Black Friday Online Spending Rose 10% y/y to $1.66B

ComScore says that Black Friday desktop spending rose 10% year-over-year to $1.66 billion. Thanksgiving day spending rose +9% year-over-year to $1.10 billion. Spending for November 1st to 27th rose +5% year-over-year to $23.4 billion.

ComScore says that while the holiday season opened a little softer than anticipated, Thanksgiving and Black Friday both posted strong online spending totals that surpassed $1 billion on desktop computers and grew at the rate they had expected.

This is also the second straight year that Thanksgiving has established itself as one of the more important online buying days, while Black Friday continues to gain in importance online with each passing year. Looking ahead to Cyber Monday, we expect to see upwards of $2.5 billion in desktop spending as people return to their work computers after Thanksgiving weekend and use some of their down time to continue their holiday gift buying, but without other family members looking over their shoulders.

S&P Futures began trading on Sunday night in the U.S. and are down as of 5:01 PM PT:


Durable Goods Orders Going Sideways

The mainstream financial media is acting as if the 3% gain in Durable Goods Orders released today is somehow like a phoenix rising from the ashes, showing new life to an otherwise dead planet.

Hype and politics aside, the Durable Goods Orders report looks like its going sideways to me. It certainly doesn’t show an economy that is picking up strength. Check out my updated Durable Goods Orders chart that proves this point:


Total shipments fell -1% in October which is not a good start to the fourth quarter with core capital goods shipments down -0.4%.

Retail Sales Barely Gain 0.1 Percent In October 2015

Retail sales rose just 0.1 percent in October; however, when excluding vehicles and gasoline stations, where sales once again fell on price weakness, core sales rose 0.3 percent.

Year over year retail sales are up a respectable +4.1 percent, excluding gasoline stations which is down -20.1 percent and has been badly skewing retail sales all year.

Looking at the chart of Retail Sales tells us something very important that we have to price in to our trading.

Retail Sales October 2015

I think we have to consider the possibility that if the Federal Reserve hikes rates in December, it may be too early for the Federal Reserve to slow the economy and hence we could have the next Bear market. Now we still have one more Retail Sales reports that may be skewed to the upside by holiday shopping but I think we have to start thinking about the possibility that the Fed could error and hike rates too early.

Fed Williams Says Not Raising Rates In October Was a Close Call

Federal Reserve Bank of San Francisco President John Williams, who is a moderate, voting member, said that not raising rates in October was a close call. It is rumored that the official 9 to 1 vote to not raise rates, with Jeffrey M. Lacker as the only vote against, is not representative of what went on behind closed doors and just how close the Fed really was to hiking rates in October.

John Williams went on to say that raising rates sooner, rather than later, will allow for a more gradual tightening campaign. Mr. Williams said that waiting too long introduces a range of risks.

Mr. Williams said that the U.S. is very close to full employment, even with an only 62.7% participation rate. Mr. Williams did say that inflation remains too low but sees it returning to 2% shortly as the GDP comes in at around 2% to close out 2015.

One of the concerns of Mr. Williams is the speed of the housing recovery. A faster housing recovery is one of the upside risks to keeping rates low for too long.

Janet Yellen Fed Rate Hike in December 80% Odds

I put the probability of a Federal Reserve rate hike at 80% after the blowout Employment Situation report for October 2015. This will be the first rate hike in almost 10 years.

What a massive reversal!

Just a month ago, the probability of a Fed rate hike was about 10%. As of the September FOMC meeting, that had risen to 33%. Last week we were talking about a 50% Fed rate hike if the October jobs number came in above 150K. Today, after the 271K October number, the probability of a Fed rate hike is now 80%.

Janet Yellen has a speech planned for December 2, 2015 to the Economic Club of Washington, in Washington. Rumors are going around that this is not a coincidence and that she’s going to use this venue to get markets ready for the December 16, 2015 FOMC meeting announcement of the rate hike.

October US Jobs Report Crushes Expectations

Nonfarm payrolls exploded higher to 271,000 in October versus expectations for 190,000.

Last month, the September Employment Situation report had been a big bust, with the low headline nonfarm number and significant revision lower to the August nonfarm figure raising real questions about the state of the US economy, not to mention the viability of Fed pledges for 2015 rate hikes. Today’s October jobs report seems to have washed away similar concerns. The +271K nonfarm figure absolutely crushed expectations and pulled the three-month average to +187K, which is just modestly below the +206K average for the year to date.

At this point, the case for a December Fed rate hike is on.

Employment Situation October 2015

ISM Manufacturing Barely Above Contraction

The ISM Manufacturing report came in at 50.1 in October. The consensus range was 47.9 to 51.5. This is the third month in a row that the ISM barely came in above 50, a level that markets contraction versus expansion. Anything below 50 indicates contraction, while anything above 50 indicates expansion.

This is the lowest 3 month run of the recovery.

New orders came in stronger at 52.9, gaining a solid two points since last month. Backlog orders are in deep contraction territory, coming in at 42.5. Employment contracted for the first time in six months, coming in at 47.6, a big 3 point drop from the previous month.

ISM Manufacturing Index Chart October 2015

Carl Icahn Warns of Exodus of Many of Our Best Companies

Carl Icahn comments on the recent news of Pfizer and Allergan merging.

Unfortunately, my warnings concerning the fact that there will be a large number of our companies leaving the country within the next year is already coming true. Just this morning, both Pfizer and Allergan confirmed they are in preliminary friendly discussions about merging. Allergan is domiciled in Ireland, and if consummated, this will be the largest corporate inversion to date, and as a result our country will lose Pfizer, its tenth largest company. The imminent planned exodus of many of our best companies is extremely dangerous, especially in our fragile economy, as it will cause the loss of thousands of jobs, as well as hundreds of billions of dollars of future tax revenue and investment in the United States. As I said in my October 20th letter, its not too late if we act now.