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Head On A Swivel – Financial Market Blog

Economic Information – January 11, 2010

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INTERMARKET-ANALYSIS AND KEY INDICATORS SUMMARY

(SEE “HEAD ON A SWIVEL” FOR FULL REPORT WITH CHARTS)

Economic News

 There were seven US major data points released last week with pending home sales m/m showing a significant miss (-16% compared to –2.3% expectation). As well, non-farm employment was crushed on Friday with 85K loss of jobs compared to a near flat expectation. However, we have an interesting psychology occurring here as on Thursday the news was all about how important Friday’s pending employment actual/expectation number would be to the market, yet the market initially pulled back then it shook off the numbers and moved higher. For the week ISM manufacturing posted a gain (55.9 versus 54.1) and unemployment claims came in better than expected (434k versus 449K). Unemployment was steady at 10.0% versus 10.1%.  A similar story occurred in Canada as jobs fell short (-2.6% versus +20.2K) and the unemployment rate held steady at 8.5%. Big misses on material items yet no panic sell off and the VIX closes out lower. Stability and optimism has returned!?!?!?!.

This week the markets are looking for an increase in unemployment claims (438K forecast versus 434 last week). Look to Thursday as both core and total US December retail sales are announced and expected to increase for the 3rd month in a row.  The last 2 months actuals beat expectations and we wait to see if the estimates are yet again conservative. Core CPI comes out Friday morning (0.1% expectation). Expectations for each month in 2009 was for a .1% increase and 7 times the actual number was above the estimate. Canadian housing start are expected to rise slightly (161k versus 159k last week) however new building permits, a gauge of future construction activity,  are m/m expected to fall (-1.1% from 18% previous month).

 Credit Markets

Credit markets ($LIBOR, $TED and VIX) continue to remain subdued. We’ll watch these measurements to gauge banks inter-lending confidence when the world’s central banks begin to withdraw stimulus. Stay tuned.

Bonds

Bonds prices continue to fall and yields continue to rise on the improving economic outlook.  Japan bonds, another safe haven call, completed the biggest weekly price last week as global markets continued to show strength.

Currencies

The USD reversed last month’s gain and fell to a 3 week low against its major trading partners as an improving economy caused bids for commodity dollars (Aussie, Kiwi and Loonie) at the expense of safe-haven currencies.  In addition to the commodity demand a reverse of last weeks view that the Fed was nearing the end of the stimulus program turned around on the Dec 15-16 Fed minutes.  The Yen saw a change of management with Naoto Kan taking the helm as Finance Minister. Previous “management” preferred a stronger Yen but said he prefers a weaker yen and it is believed that he will put that philosophy into action to revive the Japanese sluggish economy.

 Commodities

Major commodities charts remain constructive albeit for different reasons. Gold moved up this week in hedge mode as talk of an extended stimulus program put pressure on the USD. Oil was up again as China, the world’s second biggest importer of energy product (4.1 million barrels a day) and the world fastest growing economy, recorded record Oil imports last year and projected an additional import increase of 10% this year. Natural Gas moved to its highest price in a year on a artic chill covering the Northern Hemisphere (get Al Gore another quilt!) and the reduced supplies due to problems with Norway’s Karrrstoe processing facility.

North American & Nikkei Indices

 S&P500 Index had its biggest weekly gain in 2 months and is at a 15 month high on the back on positive economic news which pushed up metal and oil prices and generally the share price of related companies. The Dow also followed trend closing up 1.8% for the week and was confirmed by the DJTA.  The Nasdaq also advanced with gainers counting for outpacing decliners 1.75 to 1.The TSX shook off disappointing employment news and moved to a 15 month high lead by gains in industrials, materials and energy stocks.  The Nikkei advanced on the week partially on the yen/$dollar losing ground which improves the local exporters outlook.

Canadian Reports

US Reports

 

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Written by thehallmarketreport - Head on a Swivel

January 10, 2010 at 11:18 pm

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