November\u2019s surge in capital expenditures continued last month with the 3-month moving average rising at the fastest pace in over two years, marking a 28-month high. Nondefense capital goods orders excluding aircraft, a proxy for business investment provided in the monthly durable goods report from the US Census Bureau, rose 0.5% month over month (m\/m) in December, exceeding the 0.3% median estimate but decelerating from the prior month\u2019s 0.9% jump. From a broader perspective, however, overall durable goods purchases took a dive, dropping 2.2% m\/m and missing the 0.6% projection while accelerating south from November\u2019s 2% decline. The weakness stemmed from passenger airplane orders contracting 45.7% m\/m amidst more modest decreases as follows:<\/p>\n\n\n\n
- \n
- Computers and related products, 1.4% <\/li>\n\n\n\n
- Primary metals, 0.6%<\/li>\n\n\n\n
- Communications equipment, 0.3%<\/li>\n\n\n\n
- Automobiles and parts, 0.2%<\/li>\n<\/ul>\n\n\n\n
Other categories that strengthened and the amount of their expansion included the following:<\/p>\n\n\n\n
- \n
- Fabricated metal products, 1.2%<\/li>\n\n\n\n
- Defense aircraft, 0.7%<\/li>\n\n\n\n
- Other durable goods, 0.4%<\/li>\n\n\n\n
- Electrical equipment, 0.3%<\/li>\n\n\n\n
- Machinery, 0.2%<\/li>\n<\/ul>\n\n\n\n
![\"Business](\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\")
<\/figure>\n\n\n\nConsumer, Business Sentiment Trends Are Bifurcated<\/strong><\/h2>\n\n\n\n
Business optimism and investment are trending upward, but household sentiments have moved the other way, albeit modestly, with this morning\u2019s consumer confidence print adding further evidence to the bifurcation. Elevated prices and rising pessimism about employment and business conditions led to a miss in this morning\u2019s report, as this month\u2019s Conference Board\u2019s Consumer Confidence Index retreated to 104.1, arriving beneath the anticipated 105.6 as well as the prior period\u2019s 109.5. The present situation and expectations indices both contributed to the decline, decreasing from 144 and 83.9 to 134.3 and 86.5 m\/m. An uptick in 12-month inflation expectations from 5.1% to 5.3% also led to a drop in folks believing that interest rates would descend. Moreover, not one of the five major components of the survey improved. <\/p>\n\n\n\n
<\/figure>\n\n\n\nRegional Fed Surveys Reflect Deceleration<\/strong><\/h2>\n\n\n\n
A pair of regional Fed surveys pointed to a slower contraction in manufacturing conditions within the central bank\u2019s Richmond district and a deceleration in services momentum for the Dallas district. The former gauge rose from -10 in December to -4 this month, but weaknesses in new orders, shipments and backlogs were countered by buoyant expectations about the future. For the latter indicator, lighter consumption, slower hiring and tall prices weighed on the headline. It fell from 10.8 to 7.4. Similarly, however, business optimism countered some of the sluggishness in other areas.<\/p>\n\n\n\n
A Mixed Day for Earnings Reports<\/strong><\/h2>\n\n\n\n
The strength of earnings reports this morning varied within manufacturing and consumer-focused segments as illustrated by the following fourth-quarter highlights:<\/p>\n\n\n\n
- \n
- Boeing (BA) reported losses of $3.86 billion and $11.83 billion for the fourth quarter and full year. The quarterly loss per share of $5.90 was worse than the forecast. Revenue also missed expectations. The company has struggled with quality-control issues, aircraft crashes, and a machinist strike. This past summer, Boeing hired Kelly Ortberg as its new chief executive officer to right the ship. Ortberg says the company is making progress in stabilizing production, improving its culture and streamlining its business. <\/li>\n\n\n\n
- General Motors (GM) top- and bottom-line results substantially surpassed analyst expectations. Additionally, its guidance for various metrics was either in-line or above analyst expectations although CFO Paul Jacobson says the company\u2019s outlook doesn\u2019t include any impacts from potential tariffs or tax reform. While sales of electric vehicles and traditional internal combustion powered cars were strong last year, GM had special charges totaling $5 billion associated with operations in China and pulling the plug on its Cruise robotaxi initiative.<\/li>\n\n\n\n
- Royal Caribbean Cruises (RCL) provided fourth-quarter results and full-year guidance that illustrated that strong post-Covid-19 travel demand hasn\u2019t abated, with the company achieving record-booking volumes even after raising its prices. Royal Caribbean\u2019s quarterly earnings per share (EPS) exceeded analyst expectations and revenue was in-line with forecasts. It anticipates profits to jump roughly 23% this year. <\/li>\n\n\n\n
- JetBlue Airways (JBLU) posted mixed results with its quarterly loss of $0.13 per share, lower than the -$0.35 anticipated by analysts; however, its revenue sank 2.1% y\/y. Despite declining, revenue outpaced Wall Street\u2019s expectation. The company said a metric used to measure pricing power called revenue per available seat mile this year ranged from a decline of 0.5% to an increase of 3.5% relative to 2024. That disappointed analysts who expected guidance of a 6.8% increase. JetBlue also expects costs per available seat mile, not including fuel, to expand by as much as 10% this quarter. More frequent inspections of Pratt & Whitney (RTX) Geared Turbofan engines will contribute to the higher costs.<\/li>\n\n\n\n
- Kimberly-Clark\u2019s (KMB) revenue dipped 0.8% y\/y in the final quarter of 2024 and its EPS sank from $1.50 to $1.34. Revenue surpassed analysts\u2019 expectations while earnings were roughly in-line with expectations. The company is well known for products such as Kleenex tissue, Huggies diapers and Scott paper products. Kimberly-Clarks\u2019 North America net sales dropped 0.5% y\/y. Beyond the US, sales of the personal care segment and the family care & professional segment dropped 3.1% and 1.2%.<\/li>\n<\/ul>\n\n\n\n
Australia Business Conditions Improve<\/strong><\/h2>\n\n\n\n
Australian businesses strengthened their views of economic conditions in December and sentiment has almost returned to the long-term average as depicted by data from the National Australia Bank (NAB). The uptick was an improvement from the decline in November. During 2024\u2019s final month, the bank\u2019s conditions gauge climbed 3 points to +6. Improvements occurred in most sectors with the retail group entering positive territory but still trailing other categories. It was the first positive reading for the retail category since November 2023. Conversely, conditions are the strongest in the service sector. Also in December, business confidence climbed 1 point to -2, well below the long-term average. Confidence in the retail sector exhibited the largest gain while mining and construction experienced the most significant declines.<\/p>\n\n\n\n
Singapore Manufacturers Fetch Higher Prices<\/strong><\/h2>\n\n\n\n
Singapore\u2019s producer prices for goods reversed a four-month y\/y decline in December and recorded a 2.3% y\/y increase, according to the Singapore Manufactured Product Price Index (SMPPI). In November, the benchmark fell 4.0% y\/y. On a m\/m basis, the SMPPI climbed 5.8% during the last month of 2024 after having advanced 1.6% in November. The m\/m gain was driven by a 6.8% increase in non-oil items with the petroleum category dipping 0.1%. Price gains were led by the machinery and transport category with higher prices for electrical equipment. In a related matter, import prices fell 3.6% y\/y but climbed 1% m\/m. Export prices descended 3.1% y\/y while strengthening 0.6% m\/m.<\/p>\n\n\n\n
Equities Stage a Comeback<\/strong><\/h2>\n\n\n\n
Equities are taking back roughly half of yesterday\u2019s losses as market participants look ahead to critical corporate earnings results, the Fed meeting and incoming economic data later this week, including GDP, the Employment Cost Index and the central bank\u2019s preferred inflation gauge. But a return to aggressive rhetoric on the trade front from President Trump is weighing on Treasurys while propping up commodities and the greenback.<\/p>\n\n\n\n
All major domestic stock benchmarks are trading north with the Nasdaq 100, S&P 500, Dow Jones Industrial and Russell 2000 indices up 1%, 0.7%, 0.5% and 0.1%. Sector breadth is tilted to the downside, however, with just 4 segments moving higher and led by technology, communication services and financials; they\u2019re up 1.5%, 0.5% and 0.2%. Utilities, real estate and energy represent today\u2019s laggards; they\u2019re losing 2%, 0.8% and 0.8%. Turning to fixed-income, currencies and commodities, a lift in tariff concerns is weighing on bond performance, with the 2- and 10-year Treasury maturities changing hands at 4.22% and 4.58%, 3 and 4 basis points (bps) heavier on the session. There is a $44 billion offering of 7-year notes this afternoon, by the way. Pricier borrowing costs are helping the US tender, with the Dollar Index up 48 bps as the greenback appreciates versus all of its major counterparts, including the euro, pound sterling, franc, yen, yuan and Aussie and Canadian contemporaries. Increasingly fearful of disruptions to global commerce, commodity investors are bullish, resulting in gold, crude oil, silver and copper gaining 0.6%, 0.4%, 0.4% and 0.2%.<\/p>\n\n\n\n
The Uneven Impact of Tariffs and Geopolitics<\/strong><\/h2>\n\n\n\n
Today\u2019s bifurcated market action reflects how Trump bumps can affect different asset classes in distinct ways. Recent increases in Trump’s tariff threats include imposing meaningful across-the-board levies well in excess of 2.5%, with some anecdotal evidence pointing to 20% as the potential number. Meanwhile, Mexico and Canada may be served with import duties of 25% as soon as this Saturday. Against this backdrop, nervousness has been building in Latin America following President Trump\u2019s quarrel with Colombia\u2019s President Gustavo Petro, as the latter acquiesced to receiving deportees after being dealt with a 50% tariff warning. Finally, an increase in international agreements with Washington will serve to ease borrowing costs, stabilize the greenback and provide a supportive environment for equities. More clashes, on the other hand, will offer just the opposite, dealing investors with Trump bumps.\u00a0<\/p>\n\n\n\n
ForecastEx Weekly Pick<\/strong><\/h2>\n\n\n\n
Chief Strategist Steve Sosnick and Senior Economist Jos\u00e9 Torres like the \u201cYes\u201d Forecast Contract<\/a> for final fourth quarter US GDP growth coming in above 1.9%. While we will receive a preliminary view of the result this Thursday, this contract settles on March 27 when the final figures are released. The \u201cYes,\u201d currently priced at $0.67, pays out a dollar if correct.<\/p>\n\n\n\n
<\/figure>\n\n\n\nSource: ForecastEx<\/p>\n\n\n\n
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<\/figure>\n\n\n\n![\"Forecast](\"https:\/\/www.interactivebrokers.com\/campus\/wp-content\/uploads\/sites\/2\/2025\/01\/Picture4-12.png\")
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