Tolerance and Empire State Manufacturing

By Jeff Kelly on November 15, 2024

“Tolerance implies no lack of commitment to one’s own beliefs. Rather it condemns the oppression or persecution of others.”

– John F. Kennedy

“Tolerance” is one of those words we like best when it’s used in our favor.  Being tolerant of our own children is critically important. We don’t want to ruin their confidence or stunt their personal growth. However, listening to those other spoiled, screaming brats is quite another thing.

Being tolerant isn’t giving up one’s beliefs. As President Kennedy says above, it is respecting the beliefs of others. We are in a period where tolerance is in short supply. Truth is, being tolerant is difficult. It’s humbling to see the other side. We are coming into the holiday season. We all know Uncle Billy Bob is coming to Thanksgiving dinner. He’s a blow hard with so many opinions completely out of step with the rest of the family. And we know he will express those opinions in the most obnoxious way possible. Being tolerant of the old guy makes sense for everyone involved.

Tolerance is not acquiescence. It’s not giving up our views or our principles. Staying true to principles and beliefs is the most difficult when confronted with adversity. In the next weeks months and years, we are going to experience some upheaval. Deciding what’s most important to you, your family and what you are willing to tolerate is important.

It’s also important to decide what we won’t tolerate. It’s when we reach those points that people act. Everyone will make those decisions for themselves.

The markets are showing a bit of intolerance for the very high prices reached early this week. Some of the darlings of the market are down 10-20% in a hurry. It’s also interesting that some of the laggards are playing a bit of catch-up to the broad market levels. Even in the sell off today we have seen large financial companies hold at higher level. We also saw interest rates stop their incessant rise and begin to decline a bit.

The euphoria after the election is resulting in a modest correction for the broad indices. We expect this to resolve in another push to the upside over the coming month. A particularly good piece of news comes to us today from the Empire Manufacturing Survey.

• Headline = +43.1 pts M/M to 31.2 = 3Y High
• +43.1 M/M was good for the largest sequential gain ever outside of the pandemic distortion comps.
• New Orders = +38.2 pts M/M to 28, driving most the Headline increase.

The numbers are outsized but maybe it’s a sign of things to come. One can dream anyway.

CHARTS FROM THE WEEK PAST

Tariffs in 2018-2019 led to changes in the currency markets that mitigated any effect in China.

Tariffs in 2018 and 2019 didn’t lead to higher inflation.

Momentum in the labor market has slowed.

Main street is still struggling.

Food scarcity still an issue and consumer confidence is low.

After years of declines retail sales starting to move higher.

The credit cycle maybe improving.

On the left, the % saying credit is hard to find is declining. On the right credit card delinquency rates are starting to move lower.

Home Equity Loans may help the economy over the next year, After a decade of declines we are seeing growth.

Democrats fared better with the wealthy but did poorer with everyone else.

S&P 500 earnings grew 8% year-over-year vs. 3% expected.

A good quarter.

S&P performance by Presidential term.

George W Bush and Richard Nixon were the only ones negative over their term. Bush did it twice.

Trump trades have been something.

Wall Street strategists have begun to raise 2025 price targets.

Absolutely useless.

They are magnificent for a reason.

A great checklist for a market decline coming.

Big increases in water and sewer construction in the U.S.

China home sales rise for the 1^st time this year.

They have put lots of stimulus in the system.

Foreign firms continue to pull money out of China.

Bond yields and oil prices have traded together.

Now we see a big change. Are oil prices forecasting lower yields?

Holiday spending for 2024 now looks to outpace 2023.

US share of G7 gross domestic product has never been higher.

The percentage of the index represented by the US has never been higher.

Stocks are looking expensive to bonds.

By inauguration day they may look even more expensive.

U.S. Tariff history 1821-2016.

They aren’t good and aren’t replacing income taxes. But believe what you want.

Probably time for the UN to go away.

Vaccines are a great, great success story.

Don’t let a crank tell you any different.

WEEKEND HOMEWORK

RFK Jr bibliography:

RFK Jr. spent years stoking fear and mistrust of vaccines. These people were hurt by his work

Sometimes the Truth is the Truth. Wilson wasn’t who he has been made out to be. A very good read.

More than a century after he dominated American politics, Woodrow Wilson still fascinates. With panoramic sweep, Woodrow Wilson: The Light Withdrawn reassesses his life and his role in the movements for racial equality and women’s suffrage. The Wilson that emerges is a man superbly unsuited to the moment when he ascended to the presidency in 1912, as the struggle for women’s voting rights in America reached the tipping point.

The first southern Democrat to occupy the White House since the Civil War era brought with him to Washington like-minded men who quickly set to work segregating the federal government. Wilson’s own sympathy for Jim Crow and states’ rights animated his years-long hostility to the Susan B. Anthony Amendment, which promised universal suffrage backed by federal enforcement. Women demonstrating for voting rights found themselves demonized in government propaganda, beaten and starved while illegally imprisoned, and even confined to the insane asylum.

Lots to process this weekend. I’m going to do some good exercise, write a bit, read a lot and maybe just think quietly. There is much to process in our world. Emotional reactions don’t change facts. We must deal with the world as we find it, not how we wish it to be. Be the light. Help the friends that are struggling. It will make your day!