Daily Market Commentary for November 7, 2011

The Consumer Financial Protection Bureau announced that it may give financial firms a heads-up, Early Warning Notice, when it finds that the company may have violated consumer protection laws.
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Conference Board gauge of employment trends 'employment trends index' slightly gained in October and reported upward revisions to results for prior months, pointing to a "slightly more optimistic outlook." The report was designed to forecast turning points in employment and rose 0.7% during October from previous month and is 5% higher than the 2010. "Given the deterioration in the confidence of consumers, businesses and investors in recent months, we think that the economy is simply not strong enough to deliver more than 125,000 jobs a month," said Gad Levanon, macroeconomic research director at the Conference Board. The employment-trends index is made up of eight labor-market indicators, such as unemployment-insurance claims, and six of the indicators made positive contributions in October.

According to Eric Rosengren, president of the Boston Federal Reserve Bank, the Fed must remain aggressive to combat the weak labor market. "Given the very weak labor market conditions and the low expected inflation rate, the Federal Reserve should in my view continue to take action to aggressively try to reduce the stubbornly high U.S. unemployment rate,' Rosengren said in a speech in Boston. Per Rosengren, headwinds from the financial crisis and concerns about possible future financial shocks have led to lethargic economic growth and slow job growth, despite the Fed's efforts to stimulate demand.

According to CoreLogic, U.S. home prices fell 1.1% in September for the second consecutive monthly decline. Excluding distressed sales such as short sales and real estate-owned transactions, year-over-year prices fell 1.1% with year-over-year prices lower by 4.1%. Mark Fleming, chief economist for CoreLogic reported prices will continue to adjust to market fundamentals of high inventories and weak demand and he said, "We expect declines to continue through the winter." The CoreLogic HPI is a repeat-sales index that tracks increases and decreases in sales prices for the same homes over time.

Italian Prime Minister Silvio Berlusconi resisted pressure to resign today as government borrowing costs spiked to the highest level seen since the launch of the euro and underlined fears the euro zone’s No. 3 economy could soon be engulfed by the long-running debt crisis. Berlusconi has scrambled to prevent further detections by parliamentary members of his own ruling coalition ahead of a budget vote on Tuesday.

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