1. The jobs picture continues to improve. New weekly unemployment claims fell 5,000 last week to 330,000, the lowest level since January, 2008. The four-week moving average fell by 8,250 to 351,750, the lowest level since March, 2008.
2. The U.S. PMI Mfg Index jumped to 56.1 in January from 54.0 in January, indicating faster expansion than analysts expected. The consensus forecast was for a slight decline to 53.0.
3. China’s economy continues to improve. China’s HSBC PMI Mfg Index ticked up from 51.5 in December to 51.9 in January, a 24-month high.
4. However, the overall euro-zone PMI improved some, from 47.2 in December to 48.2 in January, but remained in the recession zone beneath 50.
5. It was wonderful for the market when Apple shares were soaring, with Apple’s heavy weighting accounting for so much of the gains in some of the Indexes. But with Apple plunging back down the chickens are coming home to roost. After reporting disappointing earnings yesterday, Apple shares are down another 8% in pre-open trading, which has Nasdaq futures down 1.3%. Analysts who had targets of $1,000 for Apple for this year are scrambling to get them out of sight. Apple, as of yesterday’s close:
6. We remain on the intermediate-term sell signal for gold (intermediate-term technical indicators not shown in chart).
After gold topped out from its previous rally it moved into a symmetrical triangle formation. The direction of the break-out from such a formation usually determines the direction for a while. As we have been telling subscribers its latest rally attempt off the support line has our attention. It is approaching the upper limit of the triangle where it will either break out to the upside, or fail again.
So it’s interesting that gold closed down yesterday, and at least at the moment this morning it’s down another $13 an ounce, and back below its 30-day m.a.
A few casual observations.
1. It’s eye-catching when economic reports from the housing industry, and now employment, have recovered to the point of being compared to levels in early 2008, and in housing to numbers not seen since 2007.
2. As preparations are made for the upcoming budget talks, various forecasts are coming out as to for instance, how much must be cut from the annual Federal budget in order to get the national debt down by certain amounts in ten years. They all seem to be based on extending current economic growth, revenue from taxes (personal income taxes, corporate income taxes, capital gains & dividend taxes), etc., out ten years.
Do they really think the economy will not see any improvement in the rate of growth for 10 years, more people working, more closed businesses re-opening or replaced by new ones as demand increases, corporations seeing sales and profits recover further, more investors making taxable profits as the millions of frightened-off investors slowly move record levels of cash from low-yield savings accounts and bonds to investments with higher taxable profits?
That’s the kind of dire estimates that were made during the Reagan years, the last time record budget deficits and record debt levels were seen due to massive government spending efforts to pull the nation out of the 1970’s economic meltdown.
3. On a related subject, it’s interesting that the state of Florida, one of the hardest hit states in the 2008-09 meltdown; a housing industry collapse, near the top of the lists for housing foreclosures, plunges in home prices that drastically lowered the state’s revenue from real estate taxes, bank closures, high unemployment, and state budget deficits, has already recovered enough, even with unemployment still higher than the national average, that its legislature is now projecting a sizable budget surplus for 2013, proposing raises for teachers, etc.
To read my newspaper column from last weekend click here: Corporate Hoarding Of Cash May Soon Become A Big Positive!
Subscribers to Street Smart Report: The new issue of the newsletter is in your secure area of the Street Smart Report website from yesterday afternoon. There will be an in-depth Global Markets update there later today.