Markets are roughly flat in early trading. Yesterday the markets really tailed off at the end of the day and ended on a weak note. It's interesting that there is usually at least one big down day during the week of options expiration, so maybe yesterday was that day.
I'm a little surprised the market didn't bounce more on some of the positive economic data we got. That could indicate some more weakness later in the day. And as we get closer to Friday volume levels should tail off as people leave to take a long holiday weekend. The market is open for a half day on Monday, but lots of folks will simply take off and get in a 4-5 day weekend.
The final estimate of Q3 GDP came in much higher than expected at 3.1%. That's pretty solid growth, but of course its a rear view mirror datapoint, and at this point we are really concerned with how 2013 GDP will come in. Current estimates are for growth of 1.5% - 2.0% depending on how fiscal cliff talks effect spending and taxes.
The Philly Fed survey ticked up to +8.1 for December from a low -10.7 reading last month. And existing home sales rose to 5.04 million units from 4.76 million the previous month.
Asian markets were mixed overnight, after the Bank of Japan upped its asset purchase program by another 10 trillion Yen. European markets are also mixed this morning.
The dollar is higher and metals are getting hit hard. Gold prices are lower by $27 to $1640. Copper prices are down -2% on the day and silver prices are off by more than 4%. Lots of selling pressure.
The 10-year yield is hovering near 1.79%. And the VIX is flat at 17.40.
Trading comment: With more individual stocks showing positive action, its hard to want to fight the tape here. I am no more confident that a grand bargain is reached regarding the fiscal cliff. Most congressmen are getting ready to go home for the holiday. So they will have less than a week to get something done when they get back. That should make for interesting action in the market. And I still wouldn't rule out a brief pop on any hastily crafted agreement combined with some can kicking provision to push things into 2013. But as we enter 2013 we have been moving our asset allocations toward a more conservative posture.