Archive - Dec 30, 2010

Even as economists were expecting a contraction in December from the November print of 62.5 to 61.0, the Chicago PMI climbed to 68.6 in December, an unprecedented 15th consecutive month surge and the highest reading since 1988! In terms of specific indices: Production reached its highest levels since October 2004; New Orders improved to 2005 levels; Employment reached its highest level in more than 5 years; Priced Paid accelerated to its highest point since July 2008. And while inventories and "prices paid" demonstrate that the prevailing weakness across inventory accumulation and margin pressures as seen in other diffusion indices persist, there was strength in most verticals. Then again, as the PMI is a B-tier indicator at best, it is unlikely that the Fed will actually look at it in determining whether or not to end its monetary stimulus. But be sure it will be trucked out to validate any stock ramp in the next several hours.

Night on the town.

It appears someone, even if that someone is the traditionally bearish John Taylor, finally gets the fundamental issue at the core of the global financial and economic problem: "We see the health of world economy as being driven by the implied strength of three economic centers: the US, China, and the Eurozone... Each of these three centers has a problem in that the amount of debt is too high and the assets against that debt are unable to throw off enough cash to support it, much less retire it."

And the year end seasonal divergence starts: while seasonally adjusted claims came at 388,000, a 34,000 drop from the prior week, and 30k below consensus, it is the Non-Seasonally adjusted number which probably provides a far better indication of what is happening: and at 521,834 it was a 24,879 increase from last week's 497k. Additionally, the 99 week cliff continues impacting more and more claims recipients: a total of 150k people dropped from EUCs and Extended claims. Lastly continuing claims increased on a Seasonally Adjusted basis by 57K to 4.128MM even as the actual NSA number declined. Lastly, last week's slightly better than expected print of 420k has been revised to what would have halved the number to the expectation of 424k. We will soon chart how in 2010, the BLS revised upward (i.e. adversely) almost 100% of its initial claims data in the subsequent week.

The future of media lies in creating truly compelling content, not iPad apps or Flash gadgets. Let's get back to the old school when media outlets broke truly investigative stories and they reported the news in lieu of having it reported to them. Isn't there a reason why ZeroHedge is so successful with absence of iPhone app, flash animation, etc.?

• China Manufacturing Growth Slows as Policy Tightened (Bloomberg)
• Why I Don't Believe In This Santa Rally (WSJ)
• Who Is Ron Paul? (National Review)
• A True 'Japan Inc.' Could be on the Way (WSJ)
• Forecasters Warn UK Jobless Rate Set to Nudge 9% “ (FT)
• Three Hedge Funds Got Inside Data From Consultant, U.S. Says (Bloomberg)
• China To Enhance Regulating Property Market in 2011 (China Daily)
• BP Facing New Legal Threat Over Gulf Spill (Independent)

The main news out of the US, Europe and Asia shaping today's markets.

Claims, Chicago purchasing managers’ index, pending home sales, and the Fed’s balance sheet…