Via Rational Capitalist Speculator ,
This objective report concisely summarizes important macro events over the past week. It is not geared to push an agenda. Impartiality is necessary to avoid costly psychological traps, which all investors are prone to, such as confirmation, conservatism, and endowment biases.
+ Contrary to bearish pessimism of disunity in Europe, it’s important to understand that actions speak louder than words. Bickering amongst Europe’s leaders is how things get done there. An agreement to ease the terms on emergency aid to Greece  as well as stated commitments to apply “further measures and assistance” signals that Europe is slowly taking care of business. Steps are being taken  to unite the region. Sovereign yields in Spain and Italy are falling  as a result, indicating financial and economic stabilization .
+ The bears point at weakening consumer confidence has a harbinger of weak holiday sales. Not so  says weekly sales metrics from Redbook  and the International Council of Shopping Centers , which show a successful  start to the holiday shopping season . The National Retail Federation says  that this year’s Black Friday weekend was the busiest ever. Meanwhile, Cyber Monday sales rise 30% from a year ago .
+ Resilient consumers are buoyed by the positive wealth effect of rising  home prices . They have bottomed  and falling inventory levels (due to increased buying activity) will ensure that positive trends in prices will continue. Housing is now a major driver of the recovery .
+ The U.S. understands that it cannot rock the boat with regards to China’s economic restructuring. Patience will be practiced  and the U.S.’s strategy will focus on continued diplomatic pressure, instead of myopically labeling China a currency manipulator thereby raising the risk of protectionism. As the global economy restructures, companies will increasingly find the U.S. as a great place  to establish manufacturing operations .
- Words mean little in Washington. After weeks of announcing their embrace of cooperation in the face of the fiscal cliff, both Democrats  and Republicans  are starting to play a game of chicken as it approaches . Business investment has drastically slowed, manifesting itself in stalling economic growth along with falling revenue growth . The 3-month average reading for the Chicago Fed’s National Activity Index  has fallen to the lowest since 2009 and is negatively affecting  the job market . Increasing downside risks are clearly being ignored;  complacency  is the order of the day.
- The Shanghai Composite in China closes under 2,000  for the first time since the dark days of 2009, clearly not a bullish signal for those forecasting a pick up in growth. Check out the country’s most popular “nail house ” .
- Economic activity in Europe remains in the doldrums and is a clear threat to global growth . Italian consumer confidence sinks  from 86.2 to 84.8 in November. Continued weakness in the country’s economy will be a consistent tailwind for anti-austerity/anti-Europe Beppe Grillo’s 5-Star movement, creating political uncertainty  in a country currently off of investors’ radars. In Spain, an overhaul of the country’s financial system will lead to even more job loss . In France, political meddling  in the economy will lead to inefficiencies. Greece is turning into a “slummy country ” before our eyes. And finally, rumblings  from Britain may indicate a desire to exit the EU.
- Geopolitics  will be a consistent wildcard in the coming months, resulting in continued uncertainty and reduced investment/growth. Ehud Barak’s retirement  could open the door to a more aggressive defense minister, which is particularly concerning given Israel’s current predicament with Iran. Meanwhile, Turkey has requested NATO involvement, which could create a flashpoint  between UN Security Council members. Meanwhile, tensions are simmering in Egypt . And finally in North Korea, rumors of another missile test  are disseminating.
- The U.S. housing market is not poised for a rebound. At best, it will be a very slow recovery, contributing a feeble tailwind for the economy. New Home Sales for October  fell and last month’s result was revised sharply lower. Meanwhile, mortgage applications are signaling further tepid growth at best.