Weekly Snack with Dave
BETTER TONE TO JANUARY CONSUMER SPENDING
Spending rose a hefty 2.1% MoM (consensus was +1.6%) and volumes expanded 1.5% (consensus was +1.2%), though this did follow a downward revision to December to -1.3% from -1.0%. Interestingly, all the spending growth was in durable goods, which soared 8.5% (wiping out two months of declines) — a surge that ranks in the top ten months of all time.
THE U.S. HAS MORE POTENTIAL THAN YOU THINK
Strong growth for the labor force and productivity should translate into higher 2022 potential U.S. GDP growth (and therefore larger economic slack) than what is generally assumed.
LOOKING FOR OPPORTUNITIES AMIDST THE VOLATILITY
While the S&P 500 is still trading at an elevated forward P/E (relative to its history) there are an increasing number of industries that have below-average multiples. In our view, these are worth emphasizing in a portfolio, especially as the Fed begins the process of removing accommodation.
领英推荐
AN UPSIDE ISM SURPRISE
The ISM manufacturing PMI came in at 58.6 in February, slightly beating estimates of 58.0 and up from 57.6 in January. The indices for production, inventories, orders, and two-way trade flows expanded during the month. However, the one sore spot was the employment subindex, which slipped from 54.5 to 52.9, a four-month low.
U.S. EMPLOYMENT REVIEW: SOMETHING FOR EVERYONE (NICE JOB GROWTH, SORRY ABOUT THE WAGES!)
Non-farm payrolls in February soared 678k in another blowout number that topped the consensus estimate of +423k, and there were revisions to the prior two months totaling +92k. The big surprise in the data was the 0.0% reading on average hourly earnings. And no — this wasn’t due to any compositional shifts. The wage weakness was actually broad-based, with two-thirds of industry posting outright declines.
These snippets are from Weekly Buffet with Dave, a Rosenberg Research publication that compiles the best articles of the week from Dave’s daily report, Breakfast with Dave. To access the full report, click here to sign up for a free trial.