Mixed Economic News ...

Some mixed economic news this morning:

• The good news was that initial jobless claims came in at 343K, significantly below the 370K consensus.  Of course, the previous week's figure was revised higher by 2K.  Overall, news of initial claims below 350K is a bit encouraging.  The last time that the seasonally adjusted initial claims were below 350K was in early Oct.  We note that such good news could ease the excitement over another Fed QE.
• The less encouraging news consisted of Nov. PPI falling 0.8%, more than the economists' 0.5% decline estimate.  Core PPI, which excludes food & energy, increased 0.1%, but still below the 0.2% consensus.  But do not be fooled.  While energy costs declined 4.6%, food costs increased 1.3% in Nov.  We do not consider this good news.  Although volatility is expected in food & energy PPI, we note that Nov.'s 1.3% increase in food inflation followed a 0.4% increase in Oct.  By the way, food is a necessity.
• Nov. retail sales numbers were mixed.  Overall, they increased by 0.3%, below the 0.6% consensus.  However, excluding auto and gas, retail sales went up 0.7%, beating the 0.5% estimates.  This was driven mainly by a 2.5% increase in sales at electronics & appliance stores, which we think is partially due to the upcoming Christmas Holidays and to the rebuilding going on post-Sandy.  By the way, speaking of electronic stores, BBY (Best Buy Co.) is up nearly 18% in pre-market.  It appears that auto sales did not recover as quickly as economists thought.  Excluding only autos, Nov. retail sales were flat, meeting expectations.  Total motor vehicles & parts dealers' sales went up 1.4% in Nov., not nearly as healthy of a gain as Oct.'s 5.4%. 

 

CPI and industrial production & capacity utilization will be reported tomorrow morning.  We posted our projections of the last two earlier this week.  S&P 500 futures are pretty much flat, while gold has dipped below $1700 and front month oil futures are down slightly, trading at $86.6.