Major Market Movers

The Good, the Bad…

After all the wait, the U.S. economy started to reveal December's readings, with inflation being just where the fed wants it to be, representing the good side of the formula, other sectors in the economy are screaming for help, manufacturing seems to be the bad of the economy.


CPI data were uncovered in the U.S. economy today showing almost inline with expectations readings, especially on the core level, the actual readings paralleled economists' expectations, those numbers are considered as good ones on the fed's policy making parameters, as the Mr.Bernankeh quoted that inflation levels are reasonably anchored, this seems to be the case, giving them the green light for further policy easing.

On the other hand, and as we got from yesterday's and today's industrial and manufacturing figures, we are definitely seeing a considerable decline in that sector, worth mentioning the humble earnings reported by industrial companies in the last couple of days, suggesting that a recession in the U.S. economy is knocking the doors with a hammer, waiting for the fed either to welcome it with a paper door, or to counter it with a gate of steel.

Industrial production and capacity utilization gave the hints today; though it came out slightly higher than economists' expectations, but still it reflected a poor industrial condition in December as compared to the previous months, that is just the start of the leak from the housing sector into the economy, and that was the original sin of the U.S. economy.

From the other hand, the net foreign cash flows to the U.S. assets are improving, leaving no worries from the trade gap and its effect on the liquidity from the Federal Reserve Bank, another good and relieving aspect that gives a green light for the feds for further easing.

The dollar took the news rather neutral, as it was improving against the Japanese yen and the Euro, it lost some ground against the British pound, the main event is still growth in the 4th quarter, and that’s what the markets are waiting to move currencies up and down to their extremes.