All Eye On Economic Data

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Big data points have just been released ahead of the market open today, and the results immediately made big headlines: Housing Starts Rise 25.5%! Jobless Claims Fall by 19,000! Also, we saw Consumer Price Index (CPI) and Philly Fed reads which were more in-line with expectations.

Housing Starts really broke out in a very big way last month: 1.323 million new digs (annualized) followed a disappointing 1.054 million starts in September, which was a -9.5% read from the previous month. Which means we've just seen a +35% swing over the past two months, which is extraordinary.

It's tempting, but difficult, to credit the surprise election victory of Donald Trump for these numbers; after all, the election had not yet happened until last week (November), and Hillary Clinton had been the odds-on favorite to win the presidency. And before we let this exuberance get the better of us, we should note that Building Permits - a forward indicator of future Housing Starts - was +0.3%. This is one-tenth higher than the consensus estimate, but definitely more within the range of normal housing development.

The Initial Jobless Claims number was similarly gaudy, though it tracks just the past week, i.e. after the election. In order to find a number as low as 235K claims in one week, you'd have to go all the way back to when Richard Nixon was president (November 1973). Continuing claims also fell to rarely seen levels, below 2 million to 1.97 million. Electoral exuberance is much more likely to have occurred in these weekly numbers; many appear hopeful Trump will make America awash in new jobs.

The CPI reversed the disappointment of the PPI's unchanged read month over month yesterday, rising 0.4% in October. Stripping out food and energy, that number comes closer to the PPI number at +0.1%. Year over year core CPI is +2.1%, at the low end of this very tight range (the high for the year was 2.3%, in August). And the last time we saw a read higher than 2.3% was 8 years ago, just as the Great Recession was beginning to stir.

The Philly Fed read for November was slightly below expectations, +7.6 from the 7.8 expected. This follows a +9.7 the previous month, which indicated a slowdown in Philadelphia's economic production. But 7.6 is still solidly positive, so no real bad news here.

All this amounts to increased pressure on the Fed to raise interest rates on December 14th. In fact, Fed Chair Janet Yellen was quoted in a prepared statement she plans to give on Capitol Hill this morning as she delivers testimony for the first time since the election, as saying a rate hike could occur "relatively soon." She added that if the committee waited too long to raise the federal funds rate, "it could end up having to tighten policy relatively abruptly to keep the economy from overshooting both of the committee's longer-run policy goals" of full domestic employment and controlled inflation.

As Q3 earnings season continues to wrap up, Wal-Mart WMT follows Target's TGT surprisingly good quarterly results yesterday. The world's largest big-box retailer missed sales estimates in the quarter, and shares are down 3% in today's pre-market.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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