Markets advanced Friday as the Markit composite PMI rose further above 50 in August and adds to the evidence that the rebound in economic activity has been resilient to both the earlier resurgence in the virus infection rate as well the expiry of the $600 weekly enhanced federal unemployment benefits.

The larger than expected rise in the composite PMI to 54.7 in August, from 50.3. is consistent in the past of 3% annualized GDP and this data point coupled with other statistics released all but guarantees the actual rebound in third quarter GDP will be far larger than expected with some now suggesting a “low 30 handle.”

The increase was driven by further gains in both the manufacturing and services indices.  Inventories have been squeezed because of the V shaped recovery.

The economic calendar is comprised of several housing indicators, manufacturing statistics, personal income and spending, initial jobless claims and weekly unemployment claims.  How will the markets interpret the data?

Last night the foreign markets were  London was Paris and Frankfurt.  China was Japan and Hang Sang

The Dow should open moderately higher on vaccine optimism.  Will the advance broaden?  According to CNBC 38% of the S & P 500 stocks have made up all the gains in the S &P 500 since the March lows.  Sixty two percent are lower than they were on February 19.  An incredible 126 companies are still down 25% or more.    The 10-year is off 2/32 to yield 0.63%.


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