Little Ho Ho Ho in the Data (Michael Pento) but the market doesn't care.....yet

The Dow is roughly 21% from its all time,

ever high, set in October 2007

Unemployment rate in October 2007...4.7%

(less than 1/2 of the current, fictitious rate)

Wednesday, December 1, 2010
By: Michael Pento

American consumers are trampling each other to capture the holiday spirit—which sadly has now become Black Friday and Cyber Monday. However, the economic data is flashing a warning sign that may, hopefully, deter shoppers from their recidivistic habits.

The number of mortgage applications in the U.S. fell last week by the most this year as lending rates inched higher. The average rate on a 30-year fixed mortgage increased to 4.56% from 4.50% the prior week. Borrowing costs have been rising since reaching 4.21% during the week ended Oct. 8th, which was the lowest in records going back to 1990.The Mortgage Bankers Association’s index dropped 16.5% in the week ended Nov. 26. The gauge of refinancing fell 21.6%, which was the biggest drop in all of 2010.

Meanwhile, the Challenger, Grey and Christmas report released today showed the pace of downsizing surged to the highest level in 8 months. Planned layoffs jumped 28% from their 37,986 level posted in October, to reach 48, 711 in November.

The ISM Manufacturing Report fell slightly in November to 56.6 from 56.9 in October. The ISM’s U.S. new orders index fell to 56.6 from 58.9, while the production index dropped to 55, the lowest level since June 2009, from 62.7. The employment gauge was little changed at 57.5 from 57.7, and the index of export orders dropped to 57 from 60.5.

Finally, the ADP report for November showed that of the 93,000 private sector jobs created this month, only 14k was in the goods producing sector of the economy. The direction of the ADP number is good but still very much shy of the number of new jobs needed to bring down the unemployment rate.

The economy is barely subsisting despite of, or perhaps more correctly, because of government intervention. When will we learn?

Michael Pento, Senior Economist at Euro Pacific Capital is a well-established specialist in the “Austrian School” of economics. He is a regular guest on CNBC, Bloomberg, Fox Business, and other national media outlets and his market analysis can be read in most major financial publications, including the Wall Street Journal. Prior to joining Euro Pacific, Michael worked for a boutique investment advisory firm to create ETFs and UITs that were sold throughout Wall Street. Earlier in his career, he worked on the floor of the NYSE.