Sethi Associates

     Daily Summary – February 22, 2021 I ended last week noting that I really wasn't sure which way this week would go, seeing potential for both strength and weakness, and it turned out that was exactly the way to look at it, as we saw both, just depended on whether you were looking at the value or the growth side of things. Value performed well continuing on its performance end of last week led by small value up over 1% (in that regard IWN, a small cap value index hit a record high today). Growth on the other hand was sold aggressively in all market cap sizes although the style box had mid-caps getting the worst of it.  But all three growth boxes were down at least 2.5%. In terms of indices due to large caps in general doing worse than smaller, the four I follow all were down led by NDX at -2.63% and Naz at -2.46% while SPX and RUT did better as they contain more value down by 0.77% and 0.69% respectively.  Also would note that while the indices made an attemp...

US Chicago Fed National Activity Index Jan: 0.66 (est 0.50; prevR 0.41; prev 0.52) CFNAI beats again this month, although should be noted that Dec was revised down a bit and three of the four indicators showed decreasing gains from December.  This is one index that you have to look at the revisions because not all data is available as of the time of publication.  Still all four were up and the overall level was the highest since October and remains well above year-ago levels. I like this report because it's a national report that uses 85 different economic indicators in a lot of different areas.  The CFNAI was constructed using data available as of February 18, 2021. At that time, January data for 50 of the 85 indicators had been published. For all missing data, estimates were used in constructing the index  Production-related indicators contributed +0.28, down from +0.37 in December. The contribution of the sales, orders, and inventories category to edged down ...

   US Leading Index (M/M) Jan: 0.5% (est 0.4%; prev R 0.4%) Conference Board's LEI's continue to recover, and after several months of slowing growth, it picked up in January although below Nov's level of 0.9%. Still overall level now just about where we were pre-pandemic. From CB: “While the pace of increase in the U.S. LEI has slowed since mid-2020, January’s gains were broad-based and suggest economic growth should improve gradually over the first half of 2021,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board. “As the vaccination campaign against COVID-19 accelerates, labor markets and overall growth are likely to continue improving through the rest of this year as well. The Conference Board now expects the U.S. economy to expand by 4.4 percent in 2021, after a 3.5 percent contraction in 2020.”

  US Dallas Fed Manufacturing Activity Feb: 17.2 (est 5.0; prev 7.0) Big jump in Dallas Fed Texas Mfg activity for February (survey response were 2/9-2/17 so just hitting the weather issues at the end. From the report: Texas factory activity expanded at a markedly faster pace in February, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, surged 15 points to 19.9, indicating a sharp acceleration in output growth. Other measures of manufacturing activity also point to more rapid growth this month. The new orders index rose seven points to 13.0, and the growth rate of orders index rose six points to 11.6. The capacity utilization index pushed up from 9.2 to 16.5, and the shipments index edged up three points to 16.1. Perceptions of broader business conditions continued to improve in February. The general business activity index shot up 10 points to 17.2. The company outlook inde...

    Daily Summary – February 19, 2021 All week I've been referencing the above tweet from Bespoke about what typically happens President's Day week as it has pretty well described what we saw (basically flat to down action every day), particularly the RUT which coming into today had been down all week. And, magically, RUT followed the script today posting a big over 2% gain to pare its losses for the week to 1%. SPX, Naz, and NDX, which started the day with ok to decent gains gave those up though with Naz finishing barely green, SPX down two tenths and NDX down little over four tenths.  For the week they were down in the 1-2% range, so a red week all around. In terms of today's action, on the small side it was balanced between value and growth, but in the large caps there was a definite bias to value with large growth finishing well behind the rest of the style boxes. Technically, RUT bounced right where it "should" have off that 20-day MA. So now all of the indic...

US Markit Flash Manufacturing PMI Feb P: 58.5 (est 58.5; prev 59.2) - Services PMI Feb P: 58.9 (est 57.6; prev 58.3) - Composite PMI Feb P: 58.8 (prev 58.7) Markit January flash Composite PMI upticks slightly as manf comes down a bit, services up a bit. Service sector growth the strongest since March 2015, with firms often reporting higher activity as virus-related restrictions were partially eased and inflows of new business picked up, notably among domestic customers. The slower manufacturing growth was often blamed on extreme weather and existing widespread supply shortages. Supplier delays hit a record high during the month.  Prices continued to press upward with the quickest rises on input and selling prices in a decade (in the history of the survey in the case of selling prices).  This makes that Philly survey on selling prices falling even more an outlier. Backlogs increased while employment stabilized, but stayed at high levels, particularly for manf. Outlooks were als...

 January Existing Home Sales: +0.6% to 6.690M vs. 6.600M consensus and 6.65M (revised from 6.760M) Existing home sales stayed solid increasing 0.6% from December to up 23.7% y/y from December's 20.7%. That is the 5th straight month of 20+% y/y change in existing home sales.  The median existing-home sales price rose to $303,900, 14.1% higher from one year ago. As of the end of January, housing inventory fell to a record-low of 1.04 million units, down by 25.7% year-over-year – a record decline. "Home sales continue to ascend in the first month of the year, as buyers quickly snatched up virtually every new listing coming on the market," said Lawrence Yun, NAR's chief economist. "Sales easily could have been even 20% higher if there had been more inventory and more choices." Properties typically remained on the market for 21 days in January, seasonally even with December and down from 43 days in January 2020. Seventy-one percent of the homes sold in January 20...