JANUARY 6, 2005

Today we had more weak economic news from Europe. Their business consumer survey, French consumer confidence,German retail sales and UK services PMI all were down. These numbers again contributed to a higher dollar for the fifth consecutive day, the euro falling almost a cent. Following the dollars lead, Gold fell another $5 bucks. Bonds were again lackluster waiting for tommorrow's unemployment report which has been the big mover for that market in the past year. Natural gas reserves had a big draw today and OPEC cut crude production, sending oil up over $2 bucks. Neither a stronger dollar nor higher oil prices, nor a surge in initial unemployment claims could restrain stocks as they rallied strongly in what is being termed and oversold bounce. Cyclicals like Tyco and MMM particularly strong. Fed's Hoenig thinks the job number will be better.

Looks like the retail indexes have finally broken down, the RTH and RLX. One more downward thrust and the same could be said of the transports, housing and banks.
There was some talk today of higher delinquencies and late paymnets on credit card, home equity and mortgage payments.

Regarding tommorrows job number. There have been long periods where we have had a good economy and a lousy stock market and vice versa. So whats good for main street is not always good for wall street. The few good job numbers we had last year, I was disappointed by the markets response. So if we get a good number tommorrow don't be suprised if we get a muted response. More jobs could lead to faster rate hikes, lower productivity and profits, after all.