Markets soar on strong economic data

Stocks surged out of the gate & never looked back.  The Dow shot up 190 remaining at its daily highs, advancers  over decliners 4-1 & NAZ was up 50.  Bank stocks were market leaders taking the Financial Index higher.

S&P 500 FINANCIALS INDEX

Value	196.79
Change	2.66  (1.4%)

MLPs were lower as the index fell 1 to the 355s, hardly of concern to the bulls.  REITs were also mushy with the index up only a small fraction in the 215s.  Junk bond funds (stocks with high yields) had good gains while Treasuries sold off.  Treasuries fell amid speculation the European Central Bank may take additional steps to prevent the euro region’s debt crisis from spreading diminished the appeal of US securities as a safe haven.  The yield on the 10 year Treasury bond rose a whopping 12 basis points to 2.91%, near its highest levels in 4 months.

Treasury yields:

U.S. 3-month		0.16%
U.S. 2-year		0.51%
U.S. 10-year		2.92%

Alerian MLP Index   ---   2 weeks



Dow Jones REIT Index   ---   2 weeks



10-Year Treasury Yield Index   ---   2 weeks




Oil rose benefiting from talk yesterday about $100 oil.  The $85-90 zone is the high end of its trading range over the last 2 years.   Meanwhile gold is resting. 

CLF11.NYM

...Crude Oil Jan 11

...85.36

... 1.29

(1.5%)

GCZ10.CMX

...Gold Dec 10

.....1,385.80

... 0.80

(0.1%)

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Construction spending in the US rose for a 2nd straight month in Oct, pushed up by growth in residential building & gov projects.  Construction spending increased 0.7% in Oct, matching the Sep gain according to, the Commerce Dept (marking the first time that construction activity has risen for 2 straight months since Mar & Apr). Spending rose to an annual rate of $802.3B.  However, construction spending is still 33.7% below the peak hit in Mar 2006.  Much of the strength came from a 2.5% rise in private residential construction, the biggest one-month gain since Apr & pushed activity in this category to an annual rate of $229.6B.  Spending on residential projects was up 0.6% in Sep after 4 straight monthly declines.  Spending on nonresidential construction projects dropped 0.7B to an annual rate of $252.2B. Declines in construction of office buildings, shopping centers & hotels led to the drop.  Spending on gov projects rose 0.4% to an annual rate of $320.5B.  Federal building increased 0.9% to an annual rate of $33B, an all-time high on records that go back to 1992.  Spending on state & local projects rose 0.4% to a rate of $287.5B.  The good news in residential spending may not last.  With the 10 year Treasury yield up 50 basis points in the last 2 months, mortgage rates are climbing (from their record low levels) while home builders remain in "challenging" times.

Construction Spending in U.S. Unexpectedly Climbs on Residential Projects

Change in residential spending - 1 year





Research firm comScore reported Cyber Monday revenue rose 16% from a year ago to $1.0B, the first one-day spending total above $1B ever! Since the beginning of Nov, online sales are up 13% to $13.55B.  Meanwhile, another company, Coremetrics, found Cyber Monday sales rose 19.4% over last year.  Cyber Monday was also PayPal's biggest day ever as online payments rose 19% from last year.  Though it is growing quickly, online spending makes up only 8-10% of total holiday spending.  ComScore said the number of buyers online increased at a slower rate than total spending, up 4% to 9M. The average shopper spent 12% more, at $114.24 each, according to the data.  ShopperTrak data shows revenue at stores in shopping malls was flat over the weekend following Thanksgiving, but traffic rose 2.8%.

Cyber Monday sales top $1 billion for first time AP


The new month started with the bulls taking control of the markets (after last month's drab performance).  But it's interesting that MLPs & REITs were left behind.  The residential data looks suspicious to me with housing starts in the doldrums.  The important jobs report on Fri will give a better idea about how the recovery is progressing.


Dow Jones Industrials   ---   2 weeks

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Euro debt concerns sink markets

Stocks sold off at the start but are trying to rally.  The Dow fell 52 taking it near 11K, decliners over advancers 5-2 & NAZ was down 27.  Banks are giving back yesterday's gains.


S&P 500 FINANCIALS INDEX

Value	194.02
Change	-1.50  (-0.8%)

The MLP index fell 1½ to the 355s where it has been all month while the REIT index was off 1½ to the 214s.  Junk bond funds were slightly lower.  Treasuries rose on growing worries about European debts. The yield on the 10 year Treasury bond fell 5 basis points to 2.77%, a 2 week low.

Treasury yields:

U.S. 3-month		0.16%
U.S. 2-year		0.47%
U.S. 10-year		2.77%

Alerian MLP Index   ---   2 weeks



Dow Jones REIT Index   ---   2 weeks



10-Year Treasury Yield Index   ---   2 weeks




Oil dropped from the highest price in 2 weeks on concern that the European Union may have to bail out more member states after Ireland agreed to a rescue package. Gold gained for a 2nd day as speculation Europe’s debt woes will worsen.

CLF11.NYM

...Crude Oil Jan 11...

85.50

..... 0.23

(0.3%)

GCZ10.CMX

...Gold Dec 10

....1,384.60

... 18.60

(1.4%)

Gold Super Cycle Link!! Click Here

A monthly survey shows Americans' confidence in the economy rose in Nov to the highest level in 5 months amid more hopeful signs, an encouraging sign at the beginning of the holiday shopping season. However confidence remains weak as Americans grapple with high unemployment.  The Conference Board said its Consumer Confidence Index now stands at 54.1, up from a revised 49.9 in Oct & above expectations of 52.0. This reading marks the highest point since a 54.3 in Jun.  The measure of sentiment about present conditions increased to 24 in Nov from 23.5 a month earlier & the gauge of expectations for the next 6 months rose to 74.2 (the highest since May) from 67.5 in Oct.  The share of consumers who said jobs are currently plentiful rose to 4% this month, while those who said jobs are hard to get increased to 46.5%.  Improvement sounds good, but they're coming off low levels & the increase for those who say jobs are hard to get is disturbing.  

U.S. Consumer Confidence Rose in November to a Five-Month High

Consumer confidence - 1 year




Present conditions - 1 year



Expectations for next 6 months - 1 year



Jobs are hard to get - 1 year





Cyber Monday online sales rose 19% yesterday, the biggest internet shopping day of the year so far according to research firm Coremetrics.  The average order rose 8.3% to $194.89. Sales of luxury goods rose 24%.  Cyber Monday is an indicator of how the rest of the holiday season is shaping up.  Online retailers will account for 7% of total retail sales in the US this year, up from 6% last year, according to Forrester Research.

U.S. Online Sales on Cyber Monday Climbed 19%, Coremetrics Says



President Obama & Rep congressional will battle over taxes into a face-to-face meeting with no breakthrough expected soon as Reps show no sign of compromise.  Obama plans to host key Reps & Dems  at the White House & taxes are at the top of their agenda. Neither side anticipated the meeting would lead to an immediate agreement on extending Bush-era tax cuts that expire at the end of the year.  Reps went into the meeting insistent that tax cuts for all Americans be extended, even for the wealthiest ones.  If no agreement is reached, taxes on all Americans would increase, a new year shocker that would increase pressure on Washington to act.

• Obama, Republicans in tax face-off at White House- Reuters

Buyers should have come out after the consumer confidence numbers, but not today.  Markets are paying more attention to Euro debt problems which are getting larger every day.  Treasuries are benefiting but not as much as would be expected.  Gold shot up today, the kind of bounce Treasuries would receive if market conditions were better for them.  Meanwhile Dow is barely hanging in there above 11K where it was at the start of Oct & Apr.If Euro debt problems worsen, Dec could be another bad month (like May).. 

Dow Jones Industrials   ---   2 weeks

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