Equity markets were bolstered by optimism in the manufacturing sector which unexpectedly expanded in January by the fastest pace since 2022. The data surpassed all estimates provided by Bloomberg.
A 10-point increase in a gauge of new orders was a major reason for this reading. Order backlogs expanded for the first time since 2022 while export orders also increased.
The strength in demand reflected in part a decline in a measure of customer inventories, which contracted by the most since mid-2022 as tariff induced stockpiles have been almost all drawn down.
How will this replacement impact inflation? Will inflation accelerate as stores could be potentially purchased at a higher price?
Gold and silver stabilized and Bitcoin rose.
Treasuries sold off across the curve albeit the yield curve did flatten nominally.
Several significant data points are released this week. What will the statistics suggest?
Over 100 S & P 500 companies are expected to post results this week and according to Goldman Sachs, of the firms that have released earnings, more than half have guided to above analyst expectations, exceeding the historical average of 40%.
Later in the week GOOG and AMZN release fourth quarter results. How will they be interpreted?
Last night the foreign markets were mixed. London was down 0.42%, Paris down 0.12% and Frankfurt up 0.32%. China was up 1.29%, Japan up 3.92% and Hang Seng up 0.22%.
Futures are bifurcated as Dow futures are flat and NASDAQ up 0.35%. Gold and silver is up 5% and 10%, respectively. The 10-year off 2/32 to yield 4.28%.
Kent Engelke
Chief Economic Strategist Managing Director
The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.
