Here comes December

Economic reports for the day included PCE (personal income expenditures) and Chicago PMI.  The Chicago PMI is a survey of 200 purchasing managers and is a barometer of the manufacturing industry.  The report came in at 50.4 which was slightly lower than estimates, but still on the positive side of the scale.  Personal spending fell by 2% last month, with hurricane Sandy getting the credit for the drop.  Inflation was in line and stocks indexes are all relatively flat.  Investors are puzzled with the potential failure of political agreement on solving the Fiscal Cliff and the tax ramifications.  Many feel there will be a big selloff in stocks before the end of the year if an agreement is not reached.  mortgage bonds are still grinding their way higher slowly and are still trading above the 25 and 50 DMA’s.  As long as we remain above both the 25 and 50 day moving averages, we will maintain a cautious floating bias.