Jobless Claims disappointed as they rose back to nearly 400K (399K vs expectations 375K & previous 375K revised higher) and this data from a shorter week. Retail Sales data was also surprisingly weak considering the holiday period (.1% vs .4% consensus & .4% previous. Ex-Autos .0% vs .2% expected and .2% previous.). Business Inventories also declined sharply (.3% vs .5% consensus and .8% previous.) meaning restocking isn't taking place. The European Union chickened-out of imposing Iran sanctions for 6 months which must have been a blow to the WH. Does it surprise you the Europeans got weak in the knees? I thought not. That announcement caused crude oil to drop nearly $2.00 per bbl, while gold continued its rebound. Bonds were slightly lower in price. In the eurozone today ECB president Mario Draghi decided the best defense is a good offense and cleverly spun a yarn that his policies are working. Draghi further states that "interest rates will remain low for an extended period"...where have we heard this before? This statement caused the euro to rally about 1% on the day perhaps squeezing some shorts. Stocks just don't seem to care about much and are hopeful future earnings reports will justify their enthusiasm. As noted yesterday the trailing PE is around 13X for the S&P 500 which is low but not historically so. Forward earnings are what bulls should care about if the current rally is to have legs. Below is a chart indicating forward looking earnings are flattening out. From the WSJ's analysis of FOMC Minutes Thursday is this nugget suggesting both Bernanke and Geithner were incompetent regarding the housing market decline beginning in 2006: "Bernanke, who took over from Alan Greenspan as Fed chairman in February 2006, is cautious in making forecasts about housing and the wider economy. But, together with then New York Fed chief Timothy Geithner, he believes the slowdown in housing is healthy and likely to end well." On this kind of ineffectiveness he gets reappointed and Geithner is promoted. Volume remains so light that this condition in itself is becoming a greater risk with each passing day. Breadth per the WSJ is positive meaning we're becoming overbought. You can follow our pithy comments on twitter and join the conversation with me on facebook. SPY - The SPDR® S&P 500® ETF is a fund that, before expenses, generally corresponds to the price and yield performance of the S&P 500 Index. Our approach is designed to provide portfolios with low portfolio turnover, accurate tracking, and lower costs.
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