Varchev Finance Weekly Wrap Up

Due to the week of cut-off sessions and liquidity, markets will focus mainly on the macroeconomic picture as well as major changes in traders' portfolios that rebalance their exposures and earn at the end of the year.

Markets rose to historic highs thanks to Santa's rally, aided by progress signs in US-China talks, as well as Mastercard Spending Pulse data, which points to strong e-commerce sales in the US that hit a record this holiday season . Talking about e-commerce trends, Amazon's stock performed extremely well as the company announced that "this season is a world record for sales."

For those unfamiliar with the term, Santa's rally is a calendar effect whereby stocks tend to increase over the last 5 trading days of the year, followed by the first two of the following.

Although there are many potential explanations for the phenomenon and we certainly welcome the new peaks, it should be borne in mind that the volume of trade tends to decrease during this time of the year and as a result of any transaction made during this period that we tend to it carries more weight - we don't want to be in a situation where we chase movements, especially those like the last ones. As a result, although we see a new name for potential investment this week (Tyson Foods (TSN), here), we have been relatively inactive on the trade front as we want to protect our redistribution levels in the event of withdrawal. , especially given the few indicators we see (including the stable S&P short-range oscillator), markets are overcrowded.

Yields on 10-year government securities remained around 1.9%, while gold prices rose above $ 1,500 an ounce. The dollar index fell below 97 as the WTI expanded its profit to over $ 60 a barrel.

The economy

On Monday, the Department of Commerce announced that new orders for manufactured durables were down 2.0% in November to $ 242.6 billion. This follows a 0.2% increase in October (revised lower than + 0.5% reported earlier) and a much missed expectation of a 1.5% increase. New orders for durable goods decreased by 1.3% compared to the same time last year. Consignments for manufactured durables increased 0.1% in November to $ 251.6 billion. Outstanding orders fell 0.4% in November to $ 1.159 trillion, driven by a 0.6% decrease in transportation equipment. Finally, inventories rose 0.4% in November to $ 434.0 billion, driven by a 1.2% increase in transportation equipment. In September, deliveries increased by 1.2%, lagging behind by 2.0% and total inventory increasing by 4.7% compared to the same time last year.

New orders for non-defense capital goods except aircraft (core capital goods) increased by 0.1% in November, which is less than expected by a 0.2% monthly increase. This followed a 1.1% advance in October and a 0.5 decline in September. Deliveries of basic capital goods decreased by 0.3% during the month. With monthly readings, new capital goods orders increased by 0.7% yoy, while deliveries were up 2.0% yoy. See here for our full analysis.

Also Monday, the US Census Bureau reported new home sales increased 1.3% year-over-year in November (+ 16.9% year-over-year) to a seasonally adjusted annual rate of 719,000. Reading Missed Expectations for a 730,000 seasonally adjusted single rate. The October estimate was also revised to 710,000 units from 733,000 before. Of the 719,000 new homes sold during the period, 209,000 have not yet begun construction, while 254,000 are under construction. In terms of costs, the average selling price in November swelled to $ 388,200 from $ 377,900 in October. The average sale price also increased, rising to $ 330,800 from $ 316,900 in October.

On Thursday, the Department of Labor announced that initial unemployment claims for the week ending December 21 were 222,000, down 13,000 from the revised level of 235,000 the previous week (revised from 234,000), but 2 000 searched, above expectations of 220,000. Importantly, the four-week moving average of claims (used as an indicator to compensate for volatility in weekly numbers) was 228,000, an increase of 2,250 requests over the previous week's average of 225,750 rate of layoffs This reflects on labor market strength as demands remain below 300,000 - the threshold commonly used to categorize the healthy jobs market - for an incredible 250 consecutive weeks, the longest series of weekly records since 1967. The previous longest the period ended in April 1970 and lasted 161 weeks.

Oil

On the commodity front, prices continued to receive support from OPEC +'s declining efforts, combined with the hope that a US-China trade agreement would boost global oil demand for the new year.

Finally, we note the difference between WTI and Brent, which currently stands at $ 6 a barrel. Remember that this is a key method of analysis because the higher the distribution, the more attractive the WTI is to foreign buyers. But on the other hand, the strength of the dollar can offset the effect, as buyers will be forced to convert.

Stocks

This week, we are witnessing comfortable buying levels for Tyson Foods because of the company's ability to take advantage of falling pork shipments in China.

Reviewing the S&P 500, Q3 earnings reports are losing ground, with over 76% of companies already experiencing positive EPS growth. For the third quarter, revenue growth declined by approximately 0.9% year-on-year, down from expectations of a 1.16% decline.

Only one S&P 500 company will report revenue this week. There are no portfolio companies to report.

Other key reports include: Link to RECN Resources, Landec LNDC and Lamb Weston LW.

Monday:
17:00 US - Homes for sale on the move

Tuesday:
17:00 US - CB Consumer Confidence

Wednesday:
Day off

Thursday:
03:45 China - Caixin Production PMI
10:55 Germany - PMI production
11:30 UK - PMI products
3:30 pm - Initial unemployment claims
21:00 USA - Report from the FOMC meeting

Friday:
10:55 Germany - Change in employment
11:30 UK - PMI Construction
15:00 Germany - PMI
17:00 USA - ISM Production PMI

Read more:

• Asian markets returned some of the losses but ended in the red
• European markets continue with the losing streak, safe heaven assets are rising
• Protect your portfolio with these defensive stocks
• Forex Today: 2020 kicks off with the dollar recovering amid Chinese RRR cut, trade optimism
• We look forward to a positive start to the first European session for 2020