Doc Copper/Gold ratio breaking 10-year support

Doc Copper and Gold have both done well this year. Doc Copper has been the stronger of the two, reflected in the chart below-

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The strength in Doc Copper has the Copper/Gold ratio below doing something it hasn’t done in a long time!

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The Doc Copper/Gold ratio has remained inside of rising channel (1) for the past decade. The ratio of late is now breaking below 10-year rising support at (2).

When attempting to decide on what metals to own, this break of 10-year rising support could be sending a very important message to the metals market and could be sending an important macro message as well.

 

Why you see chart pattern analysis with brief commentary:   There is a ton of news and opinions around markets and assets that make the decision-making process more difficult than it needs to be.   I believe the Power of the chart Pattern provides all you need to see what is taking place in an asset and determine the action to take.  This approach has worked well for me and our clients and I encourage you to test it for yourself.

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This Chart Should Make President Trump Smile

If there is one thing we know about President Trump, it is that he likes "winning," and that means someone else is "losing." If the following chart is anything to go by (and anything but 'transitory') then President Trump should be smiling…

While US manufacturing is rebounding back to cycle highs, Mexico's manufacturing economy has collapsed into contraction to record lows as the natural disaster that hit Mexico led to a deterioration in the health of the manufacturing sector in October, with companies signalling lower output and new orders.

Commenting on the IHS Mexico Manufacturing PMI survey data, Aashna Dodhia, Economist at IHS Markit and author of the report, said:

“In light of the recent natural disaster faced by Mexico, the manufacturing sector fell into contraction territory for the first time in over four years.

 

The disruptions from the earthquakes were extensive, with output, new orders and employment all down since September.

 

“Meanwhile, currency volatility resulted in the strongest rate of input cost inflation since June, while factories sought to protect margins by raising their charges.

 

Looking ahead, economic uncertainty remained a key area of concern, with business sentiment the weakest since March.”

Odd that in the US, natural disasters like floods, hurricanes, and wildfires appear to be just shrugged of by the survey data… but in Mexico – there is an actual 'slowdown' when the world implodes. We wonder which is more 'real'.

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Trump Proposes Repealing Obamacare’s Individual Mandate To Pay For Tax Cuts

In a proposal which will further infuriate Democrats, moments ago Trump suggested repealing Obamacare’s individual mandate to fund his proposed tax cut.

“Wouldn’t it be great to repeal the very unfair and unpopular individual mandate in ObamaCare and use those savings for further tax cuts for the Middle Class. The House and Senate should consider ASAP as the process of final approval moves along. Push Biggest Tax Cuts EVER,” President Trump says in series of posts on Twitter. 

The Congressional Budget Office has estimated that repealing the mandate would save the government $416 billion over a decade. The mandate requires most people to pay a fine to the IRS if they do not have health insurance.

Trump’s proposal echoes a similar suggestion from Sen. Tom Cotton, who suggested it could free up to an additional $300 billion in money for tax cuts. Senate Finance Committee Chairman Orrin Hatch said this week that he wouldn’t rule out including the  repeal of the mandate in the legislation, although as Bloomberg notes it is unclear whether such a plan could pass in the Senate, which has struggled to pass Obamacare repeal legislation.

Other top Republicans have rejected the idea, including House Ways and Means Committee Chairman Kevin Brady (R-Texas) and Sen. John Thune (R-S.D.). They fear adding mandate repeal into the mix would jeopardize tax reform.

As reported yesterday, the GOP delayed its release of tax bill, as a result of last minute disagreement over the contents.  As discussed previously, this may be just the first of several delays as somehow the proposal, now likely hobbled by over $1 trillion on the revenue side as it appears there will be no significant change to the treatment of local and state tax deductions, has to reconcile a plehtora of conflicting items including:

  • Are middle-class cuts from the budget framework (like doubling the standard deduction and expanded child tax credits) included?
    Is the SALT deduction included (or capped in some way)?
  • What level is the corporate tax rate (over/under Trump’s 20% target)
  • Is there a fourth tax bracket (rumblings suggest incomes above 1mm USD would be affected)
  •    Is the tax cut retroactive to Jan. 1, 2017?
  • Is there a repatriation deal for money kept overseas?
  • Does it add to the deficit?  If so, how much?
  • Will extraneous issues be slipped into the draft to entice specific voters?
    • Minimum wage hike
    • Border wall funding
    • Debt ceiling compromise
    • Planned parenthood funding

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Whitefish Scandal Shows Government Takes Advantage When Needed Most

Via The Daily Bell

Just when people need the government most, is when you will find politicians at their sleaziest.

Over a month after Hurricane Maria pummeled Puerto Rico, about three-quarters of the Island is still without power.

But rather than respond in the best interest of citizens, the government engaged in a crony deal with an inadequate energy company. Puerto Rico gave a $300 million contract to rebuild their power infrastructure to the company Whitefish Energy.

The public later learned that the company only planned to send 300 employees to the island. With such a small crew, it would take years to fully restore power to Puerto Rico.

Whitefish Energy is based in the small Montana town of Whitefish. A local news station visited the headquarters and found that it was based out of a rural residence.

Interior Secretary Ryan Zinke is also from the small town of Whitefish, Montana. He denies that he had anything to do with the contract.

Zinke is already embroiled in a handful of other scandals, involving chartering expensive flights with tax dollars, and attending donor events while on duty, which means he paid for travel with tax dollars.

We still don’t know how exactly the two-year-old company Whitefish landed the no-bid contract. But it is quite clear that it is not because of their ability as a company. For starters, the company only has two full-time permanent employees. The company has never worked on a project with the magnitude of rebuilding Puerto Rico’s power structure.

The contract has now been canceled by Puerto Rican authorities, but that decision takes 30 days to go into effect. In the meantime, the company will receive $30 million for already completed work.

Puerto Rican officials, however, have wasted precious time and resources. The controversy is expected to delay the restoration of power to Puerto Rico by over a dozen weeks.

The great irony of situations like these is that when the government is most needed, they take the most advantage. In a crisis, the government could shine by quickly helping the people affected. But instead, they all too often prove just how untrustworthy they are.

Some people think of government as an insurance policy. You may not need much government protection on a daily basis, but what about when disaster strikes? Who will rescue the people?

This is one of many examples that shows much of what government does is make-believe. They offer a false sense of security. It is all for show. They talk big, and present themselves as important. But when it comes time to act quickly in order to avoid human suffering, they reveal the true nature of government. That nature ranges from corruption to incompetence.

It is unfortunate that the taxpayers are robbed of their hard earned money to pay for sweetheart deals like the absurd contract awarded to Whitefish. That leaves less money for individuals to take matters into their own hands.

But that doesn’t mean it is impossible. You can still act to protect yourself from facing the brunt of terrible situations like these. Never depend on the government to save you in bad circumstances.

These days, it is not hard to take care of power and water needs yourself. Solar panelsand battery banks are a great way to make sure you don’t depend on the government to supply power to your home. They may cost a little more up front, but they pay for themselves in the long run. And the real benefit is the security they give you. You don’t have to depend on third parties to act appropriately when you need them most.

The cool thing is, you can already order cheap solar panels online. Deep cycle RV or marine batteries are a great way to store the energy. Higher tech options include Tesla’s Powerwall units, of which they donated hundreds to Puerto Rico.
But you could also chip away at adding solar to your home. The panels are easy to install and connect. Any additions in the backyard, like sheds or floodlights, could be powered by solar. Or you could even get a solar phone charger so that in emergency situations you can still communicate.
That would allow residents of Puerto Rico to take advantage of Google’s efforts to get the internet grid functioning again. Google has been able to restore internet access to most of the island by deploying balloons equipt with 4G connectivity. But without electricity to power their devices, many residents may still be limited.

It is also simple to collect rainwater. A relatively inexpensive filtration system can make rainwater clean enough to drink.

So basically for a few thousand dollars, you can make sure you are never at the mercy of the government and their cronies when it comes to providing you electricity and water. Now that’s an insurance plan.

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Something Wicked Part 2 – The Roach Motel

Authored by 720Global's Michael Lebowitz via RealInvestmentAdvice.com,

In Something Wicked This Way Comes, we provided an in-depth look at how stock repurchases are distorting McDonald’s (MCD) earnings per share and making the company look more profitable than it truly is. When such financial wizardry is considered alongside the growing popularity of passive investment strategies and overall sense of market euphoria, we have a better appreciation for why MCD trades at a valuation higher than fundamentals suggest would be appropriate.

We thought it would be helpful to extend this analysis to the entire S&P 500 to see if we can uncover other companies demonstrating fundamental and valuation divergences similar to MCD.

Who Else?

Similar to the MCD analysis, we evaluated changes in fundamentals, equity price and valuation data over the last five years for most companies that comprise the S&P 500. The data below, summarizing our broad findings, is based on 475 of the 505, S&P 500 companies. 30 companies were omitted from the analysis due to insufficient data.

  • 141 companies, or about 30% of the S&P 500, had annualized five-year sales growth rates of 1% or less.

Of these 141 companies:

  • The average stock price gain over the five year period was +68%.
  • 106 of the companies had a stock price increase of 25% or more that was concurrent with falling revenue.
  • The average number of shares outstanding declined by 2%. This data point is misleading as many energy companies within this group issued shares to bolster capital when the price of oil declined sharply in 2014/2015.
  • The average amount of debt outstanding increased 70%
  • The valuation ratio of market capitalization to sales increased 73%.

The table below isolates companies which had five year revenue declines of greater than 10%, price increases greater than 20%, declines in shares outstanding and increased debt outstanding.

Data Courtesy: Bloomberg

The company-specific data and the averages for this group highlight the extreme divergences that exist between poor fundamental data and current price and valuation. The list of companies showing these characteristics extend well beyond what we show here, these are just the most egregious examples.

In the table below, we highlight a few other larger, well-known companies. While these companies did not match all of the criteria for the table above, they do have price and valuation changes that are inconsistent with their revenue growth.

Data Courtesy: Bloomberg

A few comments about the tables above:

  1. Note that all of the companies are large firms from a wide range of industries and thus well represented in many passive indexes.
  2. Despite flat to negative revenue growth for at least five years, they have all experienced respectable price and valuation increases.
  3. In most cases, the companies have increased their debt outstanding while decreasing shares outstanding. It is likely the debt in many of these companies is being used to some degree to repurchase stock.
  4. For the most part, the companies are mature and therefore likely have low to mid single-digit revenue and earnings growth prospects.

Disclaimer: The analysis performed on the companies listed was not as extensive as that from the prior article on MCD. Some of these companies may have new products or promising innovation that justifies their price and valuation increases despite the poor fundamentals. However, we believe the MCD problem is at play in most of these companies.

Summary

There are good companies with bad stocks and bad stocks of good companies. What we lay out here is not an indictment of specific companies but a reality check on stock valuations. This analysis highlights a host of companies that appear to have prices that are well above a fair fundamental value. This does not mean the prices of these companies cannot continue to rise and further defy financial gravity. It does mean that, over time, these companies must either grow revenue and earnings at significantly faster rates than they have or their share prices will fall as their valuations likely revert to historical norms.

The popularity of passive investing and unawareness of the effects of buybacks are complicit in boosting the price of many undeserving companies to eye-watering valuations. We suspect passive strategies will continue to attract a larger than normal percentage of investment dollars as long as these blind momentum strategies work. Given the tremendous financial incentives to executives we think stock buybacks will continue as well. That said, valuations will reach a tipping point and the masking of fundamental weakness will be exposed. When this occurs, those managers and investors employing active approaches will greatly outperform those with passive strategies.

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Papa John’s Lashes Out At Goodell, Slams NFL “Debacle” For Tumbling Pizza Sales

The ongoing NFL “kneeling” protests are starting to have a major impact on downstream businesses, and none more so than Papa John’s pizza. Earlier this week, the Sports Business Journal reported that Papa John’s in-game pizza sales have fallen since President Donald Trump encouraged people to boycott the NFL in late September.

According to the report, NFL spokesperson Joe Lockhart said that Papa John’s had expressed “concerns with the league.” While Lockhart also said that other top sponsors have expressed similar concerns as the NFL’s TV ratings slump and political battles play out in the league, the NFL is especially crucial to Papa John’s business. The company began its partnership with the NFL in 2010 and has “Preferred Pizza” partnerships with 23 NFL teams. Last year, the company signed a multi-year partnership with the NFL and the Super Bowl.

Fast forward to today, when Papa John founder John Schnatter unleashed on NFL Commissioner Roger Goodell, saying weak leadership at the league has hurt sales of his pizza.

Speaking on a conference call, Schnatter said that “The NFL has hurt us by not resolving the current debacle to the players’ and owners’ satisfaction.” The Papa John CEO and Chairman adding that “NFL leadership has hurt Papa John’s shareholders.”

While this is not the first time Goodell has taken flak for not resolving the controversy more quickly, it is the first time that a prominent corporation has accused NFL leadership and its response for hurting its shareholders.

“Leadership starts at the top, and this is an example of poor leadership,” Schnatter said, quoted by Bloomberg.

“This should have been nipped in the bud a year and a half ago,” Schnatter said on the call. “Like many sponsors, we’re in touch with the NFL. Once the issue is resolved, we’re optimistic the NFL’s best years are ahead.”

Meanwhile, Papa John’s tumbled the most in eight months on Wednesday after Q3 sales missed analysts’ estimates. The company also trimmed its revenue and profit forecasts for the year. Ratings for the NFL are down this year, which also affects how often fans order pizza.

While this could be a plain old case of redirection and scapegoating by a company, now that the seal has been broken and companies are officially involved in the fray – and not on the side of the NFL – it is only a matter of time before more loud voices emerge, demanding that the NFL put the feud to rest, although it is very much unclear how this can be resolved in a manner that is satisfactory to all participants.

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Congressional Republicans (and Maybe Donald Trump Too) Could Be Coming For Your 401(k)

House leaders say a bill will rewriting the federal tax code will be released tomorrow. One idea reportedly being considered for it could imperil a key incentive to save for retirement.

President Donald Trump and Republican leaders in Congress had promised not to mess with how 401(k) plans operate or to change the current tax deduction for contributions to those retirement accounts. Last week, however, the president suggested that he may be willing to ignore that promise. “Maybe we’ll use it as negotiating,” Trump said.

If nothing else, that demonstrates the difficulties Republicans have had in passing major legislation. Saying publicly that you might use something as a negotiating tactic is, in fact, not a great negotiating tactic.

And politics aside, rolling back 401(k) deductions is a bad idea on the merits.

Any comprehensive tax reform plan is going to have significant consequences—both intended and unintended—for how Americans save for retirement. The very existence of 401(k) retirement plans is, in fact, one of those unintended consequences. That section of the tax code was written in the 1970s as a special favor to high-earning executives who wanted to avoid taxes on the part of their income that they invested in the stock market. In 1980, Ted Benna, a retirement consultant working for The Johnson Companies, realized that any employee could use that same provision to make investments with pre-tax dollars, and the 401(k) retirement plan was born. Today more than 55 million American workers have 401(k) retirement plans containing over $5 trillion in savings, according to the U.S. Department of Labor.

Under current law, workers can contribute up to $18,000 a year to their retirement plans, tax-free. So if someone earning $100,000 a year, subject to a 28 percent federal marginal tax rate, contributes $10,000 annually to a 401(k) plan, she reduces her taxable income to $90,000 for the year. That level of income is taxed at 25 percent by the federal government, so the worker’s tax liability (absent other deductions and credits) would drop from $28,000 to $22,500.

According to data from the Congressional Joint Committee on Taxation, as reported by The New York Times, the 401(k) tax break cost the federal government more than $115 billion in revenue during the current fiscal year. As Congress mulls a $6 trillion federal tax cut, some legislators—includinRep. Kevin Brady (R-Texas), who chairs the key House Ways and Means Committee—have been eyeing 401(k) contributions as a way to “pay for” tax reform. Lowering the threshold for tax-free retirement contributions, potentially to as low as $2,400 a year, would allow Congress to offset tax cuts elsewhere.

There is, of course, a better way to “pay for” tax cuts: Cut spending.

Lowering or eliminating the 401(k) deduction will likely make it harder for workers to save for retirement, something many Americans are already struggling to do. While 401(k) plans have hit record levels in recent years, the average account holds less than $100,000—an inadequate amount for an individual’s retirement.

Unlike tax breaks that benefit only a small set of individuals or businesses—or even more broad-based tax breaks, like ones targeted for homeowners and children—the exemption for retirement savings helps just about everyone. Aging isn’t a choice, and retirement is something that virtually everyone hopes to enjoy.

Rationally, people should be motivated to save for retirement whether they are getting a tax break to do so or not. Unfortunately, that’s not necessarily how many people think.

“This is going to eliminate one of the major incentives that people have to save, which is to avoid paying taxes,” says Daniel Rickett, president of Capital Street Financial Services. Rickett warns that lowering the 401(k) deduction threshold would have knock-on effects that Congress may not be expecting. Less money, for example, would be invested in the stock market.

Private retirement savings are essential, since government options such as Social Security are unlikely to cover most retirees’ living expenses (and may not even exist at all by the time younger workers retire). Private-sector workers are trying to save for their own retirements while also funding the retirement accounts of public employees, who are owed more than $1.5 trillion in unfunded benefits over the next few decades. Congress isn’t considering new taxes on public workers’ retirement income, but instead is targeting private-sector employees who are already hampered when it comes to saving for retirement.

Lowering the threshold for pre-tax contributions to 401(k) plans is part of an overall Republican strategy to encourage more Americans to use Roth IRAs, which are funded with after-tax dollars and grow tax-free. Roth IRAs are often a good investment tool for retirement, but lowering or removing the 401(k) deduction essentially forces all Americans to use Roth accounts instead of other options that might be better in individual circumstances. Consider the hypothetical worker we discussed earlier: Instead of saving $10,000 and getting a $5,500 break on her tax bill, she would have to pay the full tax amount and then save part of what’s left over in a Roth account.

Republicans also stand to lose politically by going after the 401(k) deduction. The tax bill has yet to be introduced, but Democrats have already pounced on the possible change. “Families today are already not saving enough for retirement, and we are concerned that mandating Roth savings will diminish their ability to save even further,” wrote a group of five Democratic senators in a letter sent last week to Republican leaders negotiating the tax reform plan. “Those with limited discretionary income will need to reduce their current level of saving to afford the immediate taxes due on their savings, or they will need to reduce other necessary spending.”

In other words: Because Republicans in Congress can’t find the guts to cut their own spending, you’ll have to do it instead.

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WTI/RBOB Sink As Inventory Draws Disappoint

WTI/RBOB held on to gains overnight following major draws reported by API and more OPEC jawboning (this time from UAE), but the DOE data disappointed compared to API's huge draws with Crude and Gasoline drawing down but considerably less than API reported (and Distillates barely drawing down at all).

Bloomberg Intelligence energy analyst Fernando Valle:

Strong demand continues to spur inventory drains. Crude-oil stocks remain elevated, but refined-product inventories are looking increasingly tight.

 

Wide WTI discounts to Brent are likely to push inventories down in coming weeks, driven by exports and increased refinery utilization.

 

Crack spreads are likely to stay elevated, in particular for gasoline, as demand continues to buck the seasonal trend.

API

  • Crude -5.087mm (-1.3mm exp)
  • Cushing -263k
  • Gasoline -7.697mm (-1.55mm exp)
  • Distillates -3.106mm

DOE

  • Crude -2.44mm (-1.3mm exp)
  • Cushing +90k
  • Gasoline -4.02mm (-1.55mm exp)
  • Distillates -320k (-2.5mm exp)

Following API's major draws, DOE was a big disappointment with smaller draws in crude, gasoline, and distillates than API reported and a build at Cushing…

Bloomberg Intelligence energy analysts Fernando Valle and Vince Piazza note that it's the time of year when oil inventories begin to build, and supplies are already almost 17% above the five-year norm. While benchmarks have rallied on heightened geopolitical concerns, sentiment remains unsteady. Oil production is resilient, but exports are offering a key outlet for elevated stockpiles.

Overall crude inventories are at their lowest since May 2015…

Distillates and Gasoline exports jumped last week. US crude, products imports sunk a new record low as total crude/product exports hit a new record high.

US Crude production rebounded the prior week from Gulf storm shut-ins and increased ionce again this week…

WTI/RBOB held gains from last night's API data into the DOE print, then sank as DOE disappointed…

“If trading behavior in the last few days and weeks gives any indication, prices will rise further on just confirmation of strong inventory draws,” explained Commerzbank analyst Carsten Fritsch, adding “we are close to the 2017 high from January and if that is broken then we are at more than 2-year highs. This will give further incentive for U.S. oil producers to increase output so I think we are setting the base for lower prices for next year.”

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The Swamp Wins: Trump Expected To Nominate Powell To Replace Yellen

Authored by Tho Bishop via The Mises Institute,

In the end Donald Trump will get what he wanted, a “low interest rate person” who also happened to be a “Republican.”

Jerome Powell is expected to replace Janet Yellen in an announcement later this week. If so, this means Trump will ensure that, while the stationary at the Eccles Building will change, the monetary policy guiding it likely will not.

The fact that, in naming Powell, Trump is picking an Obama-appointed Fed Governor for his most important nominations is itself quite fitting. While we have long known that bad monetary policy is bipartisan, Powell’s nomination serves as a particularly useful illustration of how little has changed in Washington since the Bush Administration.

Of course, just as Trump received his loudest applause from Washington for doing his best impersonation of his two predecessors, the President is already being praised for making a “grown up” decision when it comes to the Fed. While his awareness optics likely prevented him from ever truly considering reappointing Janet Yellen –—the preferred choice of the DC and NY — Powell’s nomination ensures that Trump’s scathing criticism of the monetary orthodox has been predictably discarded alongside a number of his most exciting campaign promises.  

Now we will see how else Trump squanders his historic opportunity to rearrange the Fed.

The administration has signaled that its plans to form a policy consensus with its remaining Fed choices – as opposed to opening FOMC meetings into some truly spirited debate.

This likely means that John Allison, whose resume as head of BB&T during the financial crisis and an admirer of Mises and Hayek made him the best fit for Candidate Trump’s rhetoric, is unlikely to be seriously considered for anything. Of course given the dangerous world the Fed finds itself in, it’s likely for the best that Allison emulates the example of Ludwig von Mises who, when offered a prestigious bank position in the 1929, famously said, “a great crash is coming, and I don’t want my name in any way connected with it.”

Going forward, it will be interesting to see how Republicans in the House and Senate proceed. For years now, House Financial Services Committee Chairman Jeb Hensarling has been pushing Fed reform which would have included requiring the Fed to adopted rule-based monetary policy. While this would have complimented the nomination of John Taylor or Kevin Warsh, Powell has made it clear that he opposes such limits being placed on the Fed.

Going forward, we should expect to see the Fed continue its tediously slow normalization of its balance sheet – what George Selgin has cleverly dubbed Operation SNAIL. Whether the Fed continues with its projected interest rate hike in December may itself depend on Congress. The legislature’s knack for kicking the budgetary can down the road as led to yet another “fiscal cliff” scenario at the end of the year.

While we can be ensured that outcome will be more spending (and more debt), the bout of yet another round of arbitrary drama may give the Fed enough of an excuse to follow their lead and hold off until 2018. 

 

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US Manufacturing Shrugs Off Fires, Floods, & Storms In October But ISM Disappoints

Against disappointing China PMIs, US Manufacturing PMI surged back near 2017 highs in October – shrugging off the efects of recent storms, floods, and wildfires – with factory jobs near their best since the financial crisis and gains broadening out to smaller firms too. However, ISM Manufacturing disappointed, falling back from 13 year highs.

So take your pick... is manufacturing momentum picking up (PMI) or fading (ISM)?

 

Under the hood, ISM reported weaker production, lower prices paid, and weaker new orders and while PMI reported a surge to 28-month highs for employment, ISM saw a drop to 3 month lows.

As a reminder, in September, the ISM's gauge was inflated by a surge in the supplier deliveries index, indicating longer lead times as producers scrambled to get back to normal operations following hurricanes Harvey and Irma. That measure fell in October while remaining well above its average from the first eight months of 2017.

 

ISM Respondents were generally positive with most comments focused on prices…

"Raw material costs on the rise, but purchasing operation has navigated shortages caused by hurricanes." (Chemical Products)

 

"Incoming orders are strong, mainly due to recovery efforts in the wake of Hurricanes Harvey and Irma. Backlogs are up due to operating inefficiencies." (Machinery)

 

"Hurricanes have caused shortages in the resin market, resulting in price increases, inventory constraints and increased lead times." (Computer & Electronic Products)

 

"Ongoing market growth. Minimal impact expected from hurricanes so far in this season." (Miscellaneous Manufacturing)

 

"Business seems to be a bit depressed due to the storms last month, but is picking back up." (Fabricated Metal Products)

 

"Business continues to be better than expected." (Transportation Equipment)

 

"Business is good. Supplier deliveries have extended. Things are really picking up." (Food, Beverage & Tobacco Products)

 

"Our plants are sold out for 2017 — we can’t take any new orders." (Nonmetallic Mineral Products)

 

"In plastics processing, Hurricane Harvey is the reason for every price increase being announced — and virtually all suppliers are announcing price increases." (Plastics & Rubber Products)

However, commenting on the final PMI data, Chris Williamson, Chief Business Economist at IHS Markit was relatively exuberant:

“US manufacturing stepped up a gear at the start of the fourth quarter, boding well for higher factory production to support robust economic growth in the closing months of 2017.

 

“Production volumes jumped higher on the back of a substantial improvement in order book inflows, in part due to supply chains returning to normal after the hurricanes but also reflecting a combination of strong underlying demand.

 

Factory jobs growth has also picked up to one of the strongest since the global financial crisis, underscoring the improvement in optimism about future trading among manufacturers.

 

“An important change in October was the broadening out of the expansion to smaller firms, which have lagged behind the strong growth reported by larger rivals throughout much of the year to date but under-performed to a lesser extent in October.”

Along with this morning's ADP data, it certainly bodes well for Friday's payrolls print…

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