● Solid construction, auto sales data boost U.S. growth picture | Reuters
● PMI: Eurozone economic growth at 16-month low in Nov | Markit
● PMI: UK service sector growth strengthens in Nov | Markit
● Uncertainty in Washington Poses Long List of Economic Perils | NY Times
● Top CEOs less optimistic about US economy but plan more hiring | LA Times
● Fed’s Dudley says oil price drop a net benefit for US | Reuters
● Russia warns of recession in 2015 | BBC

Private nonfarm payrolls in the US are projected to increase 227,000 (seasonally adjusted) in tomorrow’s November update of the ADP Employment Report, based on The Capital Spectator’s median point forecast for several econometric estimates. The median projection is marginally below October’s increase.
Continue reading →

The expected risk premium for the Global Market Index (GMI) continued to fall in November. GMI, an unmanaged, market-value weighted mix of the major asset classes, is currently expected to earn an annualized 3.9% over the “risk-free” rate for the long term (for details on the methodology, see summary below). Today’s forecast is slightly below last month’s 4.0% estimate and moderately under the recent peak of 4.7% in August
Continue reading →

● Factories Humming in U.S. Even Amid Global Slowing | Bloomberg
● Euro zone producer prices fall at sharpest rate in a year | Reuters
● UK construction PMI falls to 13-month low in November | Investing.com
● Spain Jobless Claims Log Biggest Decline For November | RTT
● RBI leaves rates on hold, says could ease early 2015 | Reuters
● Australia holds rates as speculation mounts for cuts | CNBC
● MNI Japan Survey: Q3 Revised GDP -0.5% Annual Vs -1.6% | MNI

The Federal Reserve is reportedly on track to start raising interest rates next year, but the tightening is already underway if only in relative terms. Indeed, there’s a conspicuous directional change in the year-over-year comparison in the real (inflation-adjusted) monetary base. The substantial deceleration of the growth rate that’s been unfolding this year isn’t surprising at this point, but it serves as a reminder that the central bank’s plan to normalize policy is a process rather than a single date in the future when the Fed funds rate increases.
Continue reading →

US equities (Russell 3000) took the lead with performance among the major asset classes in November, posting a solid 2.4% total return. US real estate investment trusts (REITs) were in close pursuit with a 2.0% advance, which builds on October’s spectacular 10.0% surge, based on the MSCI REIT Index. In third place: foreign stock markets in the developed world (MSCI EAFE), which dispensed a respectable 1.4% total return. Whatever macro troubles weigh on Europe and Japan (and there are many), the burden appeared to be in remission in November in terms of equity performance overall.
Continue reading →

● German manufacturing PMI revised down to 49.5 in November | Investing.com
● Eurozone manufacturing hits near-stagnation as Big 3 nations contract | Guardian
● Italy Manufacturing Contracts Again | RTT
● Fed rattled by elusive inflation, but loath to sound alarm yet | Reuters
● Black Friday Spending Drops 11% | Time
● Oil suffers fresh heavy losses, with outlook unclear | Marketwatch