Greek Coffee: Old & New Economy Contrast

In Greece, old souls like myself like to drink a Greek coffee in the afternoon, after siesta. It helps fuel the passion that drives them to squeeze the lemon of life for all the juice it has. (Stocks in article: NYSE: SPY, NYSE: DIA, NYSE: BSC, NYSE: MBI, NYSE: FDX, Nasdaq: GOOG, Nasdaq: QQQQ, Nasdaq: DCLK, Nasdaq: ORCL, NYSE: RAD, NYSE: CAG)

The day offered an interesting mix of past and present contrast. While the Q3 GDP figure went unrevised, its strength looks sure to falter in coming quarters. Reports from the Philly Fed and Conference Board raise concern over the outlook for Q4. Moving forward, I continue to see consumer softness driving a second leg of weakness for the economy. However, despite this weakness I continue to see a bullish market opportunity on the January effect I expect to present itself this year.

Today's Market Factor Analysis:

Philly Fed Survey

The Philadelphia area manufacturing report indicated quite poorly, and offers up a bad omen for future ISM reports. The Philly Fed Survey came in at a negative 5.7, versus consensus expectations for a positive 6.2, according to Bloomberg. CNBC's Steve Liesman indicated that for whatever reason, the Philly Fed measure seems to offer a good predictor for national manufacturing. A negative reading indicates contraction, and considering the Empire State reading weakness earlier this week, it appears manufacturing is moving into recession.

Leading Economic Indicators

The Conference Board's Leading Indicators posted a 0.4% decrease for November, versus expectations for a 0.3% decline. The drop was the third in four months and offers further evidence that the economy is slowing down precipitously into '08.

Weekly Initial Jobless Claims

New unemployment benefits filers measured 346K last week, which amounted to an increase of 12,000 over the week before. We've noticed a clear trend higher now, and the four-week moving average confirms this as it rose 4,250 to 343K. Remember The Greek's expectation for unemployment to increase even further as consumer spending softness leads to layoffs at retail, restaurant and other consumer services firms. This in turn should drive consolidation and a recession in commercial construction.

Market-Moving News:

• ECONOMIC REPORT: Philly Fed Negative 5.7 Vs. Expected Positive 6.2


• MarketWatch: Jobless Claims Trending Higher


• Bloomberg: Leading Economic Indicators Falls Again


• AP/Yahoo!: Bear Stearns (NYSE: BSC) Reports


• CNN Money: Q3 GDP Unchanged in Last Revision


• CNBC: Dissatisfaction With Economy Increases


• DailyFX: EURUSD to 1.4?


• EIA: Natural Gas Storage Report


• Platts: Crude Lower


• Financial Times: China Raises Rates for Sixth Time


• Yahoo! Earnings Calendar


• AP/Yahoo!: Oracle (Nasdaq: ORCL) Reports Strong Results


• CNBC: MBIA (NYSE: MBI) Shares Fall on Raised Risk


• TheStreet: FTC Approves of Google (Nasdaq: GOOG) Doubleclick (Nasdaq: DCLK) Combo


• Bloomberg: SunTrust Bails Out its Funds for $1.4 Bln.


• CNN Money: FedEx (NYSE: FDX) Profit Falls


• AP/Yahoo!: Rite Aid (NYSE: RAD) Report Letdown


• AP/Yahoo!: ConAgra (NYSE: CAG) Raises Forecast


• BBC: Georgia, Went Too Far? Would the UN Rather Putin Win?


• Economist: The Geopolitical Week Ahead


• Iran Daily: Tales from the Dark Side

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