KBND Morning News


KBND Morning News

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Industrial production growth in China slowed to 5.4% year over year in November, while retail sales grew 8.1%, 
the lowest reading since May 2003. In Europe, services and manufacturing PMIs out of France, Spain, and the Eurozone composite all disappointed. (LPL)


U.S. retail sales strong. U.S. retail sales figures for November rose 0.2% on top of the upwardly revised 1.1% increase seen in October, topping forecasts and pointing to a healthy U.S. consumer. The better-than-expected gains may help to alleviate concerns about a slowing U.S. economy given consumer spending accounts for ~2/3 of GDP. 


Worry is increasing and that could be a good thing. There are signs that sentiment is near a washout. For instance, the recent American Association of Individual Investors sentiment poll had the most bears since April 2013. Flows saw extreme panic last week as well, as according to Lipper data, weekly outflows of US-based stock funds was an all-time record last week ($46 billion). From a contrarian point of view, this could be a positive for a meaningful low to occur.


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

Just 11 days till Christmas and here is some disturbing news. Between 75 and 80 percent of Americans who have a Christmas tree now have an artificial one, and the $1 billion market for fake trees is growing at about 4 percent a year. Americans buy about 10 million artificial trees each year. (Oregonian)


Trade tensions cooling. China has resumed soybean purchases for the first time since tariffs were put in place, and more corn shipments could be next according to a Bloomberg. China also indicated it would provide greater market access to foreign companies. (LPL)


Initial jobless claims fall. Weekly initial unemployment claims came in at 206K, below the 226K expected and last week's revised 233K. The four-week moving avg., a better gauge of labor market trends, also declined. Overall, the data suggest the labor market, and by extension the U.S. economy, remain in good shape. (LPL)


Tailored Brands, the parent of apparel chains Jos. A. Bank and Men's Wearhouse reported a quarterly profit of $1.01 per share, seven cents above estimates. However they saw sales miss estimates, and it lowered its full year guidance. (CNBC)


S&P 500 is down 28 and the NASDAQ is down 91.

Oil is down 32 cents at $52.26 a barrel.

Gold is down $6 at $1242f a Troy ounce.


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

Oil has a supply problem. Sharply lower oil prices are also being cited by some as a sign of looming recession. But oil's weakness has been driven mostly by supply issues, including Iran sanctions, record levels of U.S. production, and elevated domestic inventories. (LPL)


The Labor Department said U.S. consumer prices were unchanged in November, held back by a drop in the price of gasoline. Underlying inflation pressure is seen in rising rents and healthcare costs. In the 12 months through November, the CPI rose 2.2 percent. 


PYMNTS reported that for the first time in PayPal’s history, “mobile payment volume topped $1 billion, and did so on both Black Friday and Cyber Monday.” Black Friday had the highest total payment volume, posting a 42 percent YoY increase in mobile payment volume. 


Is a shutdown coming? President Trump threatened to shut down the U.S. government next week in a discussion with Senate Minority Leaders Chuck Schumer and House Minority Leader Nancy Pelosi Tuesday. So what does it mean for stocks if this happens? The good news is the S&P 500 Index has gained during each of the previous five shutdowns going back 23 years. (LPL)


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

My father says don’t confuse activity with accomplishment. Markets did just that yesterday with another 500 point swing that brought us back to the flatline to end the day. 


According to NFIB, their Small Business Optimism Index in November registered a 104.8 reading, a modest decline but nonetheless continuing an exceptionally strong two-year trend. Expected Business Conditions and Expected Real Sales accounted for slightly more than half of the decline. 


Bonds have done their job. Over the past month while the S&P 500 Index has lost 5% on a total return basis, Treasuries have gained 2% based on the broad Bloomberg Barclays Treasuries Index. Does that mean sell stocks and buy Treasuries? I don't think so. However, this latest performance does underscore the value of moving up in quality with fixed income allocations at this stage of the business cycle. (LPL)


Producer Price Index ticked up 0.1% MoM in November but was down sharply from October's 0.6% increase thanks to falling gas prices. (LPL)


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

According to Bend business attorney Eager law if you own residential rental property in Oregon and when your tenant moves out he leaves some of their personal property behind, you are in for some unpleasantness. You're required to provide written notice to the tenant, make a determination of value, and sometimes hold a public sale, with the proceeds of which eventually going to the tenant, who by the way left the stuff in your property to begin with. The statute governing all of this is 19 pages long when printed out and it's a mess. 


U.S. services sector still humming along. ISM's November non-manufacturing index came in at 60.7. Business activity increased for the 112th consecutive month as order backlogs fell and new orders and inventories rose. Survey participants continued to highlight concerns about tariff impacts and transport capacity shortages, but expressed stable-to-positive views on the overall business environment. (LPL)


America turned into a net oil exporter last week for the first time in 75 years. The U.S. sold overseas last week a net 211,000 barrels a day of crude and refined products, according to the U.S. Energy Information Administration.


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

Wall Street last week sawthe worst week for the Dow, S&P 500, and Nasdaq since late March. The Dow and S&P plunged about 4.5 percent each. The Nasdaq fell nearly 5 percent. The Dow and S&P 500 are negative for the year. However, the Nasdaq was still up nearly 1 percent for 2018. (CNBC)


Ten years ago this week Bernard Madoff's $65 billion Ponzi scheme came to light. (CNBC)


Uber has filed paperwork for an initial public offering. Rival Lyft filed for its IPO last week. (Reuters) 


Bloomberg News reports, “sub-$2 gasoline can now be found in at least one gas station in 20 US states, as the effects of the bear market in crude oil trickle down to motorists.” Meanwhile, “the national average has fallen for seven straight weeks to $2.53 a gallon, the lowest since March.


The National Association of Realtors points out that one reason for the flattening housing prices in the West that our region saw the biggest, fastest price increases and consumers are just being priced out of the market. That, along with the impact of increased interest rates. 


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

Stocks closed mostly unchanged yesterday after being down 3% intraday after the Federal Reserve suggested they could hold off raising interest rates later this month.
According to the Bureau of Labor the US economy added 155,000 jobs in November and the unemployment rate remained unchanged at 3.7%.  The most job gains occurred in health care, manufacturing, and transportation.
The Institute for Supply Management said that its non-manufacturing index in November rose to a seasonally adjusted 60.7%, up from 60.3% in October the second-strongest reading in 13 years.
The commerce department said that the US trade deficit rose 1.7% to $55.5 Billion which is a 10-year high, amid a record shortfall with China.  Ironically this stems from tariffs imposed by President Trump in an effort to reduce the deficit.

US Stock and Bond markets were closed yesterday in observance of a national day of mourning for the late President George H. W. Bush.  International markets were open though and continued the slide that started here in the US on Tuesday.
The Federal Reserve released their "Beige Book" report, which is a snapshot of the US economy.  The report said that the economy appeared to be growing modestly to moderately. Labor markets tightened across a broad range of industries, and wage growth "tended to the higher side of a modest to moderate pace." Tariff-driven price increases have spread more broadly through the U.S. economy, though on balance inflation has risen at a modest pace in most parts of the country. The Fed is widely expected to raise interest rates at the close of its Dec. 18-19 policy meeting. Policymakers have said the United States' strong economy could stoke higher inflation if they do not raise borrowing costs further.

The payroll company ADP released their employment report for the month of November this morning.  The report showed that the US economy added 179,000 jobs last month, which was lower than economists had predicted.

Short end of the yield curve inverts. The spread between 3- and 5-year, as well as 2- and 5-year Treasury yields turned negative Monday for the first time since July 2007.


Manufacturing activity remains robust. The Institute for Supply Management's manufacturing index for November was 59.3 up 1.6% m/m. New orders were up 4.7%, while the prices component was down 10.9% (showing increasing prices), with aluminum the most cited commodity up in price. Respondents flagged shortages, longer lead times, and tariffs as headwinds, though a healthy business environment and steady orders were positives. 


Final US Markit PMI Manufacturing for November (55.3) came in slightly below estimate, though new orders increased at fastest rate since May. Overall, manufacturing activity remains firmly in expansionary territory.


Just 20 days till Christmas and the National Christmas Tree Association says natural Christmas trees still outsell artificial, but their share of US annual sales has fallen from 77 per cent in 2010 to 56 percent last year.

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

Markets will be closed on Wednesday as we have a national day of mourning for Pres. George Bush.

The Canadian province of Alberta will cut oil production by almost 9%, or 325k barrels/day, to manage a pipeline bottleneck that has doubled the storage levels in the province. The U.S., though, is producing record output, which contributed to oil's ~22% plunge in November, and the influx of supply has put more pressure on OPEC and non-OPEC producers to curtail output in the coming year. (LPL)


The US debt-service ratio has declined from a 2007 peak of 13% to a current 9.8%; trends in quality, fixed rate debt, and delinquencies are all favorable. (GS)


Microsoft's market value at Friday's close was higher than Apple's, making it the world's most valuable company for the first time since 2002. (CNBC)


Amazon is testing cashierless checkout technology in bigger stores. The system tracks what shoppers pick from shelves and charges them automatically when they leave the store. (Wall Street Journal)


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

WTI crude fell below the psychologically important $50 t level Thursday for the first time in over a year but rebounded on news that Russia is warming to the idea of production cuts after watching prices fall >30% over the last two months. (LPL)


Today is the first trading day of December. That could be good news for equity bulls, as since 1950, the S&P 500 Index in the month of December has the highest average return (+1.6%) out of all 12 months. Also, it has never been the worst month of the year - it is the only month that can claim that rare distinction. (LPL)


Of all things to have to worry about. In January, Starbucks will introduce a content blocker that bans access to pornographic sites while using its free in-store Wi-Fi. (WP)


The Wall Street Journal reported a growing number of small and midsize mortgage firms are cutting staff, going up for sale, or closing down as evidence of the increasing pressure on the housing market amid rising interest rates. The decrease in nonbank mortgage lenders, which experts expect to continue, is contributing to concerns about the economy’s health, especially the slowing housing sector.


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

Another key fundamental pointing towards the positive is the acceleration of wage growth, with average hourly earnings up 3.1% from a year ago, the fastest growth since 2009. Meanwhile the employment cost index, an alternative measure of worker compensation, is up 2.8% from a year ago, also the largest increase since 2009. And don't let anyone tell you that this just shows the "rich getting richer." The fastest gains in weekly earnings are being made near the bottom of the income spectrum, not the top. (FT Advisors)


With discounts starting early and more days to shop before Christmas this year, fewer people turned out for the five-day shopping extravaganza that runs from Thanksgiving Day to Cyber Monday, the National Retail Federation said. (CNBC)


Housing market struggles continue, but outlook may be improving. S&P CoreLogic Case-Shiller's index showed home values continued to rise at a brisk pace in September (5.1%); however, growth was below levels seen in August (5.5%) and decelerated for the sixth straight month. Despite the negative trend, decelerating prices may encourage more buying activity in the months ahead as rising wages have a chance to narrow the gap. (LPL)


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

Another sign of a strong economy. The Conference Board's Leading Economic Index (LEI) is one of our favorite economic indicators. Last month it came in slightly above September and up 5.9% year-over-year (YoY).


The seven recessions since the early '70s all saw the LEI go negative YoY an average of eight months before the eventual recession. (LPL)


Plant-based protein company Beyond Meat has filed for a $100 million initial public offering, as vegan and meat alternative food products gain in popularity. (CNN)


The University of Michigan's monthly survey of consumers slipped to 97.5 in November, it was 98.6 in October's.

The "U-6" unemployment rate, sometimes referred to as the "true unemployment rate," which includes discouraged workers and those working part-time who say they want full-time jobs, is 7.4% right now. That rate was lower from late 1999 to early 2001 at the peak of the original internet boom, bottoming at 6.8%. So, by that standard the economy could be doing better. But the gap between 7.4% and 6.8% is relatively small in a data sense, and a huge decline from the peak in 2010 of 17.1%. (FT Advisors)


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

China’s demand for oil byproduct gasoline, dropped to the lowest level in 13 months, according to a Reuters.

Retail sales will rise 4.83 percent this year, compared to a 4.2 percent in 2017. Strong consumer confidence and big demand for consumer appliances, sales of which are poised to soar 15.2 percent, are the drivers. Jewelry will be up an expected 5.2 percent, and men’s apparel, up 12.7 percent. (FBN)


Online sales Black Friday jumped 23.6 percent from a year ago, according to a new report from Adobe Analytics.
The Friday after Thanksgiving this year was also the first day in history to see more than $2 billion in sales stemming from smartphones. Cyber Monday sales online are expected to set a new record of $7.8 billion, up nearly 18 percent from last year. (CNBC)


Reuters reported that the US Department of Agriculture has “paid out nearly $840 million to farmers as part of a $12 billion aid program to offset losses from the imposition of tariffs on American exports.” The top five commodities being soybeans, wheat, corn, dairy and hogs. The five states that received the highest amount of aid were Illinois, Iowa, Kansas, Indiana and Minnesota.


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

According to a new Funding Circle survey, 76% of Amazon Prime members in the US – and 77% of all consumers – “are willing to go out of their way and pay more for a holiday purchase at an independent, small local business than buy from Amazon.” Another 60% of those surveyed “said they are willing to pay 10% or more because they like the idea of supporting a local business and its local jobs, and keeping the money within their communities.” 
24/7 Wall St. has compiled a list of the 25 most innovative cities in the United States based on the metropolitan areas with the highest number of patents issued per 100,000 city residents. Corvallis, home of Oregon State University was number 10 on the list.
U.S. grain farmers are plowing under crops, leaving them to rot or piling them on the ground, in hopes of better prices next year. It's one of the results, they say, of the Trump administration's trade war with China. (Reuters)
Kroger, owner of Fred Meyer and Food4Less in Oregon, is building its first robotic warehouse in Cincinnati. It is the first of around 20 such warehouses they will build. (LI)
With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

The number of building permits issued last month (1,263k) topped estimates (1,260k) but was down from September. A pick-up in multi-unit construction starts offset a decline in single-family homes, though permits issued dropped in both sectors. Data from the National Association of Home Builders showed U.S. homebuilders' confidence dropped to the lowest level since August 2016 amid a significant slowdown in new home sales and rising interest rates. (LPL)


Corporate spreads jump. Credit markets are now sharing global stocks' angst over trade and oil. Spreads on investment-grade and high-yield corporate debt have jumped to their highest levels since December 2016, following a spike in credit-default swap prices. (LPL)


The Federal Reserve says industrial production rose 0.1% in October over the month earlier, it marked a 4.1 percent increase over 2017. Manufacturing production rose 0.3 percent in October over the prior month, which was the fifth straight month of gains.


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

With 92% of S&P 500 Index companies having reported, third-quarter earnings growth is tracking to an impressive 28.1% year-over-year increase, the highest since Q4 2010. Revenue results have also been very good, supported by strong economic growth. S&P 500 revenue has increased 8.5% year over year. (LPL)


The Energy Information Administration (EIA) reported that US crude supplies rose for the 8th straight week to 442.1 million barrels. October’s core US CPI reading came in at 2.1% Year-over-Year, aided by moderate housing price pressures from rentals. More significant price changes were concentrated in volatile categories such as energy and food. (GS)


The IRS announced tax code parameters for 2019, implementing a new method for making inflation adjustments, resulting in higher tax payments, and government revenue, over time. The move erodes some of the benefits for the Trump tax cut. (WSJ)


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.                                      

It may seem extreme, but it is about average. Last Thursday the S&P 500 gained more than 1%, making it the 50th time so far in 2018 that the index has gained or lost at least 1%. This is well above the historically calm 2017, in which the S&P 500 moved 1% only eight times. On average, the S&P 500 has moved 1% about 50 times each year since 1950. (LPL)


Ride-hailing service Uber's losses ticked up to nearly $1 billion during the third quarter and annualized growth is continuing to slow, according to the private company's self-reported financials for Q3. (CNBC)


Columbia Helicopters will retain its Aurora headquarters and all its 850 employees following its sale to the Bristow Group, based in Texas. Bristow paid $560 million, $492 million in cash and the remainder in stock. (Oregon Live)


Oregon State graduate Pat Egan will become chief executive officer of Warren Buffett’s See’s Candies in 2019 after working at a Berkshire Hathaway Inc. utility, NV Energy. He will be only the third CEO since Berkshire acquired See’s more than 40 years ago. (Bloomberg)


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.

Retail sales reverse two-month slide. Retail sales rose 0.8% in October. The U.S. consumer is the healthiest in years, aided by fiscal stimulus and modestly accelerating wages, and strong consumer demand will drive output going forward. (LPL)


Tensions are heating up over U.K. Prime Minister Theresa May's proposed plan for the country's exit from the European Union. European stocks have dropped 1% over the past two days, and global equities could endure volatility amid Brexit-related headlines. (LPL)


Trade and auto disruptions weighed on the German economy. The German economy contracted during Q3 as gross domestic product (GDP) shrunk by 0.2%. Weak auto sales were largely to blame. (LPL)


Japan's economy was dragged down by temporary factors, as GDP slipped 1.2% during Q3. Weather disruptions were mostly to blame, including an earthquake, typhoons, and torrential rain. (LPL)


Levi Strauss plans IPO that values company at up to $5 billion. The 145-year-old American icon is looking to raise between $600 million and $800 million. (CNBC)


The S&P 500 is down 15 and the NASDAQ is down 64. MSCI International index is lower.

Oil is up 97 cents at $57.41 a barrel.

Gold is up $2 at $1217 a Troy ounce.


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.          

The S&P 500 closed down yesterday, its fifth straight day of losses. It's now in the red for the month of November. 

Does market volatility seem more elevated than you are used to? Through the first half of 2018, the market saw 39 days in which it experienced a 1%+ move—more than double the number of days for all of 2017. (Capital 360)


With 90% of S&P 500 companies having reported, S&P 500 Index profit growth is tracking to an impressive 27.9% year-over-year increase, the highest growth rate since the fourth quarter of 2010. Sales growth is tracking to an 8.5% year-over-year increase. The strong top line performance, clearly boosted by a strong U.S. economy, is particularly impressive given there is no direct benefit from the lower corporate tax rate. (FactSet).


Hazelnut growers in Oregon were anticipating harvesting 52,000 tons of hazelnuts but instead processors say they are looking at between 46,000 to 48,000 tons, which is higher than last year's 32,000 tons and still a record. Hazelnut acreage has doubled in Oregon over the past decade, up to 72,353 acres. (Oregon Live) 


Chick-fil-A will begin delivering from more than 1,100 of its restaurants around the United States. (USA Today)


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.                                      

Stocks pause after back-to-back weekly gains. After rebounding from October's volatility spike over the past two weeks, investors used negative headlines tied to a few bellwether firms in the U.S., along with political tensions in Europe and Washington as reasons to take some gains off the table. (LPL)


Emerging markets equities have started to show some signs of life, having bounced nicely off of the 10/29 lows (+6.8%, slightly ahead of the S&P 500 Index). (LPL)


Oil struggling after plunging 7 percent yesterday, with surging supply and perceived falling demand. WTI has lost over a quarter of its value since early October. (Reuters)


Small business owners delivered another near record month of optimism in October. The index shed a modest 0.5 points for a 107.4 reading. Meanwhile, the percent of owners with one or more unfilled job openings was at a 45-year, all-time high level. (NFIB)


Kellogg is selling its Keebler, Famous Amos and fruit snacks businesses. It is consolidating its morning foods, snacks and frozen foods business units.  (CNBC)


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.                                      

The number of women-owned businesses is on the rise. Four in 10 companies in the U.S. are now majority-owned, operated, and controlled by women, according to CNBC.


The Wall Street Journal reported that US companies are raising prices on their products after years of low inflation. Food makers, manufacturers, and airlines are among the firms that have announced price increases.


According to the Stanford Center on Longevity one-third of baby boomers had no money saved in retirement plans in 2014, when they were on average 58 years old. Among boomers with positive balances, the median savings was around $200,000.


One-third of homeowners over the age of 65 were still paying off a mortgage in 2012, compared with less than a quarter of people in 1998 — and the median amount they owed nearly doubled to $82,000 from $44,000. (Stanford Center)


The number of people aged 60 and older with student debt quadrupled between 2005 and 2015, to 2.8 million from 700,000. (Stanford Center)

With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.                                      

According to the Mortgage Bankers Association mortgage applications to purchase a home fell 5 percent for the week to the lowest level in two years. Purchase applications were 0.2 percent lower than a year ago. Mortgage applications to refinance fell 3 percent last week and are 33 percent lower than a year ago.


Trump critic and Wall Street foe, Rep. Maxine Waters, will take control of the House's financial services committee. She has been the top Democrat on the banking panel since Barney Frank retired in 2013. (CNBC)


Kraft Heinz is selling its Canadian natural cheese unit to Italy's Parmalat for $1.23 billion. (CNBC)


The Girl Scouts has filed a trademark infringement lawsuit against the Boy Scouts of America after the Boy Scouts decided to drop "Boy" from its namesake program and start welcoming older girls. The Girl Scouts, founded in 1912, are trying to avert an erosion of its brand and membership. (CNBC)


The S&P 500 is down 10 and the NASDAQ is down 54. MSCI International index is lower.

Oil is down 92 cents at $59.75 a barrel.

Gold is down $7 at $1218 a Troy ounce.


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart.                                     

Stocks end sharply higher yesterday, following closely watched midterm elections that saw Democrats take control of the House and Republicans retain their hold on the Senate.  The surge in stocks marks the best post-midterm election rally for the S&P 500 and Dow in more than three decades.


Shares of industrial stocks including 3M and Caterpillar rose as some investors viewed the split Congress as a potential mitigator to Trump’s aggressive trade policies.  Shares of big tech companies are also climbing as the specter of regulatory crackdowns against giants including Amazon and Apple fizzled with a divided Congress.


The number of job openings in the U.S. fell in September just a month after setting an all-time high, but companies are still scrambling to find workers and offering higher pay and benefits to attract them.  Job openings slipped to 7 million on the last day of September from a record 7.3 million in August.  Even after the decline, job openings still exceed the 6.1 million Americans officially classified as unemployed.

Earnings growth surpasses prior two quarters. With about 75% of S&P 500 companies having reported, earnings growth is tracking to a 27.1% year-over-year increase, up from 25.2% last week and highest since Q4 2010. Meanwhile earnings expectations have held up well. Despite tariffs, S&P 500 earnings estimates for the next 12 months have only been reduced by 0.4% since October 1, less than the average earnings season decline. (LPL)


Data continue to show Chinese economy feeling tariff heat. The Caixin Purchasing Managers' Index showed activity in October fell to 50.1. Of particular interest was the sub-index of new business, which fell to its lowest level since 2008. All of which suggest the U.S. may have the upper hand as negotiations between President Trump and the President of China are poised to officially begin at the G20 summit later this month.


U.S. services sector still on solid footing. ISM's October non-manufacturing index came in at 60.3. Business activity and employment components were down month over month, but new orders were little changed overall. 


With Northwest Quadrant Wealth Management, a Registered Investment Advisor I am Troy Reinhart. 

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