Market Survey on 11/30/2011
Significant events:
1. The central banks of the U.S., the euro region, Canada, the U.K., Japan and Switzerland agreed to cut the cost of providing dollar funding via swap arrangements, the Fed said, and agreed to make other currencies available as needed. The liquidity swap arrangements are intended to lower the cost of borrowing in U.S. dollars so as to support bailout efforts in Europe and elsewhere. The rate on these swap arrangements has been reduced from the U.S. dollar overnight index swap (OIS) rate plus 100 basis points to the OIS rate plus 50 basis points. (http://www.federalreserve.gov/monetarypolicy/bst_swapfaqs.htm#5631)
2. China, reduce the bank reserve ratio by 0.5% for the first time since 2008.
3. Low prices and low interest rates appear to be creating traction in the housing market with pending home sales the latest report to show strength. The pending home index, which is a measure of contract signings for sales of existing homes, jumped 10.4 percent in October to 93.3. The gain points to strength in final sales of existing homes for November and December though cancellations, tied to low appraisals that keep buyers from selling their own homes and to restrictions to credit access, have been cutting into the proportion of contracts that make it to closing.
4. ADP estimates private payrolls rose 206,000 in November vs a revised 130,000 rise in October
5. Layoff announcements are little changed this month at 42,474 vs 42,759 in October and 48,711 in November last year. Government has been a heavy sector for layoffs this year as it is once again this month, at more than 18,500 with 13,500 of the cuts hitting civilians in the Air Force. Food, retail, and computer round out the month's next three hardest hit sectors. Layoffs in the financial sector have been mild the past two months but the report warns that contagion tied to the European financial crisis is putting US jobs in this sector at risk. ADP will post its estimate for November private payrolls at 8:15 a.m. ET this morning.
Market reactions:
1. The S&P 500 advanced 4.3 percent to 1,245.99 at 4 p.m. The index rose 7.6 percent in three days. The biggest three-day rally since 2009
2. NQ vs. SP is down.
3. FV and US is down. FV vs. US is up.
4. Financial vs. Material is still down.
