"Oh the weather outside is frightful,
But the fire is so delightful,
And since we've no place to go,
Let It Snow! Let It Snow! Let It Snow!"
The market has carried the holiday spirit into the New Year. Even though the weather has defied the notion of global warming, the stock market continues to defy the notion it has come too far, too fast. I'm trying not to become too giddy, but, let it snow, let it snow, let it snow. Stocks came out of the gate with gusto after a report from HSBC backed up another report from the China Federation of Logistics and Purchasing showing continued strong gains in the China manufacturing sector. Not to be outdone, the next stage of this liftoff got a boost with the release of the PMI report on the state of U.S. manufacturing. It's hard to find any negatives in the report. One could quibble that the reading on exports dipped to 54.5 from 56.0 but the November reading was the highest since August 2008. The headline number for December of 55.9 came in above the 53.6 November number, and was the highest since April 2006.
Huge Positives included: New Orders 65.5 from 60.3, Employment 52.0 from 50.8, and Inventories 43.4 from 41.3 (yes, still well below expansion, but climbing off canvass), and Imports 55.0 from 51.5.
Slight Negatives include: Backlogs dipped to 50.0 and Input Prices rose to 61.5 from 55.0, but this reading has been higher in recent months.
Construction spending was a disappointment as the latest reading came in below consensus. The headline reading for November construction was -0.6% versus consensus of -0.5%. Residential construction stumbled to 258,907 from 263,009, and non-residential construction was down sequentially for the eighth month (it's like a concentric circle) to 641,172 from 642,582.
There is always a certain amount of enthusiasm that comes with a new year but today's action reflects more than foolish sentiment. The Dry Bulk Index looks great today, no doubt buoyed by data on China's economy, but also a sense there really is a global recovery underway.