It’s now November, the bloodbath that was October has passed…The markets ended the week nicely, with all three major indices in the green. The Dow was up 1.57%, the NASDAQ gained 1.32%, while the S&P 500 rose 1.54%. The final week of the month resulted in a 10.5% gain for the S&P. I still wouldn’t look at my 401K statement if I were you…

Morning Outlook

The overseas markets rose moderately before the opening bell on the street; Britain’s FTSE 100 gained 0.73%, Germany’s DAX index advanced 0.96%, while Hong Kong’s Hang Seng Index climbed 2.7%. It is expected that the European Central Bank (ECB) and Bank of England (BOE) will cut their target lending rates this week. However, they have since given up their gains as well as in the futures markets, where it seems we will head for a pretty flat open as investors wait for economic news on the heels of the markets worst month in 21 years.  Notice how oil continues to slide as invstors completely ignore OPEC’s production cuts.

Economic Calendar

10:00 AM
Construction Spending: measures the value of new construction activity on residential, non-residential, and public projects, giving a great indication of the economy’s momentum. Why would you expand your operation if you think the near term outlook is bleak? The same can be said on the residential front. Public project spending puts money back into the hands of those providing the labor and thus has its own ripple effect throughout the economy.

The consensus is for a drop of -0.8% in August. The forecast is down after no change from June to July. Let’s see if the markets can get some surprisingly good data with the aid of lower interest rates. The recent government and Fed measures to inject liquidity will not show up this early in the cycle.

The ISM Manufacturing Index: The Institute for Supply Management surveys more than 300 manufacturing firms on employment, production, new orders, supplier deliveries, and inventories. The index gives a great look at the state of manufacturing and the direction it is heading. The cyclical nature of manufacturing could signal further economic downturn, and also can send off serious inflationary pressures in the economy on a higher than expected number. You can bet the Fed will have a close eye on this report, with the CPI well north of 5% as is.

The consensus figure is 41.5 for the month of September, a significant drop from the actual figure in August of 49.9