Last Week:

Markets had a strong pullback.  After an amazing upward result two weeks ago, markets pulled back in farther than the prior week’s advance. Not even statements from St. Louis Fed President Jim Bullard (a non-voter in next week’s final Fed meeting of the year), that the expected rate hike might be delayed; nor a market holiday to observe President Bush’s funeral; were enough to stem the negative slide last week.

My model’s status: after Monday’s results, it looked like we were headed back to positive territory in the short-term. But Tuesday’s and Friday’s results took all of that away. My model says we are now at 1-3, and the short-term trend is negative again.

The November jobs number disappointed. The expected range was somewhere between 150,000-220,000 jobs. The consensus was for 190,000 new jobs, but the actual number came in at 155,000.

The U3 unemployment number remained at 3.7%, as expected.

The final Beige Book of 2018 saw the Cleveland District finish the year with modest growth. Demand was strong in banking, manufacturing, and non-financial services. Retail sales were up slightly, while housing demand softened. Wage pressure was widespread, seeing an increase in wages as well as signing and retention bonuses being offered to keep staff in place. There was also a noticeable increase in the cost of materials, but manufacturers seemed to have absorbed those increases.

This Week:

The economic focus of the week: Will the market’s pullback continue? Or will buyers come back into the market and provide some necessary support? We don’t have long to wait to find out.

Indicator focus:  November’s Producer Price Index (Tue); November’s Consumer Price Index (Wed); and November’s retail sales and industrial production (Fri).

Have a great week.


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