NEW$ & VIEW$ (4 JANUARY 2013)

December Nonfarm Payrolls: +155K vs. consensus +150K, 161K previous (revised from 146K).

Auto  Strong December for Auto Makers

Shares in U.S. auto makers hit 52-week highs as consumer demand for new cars and light trucks shrank GM’s inventory overhang while sales at Chrysler climbed 10% and Toyota posted a 9% sales increase.

Sales rose 9% in December compared with a year ago and were up 19% compared with November. The seasonally adjusted annualized sales rate was 15.37 million vehicles, according to market researcher Autodata Corp.

For the full year, sales rose 13.4% to 14.5 million cars and light trucks, the highest point since 2007.

Bespoke Investment has the pick-up truck indicator:

(…) a lot of economists like to look at sales of pickup trucks as an indicator of strength in the small business sector. The reason they focus on pickup truck sales is because small business owners tend to make up a large portion of the overall buyers of these types of vehicles. To that point, Ford’s December report of its iconic F-Series truck line continues to signal positive growth in the U.S. economy.

For the month of December, Ford sold 68.8K F-Series trucks which was a slight increase from December 2011.  For the entire year, total sales of F-Series trucks were 645.3K, representing a 10.3% increase from 2012, and the third straight year of annual increases. 

 

Costco, Nordstrom Lead Mixed December Retail Sales

Retailers ended the holiday season with better-than-expected December sales. November-December comps rose 2.9% from a year earlier, slightly below last year’s 3.3% rise and 2010′s 4%.

Holiday Retail Sales Beat Dec. Targets, But Results Mixed

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Party smile  New year cheering up

I perused the last 5 weeks of New$-to-use and tallied the important eco headlines on the U.S. economy. From the list below (latest to earliest), only 4 of the 26 headlines were negative. Positives touched most aspects of the economy, including some powerful improvements to America’s competitiveness which probably explain why the U.S. has done pretty well in 2012 in spite of the Eurozone mess, China’s slowdown and the fiscal cliff episode.

We do not need a booming economy for equities to do well when they are cheap and inflation is not rising. Since nobody plunged into the cliff, recession odds remain fairly low, imagegiving hope that Q4 earnings will be alright. RBC Capital is hopeful:

This week’s ISM Manufacturing and global PMI data showed improvement, with both moving above their breakeven level of 50. These developments suggest that S&P 500 earnings growth, which has effectively flat-lined on a year-over-year basis, should pick up pace in the first half of the new year.

The Rule of 20 barometer is in very cheap territory. This is a risk/reward indicator currently saying that risk in equities is historically low using trailing earnings and inflation. Inflation is not a problem at this time. If earnings hold well and investors become less worried on the economy, the valuation gap will close as the the world liquidity flood seeks a home (click on chart to enlarge).
 

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U.K. Data Point to Contraction

Activity in the U.K.’s dominant services sector fell for the first time in two years in December, a closely watched monthly survey showed on Friday, a sign the economy may have contracted in the final quarter of the year.

The services purchasing managers’ index fell to 48.9 from 50.2 in November, the weakest reading since April 2009, according to a survey of companies conducted by Markit and the Chartered Institute of Purchasing & Supply. It marks the first reading below 50.0, which indicates a fall in activity, since December 2010, when snowfall hit the sector.

German Retail Sales Rise as Jobless Rate Near Record Low

Sales, adjusted for inflation and seasonal swings, increased 1.2 percent from October, when they dropped 1.3 percent, the Federal Statistics Office in Wiesbaden said today. Sales fell 0.9 percent from a year earlier. The statistics office said overall in 2012 sales fell between 0.1 percent and 0.3 percent against the previous year, after inflation was taken into account.

China Housing Signals Recovery

China’s average home prices rose in December, ending eight straight months of year-on-year declines, signaling the country’s property market is recovering from its lengthy slump.

A survey of property developers and real estate companies showed the average price of housing in 100 Chinese cities rose by a modest 0.03% in December from a year earlier, data provider China Real Estate Index System said Friday.

Euro area inflation estimated at 2.2% (December flash estimate)

Punch  New$-to-use marketing department could not resist this plug opportunity:

Almost All of Wall Street Got 2012 Market Calls Wrong  From John Paulson’s call for a collapse in Europe to Morgan Stanley’s warning that U.S. stocks would decline, Wall Street got little right in its prognosis for the year just ended. (Detailed track record)

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