Weekly Sentiment Paper Distributed by: One Financial

For the Week of: 12/07 through 12/13 Written by: Andrei Wogen

Email: finance.wogen@gmail.com

Last Week in Review! 2

Australian Dollar! 2

New Zealand Dollar! 4

Japanese Yen! 6

China Renminbi; Onshore, Yuan! 7

Euro Area: Euro! 9

British Pound! 11

Canadian Dollar! 12

United States Dollar! 13

Last Week in Review

Australian DollarOverall Picture and Its ToneOverall the Australian is weak economically. The weak points continue to be weak mining

sector and the employment sector while the consumer also remains weak and feels weak as both retail sales and consumer sentiment have been lower respectively. As for the business sector, manufacturing and services sectors continue to weaken as does business sentiment. Politically speaking, the country is doing well but recent budget problems have caused the government to cut down on spending and adjust policy in order to keep debt from rising too much. This action has also caused consumer sentiment to weaken and there is likely more cuts on the way as the mining industry continues to slow. Another thing that has caused some worry from the government is the strong housing market. Prices continue to rise which is helping to support consumers some but has caused the government to voice their disproval of these high

• Australia GDP for the third quarter much weaker than expected; terms of trade continues to decline as commodity prices continue to fall while household consumption did okay

• US employment data comes in much better than expected; average hourly earnings rises as well

• ECB leaves rates along; Draghi stepping back from his commitment to do QE saying that the ECB needs more time to assess things before making a decision

• Canadian employment data comes in much lower than expected showing a loss in newly employed individuals

• China manufacturing continues to weaken; bets continue to rise that more easing is coming from the PBoC pushing equities higher in China

• Bank of Canada leaves rates alone and continues to say that recent higher inflation is “just noise”

prices worrying about a bubble forming. As for the central bank they continue to remain neutral to slightly dovish while continuing to keep rates at historical levels. They continue to say that rates are the right level to foster growth and investment but they also continue to verbally talk down the Australian Dollar which they say is too high. Still no actual intervention though….yet. Overall then the tone of Australia is neutral to slightly negative

. Overall Sentiment of the Australian Dollar As for the overall sentiment towards the Australian Dollar, this is now fully negative overall.

Last Week in Review The RBA left rates alone last week as expected. In their statement, things remained the

same though they sounded a bit more downbeat on the Australian Dollar. They mentioned that the AUD was still too high relative to commodity prices which continue to fall. Sounds like they are continuing to get more and more negative on the Aussie Dollar’s value and could be getting very close to intervening in the market to help bring it down. The other big event last week was Q3 GDP release which in came in lower than expected overall. The terms of trade in particular was disappointing as commodity prices continue to fall. In light of this calls for rate cuts by the RBA are growing as the Australian economy continues to weaken. Also in terms of data, building permits data improved again as did Australia’s trade deficit with imports falling into negative territory and exports rising, coming in stronger than last month.The other big event last week was the overall down move that occurred in the Australia Dollar as it continues to weaken agains the US Dollar in particular.

The Week Ahead and Other Thoughts This week the monthly employment data will be released on Wednesday. However it

should be noted that with all the recent changes to the data in how it is calculated its relevance and authenticity has been shaken somewhat as of late. Still though, markets will be watching anyway to get a gauge on Australia’s employment situation. Overall it is not good with unemployment continuing to stay elevated and the participation rate continues to fall. Other data to mention for the week will be Home loans data and consumer confidence numbers on Tuesday, the latter being the one to watch as the consumer has begun to start to feel a bit better after a huge decline earlier this year but the improvement is still nothing to be very optimistic about. The other data to watch is business sentiment numbers on Monday. Overall though, the story to watch will be how the Aussie Dollar continues to perform. Whether it will continue its fall or whether we will get a rebound of some sort.

New Zealand DollarOverall Picture and Its ToneNew Zealand as a whole continues to do well though has weakened some over the past

few months, economically speaking. Lower commodity prices, lower house prices and lower inflation have been the main weaknesses for the New Zealand economy. Other weaknesses have been a deteriorating trade balance, along with falling exports and a fall in business and consumer sentiment which has also translated into lower consumer spending via retail sales data. However all is not bad in New Zealand and actually things are pretty good despite these negatives. Though business sentiment is low, it is still high in historical terms which has been seen in the manufacturing sector in particular which remains strong as well as does the industrial sector. As for trade, imports continue to rise while the labor market also remains strong with falling unemployment and increased employment overall. However, as is the case around the world overall, wages continue to remain weak. Looking to the housing market now, after rising prices from the beginning of this year, they have fallen now from their highs after implementation of policy to help cool the housing market went into effect several months back. This, and now weaker building permits, continue to cause the housing market to weaken overall though in some parts, construction remains active overall. As for the government, they continue to remain strong as pro-growth policies and increased government spending continue to help support the economy and with the recent elections keeping the incumbent prime minister in power for another term, there will likely be little change. In regards to the central bank, after having tightened policy by raising rates three times this year beginning in March, the central bank is now on hold indefinitely after falling commodity prices and lower inflation have caused them to reassess their estimates of future inflation in the country. This is a pretty big turnaround for them from just a few months ago when they were talking about seeing a need to raise rates pretty consistently due to what they used to see as inflation pressures building. However these pressures have since diminished or left altogether and so in response the central bank is expected to be on hold until at least the middle of next year and possibly longer if inflation doesn’t start to pick up soon. They have also voiced their concerns about the high valuation of the New Zealand Dollar relative to other currencies. This has caused the RBNZ to intervene in recent months in the currency market to bring down the value of the Kiwi. This is an obvious statement by the Bank that they are not willing to let the currency stay too strong and will do something to help bring it down and so in light of this there continues to

be speculation that they will continue to intervene in the markets going forward. Overall then, the tone for New Zealand remains in neutral territory overall.

Overall Sentiment of the New Zealand Dollar The overall sentiment for the New Zealand dollar is neutral to negative as it continues to move lower versus the Dollar but higher versus the Yen.

Last Week in ReviewLast week the big event for the week was a speech made by Wheeler. The big news from

the speech was that there was no change to the RBNZ’s loan limits it set on housing a while back. Wheeler mentioned that the limits amount to a 25 - 30 bps rate hike but that they would remain in place until housing pressures eased (more). The “more” being my addition as housing prices and the general real estate market has eased some over the past few months. Besides that speech, data from New Zealand was sparse but continued to show weakness in the country’s commodity sector as commodity price index number continued to deteriorate, in negative territory again, and terms of trade data printed into negative territory on the back of weaker commodity prices. Yet more signs of the strain that lower commodity prices, particularly milk prices, are having on the country.

The Week Ahead and Other ThoughtsThe RBNZ meeting on Wednesday is the even to watch this week from New Zealand. The

chance of a rate hike is very small in my opinion and really, in the markets too, as the market is expecting the next rate hike to happen not until next year sometime as commodity prices continue to move lower, putting pressure on inflation to the downside and the overall economy softens somewhat. Still though, it will be interesting event to watch to see what the Bank has to say about the current situation when they release their monetary policy statement at the conclusion of its meeting and then what will be said during its press conference later on. I personally expect a downward assessment on inflation and growth overall which will tell the markets that another rate hike is still far from happening, at least for now. I also expect the usual talking down of the Kiwi by the RBNZ as the Bank continues to see the exchange rate of the NZD to be too high. How forceful that talking could be though is what’s important. If there is just a line of how high the NZD is, then there will likely be little reaction in the markets to that. However if the Bank elaborates more and especially explains WHY the NZD is too high and HOW it is affecting domestic activity, then there will likely be more of response in the markets. Also too any mention of more intervention could get the markets going again…lower. Other data for the week will be Business PMI for November on Thursday, which has been strong as of late, and monthly Electronic Card Retail sales data numbers on Monday.

Japanese Yen Overall Picture and Its Tone

Japan as a whole is very weak right now, politically, socially and economically. On the economic side, businesses continue to be weak as manufacturing, services and industrial sectors continue to be weak however on a bright note, corporate profits continue to rise. On the consumer side, consumer sentiment and consumption both remain weak as seen recently in household spending and retail sales data. As for trade, imports and exports have been weak but now both are improving some while the overall trade balance remains in negative territory. Inflation also remains weak and continues to fall causing deflation to persist. On the government side of things, debt remains high while recent tax hikes meant to bring down the level of debt in the country have caused yet more weakness in the economy. The government in general remains stuck in old ways and lacking reforms to help revise the economy. As for the central bank they continue to remain very negative overall with low interest rates and and a quantitative easing program that puts all others that have occurred or are occurring to shame as its size is huge. A couple of weeks ago too, the central bank surprised the markets by implementing and increasing their QE program. Finally, on the social side of things, as the population continues to age the levels of debt continue to increase while other social developments continue to cause weakness in the economy. Overall then the picture of Japan is very negative right now.

Overall Sentiment of the Japanese Yen The overall sentiment for the Japanese Yen is very negative right now as it continues to move lower against pretty much everything...including itself.

Last Week in ReviewThere wasn’t much in the way of data last week from Japan and focus seems to be fully

on upcoming elections on the fourteenth of December. Polls show at this point that Abe will obtain a landslide victory in the elections allowing him to gain a majority in parliament and keep his job. This is a bit of a surprise to me if this does come to reality. I would have expected more of a resistance by the people towards Abe and his policies especially as his “Three Arrows” are doing little to help the common man out of his woes….economically speaking. As for the data last week, starting from the top: Capital spending came in better than expected while manufacturing data slipped lower. Vehicle sales also fell further into negative territory. Services PMI data showed a massive improvement in what some are calling a “weather related” improvement. New business for the services sector continued to rise as do new orders.

However business sentiment remains bleak. Employment also rose and there was much concern and uncertainty for the future by the respondents in terms of the sales taxes and the upcoming elections. Then, to close out the week, Coincident index came in better than previous while Leading economic index number slipped versus the previous reading. As usual too, the Yen continued its decent overall last week, especially against the US Dollar, with the USD/JPY pair reaching the important 120.00 level.

The Week Ahead and Other ThoughtsFor this week, the final reading of third quarter GDP will be the data to watch. Any signs

of improvement in the data will be a welcoming sign to the markets as the preliminary reading ws very dismal on all fronts. This data will be released on Sunday (EST US Time). The other data on Sunday (EST US time) will be trade balance data and consumer confidence data. Then later on in the week we will get machine tool order and machinery orders data, both important as they are a reflection of Japan’s industrial and manufacturing industries, both of which has performed quite badly over the past few months. Then, speaking of the industrial sector, October Industrial production numbers will be released on Thursday. But as is the case with other currencies right now, the big news will be how much lower the Yen will move and if and when (and the “when” is more likely) the Japanese government or even the BoJ will step in and talk it higher some. Members of the government in particularly have already come out and said that they see the Yen weakening too fast as being a bad thing for the currency and for Japan as a whole. A repeat of this rhetoric is very likely if the Yen continues its move lower like it has been doing lately.

China Renminbi; Onshore, Yuan Overall Picture and Tone

Overall China is weak right now economically and is changing politically and socially. As for the economic picture, this has been weakening over the past few months. Inflation continues to move lower which also includes food prices which continue to move lower. As for the consumer, Consumer Confidence is improving some again after deteriorating over the past few months while retail sales continue to move lower. As for the business side of things, the services sector, manufacturing sector and industrial sector as well as business confidence all continue to weaken overall. As for the employment picture this remains mixed to weak as labor costs continue to weaken and the number of unemployed persons continues to move higher highlighting the struggle of the Chinese economy to move from a strictly manufacturing based

economy to more of a services based country in terms of their main revenue and GDP growth source. As for the housing market, prices continue to move lower as does loan growth putting pressure on the consumer and the economy as a whole. With lower housing prices the demand for existing and new housing is slowing and with the real estate market being such a big driver of growth in China, this is putting a strain on its overall growth. On the government side of things they continue to work on pushing through reforms to move the economy form a centrally, government controlled economy, to a more market baed economy. During their recent Fourth Plenum meeting they highlighted these reforms they are and want to implement especially focusing on making the law system freer. As for the central bank, they continue to implement reforms and easing measures to help revive the economy including reserve ratio for certain banks and other reforms to help rural regions and the real estate market improve including rate cuts recently. Interest rate liberalization is also one of the main things on the central bank’s agenda in terms of reforms they want to implement. Overall then the tone of China is a more negative one right now as reforms being implemented by the government and central bank continue to cause weakness in the economy while overall global growth being weak is causing the manufacturing industry to be weak right now.

Overall Sentiment of the Chinese Yuan (Onshore) The overall sentiment for China is negative but as the Yuan is controlled by the PBoC right now, the movements in their are not true in many ways. However, the Yuan has now been weakening versus the USD over the past few weeks and continued to do so last week as well.

Last Week in ReviewThe biggest news last week from China was in the equity markets in the country as they

continued to rise as bets continue to increase that the PBoC will ease further soon to help the ailing economy. As for data, NBS Manufacturing and HSBC manufacturing data both came in weaker than previous and the NBS number came in lower than expected as well. Both these data sets point once again to an ailing manufacturing sector of China. HSBC now sits right at the level that separates expansion from contraction. Other data though showed improvement in both the Services and Non-Manufacturing sectors of the economy as both came in above previous estimates. Overall though the economy in China continues to remain frail, hence the continued bets of coming easing from the PBoC that is currently being priced into the markets.

The Week Ahead and Other Thoughts: This week, the big data for the week will come on Tuesday as the CPI numbers for

November are released. The risk for another drop in the number is high in my opinion as if that does come to pass, we will see yet more bets of easing be priced into the markets in China. The other data of importance, also being released on Tuesday, will be New Loan data for November which will give another look at the health of the loan industry in China. Also for the week, on

Sunday night (US EST time) Trade balance data will be released and then on Thursday Industrial production, retail sales and Urban Investment numbers will all be released and give more of an indication of how the Chinese economy is doing. Both retail sales and industrial production numbers have been moving weaker lately so any sign of improvement will be encouraging though will likely do little if anything in terms of bets of more easing by the PBoC. Overall perceptions towards China continue to be mixed to negative though as the markets continue to be more negative towards it while businesses seem to be mixed to more positive.

Euro Area: Euro Overall Picture and Its Tone

The overall conditions of the Euro Zone are and continue to be very weak and negative. Overall growth continues to move lower with some countries, including Germany, slipping into negative growth in the most recent quarter. As for the business side of the economy, the services and manufacturing and industries sectors all continue to move into weak territory while business sentiment also continues to deteriorate. As for the consumer, consumption remains low as seen in continued weakening retail sales data while sentiment also continues to move lower. The labor market is also very weak with high unemployment, especially youth unemployment, and wages continue to be low. Trade also remains weak with imports falling while exports are actually remaining fairly supported. As far as the loan and money sector goes, loan growth continues to be weak to both businesses and consumers. On the government side of things debt levels remain very high and there is little ambition from some Euro Zone members to bring those high debt levels down. In fact the recent budget presented by Italy to the European Commission showed little in the way of actual reforms to bring down their debt level and was accepted by the Commission showing once again, that these debt levels in the Euro Zone will continue to rise until a day of reckoning comes and these countries have to default. Another thing of continued concern continues to be the political divide between political members and regions of the Euro Zone especially, now, in terms of how the ECB is allowed to deal with the low growth and inflation. However disagreement and divide are also continuing to be present in light of continued rising debt and lack of reforms from different countries, namely Italy and

France. As for the central bank, they continue to remain very dovish, recently implementing a sort of QE program with the purchases of covered bonds and ABS assets in a bid to help revive the Euro Zone’s struggling loan and banking industry in order to therefore revive economic growth. They also have cut rates quite a good amount since about June of this year with one of their rates now in negative territory. So overall the tone of the Euro Zone is negative.

Overall Sentiment of the Euro The overall sentiment for the Euro currency is currently still negative overall.

Last Week in ReviewThe ECB meeting last week offered no new measures from the Bank to fight low inflation

and low growth. In fact, the ECB sounded a bit hawkish especially in terms of the balance sheet expansion plans. Seems that there are some in the Bank that are not in favor of the measures Draghi wants to do both in terms of the balance and in terms of QE. Draghi also said that the governing council will reassess in the new year as it needs more info to assess before making a decision on QE. Also the ECB downgraded both growth and inflation for this year and next though these projections did not take into account the recent fall in oil and so those projections will likely go even lower. All in all though the markets response was to buy the Euro and buy quite a bit as the Euro shot up in response to the meeting and the ECB’s decision on rates and no QE. Given the recent negativity towards the Euro, with no new announcement of more easing measures, QE being the main one, this was seen by the markets as being more hawkish than the past few meetings. Also it would seem that QE is further off than the markets originally thought and this has also put a bid in the Euro and altered perceptions of the participants towards QE occurring. As for data releases last week, Services data cam in lower than expected and previous overall for the Euro Zone, France, Germany while Italy service data came in a bit better than expected and previous. Retail sales data for the Euro Zone also came in pretty good. As for manufacturing data, Germany and Italy data both came in lower than expected with German manufacturing slipping into contraction territory. France and Spain manufacturing data came in better than expected and showed continued expansion in both country’s manufacturing sectors. Then to close out the week, final quarter three GDP for the Euro Zone came in as expected and previous.

The Week Ahead and Other ThoughtsAs for this week, there is a host of data to be released. On Monday, German industrial

production and Euro Zone investor confidence will be released; the former continues to be weak while the latter has shown some improvement lately. Then on Tuesday, German Trade Balance data will be released as will France trade balance data. Then on Thursday, German and France CPI data will be released and then on Friday, Euro Zone employment change and Euro Zone industrial production numbers will both be released. The big event though for the week will be the amount of the TLTRO take up by the banks in the Euro Zone. This will be crucial data as the last TLTRO offered was not so well received by the banks though this was likely due to the bank

stress tests that were to occur soon after. However expectations are now that banks will take up a bigger amount of the TLTROs being offered this round. If the take up is a good amount, then this will likely be seen as a positive development for the Euro Zone and hence the Euro and so we could get yet another round of the Euro going higher.

British Pound Overall Picture and Its Tone

The overall economic picture is one of strong growth while some weakness has been seen recently in some sectors. The recent weakness has been seen in particular in the manufacturing and services industries with the latter being of some concern as the UK’s economy is so dependent on this sector for its growth. Other weakness has been seen in the country’s exports, though not too surprising there as the Pound continues to be strong overall. Imports also have fallen some over the last few months. As for the consumer, consumption has moved lower as seen in recent weakening in Retail Sales data while sentiment numbers have begun to weaken. This weakness in consumer sentiment has stemmed in part from a weakening housing market as house prices fall as well as construction activity. As far as inflation goes, this also continues to move lower as the UK follows the rest of the world (or a large part of it) into a world-wide deflationary trend, in some respects. This low inflation and weaker growth has also kept the BoE at bay in terms of them raising rates. They continue to be neutral on that fact and the market is currently expecting them to keep rates on hold and not raise them until the middle part of next year at the very least. Another concern of the BoE, which has kept them from raising rates at this point is the low wage growth. However the labor market as a whole continues to improve as the number of newly employed continues to rise and the number of unemployed continues to fall. Overall then the tone of the United Kingdom is neutral to slightly positive.

Overall Sentiment of Pound SterlingOverall the sentiment for the Pound Sterling is neutral to negative. Last Week in ReviewData last week came in mixed overall. Consumer credit rose for the month of October

while both the manufacturing and services sectors showed higher than expected expansion. Also, house price data showed a continued climb in house prices in the UK during the month of November. On the negative side of things, construction PMI number came in worse than

expected and previous however not all is bad looking at the internals. Employment and new orders continued to increase while delivery times are getting longer due to supply issues for materials. There is also a continued need for more skilled workers, either foreign or domestic. Overall though the construction sector continues to be strong in the UK and last month’s number could very well be weather related. The other event to occur last week was the BoE’s monthly meeting and rate where they left rates and their QE program as before; so no change to either. Expectations are that the first rate rise from the BoE will be sometime in the middle of next year, right around the time the US Fed is expected to begin raising rates as well.

The Week Ahead and Other ThoughtsThis week there isn’t much in the way of data from the UK. Industrial and Manufacturing

production numbers for October will be released on Tuesday. Both sectors continue to remain strong overall. Then on Wednesday, trade balance data will be released for October. Besides that though, there is little else in the way of data scheduled for the week.

Canadian Dollar Overall Picture and Its Tone

The Canadian economy continues to be mixed overall. The positive side of things is that inflation continues to be relatively stable and high, though this has likely changed now with oil moving so low. Overall growth too continues to be supported. As for the consumer this is where some of the weakness lies as spending remains subdued as seen via retail sales data. As for the business side of things, this remains supported overall. Oil production also continues to increase but with prices as low as they are, they are not helping the economy any right now. As for the housing sector, this remains strong with high prices and good building activity both being supported by low interest rates. As for trade, exports have started to increase some recently especially as the US continues to bounce back. As for the labor market, this seems to be improving as new jobs continue to increase in number and the unemployment rate continues to move higher while wages remain weak, as seems to be norm right now. As for the central bank they remain neutral to dovish in their tone towards the Canadian economy though they are starting to sound a bit more optimistic now as the US economy, which Canada is very dependent on, continues to improve. However, they continue to see recent inflation levels as being just temporary and still continue to expect weaker growth for a while going forward. Overall then the tone of Canada as a whole is neutral in relation to the monetary policy in particular.

Overall Sentiment of the Canadian DollarOverall the sentiment for the CAD is currently neutral to negative. Last Week in ReviewThe employment lost jobs last week instead of gaining jobs, which is what was expected

would happen.The participation rate and the unemployment rate stayed steady for the month. Overall though the reading was not that great and does not reflect the recent strength that has come from the data from Canada recently. Other data for the week was trade balance data which narrowed more than expected with both imports and exports rising from the previous month. As for the business sector of Canada, manufacturing PMI came in as expected and still continues to be in expansion. Also business sentiment improved by a good amount for November with higher expectations for employment supplier deliveries while prices fell showing more disinflation. As for events last week the BoC met to make their monthly rate decision where they left rates alone at 1% which was the same as previous. In their statement they expect that lower oil and commodity prices will weigh on the economy going forward while also being somewhat optimistic on exports. The one key part of the statement though is where they continued to say that inflation was higher than expected but is largely due to temporary factors. So once again, not seeing any reason to think that inflation is rising in a meaningful way. Overall then the BoC continues to see that current policy is appropriate for current economic conditions.

The Week Ahead and Other ThoughtsThis week is a slow one for data out of Canada. On Monday we will get housing starts

and building permits data an then on Thursday Capacity Utilization and new house price index numbers will be released, with the former likely coming in strong given recent manufacturing PMI numbers were strong as well.

United States Dollar Overall Picture and Its Tone

The overall picture of the US one of positive growth overall, a central bank that is (very slowly) turning more hawkish while the government has been pushed to one side in many respects as it continues to wrangle with its differences and division. As for the economy: it continues to improve overall though there has been some weakness seen recently, particularly

in the manufacturing sector due to the increasing value of the US Dollar. However this sector, as well as the industrial and services sectors continue to grow. Business sentiment also remains strong. The employment sector continues to be good overall with rising employment and falling unemployment. However problems remain as long term unemployed people continue to struggle to find jobs and the skills gap continues to widen as fewer and fewer have the skills necessary to do high tech jobs that are so vital to a nation’s growth. As for the consumer, they also remain pretty good though weak wage growth continues to be a problem and consumption is down some now looking at retail sales data. Sentiment though for the consumer remains strong overall. Trade continues to do well with both exports and imports strong though the deficit in the US continues to deepen. As for inflation, this continues to stay steady, but steadily below the Fed’s target. As for housing, after a good start this year this sector has weakened some in the past few months as rate hike expectations continue to be in focus for this industry. As for rates, and the Fed, in light of the overall US economic picture they have begun to turn more hawkish in their tone and in their policy recently exiting their QE program completely in a bid to begin to slowly tighten policy. The tone from the Fed is also changing, though also changing as they are sounding more optimistic on the economy and jobs and so on but are still concerned about low inflation. Looking to the government, this part of the US continues to be in a wrangle with itself failing to pass any meaningful laws or policy changes to help the economy grow. Recent mid-term elections have given some people some hope as the Republicans now control both the House and Senate though with a stubborn President at the helm of things, little will likely change until after presidential elections in two years. However we will have to see. Maybe Congress will be able to pull a rabbit out of its hat after all. Overall though the tone of the US economy is neutral to positive overall due to a more optimistic Federal Reserve and stronger economic growth that continues to get stronger.

Overall Sentiment of the US DollarOverall the sentiment for the USD continues to be positive overall. Last Week in ReviewBased on last week’s employment data the US jobs sector is doing very well. NFP

numbers for November came in way above expectations and above 300 thousand while the previous reading also being revised higher. The internals were good too with average hourly earnings rising more than expected and average weekly hours worked increasing. The participation rate and unemployment both stayed steady. So overall a good read on the US jobs market though it should be mentioned that this number could likely be just a one off event type of release as holiday hiring was likely a major factor and if that was the case then the market, and the Fed, will want to see a couple more months of jobs numbers to get a true read on the US jobs market. But right now things are looking very good indeed for the jobs part of the economy. As for other data, Factory orders slipped lower than expected and previous and jobless claims fell less than expected and ADP employment numbers came in less than expected. As for upbeat

data, construction spending rose for October and Non-Manufacturing PMI number for November came in better than expected. ISM Manufacturing also came in better than expected though prices paid shoed a steep decline, not a good story for inflation. Labor costs also fell for the third quarter pointing to possible lower wages going forward though that doesn’t seem to be the case yet if last week’s NFP data was any indication. Also last week we heard from the usual group of Fed members as they gave their assessment on the US economy and Fed policy. Fed member Dudley talked about the need to let the economy “run slightly hot” for a while before raising rates while Plosser outlined and argued for rate hikes in order to mitigate the risks of rates being low for too long. On the outside, the Fed seems to be getting closer and more comfortable with the idea of raising rates, and soon too. On an overall basis though the US economy seems to be chugging along quite nicely and strongly while the rest of the world seems to be falling apart at the seams. Makes me wonder though how long the US can go the way it has been before it is negatively affected by the rest of the world’s problems. I think it might not be long.

The Week Ahead and Other ThoughtsFor this week there is the usual host of data due from the States with the Retail Sales data

on Thursday being the most watched. Expectations too are for a slight negative reading from previous overall. Other data for the week will be business inventories and export and import prices, the latter two being gauges of inflation and all this also on Thursday. Then on Tuesday Wholesale inventories will be released as will small business sentiment numbers and then on Friday we will get the prelim reading of UoM consumer sentiment. Overall then, it’ll be the usual set of data for the markets to chew on to get a further reading on the US economy.