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The US Equity Bull Market Lives to Fight Another Day


Today's financial recap and tomorrow's financial outlook.

Tensions continued to heat up between Japan and China today. Over the weekend, the Chinese government established an air-defense zone encompassing three islands in the East China Sea that the Japanese government had purchased last year. Japan responded by recommending that domestic airlines not report their flight plans to China. Additionally, the Wall Street Journal reported today that two US B-52 bombers had penetrated the zone on a routine training mission. The Chinese government said that it has the right to potentially take military action in the area.

US equities opened near flat this morning and drifted higher throughout the day. However, there was a large sell imbalance near the close, causing stocks to sell off back to their starting point. Trading activity was lower than usual due to the upcoming Thanksgiving holiday. Retail stocks, particularly those with a higher-end clientele, saw rotation from the financial and transportation sectors. Investment banks like Goldman Sachs (NYSE:GS), Citigroup (NYSE:C), and JPMorgan (NYSE:JPM) lagged the broader market.

October building permits were reported in the pre-market. Permits accelerated to an annual rate of 1.034 million, the highest since September 2008, but this increase was largely due to an outsized jump in multifamily permits. Single-family permits were little changed at 620,000 and near the 618,500 average from the last seven months. The Conference Board's gauge of consumer confidence fell for the third month in a row, down to 70.4 from 72.4 last month. Economists had been expecting a reading of 72.6. Consumers in the survey had an increasingly pessimistic outlook on the economy.

The US Treasury auctioned $35 billion of five-year notes. The auction was met with strong demand from foreign buyers and priced near the pre-auction levels of 1.340%.

Tiffany & Co. (NYSE:TIF) reported earnings before the market open, beating expectations solidly. Earnings per share came in at $0.73, beating the $0.58 estimate, and revenues of $912 million beat the $889 million consensus. The company also boosted its full-year EPS forecast. The stock rose 8.68% in heavy trading today.

Tomorrow's Financial Outlook

A number of economic data reports will be released tomorrow rather than Thursday due to the holiday. Weekly jobless claims will be reported tomorrow morning and could be subject to adjustments due to the shortened reporting time. October durable-goods orders are also scheduled for the early morning. Orders are estimated to have fallen 1.9% from the prior month, though the ex-transports figure is forecast to rise 0.5%. Capital-goods orders, which have a tight relationship with GDP, are estimated to rise 0.7%.

The other two economic data points to note are the Chicago regional-manufacturing survey and University of Michigan consumer-confidence index. The survey reached a two-year high last month at 65.9 and is forecast to fall back to 60.0. The final estimate of the University of Michigan/Reuters consumer-confidence index is due out in the late morning.

Two important market-moving releases are scheduled for early tomorrow morning. The UK will release its advance estimate of third-quarter GDP and the December German GfK consumer-confidence survey. UK growth is estimated to remain at the same rate from the second quarter at 1.5% year-over-year. The German consumer-confidence gauge is forecast to rise very slightly.

There are no major earnings reports scheduled for tomorrow.

Twitter: @Minyanville

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