Thursday, December 21, 2006 5:26:35 PM
Bellwether Report Large-Cap Newsletter for December 21st 2006:
Holiday Blahs and Philly Fed Pressure Stocks...
Corporate Info:
I can't really say the bait and switch is in affect because the market really hasn't been able to get out of the gate. There is a sense that a lot of folks are done for the year, which means there isn't an axe to grind either way. This usually means stocks will drift.
Certainly, there are two concerns going into the New Year, corporate earnings and the status of the economy. What will the Fed do is anyone's guess. At this point, they don't have to cut rates, but simply acknowledge there are troubled areas of the economy. Right now, we're greeted mostly with threats of higher rates, and talk of inflation.
Philadelphia Region Continues to Stumble:
There is one area of the nation where the economy is clearly trapped in a sinkhole. The Philly Fed released its latest survey of business conditions in the region (PA, NJ, and DE), and not only is not a pretty picture, it's getting uglier by the day. If the rest of the nation was experiencing the kinds of trends scene in the Philadelphia region, the Fed would have to cut rates today.
General business conditions slipped to their weakest reading since April 2003, and save for a bump in November, the trend has been decidedly tepid since August. Inventories have been a mixed bag all year long, as it seems there has been a concerted effort to play inventories close to the vest. More discerning is the trend in new orders, down for the second consecutive month, it portends to future weakness in the area.
New Orders Table:
There was a silver lining to the report, prices paid, were lower for the fifth month in a row.
The Philly Fed Data Points Table:
Prices Paid Chart:
Low prices are the crux of the discussion on interest rates and the Fed; then there is the state of the overall economy. In the Philadelphia region, and many others too, higher prices aren't the main threat, but instead economies sinking even further.
Natural Gas Inventory:
Natural gas supplies fell this week by 71.0 billion cubic feet to 3.167 trillion cubic feet, which was roughly in line with the Street's expectations of a draw of 73.0 billion cubic feet. Current inventory levels remain at the upper-end of its five-year average, but the weather continues to be the real driver of natural gas.
The official beginning of winter is quickly approaching, and despite the blizzard in the Rocky Mountains, it appears most of the country will not have a white Christmas. Natural gas prices have fallen below $7.00, and are trying to fight back, but it will be hard for the bulls to grab a foothold if the temperatures remain at current levels.
I'm not so sure we can pin today's weakness solely on the Philly Fed, but it's playing a role (natural gas is a non-event today). Many times I've said the market would rather get strong economic data (and deal with the rambunctious Fed) rather than slow economic data at this stage of the game.
Market Commentary By Charles Payne, CEO & Principal Analyst of Wall Street Strategies.
Bellwether Report has partnered with Wall Street Strategies, an independent research firm based out of New York City, to provide proffesional research for our Large-Cap Members.
Holiday Blahs and Philly Fed Pressure Stocks...
Corporate Info:
I can't really say the bait and switch is in affect because the market really hasn't been able to get out of the gate. There is a sense that a lot of folks are done for the year, which means there isn't an axe to grind either way. This usually means stocks will drift.
Certainly, there are two concerns going into the New Year, corporate earnings and the status of the economy. What will the Fed do is anyone's guess. At this point, they don't have to cut rates, but simply acknowledge there are troubled areas of the economy. Right now, we're greeted mostly with threats of higher rates, and talk of inflation.
Philadelphia Region Continues to Stumble:
There is one area of the nation where the economy is clearly trapped in a sinkhole. The Philly Fed released its latest survey of business conditions in the region (PA, NJ, and DE), and not only is not a pretty picture, it's getting uglier by the day. If the rest of the nation was experiencing the kinds of trends scene in the Philadelphia region, the Fed would have to cut rates today.
General business conditions slipped to their weakest reading since April 2003, and save for a bump in November, the trend has been decidedly tepid since August. Inventories have been a mixed bag all year long, as it seems there has been a concerted effort to play inventories close to the vest. More discerning is the trend in new orders, down for the second consecutive month, it portends to future weakness in the area.
New Orders Table:
There was a silver lining to the report, prices paid, were lower for the fifth month in a row.
The Philly Fed Data Points Table:
Prices Paid Chart:
Low prices are the crux of the discussion on interest rates and the Fed; then there is the state of the overall economy. In the Philadelphia region, and many others too, higher prices aren't the main threat, but instead economies sinking even further.
Natural Gas Inventory:
Natural gas supplies fell this week by 71.0 billion cubic feet to 3.167 trillion cubic feet, which was roughly in line with the Street's expectations of a draw of 73.0 billion cubic feet. Current inventory levels remain at the upper-end of its five-year average, but the weather continues to be the real driver of natural gas.
The official beginning of winter is quickly approaching, and despite the blizzard in the Rocky Mountains, it appears most of the country will not have a white Christmas. Natural gas prices have fallen below $7.00, and are trying to fight back, but it will be hard for the bulls to grab a foothold if the temperatures remain at current levels.
I'm not so sure we can pin today's weakness solely on the Philly Fed, but it's playing a role (natural gas is a non-event today). Many times I've said the market would rather get strong economic data (and deal with the rambunctious Fed) rather than slow economic data at this stage of the game.
Market Commentary By Charles Payne, CEO & Principal Analyst of Wall Street Strategies.
Bellwether Report has partnered with Wall Street Strategies, an independent research firm based out of New York City, to provide proffesional research for our Large-Cap Members.
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