Fed and Fed Agency Announcements

Most of the CME Markets close at noon today for the Christmas Break, expect trading this morning to be light as many traders take the entire day off.

Durable Goods Orders
8:30 AM ET

Jobless Claims
8:30 AM ET

3-Month Bill Announcement
9:00 AM ET

6-Month Bill Announcement
9:00 AM ET

EIA Natural Gas Report
10:30 AM ET

NYSE Early Close – 1:00 ET

SIFMA Rec. Early Close 2:00 ET

Fed Balance Sheet
4:30 PM ET

Money Supply
4:30 PM ET

Relevant Consensus Analysis

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ESH0 For 12/23/2009

How To Use

Fed and Fed Agency Announcements

MBA Purchase Applications
7:00 AM ET

Personal Income and Outlays
8:30 AM ET

Consumer Sentiment
9:55 AM ET

New Home Sales
10:00 AM ET

EIA Petroleum Status Report
10:30 AM ET

2-Yr Note Announcement
11:00 AM ET

5-Yr Note Announcement
11:00 AM ET

7-Yr Note Announcement
11:00 AM ET

Consensus Reports

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The talking point on government economic reports is always consistent, as we typically trumpet exceptional numbers on initial economic reports then quietly revise downward in following months.  The Commerce Department would say the numbers are revised as more information is gathered and a clearer picture of the economy emerges, and this is indeed a cogent argument.  The job of estimated the US GDP is a mammoth undertaking.   But that is not the problem, it has been a long time since I have seen numbers revised upward as oppose to downward.  Simple probability would suggest that they would make revisions both to the upside and downside as more information becomes available.

I suppose it isn’t politically correct to question the Commerce Departments veracity, but initial numbers released by the Department have to be treated with a grain of salt, as few people put much confidence in the bright picture often portrayed by the numbers.   This practice is nothing new and did not start under the Obama Administration, it’s been going on for years, and has reduced the Commerce Departments credibility significantly.  The market has simply learned to shrug off the glowing reports issued and continue trading with what the market offers to be true through independent pricing models and reports issued by individual corporations.

What ever happened to the maxim to “err on the conservative side?”  Even MSNBC, the bastion of spinning horrible news into “not quite as bad as you think” news has taken to shrugging off statistical surprises and recommends, from time to time, to wait for the revisions to give us a clearer picture.   Oddly enough, it is my opinion that the general public has a pretty good idea what is going on in the economy.

I was at Wal-Mart yesterday and happen to know the manager pretty well, and questioned him how Christmas season sales were going and he smiled and rattled off a stream of positive numbers over last year.  I didn’t need to ask, really, the throngs of people in Wal-Mart indicate a change in spending.   On the other hand, I questioned the local Macy’s manager about Christmas sales and he stared at his shoes and mumbled incoherent jabber about a late surge he expected to bring the numbers up to par from last year.  The logic is simple:   Wal-Mart is cheaper than Macy’s and people are spending less this year.  I do’t need the Commerce Department to tell me that fact, either.  I can see and feel it.

As always, I am thankful I am scalper and don’t have to depend upon government prognostication to support myself.

Fed and Fed Agency Announcements

4-Week Bill Announcement
11:00 AM ET

3-Month Bill Auction
11:30 AM ET

6-Month Bill Auction
11:30 AM ET

Highlights
After the boost to equities at Friday’s close from quadruple witching, will the gains reverse as trading returns to normal?

ESZ9 For 12/14/2009

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Fed and Fed Agency Announcements

4-Week Bill Announcement
11:00 AM ET

3-Month Bill Auction
11:30 AM ET

6-Month Bill Auction
11:30 AM ET

From Financial Armageddon

It’s been said that people don’t change. However, history and experience suggest that if they are prevented from doing something for a sufficient period of time, or are penalized enough times for acting or thinking a certain way, then they will alter their behavior — and even their perspective.

Of course, it’s hard to figure out just what is “enough” — what it takes to engender such a transformation, whether it involves one individual or an entire society.

Some might wonder, for instance, whether the traumatic circumstances of the past two-and-a-half years, which have been as severe as anything we have experienced since the Great Depression, have been enough to force a broad enough cross-section of Americans to abandon the free-spending ways of the past.

Based on the following Los Angeles Times report, “Being Frugal is Back in Fashion,” some might say the answer is “yes.”

Hit hard by job losses, strapped with debt or just plain weary of shopping for shopping’s sake, millions of Americans are changing their free-spending ways.

Ask Juli Thurston how things have changed from her spendthrift past and she’s likely to point to a thick silver ring that she bought from Tiffany’s for $175.

She recently put it up for sale on EBay. In today’s economy, something less flashy will do just fine, thank you.

In fact, the only real accessorizing Thurston is doing these days is tightening her belt. After relocating to Florida last year to be close to her grown daughters, the former Los Angeles resident hasn’t found steady work.

So what is is Thurston buying? Mainly groceries, which she shops for carefully, using coupons and food stamps. She’ll be making many of her Christmas gifts this year. And she keeps up with friends on Facebook, instead of meeting them for drinks or dinner.

“I used to shop at Nordstrom and would go out to eat at least once a twice a week with friends,” said Thurston, 50.

“I compare what I’m doing now to what my grandparents said they did during the Great Depression. I have cut back on everything, even the Internet and utilities.”

She’s not alone. Hit hard by job losses, strapped with debt or just plain weary of shopping for shopping’s sake, millions of Americans such as Thurston are changing their free-spending ways.

The brutal economic downturn has battered stock portfolios and home values and made easy credit tough to come by. Even Wall Street tycoons are consuming less conspicuously.

In short: Frugal is back in fashion.

“In a normal recession, people pare back their spending somewhat,” said Craig Thomas, a Pennsylvania-based economist and author of “The Econosphere.” “But this is an honest-to-goodness slam on the brakes. Households have cut way back on their consumption.”

Signs of the trend

For economists, the shift is chronicled through reams of data that track indicators such as consumer debt and same-store sales. The national savings rate, for example, which lingered around 1% in 2008, has soared to 4.4%. Sales of “apparel and notions” have fallen 13.7% since January. Consumers are even spending less at the grocery store, according to the U.S. Census Bureau.

All the data tell the same story. People who spent every dime of their disposable income two years ago are now saving and paying down billions in debt. Like Thurston, they’ve shifted from shopping at luxury stores to buying from discounters. They’re scrimping with more vigor and tenacity than economists have seen in decades.

“You even see a decline in sales of essentials,” said Gary Schlossberg, senior economist with Wells Capital Management in San Francisco. “It’s not that people are eating less. They’re buying less expensive items — private label rather than brand name. The stores are restocking their shelves to make more room for the cheap stuff.”

But there’s no need to turn to numbers to find signs of the trend. Legions of reformed overspenders like Sandra Hanna, 28, will tell you that cutting back is chic.

“Solvent is sexy,” said the Denver author and talk show hostess. “Now when my friends get together, we talk about money, some sweet deal that we’ve found or what we’re investing in. It’s like we used to talk about boys. Everybody’s eyes light up.”

Hanna is part of a group of five women known as the Smart Cookies, whose conversion into penny pinchers has netted the team two book deals as well as a talk show on the W network.

Their transformation started one night when one of the five confessed that she had maxed out her credit cards and was $20,000 in the hole. Hanna had a confession of her own: She’d saved $8,000 by living with her parents after college. But in a mere two months, she had spent every dime of that and had racked up an additional $2,000 in debt.

“I worked with these women who had these fabulous wardrobes and stylish apartments,” Hanna said. “I look back at it and realize that I just thought that’s what you do.”

They formed their own spenders’ support group, urging one another to stay out of the malls and stick to their goals. In two years, the group managed to pay off $50,000 in consumer debt.

If there’s a silver lining to today’s recession, Hanna said, it’s that it caused a lot of people to hit rock bottom and realize the lives they were living weren’t sustainable. Some people say they also came to the realization that spending might provide a short-term lift, but it was like a sugar high. It didn’t bring any lasting satisfaction.

Former spendthrifts

That’s certainly the case for Susan Kessler, a Los Angeles resident who is best known by her blog moniker The Frugal Diva.

A graphic designer, Kessler said that when work was plentiful she shopped frequently and spent carelessly on things such as dinners at overpriced restaurants. But when the economy stalled, she shifted gears. Kessler now dispenses advice on her blog about free activities and how to “work the system” to find nice things for less money.

“You are part of this culture that says, ‘I really like that dress. I’m going to buy it. And then I’m going to go on that vacation, and then I’m going to buy something else,’ ” Kessler said. “I found the lifestyle so unsatisfying.”

So did Rosalyn Hoffman, author of “Bitches on a Budget.” A former buyer for Filene’s and Bonwit Teller, the Boston resident said she experienced no sudden reversal of fortune; rather a feeling that her possessions had become a burden.

“I woke up and thought that I don’t want to live like this,” Hoffman said. “I didn’t hate my life. I just didn’t want to be responsible for all these things. I wanted to get rid of all the stuff. Clean things out. Edit things down to what was important.”

Hoffman said she and her husband sold their luxury home in 2007 and moved into an apartment. She’s since made a mark telling pampered consumers how they can get luxury goods for bargain prices.

“People get caught in these cycles and stop thinking about what they are doing,” Hoffman said. “I think this bad time is really a great opportunity to step back and take a breath.”

Heidi O’Gorman, 49, has a similar story. The communications consultant lived for years on Chicago’s swanky Gold Coast. She spent lavishly on her elegant wardrobe and thought nothing of dropping $1,000 a month on dinners out with her husband, Britt.

“There were 50 wonderful restaurants within walking distance of our home, and theaters and museums and concerts. We took advantage of all of that,” she said.

But when the consulting firm she had been working for in Chicago started downsizing, O’Gorman and her husband decided to start afresh. The couple moved to Florida, where O’Gorman formed her own company, Carrick Marketing and Communications. She now works out of her home and watches expenses like a gimlet-eyed bookkeeper.

“What’s different now is that the connection between how hard I work and the money I have to spend is far clearer to me,” she said. “You become much more careful.”

A permanent shift?

Economist Thomas said O’Gorman had put her finger on the underlying cause of the shift: The recession and current tight-credit environment are making people far more aware of the cost of spending.

In the past, you could borrow against your home equity to finance day-to-day purchases. In that environment, a $200 pair of jeans didn’t seem that costly because you were paying only a few bucks a month by adding the purchase price to your home equity loan.

“All those sources of essentially free money have disappeared,” Thomas said. “Now that closet full of clothes represents hours and hours of toil. It represents time away from your kids with your nose to the grindstone. Now you vividly see that these products represent so much lost effort. In that environment, they appear to be much more wasteful.”

What’s unclear is whether this newfound frugality will evaporate as soon as the credit spigot is loosened again. The answer could determine when and how the nation pulls itself out of its current malaise.

“Roughly two-thirds of economic activity comes from consumer spending,” said Jack Kyser, founding economist of the Kyser Center for Economic Research at the Los Angeles County Economic Development Corp. “If consumers are being very cautious, that’s going to act as an economic brake. It will be a very, very muted recovery.”

The economy can survive the frugal consumer, Thomas said. But it would grow only to the extent that personal incomes grow. “As we see job creation, we will see spending growth,” he predicted.

But Thomas doesn’t believe that consumers will stay frugal forever. “Conspicuous consumption doesn’t necessarily go away,” he said. “Once people can afford it, they go back.”

Still, no one is predicting a rapid return to the malls. Consumers remain nervous about lingering unemployment, volatile stock prices and past excesses that cost many people dearly.

Meanwhile, blogs on spending less, using coupons and finding the fun in frugality are proliferating, giving cachet to cheap. Besides, spending frivolously when your friends and neighbors are struggling seems insensitive.

“The era of hugely conspicuous consumption is dead,” Hoffman said.

Economists are not so certain. But conspicuous consumption is definitely taking a breather — possibly a long one.

“It’s funny how much things have changed,” Kyser said. “I see the people zipping around in the expensive SUVs and just sneer at them now.

“We know that times are tough. People have lost their jobs and we are all sharing the pain,” he added. “We are not going to be over-the-top spenders in the face of that. We are going to be frugal because it makes us feel virtuous.”

Fed and Fed Agency Announcements

International Trade
8:30 AM ET

Jobless Claims
8:30 AM ET

RBC CASH Index
9:00 AM ET

Quarterly Services Survey
10:00 AM ET

EIA Natural Gas Report
10:30 AM ET

3-Month Bill Announcement
11:00 AM ET

6-Month Bill Announcement
11:00 AM ET

52-Week Bill Announcement
11:00 AM ET

Elizabeth Duke Speaks
12:45 PM ET

30-Yr Bond Auction
1:00 PM ET

Treasury Budget
2:00 PM ET

Fed Balance Sheet
4:30 PM ET

Money Supply
4:30 PM ET

Consensus Analysis

The Treasury Department expects to recover all but $42 billion of the $370 billion it has lent to ailing companies since the financial crisis began last year, with the portion lent to banks actually showing a slight profit, according to a new Treasury report.

The new assessment of the $700 billion bailout program, provided by two Treasury officials on Sunday ahead of a report to Congress on Monday, is vastly improved from the Obama administration’s estimates last summer of $341 billion in potential losses from the Troubled Asset Relief Program. …

The officials said the government could ultimately lose $100 billion more from the bailout program in new loans to banks, aid to troubled homeowners and credit to small businesses.