Stephen J. Guilfoyle “Sarge”, is the U.S. Economist at Meridian Equity Partners since 2007. Stephen joined Meridian after a long career at Credit Suisse. Stephen has worked on the trading floor of the NYSE continuously since July 1987 and actively serves as a Sergeant in the National Guard.
Chinese stocks led the risk on move in Asia today for a couple of reasons. First off, the government stated that insurers would now be allowed to invest more heavily in banks. Secondly, Chinese leaders met on Tuesday and expressed not only confidence in China’s soft landing, but a desire to continue their predecessors’ monetary, and fiscal policies to ensure that the nation reaches it’s economic goals.
Wednesday brings us a very busy macro day, both here in the U.S. and overseas as well. Not only does jobs week get under way, but we are also privy to a barrage of service sector PMI’s. In Europe this morning, November Services PMI’s were released by the UK, and not only the EMU in general, but also by Spain, Italy, France, and Germany in specific. These numbers mixed picture, one that in general is contracting more slowly than many people had thought. Italy was the only real disappointment within the EMU, and the UK also missed, but was still expansionary. On top of that, Spain auctioned off some 10 year paper this morning, and it went sort of well. Spain sold 4.25 billion euros worth at a yield of 5.29%, and a bid to cover of 2.3. That compares favorably with the yield of 5..52%, and bid to cover of 1.8 that a similar auction back on 22 November provided. What was disappointing was that yields for the Spanish 10 year rose in the secondary market after the auction.
On this side of the pond, we look for the ADP Employment Report for November at 08:15 ET. This is the sometimes accurate, sometimes not so accurate predictor for Private Payrolls. Today, expectations are for 125K, with a very wide range of 40K to 155K. The October print came in at 158K. At 08:30, look for the 3rd quarter report on Non-Farm Productivity versus Unit Labor Costs. Projections are for Productivity (Cons. +2.8% Q/Q) to have walloped Labor Costs (Cons. -0.9%). This would be an expansion of the +1.9% vs. -0.1% victory of Production over Costs for the 2nd quarter. So basically, Americans, you are becoming more and more efficient at producing a single unit of output, and you are producing it at less expense. Is that good? It could be, it can also mean that those with jobs are being worked to death to make up for a smaller labor force.
The November ISM Non-Manufacturing Index is expected to outperform it’s Manufacturing counterpart yet again, although it is also expected to show some cooling of the pace of expansion. The consensus is for a 53.6 print, with a range of 50 to 55. October’s number was 54.2. the 10 o’clock hour also brings us October Factory Orders, which will likely illustrate the recent troubles of our manufacturing base. We look for a number around -0.1% month over month, coming off of September’s +4.8%. The range for this one today spans from -1.2% to +0.5%. Our last domestic item today is our weekly report on Oil Inventories. The expectation today is for contraction of -400K barrels. This would be the third weekly reduction in inventory in a row.
Aren’t we done with the macro yet, Sarge. Well, not if you’re at risk in Oceanic markets. The Reserve Bank of New Zealand will make their announcement at 15:00 ET. They are expected to keep their Official Cash Rate at 2.5%. This central bank has always been pretty open, so surprises are not likely. If you’re still standing at 19:30 ET, look for November Unemployment for Australia. It is likely that Australian Unemployment has edged up to 5.5% from October’s 5.4%.
Just a couple of corporations still reporting at this stage. Before the opening bell, look for TTC (.00), and after the close, you’ll hear from MW (.97). I have no position in those names. As for key speakers, right now I only see Reserve Bank of Australia Asst. Gov. Guy Debelle, who speaks at 18:00 ET from Melbourne.
This post originally appeared at Guilfoyle’s Market Recon.
Follow the Sarge on Twitter here: @Sarge986