Archive for October, 2022

• CWS Market Review – October 11, 2022
  Eddy Elfenbein, October 11th, 2022 at 8:11 pm

  The Nasdaq Falls to a Two-Year Low

  In last week’s issue, I included a picture of Lucy holding the ball in place for Charlie Brown to kick. The reference is to how bear-market rallies tempt us into thinking the coast is clear, only to punish us again.

  In this week’s issue, I’m including this update:

  

  Once again, Lucy pulled the ball away and poor Charlie Brown went flying head over heels. That’s pretty much what happened on Wall Street over the last week.

  Last week, the market gave us a brief but strong rally on Monday and Tuesday, and it’s taken it all back since then. The Nasdaq Composite closed today at its lowest level since July 28, 2020 (see chart below). Today’s intra-day low for the S&P 500 was its lowest since November 23, 2020. The index closed the day a hair above its recent low from September 30, which itself was a two-year low.

  

  It’s a mess out there. Meta Platforms (formerly Facebook) is lower than where it was six years ago. We’re still seeing the trend I’ve talked about many times: risky stocks are getting hammered while conservative stocks are holding up relatively well. In today’s trading, the S&P 500 Low Vol Index rose 0.57% while the S&P 500 High Beta Index fell by 1.85%. It’s all about the Fed, the Fed and the Fed.

  The recent selling was spurred in part by last Friday’s jobs report. To be fair, the report was a combination of good and bad news.

  According to the report, the U.S. economy created 263,000 new jobs last month. That was below Wall Street’s expectations of 275,000. It also tied for the smallest monthly increase since April 2021. The unemployment rate ticked down to 3.5%.

  Even though the jobs number was short of estimates, the futures market increased its odds that the Fed was going to raise interest rates by 0.75% at its November meeting. The odds are now up to 83% and the meeting is only three weeks away. I think it’s clear that the Fed intends to hike by 75 basis points in November.

  More important than my opinion is the bond market’s. The one-year Treasury got to 4.28% today. That’s a 15-year high.

  Also in the jobs report, the government said that the labor force participation rate fell to 62.3%. The U-6 unemployment rate, which is a broader measure, fell to 6.7% from 7% in August.

  From a sector view, leisure and hospitality led the gains with an increase of 83,000, a rise that still left the industry 1.1 million jobs short of its February 2020 pre-pandemic levels.

  Elsewhere, health care added 60,000, professional and business services rose 46,000 and manufacturing contributed 22,000. Construction was up 19,000 and wholesale trade climbed 11,000.

  A drop of 25,000 in government jobs was a big contributor to the report missing expectations. Hiring at the state and local level is highly seasonal, so the decline points to a report that otherwise was largely in line with expectations and that shows a resilient jobs market.

  Also on the negative side, financial activities and transportation and warehousing both saw losses of 8,000 jobs.

  Another weak spot continues to be wages. For September, wages rose by 0.3%, which matched estimates. Over the past year, wages are up by 5%. While that sounds good, it’s less than the rate of inflation. In real terms, many Americans are seeing their wages getting cut. Inflation hurts so many folks who are already struggling. There are now 1.7 jobs per every unemployed person.

  

  The next big test for the market will come on Thursday when the government releases the inflation report for September. The last report shocked Wall Street as it showed that inflation is still not under control.

  Over the last 12 months, inflation is running at 8.26%. For Thursday, Wall Street expects to see consumer prices increase by 0.2% for September, and it expects the 12-month rate to fall to 8.1%.

  The price for oil plays a major role in the inflation stats. While the price for gasoline had been dropping for several weeks, that seems to have ended about a month ago, and gasoline has been steadily increasing since then.

  In last month’s report, the core rate of inflation came in at 0.6% which doubled expectations. That was a shocker. For September, Wall Street expects the core rate to rise by 0.4%. For the last 12 months, economists expect the core inflation rate to be 6.5%.

  The equation is simple. Once inflation is under control, then the Fed won’t have to raised rates as aggressively. That’s good for the economy and earnings. It also takes some pressure off the dollar which has jumped higher against so many currencies. In the U.K., the Bank of England has been buying bonds in an effort to protect pension funds. The bond market there has has crumbled.

  Inflation impacts so many different sectors at the same time. It’s so important that the Fed puts inflation back in its bottle.

  Giving Another Look at Ansys

  I’ve been a big fan of the company Ansys (ANSS) for some time. Unfortunately, I’ve not been such a big fan of the stock. The shares have often been very expensive. Very, very expensive.

  Ansys makes simulation software for engineers. Whenever you see a designer working with a 3-D model on a computer screen, there’s a good chance that he or she is using Ansys software. Before building a bridge, a skyscraper or an airplane, the designer wants to make sure that it can withstand the pressure it will experience in real life.

  

  Ansys is a classic “wide moat” company. Once a customer starts using their software, there’s a good chance he or she will become a long-term buyer. Ansys maintains an operating profit margin in excess of 35%, and their gross margin runs around 90%. That’s very attractive.

  As you might guess, Ansys is not exactly a value stock, but I think there are occasions when it’s worth it to pay extra for an outstanding company. I saw a good opportunity for us to add Ansys to the Buy List. That was at the beginning of 2020 and the stock did very well for us. In 2020, Ansys gained more than 41% for us. I kept ANSS on in 2021, and it gained another 10% for us.

  I loved the profits but again, I was concerned about the valuation. After some careful consideration, I decided to not include it on our Buy List for 2022. That’s a tough move to sell your winners. You can’t help but feel attached to them, but investing is about business, and loyalty to a stock is not important. The simple fact was that Ansys had become way too expensive.

  As it turned out, our decision was almost perfectly timed. Shares of Ansys are down more than 50% this year. The business has been holding up well and Ansys has continued to beat expectations. In August, Ansys reported very good Q2 earnings. The company made $1.77 per share which beat estimates by 17 cents per share.

  For Q3, Ansys expects earnings to range between $1.56 and $1.70 per share. For the entire year, Ansys expects earnings to range between $7.50 and $7.88 per share. For next year, Wall Street expects $8.49 per share.

  That means that Ansys is going for less than 24 times next year’s earnings. That’s pricey, but it’s not bad for Ansys. It’s funny how a good stock can drop in half and suddenly, everyone’s afraid to own it. I can tell you that I’m seriously considering adding Ansys back onto our Buy List. I won’t make our final decision until late December.

  Before I go, I have a quick story to share with you. In last week’s issue, I discussed how Elon Musk finally agreed to buy Twitter. I thought I’d ingratiate myself so I tweeted:

  Elon Musk is the kindest, bravest, warmest, most wonderful human being I've ever known in my life.

  — Eddy Elfenbein (@EddyElfenbein) October 4, 2022

  Most people recognized the line from the movie, The Manchurian Candidate. One outfit that did not was the newspaper, The Independent. My tweet is quoted at the end of their story. Apparently, old Sinatra movies don’t hold the shared cultural value I thought.

  That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

  – Eddy

  P.S. If you want to learn more about the stocks on our Buy List, please sign up for our premium service. It’s $20 per month, or $200 per an entire year.

• Morning News: October 11, 2022
  Eddy Elfenbein, October 11th, 2022 at 7:01 am

  Can This Man Solve Europe’s Energy Conundrum?

  U.K. Government Plans an Update to Its Tax and Spending Agenda

  Bank of England Further Expands Bond-Market Rescue

  China’s Shot at Overtaking the US Economy Is at Stake in Xi’s Next Term

  World’s Emergency-Lending Capacity Is Getting Stretched

  Fed’s Vice Chair Nods to Global Risks but Stays Focused on Inflation

  Credit Suisse May Face $8 Billion Capital Shortfall in 2024

  Chipmaker Rout Engulfs TSMC, Samsung With $240 Billion Wiped Out

  GM Looks to Parlay Battery Work Into New Energy Business

  Cathie Wood Buys Adobe as Stock Tumbles After $20 Billion Deal

  The Great Post-Covid Online Shopping Bet Was a Costly Delusion

  A Prime Day Warning: Some Discounts May Be Price Hikes, Study Shows

  Delta to Invest in Flying-Taxi Maker to Offer Rides to Airports

  Ben Bernanke Led the Fed During the Worst Financial Crisis in Generations

  Douglas Diamond and Philip Dybvig Created an Influential Model About Bank Runs

  Be sure to follow me on Twitter.

• Nasdaq Falls to Two-Year Low
  Eddy Elfenbein, October 10th, 2022 at 11:50 am

  The stock market is open today, but the bond market is closed in honor of Columbus Day. It’s another rough day for stocks. The Nasdaq Composite fell to a two-year low. The index is now down over 32% this year.

  

  As I write this, the S&P 500 is down 0.68% but the S&P 500 Hi Beta Index is down by 2.23%. It’s another day when risky stocks are getting punished.

  This Nobel Prize for economics was awarded to three economists including Ben Bernanke.

  The Nobel committee said their work in the early 1980s had “significantly improved our understanding of the role of banks in the economy, particularly during financial crises,” and in showing why it is vital to avoid bank collapses. They added this was “invaluable” during the 2008-09 financial crisis and the coronavirus pandemic.

  Bernanke’s analysis of the Great Depression in the 1930s showed how and why bank runs were a major reason the crisis was so long and severe. Diamond and Dybvig’s work, meanwhile, looked at the societally important role banks play in smoothing the potential conflict between savers wanting short-term access to their money and the economy needing savings to be put into long-term investments; and how governments can help prevent bank runs by providing deposit insurance and acting as a lender of last resort.

• Morning News: October 10, 2022
  Eddy Elfenbein, October 10th, 2022 at 7:00 am

  Bernanke and Two Colleagues Win Nobel Prize in Economics

  World’s Emergency-Lending Capacity Is Getting Stretched as Crises Deepen

  As Europe Caps Energy Bills, the Merits of Price Controls Get Another Look

  Bank of England Offers Further Support for Pension Funds Amid Crisis

  What Is the Social Security Cost-of-Living Increase, and How Do People Receive It?

  Allianz Chief Economic Adviser El-Erian Believes Core Inflation ‘Is Still Going Up’

  ‘No Possibility of Reconciliation’ as US Slams China Chips

  Strong Dollar Pressures U.S. Manufacturing Rebound

  Here’s How Weird Things Are Getting in the Housing Market

  Cathie Wood Warns of ‘Serious Losses’ in Automobile Debt

  Electric-Vehicle Makers and Suppliers Drive Into a Stormy IPO Market

  Not Ready to Go Full EV? Some Car Companies Bet Bigger on Hybrids

  A 27-Year-Old Is Taking On Big Banks to Lure Mega-Rich Families

  Under Pressure, Goldman CEO Ditches Dream of Consumer Domination

  As Warehouses Multiply, Some Cities Say: Enough

  That Reusable Trader Joe’s Bag? It’s Rescuing an Indian Industry.

  Ye Poses a Test for a Post-Musk Twitter

  How a Scottish Moral Philosopher Got Elon Musk’s Number

  Burger King’s New U.S. CEO Seeks to Restore Chain’s Luster

  Streaming Services Want to Fill the Family Movie Void

  Be sure to follow me on Twitter.

• Morning News: October 7, 2022
  Eddy Elfenbein, October 7th, 2022 at 7:02 am

  China Is the Wild Card in the Energy War With Russia

  Biden Says the U.S. Is Eyeing ‘Alternatives’ to OPEC Oil

  Biden’s Choice After OPEC Cuts: Woo Saudi Arabia, or Retaliate?

  Global Outflows Continue from Bond and Equity Funds for a Seventh Week

  Global Fallout From Rate Moves Won’t Stop the Fed

  Tracking the Coming Economic Storm

  The Job Market Has Been Like Musical Chairs. Will the Music Stop?

  Credit Suisse Offers $3 Billion Debt Buyback to Calm Nerves

  Chipmakers See ‘Breathtaking’ Drop in Demand as Recession Looms

  Biden Visits IBM to Promote Investments in U.S. Semiconductor Production

  New Cars Are Finally Back in Stock — But Americans Might Not Be Able to Afford Them

  A $568 Million Hack of Binance Coin Roils Crypto Sector Anew

  Hackers Target Eager Homebuyers With a Dumb Scam That Keeps Working

  Elon’s Hidden Motives + A Meetup in the Metaverse

  TikTok Parent ByteDance Sees Losses Swell in Push for Growth

  Bank of America to Pay Ambac Financial $1.84 Billion in Lawsuit Settlement

  Teenagers Keep Vaping Despite Crackdowns on E-Cigarettes

  Be sure to follow me on Twitter.

• Morning News: October 6, 2022
  Eddy Elfenbein, October 6th, 2022 at 7:01 am

  WTO Sees Sharp Slowdown in Global Trade, Pointing to Possible Recession

  Serbia’s Central Bank Raises Benchmark Rate to 4%

  In Global Slowdown, China Holds Sway Over Countries’ Fates

  In Rebuke to West, OPEC and Russia Aim to Raise Oil Prices With Big Supply Cut

  OPEC Move Shows the Limits of Biden’s Fist-Bump Diplomacy With the Saudis

  U.S. Gasoline Prices Are Climbing Again and May Get Worse

  U.S. Looks to Ease Venezuela Sanctions, Enabling Chevron to Pump Oil

  A Strong Dollar Is Wreaking Havoc on Emerging Markets. A Debt Crisis Could Be Next.

  Credit Suisse Weighs Outside Investor for Investment Bank Spinoff

  Elon Musk’s Renewed Twitter Bid Puts Pressure on Wall St. Banks Backing Him

  Ford Races to Win Over Pickup Fans With Electrified F-150

  Hello, Fellow Car. We’ve Got a Problem. Let’s Talk.

  Even After $100 Billion, Self-Driving Cars Are Going Nowhere

  Peloton to Cut 500 More Jobs in Effort to Save the Company

  How Macy’s Has Avoided—So Far—the Inventory Pileup Plaguing Other Apparel Chains

  Secretive Chip Startup May Help Huawei Circumvent US Sanctions

  How YouTube Created the Attention Economy

  Be sure to follow me on Twitter.

• Morning News: October 5, 2022
  Eddy Elfenbein, October 5th, 2022 at 6:09 am

  EU Chief Urges Funds for Energy Pivot, Floats Gas Price Cap

  Oil Holds Surge as OPEC+ Mulls Biggest Supply Cut Since 2020

  World’s Largest Oilfield Contractor Tackles Lithium’s Water Woes

  U.S. Electric-Vehicle Tax Rules Rile Asian, European Allies

  Lebanese Lawmaker Enters Bank Branch to Demand Frozen Savings

  As Asia’s Borrowers Turn Homeward, Local Bond Issuance Surges

  The First Global Deflation Has Begun, and It’s Unclear Just How Painful It Will Be

  Fed Official Says Inflation Fight Will Take Time, Despite Signs of Progress

  US Stocks Have Just Started Pricing In Recession, Citi Quants Say

  U.S. National Debt Tops $31 Trillion for First Time

  Endowment Tax on Wealthiest Universities Netted a Fraction of Predictions in 2021

  Musk’s Everything App ‘X’ Sounds a Lot Like China’s WeChat

  Facebook Is the Only Game in Town for Digital Political Ads

  Amazon Freezes Corporate Hiring in Its Retail Business

  N.L.R.B. Issues Complaint Against Apple

  Who’s Operating Your Flight? Air Travel Is Getting More Complicated

  Bayer Hits Courtroom Winning Streak as It Battles Remaining Roundup Lawsuits

  433 People Won a $4 Million Lottery. Was It Pure Luck?

  Be sure to follow me on Twitter.

• CWS Market Review – October 4, 2022
  Eddy Elfenbein, October 4th, 2022 at 7:16 pm

  (This is the free version of CWS Market Review. If you like what you see, then please sign up for the premium newsletter for $20 per month or $200 for the whole year. If you sign up today, you can see our two reports, “Your Handy Guide to Stock Orders” and “How Not to Get Screwed on Your Mortgage.”)

  The Stock Market Rallies 5.7% in Two Days

  The stock market put on a furious rally over the last two days, but is it just another bear-market rally? After this summer’s rally got blown apart in a few weeks, it’s hard to feel hopeful.

  In just two days, the S&P 500 has gained 5.73%. Sadly, big moves like this don’t normally come in healthy markets. Historically, most of the market’s big short-term gains have come during rough markets. They’re usually snapbacks from major lows.

  The smart take is to view the last two days with a healthy dose of skepticism. We’ve been fooled before.

  

  Still, I’m willing to take whatever profits Wall Street wants to throw our way. Look at Trex (TREX), our worst-performing Buy List stock this year. It’s up 11.8% over the last two days.

  The next big test for the market will come this Friday when the Labor Department releases the September jobs report. It will also update the numbers for July and August. The last report was a good one. According to the government, the U.S. economy created 315,000 net new jobs during August, and the unemployment rate ticked up to 3.7%. For Friday, the consensus on Wall Street is to see a gain of 275,000 jobs in September and that the jobless rate will stay at 3.7%.

  One interesting feature of the unemployment rate is that it tends to oscillate between extremes. This is the idea behind the “Sahm Rule,” named for economist Claudia Sahm. My shorthand definition for the rule is that if the unemployment rate goes up a little, then there’s a good chance it will go up a lot.

  More technically, the Sahm Rule says that we’re probably in a recession if the three-month average of the unemployment rate rises by 0.5% from its low over the last 12 months. Best of all, it’s easy to calculate.

  The lowest unemployment rate of the last 12 months came in July when it got down to 3.5%. That means that we’re not that far away from a recession. Friday’s report will tell us a lot more.

  One promising sign is that the jobless-claims numbers have been much improved since the summer. That number tends to be whatever stats people call “noisy,” which means it bounces around a lot. That’s why economists like to look at a rolling average to smooth out the bumps.

  If Friday’s jobs report comes in weak, that could take some pressure off the Federal Reserve. On the other hand, if the number is strong, then it could reiterate the Fed’s commitment to higher interest rates.

  Interestingly, the bond market shot up yesterday and the rally continued into today. That could be a bet that the Fed may ease up a bit. Still, I think the safe assumption is that the Fed will hike again at its next meeting in November by 0.75%. After that, it’s hard to say. For their part, futures traders are leaning towards a smaller hike in December. That could be right, but it depends on the direction of the economy.

  

  One worrying sign for the economy came out yesterday. The ISM Manufacturing Index fell to 50.9 for September. That’s down from 52.8 in August. Any number above 50 means that the factory sector of the economy is growing; below 50, and it’s contracting. This was the 28th month in a row of a growth.

  After the jobs report, the next big report for us will be the CPI report for September. While most people follow the CPI for the official inflation number, the Federal Reserve prefers to follow the Personal Consumption Expenditure stats.

  The last PCE report came out on Friday, and as I expected, inflation is still worse than many people think. The core PCE number rose by 0.6% in August which was 0.1% higher than estimates. Over the past year, core PCE rose by 4.9%. Wall Street had been expecting 4.7%.

  The non-core rate rose by just 0.3% in August. Falling energy prices played a big role in keeping that number low. Either way, the annual numbers are running well above the Fed’s target of 2%.

  Lael Brainard, the Vice Chair of the Fed and someone who is considered more of a dove, nevertheless spoke in strong terms regarding inflation:

  “Monetary policy will need to be restrictive for some time to have confidence that inflation is moving back to target,” the central bank official said in remarks prepared for a speech in New York. “For these reasons, we are committed to avoiding pulling back prematurely.”

  Earlier today we got the latest JOLTS report. That’s the Job Openings and Labor Turnover Survey which is put out by the Bureau of Labor Statistics. According to the report, the number of job openings dropped by 1.1 million in August. That’s huge.

  The number of available positions fell by 10% to 10.05 million. Wall Street had been expecting 11.1 million. This was the biggest drop since the early days of the pandemic. A major problem for the Fed has been to manage inflation during a very tight labor market. There used to be two jobs for every unemployed person. Now it’s 1.67.

  One interesting side note is that lumber prices are back to where they were before the pandemic. That’s a good sign of normalcy. The construction spending report should show a decline of 0.7% in August. Construction spending is still 8.5% above the number from one year ago.

  I still think the economy is likely to fall into a recession sometime next year. I suspect it will be a fairly shallow recession, but a lot of this will be determined by how successful the Fed will be in fighting inflation.

  Elon Musk to Buy Twitter

  It’s really happening! Well, maybe it’s really happening.

  This afternoon, news broke that Elon Musk has agreed to buy Twitter (TWTR) for the original offer price of $54.20 per share. (Yes, Musk worked “420” into his offer price.)

  If you recall, Musk had originally offered to buy Twitter in April for $54.20 per share, but then he seemed to get cold feet. Instead of simply admitting that, he claimed that Twitter was less than upfront about its user data.

  Then the lawyers got involved, and it looked like Twitter was ready to take the matter to court. It’s difficult to imagine a scenario where a person is forced to buy a company even when making commitments to do so, but it looked like that was about to happen. The trial was scheduled to start on October 17.

  I’m making a few guesses. The first is that Musk’s lawyers told him that he if were to take it to court, then there’s a very good chance he would lose. In many of the pre-trial motions, the judge repeatedly sided with Twitter.

  Musk and Twitter’s management have had a, shall we say, less-than-cordial relationship. Ever since Musk made his original offer, he’s been a constant critic of Twitter, and most importantly, he’s accused Twitter of lying about its number of users.

  Another guess of mine is that Musk was simply impulsive, and the “bot issue” was his strategy to back out of the deal. Once it became clear that that wasn’t going to work, Musk chose the best way to lose.

  Twitter stuck by the original offer and last month, Twitter shareholders voted to approve the deal. According to a filing with the SEC, Musk made the offer to Twitter yesterday. The stock immediately shot up higher on the news and trading in Twitter was eventually halted. Twitter said it aims to close the deal at the original price.

  If you look very closely at this chart, you can make out when the Musk news broke:

  

  How did this all begin? Earlier this year, Twitter suspended the satirical news site called the Babylon Bee for referring to a trans woman as “Man of the Year.” That seems to have spurred Musk on. Twitter has received a lot of criticism for its suspension policies which seem to be arbitrary and politically motivated. I suspect that once Twitter is private, it will allow former President Trump back on the platform.

  Given that shares of Twitter closed today at $52 per share, this suggests to me that the market is taking this offer seriously. In fact, the deal may happen quickly. Of course, this is a very different stock market than what we had this past spring.

  Another guess is that Twitter’s people told them that the deal is a lot more than Twitter is truly worth. Let’s look at some numbers. Wall Street expects Twitter to earn $1.20 per share this year and 60 cents per share next year. I should add that that’s a major decrease in expectations. Three months ago, Twitter was expected to make $1.68 per share for this year and $1.31 per share for 2023.

  Frankly, Twitter simply isn’t that profitable, and it never has been, Personally, I’d be skeptical paying half of Elon’s price. The only hitch is if there’s some way to alter Twitter’s business model to be more profitable. If there is, I don’t know it and I’m not sure Musk does, either. He has said he could get Twitter to 500 million daily users, which is a significant part of the planet.

  The lesson here is to be cautious in your business dealings. It may cost you $44 billion.

  That’s all for now. I’ll have more for you in the next issue of CWS Market Review.

  – Eddy

  P.S. If you want to learn more about the stocks on our Buy List, please sign up for our premium service. It’s $20 per month, or $200 per an entire year.

• Morning News: October 4, 2022
  Eddy Elfenbein, October 4th, 2022 at 7:03 am

  Businesses Brace for Currency Chaos in Asia, a Region With a History of Crisis

  Britain’s Economic Experiment Stumbles at the Start

  Less Turnover, Smaller Raises: Hot Job Market May Be Losing Its Sizzle

  Rising Interest Rates Test Demand for Cars

  Crypto Needs More Rules and Better Enforcement, Regulators Warn

  Kim Kardashian Could Be ‘Tip of the Iceberg’ for Celeb Crypto Crackdown

  Ray Dalio No Longer Thinks ‘Cash Is Trash’

  Samsung Kicks Advanced-Chipmaking Race Into High Gear With Road Map

  South Korean Internet Giant Buys Poshmark in $1.2 Billion Deal

  Credit Suisse’s Options Worsen as Markets Mayhem Takes Toll

  Apple Will Be Forced to Use New Charger After EU Votes for USB-C

  Meta Is Closing One New York Office With Cutbacks Looming

  Pfizer’s Unthinkable Boom Now Leaves Investors Anxious

  Warren Buffett’s Successor Is Building an $68 Million Berkshire Holding

  How McKinsey Cashed In by Consulting for Both Companies and Their Regulators

  Few Customers Get Refunds for ‘Rampant’ Zelle Fraud, Senator’s Report Says

  Be sure to follow me on Twitter.

• The Market Snaps Back
  Eddy Elfenbein, October 3rd, 2022 at 2:19 pm

  The stock market is having a nice rally today. As I write this, the S&P 500 is up more than 2.4%. On Friday, the stock market closed out a lousy day, week, month and quarter. Give it time and we can add “year” to that sentence.

  The bond market is doing quite well today which may suggest that we’re returning to a daily battle of stocks against bond. This is a change from before when both stocks and bonds moved lower. That’s what inflation can do. The 10-year yield is down about 16 basis points.

  This morning’s ISM Manufacturing Index came in at 50.9. Any number below 50 means the factory sector of the economy is contracting.