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Beige Book Clarifies Economic Prints Elsewhere

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On a day in which President Trump has made history for being the first U.S. president to be impeached a second time, markets were flat-to-up as of the Hump Day close. No new record highs were set this afternoon. The Dow finished almost exactly breakeven, -0.03%, while the S&P 500 and Nasdaq gained +0.23% and +0.43%, respectively. The small-cap Russell 2000 lost 0.75% on the day, but remains up 37% since Halloween.

Democrats in the House, along with 10 Republicans, have accused the president of inciting an insurrection, which of course refers to the forced entry of a mob into the Capitol while Congress was in session certifying President-elect Biden’s electoral win, a week ago. But while markets were wholly unbothered by the spectacle this time last week, the indexes still demonstrate a clear ability to not get spooked or somehow burdened by this series of events.

This afternoon, a new Beige Book was released. This survey goes through 12 districts (cities) around the country, much as the Federal Open Market Committee does. Most districts reported modest increases, such as in Chicago, Atlanta and Minneapolis, though Philadelphia and Cleveland both revealed declines while St Louis and Kansas City were flat. Though labor markets improved in Manufacturing, Construction and Transportation, Leisure & Hospitality saw deep cuts — much as we witnessed in last week’s non-farm payroll reports, which saw the space drop nearly 500K jobs last month.

None of this will come as a shock to you unless you completely missed last week’s jobs numbers. The pandemic rages on and its economic hinderances are very real. But it’s somewhat comforting to see agreement from disparate economic surveys — at least we can agree where we’re currently headed.

Covid-19 vaccinations should bring about an economic recovery by June according to this latest Beige Book; the next two quarters posit many continued challenges. Bank loan volumes were flat, though there is some expectation that this will pick up will the ushering-in of new stimulus lending programs from the federal government. The Retail shift to e-commerce has “intensified,” while increased Covid-19 cases and subsequent business shutdowns harmed the economy on Main Street, and looks to continue to do so, near-term.

Tomorrow brings us the first of the big Q4 earnings reports when Delta Air Lines (DAL - Free Report) reports before the opening bell. This will be followed by Citigroup (C - Free Report) , Wells Fargo (WFC - Free Report) and Dow component JPMorgan (JPM - Free Report) on Friday morning. Next week opens the spigot for Q4 earnings activity.

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