Daily Comments

After a volatile week surrounding the uncertainty over the omicron variant, Asian markets finished mixed. The Nikkei 225 rose +1.00% and the Shanghai Composite added +0.94%. European markets posted losses. The DAX index fell -0.61%. 10-year bunds yield -0.39%. October Factory Orders gained +1.0% vs +0.5% consensus. November Nonfarm Payrolls only rose +210K, well below expectations of 573K (some say the miss is due to the BLS using flawed seasonal adjustments and the November number will be subsequently revised sharply higher next month). The Unemployment Rate fell from 4.6% to 4.2%, Average Hourly Earnings were up +0.3%, the Workforce Participation Rate edged up to 61.8%, final PMI Composite was 57.2, and the ISM Services Index was 69.1 vs. estimates of 65.0. For the week of 11/27, Baker-Hughes reported that the U.S. rig count at 569, unchanged. 10-Year Notes yield 1.361%. The December US$ Index was unch at 96.16. January Crude lost -0.4% to $66.26. February Gold added +1.2% to $1,783.90. Bears were firmly in control all day, with all major stock indices in decline, but some losses were pared near the close.

Uncertainty about how the omicron variant will evolve has markets on edge. Asian markets were mixed. The Nikkei 225 lost -0.65% and the Shanghai Composite slipped -0.09%. European markets slumped. The DAX index lost -1.35%. 10-year bunds yield -0.366%. Initial Claims for the week of 11/27 edged higher from a 53-yr low, gaining 28K to 222K vs. consensus of 245K. November Challenger Job Cuts were 14,875, and Motor Vehicle Sales were 12.9M vs. 13.2 consensus. 10-Year Notes yield 1.436%. The December US$ Index gained +0.13% to 96.150. OPEC agreed to a 400K b/d increase in output, and January Crude added +1.4% to $66.50. February Gold lost -1.2% to $1,762.70. Political wrangling over meeting a looming federal govt. funding deadline continues. However, there’s a House deal to keep funding through Feb. 18, which will also need to get past the Senate. Apple shares sank on demand concerns. WHO said existing vaccines should protect against severe cases of the Omicron variant. Meanwhile, testimony from Fed officials continues to get digested by investors and traders. Bulls returned with a vengeance, pressing all indices firmly up.

China’s Nov Caixin/Markit mfg PMI showed contraction at 49.9 after yesterday’s official PMI showed expansion. Asian markets were higher. The Nikkei 225 bounced back +0.41% and the Shanghai Composite added +0.36%. European markets strengthened. The DAX index added +2.47%. 10-year bunds yield -0.347%. For the week of 11/27, the MBA Mtge Apps Index fell -7.2% (from a prior 1.8% reading), despite a strong gain in purchases. EIA Crude Inventories fell -0.9M bbls. Oct Construction Spending posted a MoM gain of +0.2% vs. consensus of +0.6%. Nov ADP Employment gained 534K vs. est. of 525K. The Nov. Mfg PMI fell to 58.3 vs. consensus of 59.1m the ISM Mfg Index was 61.1. The Fed’s Nov Beige Book noted rising prices and moderate economic growth. 10-Year Notes yield 1.42%. The Dec US$ Index was up +0.08% to 96.080. Jan Crude lost -0.9% to $65.57. Feb Gold added +0.40% to $1,784.30. Stocks rallied strongly early. At midday the 1st US case of the Omicron variant surfaced in CA and made headlines. It didn’t help bulls that the Fed’s Williams added, “Clearly, it adds a lot of uncertainty…” Stocks plunged from highs, giving back large gains and closing well into the red.