New 13-month peaks early in the week and now . . .hesitation. Ninety minutes before the opening bell, S&P 500 futures are off 10 points to 1,098 and Dow futures are 66 points lower at 10,338.
With equities taking a dip, other assets considered risky are following suit. WTI Crude is trading 70 cents lower at $78.88 per barrel and Spot Gold is $10.87 lower at $1134.63.
As President Obama warns of accumulating too much debt, he is also tapping into unused portions of the TARP funds, sending mixed messages to the market. Meanwhile, investors are concerned about the US housing market, trade relations with China, and the broad decline of the US dollar.
Still, the dollar is maintaining its safe-haven status and firming against multiple currencies this morning.
BMO’s Sal Guatieri notes that risk aversion is also helping the bond market.
“Treasuries are a bit firmer, buoyed by yesterday’s mention from the President of a possible double-dip recession ―if the government doesn’t deal with its deficits ― and the St. Louis Fed’s Bullard of possible steady rates until 2012 (if the Fed’s behaviour after the last two recessions is any guide to the future).”
Key Events Today:
8:30 ― None of the analysts surveyed by Bloomberg expects the weekly look at Jobless Claims to see fewer than 500,000 initial claims in the week ending Nov. 14, but with the prior week’s level dropping 12k to 502k, it’s certainly a possibility. The consensus expects to see 504k claims, but as I’ve written before, most “estimates” are simply a fusion of the latest data with the four-week average.
Still, the weekly numbers aren’t close to indicating job growth. “The best thing we can say about the labor market right now is that it may be getting worse more slowly,” said Fed chairman Ben Bernanke on Monday:
10:00 ― The Leading Indicators Index, a broad composite index that attempts to track turning points in the economy, has been expanding for six consecutive months. After GDP expanded by 3.5% in the third quarter it’s no surprise that October should continue growing, with most components signalling stabilization or a rebound.
“A 2.2% increase in the average stock price in the S&P500 will provide a further boost, but the drop in consumer expectations to 65.7 from 73.5 will subtract from the index,” said BBVA. “Further growth in the index could indicate that the economy will expand in 4Q09, which is in line with our baseline forecast; nevertheless, many of the index’s components remain at levels below those of last year, pointing to ongoing economic weakness.”
10:00 ― The Philly Fed Survey should give more context to how the manufacturing sector is doing in November. Analysts often view it and the New York survey (released Monday) together to make predictions for other areas of the country. Following the moderation to +11.5 in September, indicating modest month-to-month improvement, forecasts for October are in a wide range from +3.5 to +17.0. The median estimate is 12.0.
4:45 ― Richard Fisher, president of the Dallas Federal Reserve, delivers the closing address to the annual monetary policy conference held by Washington’s CATO Institute, a libertarian think-tank.
