Jade Bridge Capital

In November, retail sales rose by 0.7%, surpassing expectations and driven by strong performance in motor vehicles and online sales, despite some category declines and challenges. The final Q3 GDP was revised up to 3.1% due to increased consumer spending and exports. November's core and headline PCE both grew by only 0.1% month-over-month, missing the expected 0.2% rise.

In November, CPI rose 0.3%, driven by higher food prices, while PPI increased by 0.4%, surpassing expectations. Initial jobless claims also saw a notable rise across the country, and the household debt-to-asset ratio was 11.2% in Q3, easing some concerns about increasing household debt levels.

PCE inflation rose by 0.2% in the past month. The U.S. labor market in November added 227,000 jobs, recovering from the prior month's decline due to weather and strikes. Additionally, the unemployment rate edged up to 4.2% because of supply constraints. Total job openings increased to 7.74 million in October, aligning with pre-pandemic levels, indicating a healthy labor market continuing into 2025.

In October, consumer inflation remained steady, with the CPI slightly above the Fed's target for the third month. The PPI rose 0.2% MoM, and initial jobless claims fell to 217,000, below the consensus estimate. Overall sales increased by 0.4%, driven by automobile purchases post-Hurricane Milton, though the control group declined by 0.1%.?This combination of stable inflation and declining jobless claims may suggest fewer interest rate cuts expected in 2025.

The Dollar Index recorded a notable rise, returning to mid-year levels. This positive movement aligns with recent trends in non-farm productivity, which indicates continued productivity gains. Concurrently, Consumer Sentiment improved, reaching its highest point in six months. Additionally, it is noteworthy that Trump won the election, and the Federal Reserve implemented a 25 basis point rate cut.

In Q3, GDP growth surpassed expectations due to strong consumer spending, supported by declining inflation and stable income growth. However, net payroll changes in October dropped significantly due to the effects of hurricanes and the Boeing labor strike. Meanwhile, the Fed's key inflation measure reached its lowest level since February 2021, with the Core PCE index meeting expectations, reflecting modest inflationary pressures.

Recent economic indicators reveal mixed trends in the housing and employment markets. Initial claims for unemployment benefits decreased, suggesting a quicker recovery from hurricane impacts than projected. Conversely, existing home sales unexpectedly fell, marking the slowest pace in over a decade, while new home sales showed strength, posting a significant increase and reaching their highest level since earlier this year, despite a downward revision in the prior month's figures.

Despite the ongoing flow of capital into the U.S. market, we remain focused on identifying untapped value in emerging markets. While many investors have noted China's undervaluation and the rapid growth of the Indian market, a significant opportunity next door to China remains largely overlooked—Vietnam. Despite the temporary setback caused by Typhoon Yagi, which led some financial institutions to lower their GDP growth forecasts, Vietnam still posted an impressive 7.4% year-over-year GDP growth, with inflation standing at just 2.63%. This robust growth trajectory is not a recent development; it traces back to 40 years ago when Vietnam launched its transformative "Doi Moi" journey. On the global investment map, Vietnam has traditionally been under the radar for foreign capital, often overshadowed due to its frontier market status and liquidity constraints. However, recent developments, including the implementation of a more comprehensive policy framework, signal a turning point. We believe the Vietnamese stock market is undervalued and warrants a reassessment of its potential. Our in-depth analysis highlights that Vietnam is on the brink of a significant economic transformation, presenting a compelling case for investors. For more insights into the country's stock market and economy, explore our detailed report and uncover this emerging investment opportunity. #Vietnam #stockmarket #emergingmarkets

September headline retail sales came in a bit higher than expected. Initial claims were also lower than expected, although some forecasts anticipated distortions due to the hurricane-affected week. Dollar index reached its highest since 1-Aug.

September inflation data came in slightly higher than expected, driven primarily by the service sector. In our previous macro recap, we highlighted the growing divergence between PMI manufacturing and PMI services. The former continues to slide further into contraction territory, while the latter remains the key contributor to GDP growth. Consequently, inflation in services has increased, particularly in the transportation sector. Other trends in last week is included below.