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Chicago PMI came in at 52.4 and 52 was expected. A slight increase, a positive, but not overwhelming.
 
Existing home sales, consumer confidence up
WASHINGTON - U.S. existing home sales rose in November for a second straight month and consumer confidence hit an eight-month high in December, according to reports on Thursday showing the economy ending the year on a solid note. Other reports showed business activity expanded in the U.S. Midwest this month, suggesting the ailing factory sector could be finding its footing, while initial claims for state jobless benefits edged up slightly last week. Prices for U.S. government bonds fell, the dollar rose and stocks pared losses after the data, which was stronger than expected. Traders saw the data as lowering chances the Federal Reserve would cut interest rates early next year.
http://news.yahoo.com/s/nm/20061228/bs_nm/usa_economy_dc_4
 
I expected the good news today to be a positive market mover. While the market was off; you would have thought it would have done better. So yesterdays run up might have been a buy the rumor and sell the news situation.

So let’s see if I got this right…..good news is bad news because everyone is obsessing about the fed and if they’ll raise rates and bad news is good because it eases fears of future rate increases. On the other hand…..sometimes good news is good because the economy is strong and the market can expand and sometimes, just sometimes, bad news is bad.

The problem, at least for me, is to figure out when good news is good and …..oh to heck with it!
 
Here is the economic calendar for next week. Next week on Jan 5th we have employment numbers coming out. It is being forecast that the numbers will roll over from the prior month with a drop in non-farm payroll. If there is a significant drop in payrolls I’ll be surprised (it wouldn’t be the first time :D) because most of the economic data this quarter has been very positive.

http://biz.yahoo.com/c/ec/200701.html
 
Economic Calendar: 03 - 05 January

Wednesday
10:00 AM Construction Spending
10:00 AM Institute for Supply Management Index
2:00 PM FOMC Minutes
5:00 PM Auto & Truck Sales

Thursday
8:30 AM Initial Jobless Claims
10:00 AM Factory Orders
10:00 AM Institute for Supply Management Services

Friday
8:30 AM Average Workweek
8:30 AM Hourly Earnings
8:30 AM Nonfarm Payrolls
8:30 AM Unemployment Rate

http://biz.yahoo.com/c/ec/200701.html
 
U.S. home loan demand rises despite higher rates
NEW YORK - U.S. mortgage applications rose last week, led by increased demand for home purchase loans even as interest rates climbed for a fourth consecutive week. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinance and purchase loans, for the week ended December 29 increased 3.6 percent to 575.6. The index stood at 555.8 in the previous week, which was its lowest level since early August. The MBA said the four-week moving average of mortgage applications is down 2.8 percent. Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.22 percent, up 0.10 percentage point from the previous week. Four weeks prior, 30-year mortgage rates sank to 5.98 percent, the lowest level since October 2005. Interest rates were also above year-ago levels of 6.15 percent. Fixed 15-year mortgage rates averaged 5.93 percent, up from 5.84 percent. Rates on one-year adjustable-rate mortgages (ARMs) decreased to 5.84 percent from 5.87 percent. The ARM share of activity decreased to 20.4 percent from 23.1 percent the previous week, its lowest since July 2003. The MBA's report precedes separate data this week gauging the state of the U.S. housing market. The National Association of Realtors will release data on pending sales of existing U.S. homes in November on Thursday. The MBA's survey covers about 50 percent of all U.S. retail residential loans. Respondents include mortgage banks, commercial banks and thrifts.
http://news.yahoo.com/s/nm/20070103/bs_nm/usa_mortgages_mba_dc_1
 
U.S. Dec. ISM 51.4% vs. 49.5% expected

WASHINGTON (MarketWatch) - The U.S. manufacturing sector expanded again in December following a rare contraction in November, the Institute for Supply Management reported Wednesday. The ISM manufacturing sentiment index rose to 51.4% from 49.5% in November. Readings over 50% indicate the sector is growing. Economists were expecting the index to remain below 50% at 49.5%. The ISM index is considered to be one of the best real-time economic indicators. The production index rose to 51.8%, the new orders index rose to 52.1%, and the prices paid index fell to 47.5%

http://www.marketwatch.com/news/sto...A6C27C7-9ACE-49C0-AF6A-4572625753AB}&dist=bnb
 
In my wanderings around the internet tonight I’ve notice some people focusing on the jobs report due out tomorrow at 8:30am (ET). I don’t know if this is a bad news/good news situation. So hang onto your hats tomorrow….might be a wild ride. Here’s hoping it’s all up. :D
 
January 06, 2007

Double Edged Sword - Productivity vs. Consumption
by Gary Tanashian


Today we can the incessant technical analysis and turn to an issue that is fundamentally critical in trying to determine our future investment positions.

Peter Schiff's article entitled More Consumption Less Production inspired some interesting responses on Safehaven.com's "Talk Back" feature. Interesting to me anyway, given my long time participation in the US manufacturing sector. From Mr. Schiff's article:

December's larger than expected jump in non-farm payrolls is predictably being touted as evidence of a more vibrant U.S. economy. Unfortunately, the data does not support this conclusion. The bloated service sector added 178,000 jobs, while manufacturing shed another 12,000 jobs. What this means is that 178,000 more workers will be consuming goods while 12,000 fewer will be making them. The result will be larger trade deficits that merely compound already stretched global imbalances and exacerbate America's inevitable day of reckoning.

A service sector can only exist so long as it is supported by a vibrant manufacturing sector. The reason is simple. People employed in the service sector consume goods but do not actually produce any of them. Therefore they must rely on others, who presumably benefit from their services, to produce goods in their stead.



There is hype everywhere; bullish and bearish. American manufacturing workers are most definitely feeling a strain on the whole. As a manufacturing employer I can tell you that I have felt the strain many times myself (just this past week I found out that a large customer had attempted an "outsource" to China on a critical medical component that we have produced as a sole source for the last five years. Well, "China" screwed it up and we remain on firm footing - for now. But these are the ever-present potential hazards in the minefield known as the global economy. We take the challenge seriously and are committed to winning. What other choice is there?

I suppose the main point I am trying to make is that investors should attempt to meet each new day with an open mind and a serious attitude. Nobody, but nobody knows what will happen or where we are going. There is a spectrum encompassing everything from technological nirvana and global productivity to the fear of the dreaded "Amero" (memo to global elitists if you exist: that is a really tacky name, how about something like the "Monopo") and it is the job of investors, if they are serious, to approach it all with balance and thoughtfulness. My personal stance remains one in which I actively and optimistically participate in the real economy with hopes for the best, but also with extreme awareness as to the size of that elephant.



http://www.safehaven.com/article-6651.htm
 
Just got back into town and I noticed Tech is back…..welcome back. I also noticed that I didn’t post this week’s calendar. So here it is;

http://biz.yahoo.com/c/ec/200702.html

The Retail Sale report due out on 1/12 is the big one for the week. This is for December and will reflect the Christmas sale for ’06 and let us know how the retail trade did. I don’t think the report includes the sales of gift cards which could have a impact on the numbers. It is rated a A- for importance so we’ll want to keep an eye on it. This week also starts the earnings reports for companies so that may overshadow some of the economic reports.
 
Sorry I posted that to soon, I'll keep looking for some info that will help us out and not lead us down the wrong path.
 
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Based on what I’ve seen the Euro Zone did okay during Christmas. I did a search on Google and most of the info was positive.

I don’t know about the U.S. Markets, I know in my part of the world traffic looked light at the malls and around town during Christmas shopping. But that may not be a good indicator; I did most of my shopping on line. I do remember some stories during the period that indicated that retailers had to have some deep discounts to entice shoppers. Also gift cards are not factored into the report; they could account for a large part of store sales.

I’ll keep an eye out for any info on the subject.
 
... retail has changed so dramatically the past couple of Xmas seasons due to online shopping. With the report being rated an A, this may be outdated in terms of importance. So many people buy so much online from more and more small boutique sites not just the Amazon's... brick and mortar retailers are just catching up to the online boom. If this report doesn't wow the market, earnings could combat it, but who really know how to gauge the timing of how the market will react to the news. sounds like more volatility and more swings are ahead. A definitive pattern would be nice for the S fund.
 
2006 Christmas Sales in Major Overseas Markets and Retail Outlook for 2007 Content provided by:




(mainly based on feedback from TDC's network of offices located in major markets and business centres around the world)
Overview
• Market-wise, sales increases were recorded for the US and the major EU markets. In Asia, retail performance of the mainland was encouraging, while Japan also showed stronger year-end sales.
• Product-wise, consumer electronics, particularly flat-panel TVs and MP3 players, were a big hit. Video games were another hot seller, but clothing sales were hampered by the mild weather.
• Next year, consumption in the US will grow at a slower pace. Spending in the EU and Japan will also moderate a tad. However, sturdy expansion should take hold on the mainland.
http://www.tdctrade.com/econforum/t...=198&w_nid=1779&w_cid=755427&w_idt=2007-01-02

Okay, I think this has some semblance of reality…..or at least how I perceive it. :D This is a world wide outfit headquarter in Hong Kong. So we may see an increase, but not a large increase.
 
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