U.S. stocks were able to buck a downward bias among Asian bourses (the night before) for much of the session, but another ugly close in Europe (as those bourses lost all of their early momentum) resulted in the same late-session weakness here.  Most of the major indices did manage to close higher though and that means the latest bounce was extended to five sessions.

Utilities were the day’s clear winner with telecoms, consumer discretionary, energy, tech and health care also closing positive. The losers were financials, industrials, consumer staples and basic materials.

Putting pressure on those Asian bourses was a comment from the Bank of Japan, which warned of more downside risks to their economy from other parts of the world.  That’s a pretty amusing comment as it comes from a poster child of economic stagnation, and for 20 years now.  It’s only real rival in this respect (and we’re talking about the developed-market world) is Italy.  

The price of crude has powered back above $101/bbl -- it’s been quite the rollercoaster: falling to $75 in early October, rebounding quickly to $103 by mid November, back down to $92 by December 16; and back to triple digits again.  This latest move above the century mark appears to be largely on Middle East concerns.  It took all of about two days following our official end to military activity in Iraq for a new level of chaos to ensue.   The Iranian’s have clearly been instigating the violence.  In addition, they’ve increased their military exercises in the Strait of Hormuz and their Vice President stated yesterday that they’d do what they can to close that pass if the West increases sanctions on the country. 

Market Activity for December 27, 2011

Sector Activity for December 27, 2011

CaseShiller HPI

The CaseShiller Home Price Index measured a decline of 0.62% on a seasonally-adjusted basis for October (expected to fall 0.40%), which follows a downwardly revised 0.66% decline for September (previously measured at a 0.57% decline).  This marks the sixth-straight month of decline and the 16^th month out of the past 17 for the seasonally-adjusted measure. 

Sixteen of the 20 cities/districts tracked posted a price decline for October – which is really for August, September and October as this index is a three-month average.  This seasonally-adjusted index sits at a new post-bubble low. 

On an unadjusted basis, home prices fell for a second-straight month, down 1.23% in October after the 0.66% decline for September’s three-month average.  So no matter the measure, home prices are on the slide again.  Nineteen of the 20 of the metro areas tracked posted a decline – Phoenix being the only city to post a gain. 

Phoenix is also a city that’s shown the second-largest decline from the peak in 2007, down 56.7%.  And just to satisfy your curiosity (I know you’re burning with desire to know), Las Vegas is the city where the worst declines have occurred, where prices are down 61.3% from the peak.   And for the other side of the coin, Dallas has posted the smallest decline, down just 8.8% from the peak. 

Over the past year, CaseShiller has home prices down 3.40%. 

This measure is still holding above the post-bubble low hit in March, but it’s only a matter of time – which is precisely why QE3 will directly focus on driving mortgage rates even lower. 

Consumer Confidence

The Conference Board’s consumer confidence reading rebounded along with the U of M’s gauge in December (we touched on that one last week), bouncing to 64.5 from the downwardly revised 55.2 for November (previously reported at 56.0). 

The present situation side of the survey improved 8.4 points to 46.7 (best level since October 2008).

The expectations measure, meant to measure respondents’ views of where their finances will be six months out, bounced 10 points to 76.4 (not near the highest near-term level as it had bounced to 97 early in the year – the expectations measure shows that people tend to get a bit carried away with their optimism on occasion). 

So for the overall index, we’re still 30 points below the historic average but a bounce is nice.  We’ll see if it has some staying power this time, unlike the bounce early in the year that succumbed to another bout of pessimism.  Ultimately it will be all about job and income growth.

Richmond Fed

The third major regional factory activity survey we receive for a month showed improvement just as the first two did, but it missed expectations.  The Richmond Fed survey came in at +3 for December (expected at +5) after the print of 0 for November.  While a reading of 3 is somewhat weak, it marks the first positive reading since June. 

The internals of the report suggest it should extend this gain into January.  New orders rose to 7 from -2 in November; order backlogs when positive for the first time since June, up to +1 from

-10 in November; the average workweek rose to 3 from 0 in the prior month. 

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