Give Thanks

It’s a short trading week in the US, where Americans will gather with family members and plus-ones to eat themselves into a gravy-drunk stupor in celebration of the time their ancestors were bailed out by the locals, who didn’t have the heart to let entire communities of pale, hapless settlers freeze and starve.

No Native Americans will be invited to Thanksgiving feasts across the country. What few are left will spend November 23 drinking vodka on reservations, which is to say November 23 will be just like November 22 and every other day since their culture was systematically purged by multiplying European outcasts unironically trumpeting the many virtues of freedom and waving around declarations about equal rights on the way to committing some of the worst, race-based atrocities yet known to mankind.

Think about that when you’re forced to hold hands with your half-sister’s fourth fiancé or your second cousin’s adult child at the dinner table this week. When it’s your turn to say what you’re thankful for, say “I’m thankful I wasn’t on The Trail of Tears,” which Wikipedia at least has the decency to identify as an “ethnic cleansing” now. Points for historical accuracy.

Alternatively, you could express gratitude that you’re not stuck in one of the world’s conflict zones, where not losing a child to a bullet or a missile counts as a good day. Or you could be thankful you didn’t slip off the success ladder and through the cracks into HUD’s annual point-in-time estimate of America’s half-million homeless population.

I’m just joking, upper-middle-class America. Don’t trouble yourself with such things. Enjoy the ill-gotten spoils of conquests past, and the many undeserved lucky turns that’ve befallen you in your sheltered lives and silver platter careers. And don’t forget to Google the NFL teams scheduled to play on Thanksgiving this year. You’ll want to make the one blue-collar male head of household you were forced to invite feel at home, and the best way to do that is to feign familiarity with football, the sole source of psychological amnesty in his otherwise perpetually trying paycheck-to-paycheck existence.

For markets, this week is always the same. A handful of people will work on Monday and into Tuesday. Everyone will be traveling or “traveling” (with scare quotes) on Wednesday. Nobody will even pretend on Friday, when markets will be open for no discernible reason other than to chance a selloff into hopelessly illiquid conditions in the unlucky event something goes wrong (think: Omicron).

As far as fundamental inputs this week, the November FOMC minutes are due Tuesday. I’d say they’re stale, but that’s not quite accurate. The financial conditions discussion is even more relevant now than it was a few weeks ago. The Fed’s rationale for skipping the final hike tipped by the September dot plot revolved around the idea that tighter financial conditions engendered by the selloff at the long end of the Treasury curve could “stand in” for a rate hike. But a run of soft data, including payrolls and CPI, served to negate a meaningful portion of that FCI tightening.

Recall that the post-CPI stock and bond rally (and attendant dollar weakness) served to ease market-based financial conditions by the most in a year. The term premium is now just 7bps. It was 48bps at the highs last month.

During Jerome Powell’s press conference earlier this month, he said that for market-based financial conditions to impact monetary policy decisions, any tightening impulse would have to be “persistent.” Both Goldman’s FCI gauge and the term premium have now retraced around half of the tightening seen from July through mid-October. Suffice to say that tightening was “transitory.”

Still, the Fed’s undoubtedly pleased with the evolution of the incoming data, so the minutes will be parsed in the context both of easier financial conditions since the meeting and a more favorable macro environment for the soft landing narrative. Investors (the ones who aren’t “traveling” early when the minutes are published on Tuesday) will try to determine the extent to which the discussion at the November gathering indicated that the Committee would be inclined to hike again if the FCI tightening were to reverse. Any such tasseography will be an exercise in futility.

Also on the docket in the US: Existing home sales, which’ll probably show a decline for October. It’d be the 801st consecutive monthly drop. I’m just joking. It does feel that way, though. A decline would mark the fifth consecutive and the 19th in 21 months.

The final read on University of Michigan sentiment is due Wednesday (investors will be looking for any downward revision to the highest longer-term inflation expectations print since 2011), and flash reads on S&P Global’s PMIs for November will be released into the void on Black Friday.