Bottom of Economic Cycle Nowhere in Sight

(Continued)Regional manufacturing surveys suggested continued contraction in the sector in December, although the severity of the contraction was not so severe as in the previous month. The New York Fed's survey showed that the manufacturing index rose to -22.2 in January from -27.9 in the previous month, while the Philadelphia Fed survey's business conditions index rose to -24.3 from -36.1.
With the manufacturing sector in doldrums, expectations about industrial production were muted. The Federal Reserve said industrial output fell 2% in December and manufacturing production declined a steeper 2.3%.
Accentuating the weakness in the housing sector, a report released by Realty Trac showed that home foreclosures rose 17.1% month-over-month in December. In 2008, foreclosures rose by 81%.
The Reuters/University of Michigan's consumer sentiment index showed an increase in January to 61.90, although it is still at extremely low levels. The current conditions index declined to 69.2, while the expectations index rose for the second straight month to 57.2.
There is little to digest by way of economic news to digest in the upcoming holiday-shortened week. Traders may focus on the Commerce Department's housing starts report for December, the National Association of Homebuilders' housing market index for January and the regularly scheduled weekly jobless claims and oil inventory reports.
Housing starts are likely to show an increase in December, as they benefit from low mortgage rates, which in turn have pushed up refinancings and mortgage applications. However, the downtrend is likely to be still in place at least until the lower housing starts continue to feed into lower completions and eventually less inventory.
Monday
The markets are closed on Monday on account of a public holiday on Monday.
Tuesday
There are no important economic reports to be released on Tuesday.
Wednesday
The Energy Information Administration is scheduled to release its weekly petroleum inventory report at 10:30 AM ET on Wednesday.
The oil inventory report for the week ended January 9th showed that crude oil stockpiles rose by 1.2 million barrels to 326.6 million barrels. Crude oil inventories continued to be the above the upper limit of the average range.
Gasoline inventories and distillate inventories increased by 2.1 million barrels and 6.4 million barrels, respectively. Refinery capacity utilization averaged 84.2% over the four weeks ended January 9th compared to 84% in the previous week.
The National Association of Homebuilders' is scheduled to release the results of their survey on homebuilders' confidence.
Builder confidence remained at a record low in December, with the housing market index holding at its November lows of 9, as buyers feared to move forward and builders found it impossible to compete with the cut-rate product that is continually flooding the market from mounting foreclosures.
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