The Fed’s Beige Book was released yesterday afternoon and found economic conditions to have “improved modestly” with consumer spending, manufacturing, non-financial services, and residential real estate all strengthening. Labor markets remained weak but “there were signs of stabilization and scattered signs of improvement.” The most negative comments were regarding commercial real estate which was “depicted as very weak and, in many cases, deteriorating.” Financial institutions saw “steady to weaker loan demand, continued tight credit standards, and steady or deteriorating loan quality.”  Overall, the report points to a continuation of the accommodative policy for some time.

On a side note, after the close yesterday, B of A announced plans (including governmental approval) to repay TARP via a combination of asset sales and capital raises. Gold is currently still trading over $1200 while the dollar is weak and volatile.  Jobless claims were released this morning.  Better than expected, initial claims dropped to a print of 457k for the Nov 28th week from a downward revised 462k the week before.  This was the fifth consecutive weekly decline.  Continuing claims rose slightly to 5.47mln in the week ending Nov 21st, breaking the 10 week streak of consecutive declines.  ISM non-manufacturing index just hit the tape posting a print of 48.7 for Nov vs. 50.6 in Oct.  The number came in below expectations of a 51+ print. Selling late afternoon and overnight has now taken the market below the 8-day moving average, 119-055, for the first time since late October.  The market dipped below that average a couple of times last month, but each instance was quickly rejected.

Bears show more poise this time because of strong new sell signals on daily oscillators…..same signals that occurred at very overbought readings yesterday.  Mortgage pricing is trying to work its way back from the lows of the early morning trade.  We are not out of the woods yet, although I wouldn’t expect this trade session today to be very volatile facing tomorrow morning’s  Employment report.  From what we are seeing, the estimates are anywhere’s from 100k to 130k job losses vs the 190k number from the previous report.   I am leaning more towards the -110k mark at this point.  Expectations are for the unemployment rate to stay at the 10.2% previous month number, as well as avg hourly earnings and  avg work week numbers to stay the same as well.