Economics

   This Week’s Data

    The International Council of Shopping Centers reported weekly sales of major retailers down 0.1% versus the prior week but up 3.1% from the comparable period a year ago; Redbook Research reported month to date retail chain store sales up 3.8% on a year over year basis.

    The November Institute for Supply Management manufacturing index came in at 53.6 versus estimates of 55.0 and 55.7 recorded in October.

    October construction spending was flat with September versus forecasts of a drop of 0.4%.

    October light vehicle sales rebounded to 10.5 million units versus expectations of 10.4 million units.

    October pending home sales jumped 3.7% versus the September reading.

    The ADP Employer Services report reveals continuing job loss:
    http://econompicdata.blogspot.com/2009/12/still-shedding-jobs.html

   Other

    One last set of comments on Dubai’s problems and what they could portend (long):
    http://www.american.com/archive/2009/december-2009/a-warning-from-the-desert-with-more-to-come

    The federal debt owned by foreigners (chart):
    http://www.businessinsider.com/chart-of-the-day-federal-debt-held-by-foreigner-investors-2009-12?utm_source=Triggermail&utm_medium=email&utm_campaign=Clusterstock%20Chart%20of%20the%20Day%2C%20Tuesday%2C%2012%2F01%2F09

    An update on the NY Fed’s model using Treasury spreads as a predictor of recession (chart):
    http://mjperry.blogspot.com/2009/12/ny-fed-treasury-spread-model-economic.html
   
    The DJ Economic Sentiment Indicator rises again (chart):
    http://mjperry.blogspot.com/2009/12/dj-economic-sentiment-indicator.html

    Here is an interesting take on the value of gold--relating it to the US monetary base (chart):
    http://www.ritholtz.com/blog/2009/12/albert-edwards-gold-is-cheap/

Politics

  Domestic

    My favorite liberal blogger on the latest CBO accounting of the healthcare bill (medium):
    http://slate.com/blogs/blogs/kausfiles/archive/2009/12/01/msm-comes-through-for-obama-on-health-care-premiums.aspx

  International War Against Radical Islam

    India’s role in the Afghan war (medium):
    http://www.slate.com/id/2236951/

    On Obama’s speech last night (medium):
    http://streetwiseprofessor.com/?p=2988


The Market
    
    Technical

    The indices (DJIA 10471, S&P 1108) are trading within the up trend off the March lows (10169-12103, 1087-1371); and with the really positive pin action yesterday the S&P is once again over the 1102 resistance level.  Not counting yesterday’s close so far the S&P has traded over 1102 three times only to retreat three times; so now it is above 1102 for a fourth time.  I say this only by way of observing that (1) I don’t think yesterday told us anymore about Market direction than it did the other three times it penetrated 1102 and (2) stock prices are clearly trading in a very narrow range [circa 1086-1112] as buyers and sellers duke it out over direction.

    The dollar was down big, trading firmly in a down trend--hence, if the inverse dollar/stock trade holds, as it clearly did yesterday, implying stocks are going higher.  The VIX was down 10% but remained above its prior support level, leaving in the same state of suspended animation as the S&P.

    Bottom line: Right now, technically, this is a jump ball and I see nothing substantive pointing one way or the other.
 
    The latest from TraderFeed:
    http://traderfeed.blogspot.com/2009/12/market-summary-for-december-1st-at.html

    And Trader Mike:
    http://tradermike.net/2009/12/december_1_2009_stock_market_recap

   Fundamental

     Headlines

    Some strong economic numbers out of China got the juices flowing; then according to the talking heads, investors really got jiggy with the October pending home sales number (see above).  It was OK; but did anyone notice the lackluster retail sales or the lower than expected ISM number? 

In the end, it was the declining dollar that powered gold and stock prices higher.  So in my struggle to get a handle on what will drive stock prices higher, the only thing that seems to have any correlation is the falling dollar.  And, as I have said before, that makes no sense on a long term basis; the mathematics don’t work--the dollar simply can’t decline to zero and stock prices go to infinity.  At some point, investors will realize that a weak dollar is bad for them as investors and as consumers. 

Here is another reason a declining dollar is bad (long but an absolute must read):
http://www.ft.com/cms/s/0/24b5c0c6-dead-11de-adff-00144feab49a.html?nclick_check=1

The bet I made Monday morning (selling stocks) was that we are near that point.  I may have missed it by 50 or 100 (insert your guess) S&P points; but I believe that I am close enough for government work.