All week we have been anxious about all the economic data that was scheduled to be released (initial claims, ADP, Challenger Grey, ISM, construction spending, auto sales, etc); it all comes down to tomorrow. The BLS jobs report is due out tomorrow before the opening bell and if you judge by initial claims and the ADP report, it could be ugly. There are always the after effects of Hurricane Sandy to consider, but the Street is expecting just 80,000 new jobs last month, although they expect to see the unemployment rate holding steady at 7.9%. The economy has added an average of 170,000 jobs a month from August through October. However, economists expect a much smaller gain in November. Then you look at the other economic data points that deal with output and production and it paints a different picture. ISM Services was strong, construction spending and factory orders were higher, and monthly auto sales were the strongest since January of 2008.
Yesterday, AAPL had its worst day in more than four years, falling more than 6%, while today it's bouncing back a little bit. As AAPL goes, so goes the tech industry these days as the Nasdaq recovered from yesterday's shellacking and is the best performing index today. The Dow is down slightly as 12 of the 30 Dow stocks are lower on the day, with CAT being the largest drag on the index, falling just under 1% but accounting for more than five points of the Dow's decline. Getting back to the title of today's afternoon commentary, it feels that the market has entered into the hurry up and wait mode. We are waiting for the jobs report tomorrow, and then we are waiting for the Fiscal Cliff outcome. I will say, I am hearing more people saying to let the country go off the cliff.
Data on the labor market came in slightly better than expected. Jobless claims fell 25,000 to 370,000, a bigger drop than expected. But the numbers are overshadowed by Friday's closely watched U.S. employment report from the Bureau of Labor Statistics. The chart below shows the big spike from Hurricane Sandy; however, excluding that week, claims have been relatively flat. Interesting little fact; the number of workers requesting unemployment insurance was equivalent to 2.5% of employed workers paying into the system in the week ended Nov. 24.
Europe's Eye on Mario & Mario
Over in Europe today we've got some mixed signals, and with not a lot to go on in terms of data here in the US, it's contributing to the mixed feeling in the markets. On the positive end, we have a 3.9% month to month increase in industrial orders in Germany. That was quite a bit better than the 1.0% expected and adds to recent data suggesting that the Eurozone is waking up a little bit this winter. Domestic orders were still stagnant at 0.4%, but export orders from outside the Eurozone were up 8.5%.
Up next, we had ECB chief Mario Draghi, who had a somber mood regarding Europe's economy. The ECB sees 2013 economic growth at -0.3% versus the previous forecast of 0.5%. Another whole year of negative growth sure sounds like a real challenge for a region that's deep in recession already, and you really can't overlook its potential lingering effect on the global economy.
At the same time, Mr. Draghi notes that the ECB had a wide discussion about another rate cut. At the moment it continues to be a risk with respect to inflation, but it looks like the ECB is certainly not dismissing the idea. Any bit of help would be welcome, although overall the ECB looks to be low on ammo at this point. The euro took a dive after his comments.
While the European markets were mostly positive on the day, Italy's FTSE MIB took a 0.8% hit. The theme over there is more political struggle, with Silvio Berlusconi (one year removed from publishing his romantic ballad album "True Love") withdrawing support for the other Mario, Prime Minister Mario Monti. The fear is that this move can force an early election, and Berlusconi is against Monti's austerity practices. Of course, that brings up the idea that any progress Monti might have made in appeasing the rest of the EU could be threatened.
Unbelievably, Berlusconi himself may be ready to run in the next election for a fifth term as Prime Minister. With the rap sheet he's got, this guy would have been out of the political picture a long time ago if it were in the USA. There have been charges for bribery and corruption, prostitution scandals, and just in October he was convicted of tax fraud with a four year prison sentence and a five year ban from politics. Well, he'll probably find a way to slip around the jail sentence and the ban from politics, and it's amazing to see he still has so much clout.