Wall St. hits new record high; GBP set for weekly gain

Summary:

• New ATHs for US stocks heading into the weekend

• US data worse than expected

• Pound set for weekly gains

• Crypto newsletter; Bitcoin fills the gap 

 It’s been another good week for US stock markets and unless there’s some late drama the S&P500 will chalk up its 6th consecutive weekly gain. Two eagerly awaited speeches from President Trump and Fed Chairman Powell failed to live up to expectations whilst there’s still been no further tangible progress on the trade front. The fact that equities keep rallying on this shows once more that the path of least resistance remains higher and until there’s a clear negative catalyst or exhaustion signal then further gains ahead look probable.

A batch of economic data from the US was released just after lunch time in what is the main scheduled event before the weekend. The breakdown is as follows:

• US October advance retail sales M/M: +0.3% vs +0.1% exp. -0.3% prior

• US October core retail sales M/M: +0.2% vs +0.3% exp. -0.1% prior

• Empire state manufacturing index: 2.9 vs 6.1 exp. 4.0 prior 

This is something of a mixed bag on the whole with the beat on the headline the main positive although lower than forecast readings for the core and Empire State give an overall feeling of being slightly negative if anything. The retail sales figures could have been dampened by consumers delaying purchases ahead of Black friday discounts, although you would’ve thought this would get picked up in the consensus forecasts.

The earlier retail sales and manufacturing data was fairly mixed and since then the industrial production figures for October was below forecasts. A print in M/M terms of -0.8% was well below the -0.4% expected and even though the prior was revised higher by 10 basis points to -0.3%, it is still a sofft data point on the whole. This data may have been adversely impacted by the GM strike but it still looks weak, with capacity utilisation also disappointing with a read of 76.7 compared to 77.0 expected and 77.5 prior.

It’s been a fairly solid week for the pound on the whole with the currency appreciating against most of its peers despite a raft of worse than expected data from the UK. The sharpest move came on Monday when traders rushed to buy sterling after Nigel Farage announced that his Brexit party wouldn’t be contesting Tory seats from the last election. The Brexit party have since reportedly ceded more ground with 43 additional seats said to not contain a party candidate. It is clear that the market in the near-term currently favours developments that increase the prospect of a Conservative majority.   

Our latest Crypto newsletter focuses on Bitcoin closing its bullish gap, Litecoin struggling around the upper limit of the overbalance structure and reports the CME are said to launch Bitcoin options. It can be read in full here.