Opinion

We Need A Productivity Miracle

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Posted: Dec 07, 2021 12:41 PM
The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.
We Need A Productivity Miracle

Source: AP Photo/Richard Drew

Now, the mist across the window hides the lines

But nothing hides the color of the lights that shine

Electricity so fine

Look and dry your eyes

We are tired of all the darkness in our lives

With no more angry words to say can come alive

Get into a car and drive to the other side

Into the night, into the light

 Steppin’ Out - Joe Jackson

This market is all about folks stepping out. People are eager to get out and stay out and bask in the sunshine of life and in  the cool night skies of freedom.

The top fourteen winners in the S&P 500 are considered reopening trades. There has been a string of false starts, but this time, it feels real. 

Ironically, while the Omicron variant might be less lethal, the Delta variant is spreading rapidly. So, perhaps there will be a point when the market decides we have to live with the virus – and still find ways to thrive.

To see the chart, click here.

Message of the Market

The only thing you need to know about the market these days is where Pfizer (PFE) and Moderna (MRNA) traded (see red arrows). If they are up, chances are the broad market is down, and if they are down chances, are the broad market is higher.

To see the heatmap, click here.

Yesterday, the session began in a decidedly cautious manner, but Communication Services was up more than the Utilities sector by the close. That underscores A) hope on Omicron and B) value-seekers turning over rocks in the growth patch – particularly Communication Services stocks like Facebook (FB).

Symbol

Select Sector SPDR Fund

Last

Change

% Change

Volume

XLC

Communication Services

75.93

+1.23

+1.65

7.74 M

XLY

Consumer Discretionary

201.93

+2.28

+1.14

11.66 M

XLP

Consumer Staples

72.83

+1.26

+1.76

18.52 M

XLE

Energy

55.96

+0.82

+1.49

31.97 M

XLF

Financials

38.61

+0.58

+1.53

69.72 M

XLV

Health Care

131.11

+0.74

+0.57

15.23 M

XLI

Industrials

103.93

+1.73

+1.69

14.46 M

XLB

Materials

86.56

+1.25

+1.47

8.12 M

XLRE

Real Estate

48.50

+0.69

+1.44

8.71 M

XLK

Technology

166.70

+1.57

+0.95

18.9 M

XLU

Utilities

68.43

+1.03

+1.53

23.61 M

Broken Names

Market breadth improved, but 52-week lows remain high, especially on the NASDAQ Composite, where 657 names finished with that dubious distinction. There is some work to be done to get the broad market to better health.

Market Breadth

NYSE

NASDAQ

Advancing

2,523

2,999

Declining

860

1,749

52 Week High

53

42

52 Week Low

137

657

Up Volume

3.84B

3.39B

Down Volume

962.03M

1.70B

Portfolio Approach

Yesterday, we added a new position in Real Estate and this morning we are adding a new position in Consumer Discretionary in our Hotline Model Portfolio.


Today’s Session

More good news on Omicron, or I should say no bad news, as outside of its transmissibility, it seems tame. The markets love that, but once that coast is clear, the focus will return to the Federal Reserve.

Meanwhile, we are trying to stay focused on fundamentals even as conjecture is moving the needle a lot more than normal.

Productivity Miracle?

The 3Q 2021 Nonfarm labor productivity in the U.S. fell an annualized 5.2% from the preliminary estimate of 5.0%, and against estimates of a 4.9% drop.

It was the largest decline in quarterly productivity since the second quarter of 1960.

The news took a little starch out of the morning rally and adds questions about the productivity miracle that is needed for a roaring 2020s. The news helped the bond yields and maybe moved the needle on potential rate hikes out further.

Productivity

Labor

Output

Hours

Comp

Real

ULC

Revised

-5.2

1.8

7.4

3.9

-2.5

9.6

Prior

-5.0

1.7

7.0

2.9

-3.5

8.3

US Quarterly Production