Retail Sales and Jobless Claims Disappoint

Matt Nesto analyzes market reaction and other business headlines.
9:33 | 01/12/12

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Transcript for Retail Sales and Jobless Claims Disappoint
-- Thursday January 12 hello everyone I'm Stephanie sign New York Dow futures were up this morning ahead of the bell joining me now to discuss all the business headlines at this hour and new space Brosnan and co -- break out on Yahoo! finance. -- -- -- -- -- -- -- Thanks Stephanie appreciate it glad to be here so let's went to report out just in the last hour first retail sales for December were up. Point 1% that's a little less than what most analysts were expecting it take on the line. Yeah it and that is why are we seeing a flash opened here today we're looking for a higher open and we had -- double date disaster if you will I would go out and say that the retail sales number at 110 of a percent gain for the critical month of December is a huge disappointment analysts and economists were expecting a four tenths of our. Percent gain and then when you back out to all those that number goes down actually negative two minus two tenths of a percent again. They were looking for a three tenths of a percent gains -- half a percentage point -- mess for the December. Ex autos retail sales is not good news. It doesn't seem like -- in a lot but it is significant clearly. Out of the past hour you know every Thursday to get the weekly report on jobless claims that came in at 399000. Which is. Very close to that 400000. Mark we often talk about is just sign of that reverse solar of trouble. Well -- It's too early you know this comes out every single week it certainly is a reversal short term reversal of a trend that's been going on for a long time. I'll bet she a gentleman's bet of a dollar than a week from now. We will see this week's data print of 399000. Revised higher north of 400 -- and tends to -- be that way as it was on the previous week they. Nudged -- you know higher ever so slightly but he the 399. Thousand figure is a six week high. In it does you know snap a recent trend -- -- -- that number getting down into the closer to the mid 300 range. OK let's turn -- to Europe where there's been sort of mixed news Martin's Rodney head of the European Central Bank. Says he sees signs of stabilization. What are the implications of that. Well the the -- the most notable one was the fact that the held race the ECB held their benchmark rate at 1% they had cut. The previous two meetings to that record low level there were some out there that were forecasting -- possibly another rate cut was in store but no so that right there is a sign of confidence that maybe some of their measures are taking whole. The implications. Are certainly global but as far as US investors are concerned it keeps the narrative -- -- That Europe is at least progress saying. Or at least not when regressing in terms of their efforts to deal with their sovereign debt problem -- all the different countries and you can take your pick as well as their banking crisis. And that -- -- big bond auctions today in Europe overall haven't they -- They went well and -- and you know. The US investors typically don't look to Spanish bond auctions -- -- Daily things but these are bizarre road tar and Stephanie so -- -- give you an idea and need to look at Italy a month ago they auctioned off one year dad had to pay five point 95 present. Today just one month later it's down -- 2750. The risk change there in the same. Metrics are for Spain Spain they had double the demand for the debt they were going to additionally had targeted to -- an error rate for a three year auction was 3.3 percent down from about five point one so. You know an interest -- terms that's a -- -- Tectonic move if you well -- had a thirty day. -- that seems to show some level of optimism. Coming out of Europe. It we've been talking a lot about the value of the Euro and that it could drop some people say as little as a dollar twenty at where -- -- -- the currency moving over the next twelve months. I just had to guess on and you know with the everybody's. Aware of the fact that Euro Europe and the Euro have their problems ahead of them. It is probably the most crowded trade in the world is really -- to depend in terms of how low the European recession. Plays out how deep how. How long and how widespread. People are betting against the Euro which is that simple -- -- we're seeing some Euro strength today given the after mentioned news from the ECB in the options but you know these trends don't move in straight lines were still seeing. The dollar index and the dollar vs the Euro at better than a one year high about a fourteen month high so dollar strike is still -- And oddly any time that we see turmoil also should European narrative start to get negative beginning concerns creep in about. Defaults in sovereign write downs -- -- We could see that flight to quality which is the US dollar still regardless of our credit rating we could see that drive in the dollar ever higher. Which ironically axes -- headwind against our stock market and our commodities. Let's turn to the housing market the group -- Realty traffic solid track. -- I don't recall that it's -- not that basic foreclosures could spike this year is banks ketchup on a backlog of delinquencies we've heard this speeds the war and what effect do you see that -- on housing market which is still struggling to hear. Yeah Willits and you know it's sort of egg through the snake -- mean that their foreclosure process so all and was down 33% last year pro so that to forecast some sort of an uptick. In 2012 is sort of obvious to me you know no reality check needed -- that one. But you know the truth of the matter is there's already government programs that are in play some sort of been. Kind of under utilized if you will that would -- allow more investment. Pools to buy up some of these properties that depressed prices and turn them into rental properties has been a lot of demand for ransom sure you've read the stories. Here in New York in terms of what we see in terms of rents. But there are some that are -- that the rental market might be overheating so -- -- -- did see the entry. Into the rental market of a bunch of new properties that would ease price is there and it could also take the pressure off of the existing home. A market in terms the -- is there as well. OK switching gears of the banking sector the Royal Bank of Scotland cutting 3500. Jobs we also learned this week at PNC. Is planning some job cuts is just a sign at all of the bad times ahead for the banking industry. We yeah I mean they've had bad times behind me were -- Royal Bank of Scotland cut 30000 announced 30000 -- -- this is a rounding up another additional 10% more reductions. In the financial sector and banks in particular. With the worst performing in -- stock market last year down about 30%. So yeah there -- nervous meaning going forward there's still a lot of economic uncertainty domestically we look. Good compared to the situation in Europe. But the truth is that our recovery is Mason at -- and sub par if you will be look at most post recessionary periods of growth level was still very very. Low -- people are nervous that just a small. Extraneous or external event could you know tip us back into it recessionary or slowing growth so yeah it's very very very critical time if you will in terms of that GDP figure. Okay now what -- to an interesting topic here which is Google -- some slack for changes to their search engine which took effect this week as someone who works. What -- their primary competitors Yahoo! -- you -- to weigh in on us. -- -- you know I mean I use Google I'm not an embarrassed to SA and everybody does I think if you look at. What's been going on lately -- big picture you know Larry Page with one of the founders of the company is running. The company now. Eric Schultz who was the previous CEO is now the chairman is spending a lot of time. Before congress sort of defending the company against privacy. -- concern so. My general -- is either as an individual user I don't want more. Knowledge about my personal business displayed in my searches -- they want it I mean I don't need it offered to me I think are already know my friends are. Generally speaking maybe they know more than me in terms what people want a search for so you know god bless them but it's all ultimately it seems like all battles on the -- were neck right now circle back to FaceBook boulevard in terms how you can be -- -- growing. -- And and and try to you know stay relevant with your core business which is search which is basically advertising. And yet grow and -- and and stay relevant with a fast growing competitor. -- right anything else you're watching today Matt. Just watching the market you know we're off to a great start fit for -- 2012. Up about 3%. That has good implications watching the political scene very closely as of course. Everybody is and seeing -- we're seeing any early are ramifications -- early wagering there in terms of sectors or industries that might do well depending on who the front hundred usual or is but pretty much off to a good start keep that are here close to the data that that retail sales number. Is is certainly a shocker and also waiting for earning season to really kick in the heavy flow of earnings is gonna start. Next week. Right the market trading flat in the first nine or ten minutes of trading here -- nest and cohost of break out on Yahoo! finance -- great to have you with us thank you. --

This transcript has been automatically generated and may not be 100% accurate.

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