Strong US Data Pull Equities Out of the Ditch

Economic Data

- (TR) Turkey Central Bank (CBRT) left all three key rates unchanged, as expected
- (PL) Poland Oct Sold Industrial Output M/M: 3.5% v 3.7%e; Y/Y: 1.6% v 1.4%e ; Construction Output Y/Y: % v 2.2%e
- (PL) Poland Oct PPI M/M: -0.3% v -0.2%e; Y/Y: -1.2% v -1.2%e
- (ZA) South Africa Central Bank (SARB) left interest rate unchanged at 5.75%, as expected
- (US) Oct CPI M/M: 0.0% v -0.1%e; Y/Y: 1.7% v 1.6%e
- (US) Oct CPI Ex Food and Energy M/M: 0.2% v 0.1%e; Y/Y: 1.8% v 1.7%e
- (US) Oct CPI Index NSA: 237.433 v 237.300e; CPI Core Index SA: 239.162 v 238.045e
- (US) Initial Jobless Claims: 291K v 284Ke; Continuing Claims: 2.330M v 2.37Me
- (CA) Canada Sept Wholesale Trade Sales M/M: 1.8% v 0.8%e
- (US) Nov Preliminary Markit US Manufacturing PMI: 54.7 v 56.3e
- (US) Nov Philadelphia Fed Business Outlook: 40.8 v 18.5e
- (US) Oct Existing Home Sales: 5.26M v 5.15Me
- (US) Oct Leading Index: 0.9% v 0.6%e
- (EU) Euro Zone Nov Advance Consumer Confidence: -11.6 v -10.7e
- (US) Weekly EIA Natural Gas Inventories: -17 bcf vs. -9 to -13 bcf expected

European indices were hammered by the weal preliminary November PMI data, with no recovery in sight for the wounded continental economy. US futures were in the red on the data, however the very good Philly Fed and US housing data helped send stocks back into positive territory mid morning. Meanwhile, US CPI continues to increase very modestly. As of writing, the DJIA is up 0.06%, the S&P500 is up 0.23% and the Nasdaq is up 0.48%.

The Philly Fed's manufacturing outlook crushed expectations and delivered the highest headline figure since December 1993. Expectations of 18.5 were down slightly from last month's 20.7 reading. The new orders index rose 18 points to 35.7. Analysts note that the striking numbers runs counter to other surveys this month, with both the Empire State manufacturing report and flash PMI reports coming in mixed. Others note the series has had spikes followed by big revisions in the past.

The October existing home sales pushed out to a one-year high of 5.26 million units, while the supply of homes on the market fell to a seven-month low of 5.1 months equivalent. Analysts highlight that the current cycle high in the series was 5.380 million in July 2013. The XHB is up 2.3%, and the major homebuilders are up 2-3% a piece.

Goldman Sachs made a bunch of predictions about 2015 in a note to clients, putting their S&P500 target for next year at an underwhelming 2,100. Volatility in equity markets will remain low, keeping return dispersion low in 2015. Goldman said US stocks will deliver a modest total return of 5% in 2015.

WTI crude continues to pivot around the $75 handle. In the European session, Iran said it would hold talks with Saudi Arabia regarding market share at OPEC meeting next week but would not cut oil output by a single barrel. Gold is back where it was yesterday morning, trading below $1,180.

Shares of high-flying, camera-on-a-stick company Gopro are off another 6% this morning after sliding around 8% on yesterday's session. The freshly minted IPO has priced 10.4 million new common shars at around $75/shr, and the company is trading around $74.30 as of writing. Recall that the CEO is selling around 4 million shares in the sale.

BestBuy is up 8% after disclosing excellent third-quarter results this morning. Margins, profits and revenue all saw healthy growth, while US comps were good and online comps were very good. L-Brands is up modestly on solid third-quarter results, although its guidance was a bit soft. Keurig Green Mountain tanked in the post market and fell further this morning after yesterday's bad guidance call. GMCR is near its lows, down 8.2%.

Activist investor talk is all over the place this morning. Marcato Capital took a 4.9% stake in regional retailer Dillard's, calling on the firm to pursue a REIT. There were rumors going around that Icahn's next big target was Gilead Sciences. Finally there was also vague talk that Bill Ackman was stalking UPS, and its worth nothing that the talk a year ago was that Ackman was after FedEx.

Looking Ahead

- 13:00 (US) Treasury to sell $13B in 10-Year TIPS Reopening
- 13:30 (US) Feds Mester on forward guidance in London
- 15:00 (US) API Monthly Statistical Report
- 19:20 (AU) RBA's Heath speech at Mining Industry Conference
- 20:00 (US) President Obama on immigration
- 20:30 (US) Fed's Williams speaks at Bank of Korea event