Morning Report

Vital Statistics:

	Last	Change	Percent
S&P Futures	1453.1	-4.0	-0.27%
Eurostoxx Index	2561.6	-8.2	-0.32%
Oil (WTI)	91.7	-0.4	-0.46%
LIBOR	0.319	-0.002	-0.62%
US Dollar Index (DXY)	79.14	0.120	0.15%
10 Year Govt Bond Yield	1.80%	-0.02%
RPX Composite Real Estate Index	193.7	0.5

Markets are weaker on a weaker this morning ahead of the EU summit in Brussels. Euro sovereign yields continue to drop, which means the benign backdrop to the markets continues.  Earnings reports continue to exceed expectations, though the bar is set very low this quarter. Bonds and MBS are slightly higher.

It turns out that last week's dramatic drop in initial jobless claims was due to technical problems with seasonal adjustments in one state, as reported by CNBC.  Initial Jobless Claims increased to 388k from a revised 342k last week.

The Leading Economic Indicators had a big jump, up from -.4 to + .6,  We still seem to be oscillating around 0, with a positive reading followed by a negative one. This is indicative of a slow growth trend.

Similarly, the Philly Fed Business Outlook Survey noted that conditions in the manufacturing sector remain weak. Labor conditions dropped as 22% of all firms reported decreases in employment and 11% reported increases. The average workweek dropped as well.  In terms of the mix of employees, more firms decreased the number of full-time employees and increased the number of temp workers.

Prepare for a battle over the fiscal cliff. No tax hikes on the wealthy, no deal. Of course Obama has said that before.

The WSJ discusses yesterday's big housing starts number. As the inventory of foreclosures declines and underwater sellers sense a turnaround in pricing, more and more buyers are looking to new construction.  Foreclosures as a percent of sales dropped to 14% in September, and are down from 50% a couple of years ago.