Category Archives: Economic Indicators

Economic Indicators, Employment

December Employment Report

KEY DATA: Payrolls: +252,000; Revisions: +50,000; Private Sector: +240,000; Unemployment Rate: 5.6% (down 0.2 percentage point); Hourly Wages: -0.2%

IN A NUTSHELL:   “Firms may be hiring like crazy but they are not paying up for those workers, at least not yet.”

WHAT IT MEANS:  Today I get to be a true economist: There is both good news and bad news in the December employment report.  Let’s start with the positive.  The economic jobs machine has shifted into high gear.  Payrolls rose strongly in December and both the October and November gains were revised upward.  On average, employment increased by an average of nearly 290,000 per month over the past three months.  For all of 2014, almost 3 million new positions were added, the most since 1999, the peak of the Y2K/dot.com boom.  Job gains were across the board, with construction, manufacturing, finance, health care and especially restaurants adding workers solidly.  We are eating out again and that is a great sign.  Also, the public sector has finally started to help out with state and local governments hiring as their revenues continue to rise.  While the federal government, excluding the ever-shrinking postal service, is not hiring very much, at least it is no longer cutting workers.

There was also a very sharp drop in the unemployment rate.  We hit the lowest level since June 2008.  Okay, the labor force declined as did the participation rate, but by now, everyone should know what I think of those numbers.  The labor force growth in 2014 was disappointing but it did pick up quite sharply in the second half of the year.  As for the participation rate, it was down only 0.1 percentage point from December 2013.  It has stabilized recently.

The disappointing aspect of the report was the decline in the hourly wage and a downward revision to the November increase.  While the labor market continues to tighten, firms seem to be able to put off raising wages. 

MARKETS AND FED POLICY IMPLICATIONS:  This was a really good report but the wage numbers keep it from being a great one.  I am just not sure what to make of the hourly earnings data.  For example, there were hourly wage declines in manufacturing, education and health care, finance, information services and utilities.  These are not your typical low pay sectors where you would expect worker pay to fall, especially when demand is rising.  While retail wages were off, they were flat in hospitality and leisure.  Basically, I am not so sure we should make any judgments about worker compensation from these numbers.  That is important since the Fed is watching inflation closely, especially since some members are concerned that inflation is too low.  More rapidly rising wages would ease those concerns.  Still, with the job market firming, it is only a matter of time before we see consistently better wage increases.  The dam holding back the wage gains may be higher and stronger than expected, but it is not unbreachable and with the unemployment rate near full employment, we will likely see the cracks appearing very soon.  Until they do show up, though, Fed Chair Yellen can remain “patient”.   

ADP Payroll Estimate, Economic Indicators, Help Wanted Online, Trade Deficit

December ADP Jobs, Conference Board Help Wanted Online and November Trade Deficit

KEY DATA: ADP: 241,000/Help Wanted Online: -79,200/Trade Deficit: $39 billion ($3.2 billion narrower)

IN A NUTSHELL:   “A solid labor market coupled with a narrowing trade deficit points to continued strong growth ahead.”

WHAT IT MEANS:  Employment Friday is this week and the first guess at the private sector number comes from ADP, which estimated that employers added workers solidly in December.  That said, the government’s data and the ADP numbers sometimes diverge widely.  For example, ADP estimated that private sector payrolls rose by 227,000 in November while the government put it at 314,000.  But the 3-month trend has tended to be fairly close and that raises a question about Friday’s jobs report.  For the fourth quarter, ADP puts total private sector job gains at 710,000.  After two months, the government has it at 550,000, a difference of 160,000.  Could December’s increase be below 200,000?  Possibly, though I think it will be between 225,000 and 250,000.  Companies of all sizes are adding jobs and that should mean continued solid payroll gains.  I remain optimistic about the job market.

Helping drive the economy forward, regardless what investors might think, is a rapidly narrowing trade deficit.  Exports are beginning to suffer from the weakness around the world, but that is being offset by declining petroleum imports.  The drop in exports is not a major concern as most of the decline came from Boeing shipping were planes.  That is likely just a timing issue.  Vehicle shipments were off as well and that may reflect slower world growth.  On the import side, the only category that posted a sharp gain was cell phones.  Thanks Apple.  Adjusting for prices, it looks like the trade deficit will be fairly stable.  There have been concerns that trade would slow growth in the fourth quarter but right now that is not the case. 

The Conference Board’s Help Wanted Online Index plunged in December after having soared in November.  Actually, this one month up and one month down pattern seems to be a routine that is odd given the consistently strong payroll increases.  These data are supposed to be seasonally adjusted, so I guess I will simply say that the decline in online want ads is a concern that should unwind in a month.

MARKETS AND FED POLICY IMPLICATIONS: The recent data have been disappointing but the ADP and trade numbers were better than expected.  Indeed, today’s reports raise more questions than they answer.  Friday is only two days away so we will have a better picture of the labor market soon enough.  What investors will make of these reports is anyone’s guess.  I don’t even think investors know what they are thinking.  The markets are reacting emotionally so it’s best to simply step back and not make too much of the doings there.  And don’t forget that Wall Street and Main Street have been delinked for a long time so making a judgment about the economy based on stock movements is silly.  As for the Fed, the focus is still on wages but the issues in Europe and the continued low inflation rate are complicating things.

Durable Goods Orders, Economic Indicators, Home Prices, Supply Managers’ Non-Manufacturing Index

January Supply Managers’ Non-Manufacturing Survey, November Durable Goods Orders and Home Prices

INDICATOR: January Supply Managers’ Non-Manufacturing Survey, November Durable Goods Orders and Home Prices

KEY DATA: ISM (Non-Manufacturing): -3.1 points/Employment: -0.7 point/Orders: -0.7%; Capital Spending: 0%/Home Prices (monthly): +0.1%; Over-the-Year: +5.5%

IN A NUTSHELL:   “The economy hardly ended the year with a bang, but only because the recent pace was not sustainable.”

WHAT IT MEANS:  It would be great if we could get a string of five percent growth rates, but the likelihood that the third quarter pace will be duplicated anytime soon is not great.  What would be good is if the economy eases only modestly and that looks to be the case.  The Institute for Supply Management’s December index of non-manufacturing activity fell solidly, but there is no reason to worry.  Yes, just about every component posted decent declines, but the levels also matter and they are still pointing to decent growth.  That is, the services sector is coming down from extremely high levels to more sustainable and solid levels.  Indeed, hiring continues to be strong and dropped the least of all components.  The one change that does cause a little concern is the sudden shrinkage in order books.  The thinning was modest, though.

As second indication that the summer’s breakneck pace is cooling was the drop in durable goods orders in November.  Interestingly, while these data are usually really volatile, there was no sector, except defense aircraft, that posted either a large change.  As for business spending, executives continue to be cautious, as capital goods orders were flat after having dropped the previous two months.  I guess a strong economy is not enough to get firms to invest in the future.

Housing prices look like they have finally stabilized.  The year-over-year increase had been slowing for quite some time but we the latest data are indicating the drop is largely over.  CoreLogic’s November index showed a rise in both the monthly change and the yearly increase.  Every state and 96 of the top 100 metro areas posted increases since November 2013.

MARKETS AND FED POLICY IMPLICATIONS: The quarterly GDP growth rates always bounce around even when conditions are great.  The summer’s 5% pace was way above expectations but we really are not sure what trend growth will look like.  I think we can expand at or above 3.5% this year.  Consensus is around 3%.  As long as energy prices don’t spike, consumers will have lots more income to spend and the likely gains in wages will only add to purchasing power.  Ultimately, businesses will recognize that the U.S. economy has turned the economy and investment will rise with that epiphany.  Think about it.  The Conference Board’s CEO Confidence Index declined in the third quarter even as the economy was soaring.  So who knows what drives thinking in the corner office?  Maybe executives are more worried about the rest of the world, which is clearly a concern.  But the U.S. is hardly a problem.  Regardless, we get the December employment numbers this Friday and that is what will likely drive investor and Fed thinking.  Don’t expect another job gain number anywhere near 300,000, but it should be decent and the unemployment rate could decline even if the participation rate rises.

Construction, Economic Indicators, Supply Managers' Manufacturing Index

December Supply Managers’ Manufacturing Index and November Construction

KEY DATA: ISM (Manufacturing): -3.2 points; Orders: -8.7 points; Employment: +1.9 points/Construction: -0.3%; Private Residential: +0.9%

IN A NUTSHELL:   “Manufacturing’s robust growth rate has slowed to only a strong pace.”

WHAT IT MEANS:  I hope everyone had a wonderful New Year.  The manufacturing sector surged in the fall and it was likely that the robust pace would moderate.  Well, it did in December.  The Institute for Supply Management’s Manufacturing index dropped fairly sharply, but that hardly signals the sector is in trouble.  First of all, the level is still consistent with solid growth.  Indeed, it is hard to believe that firms ramped up hiring if they were worried that conditions were weakening significantly.  Thus, the moderation in order growth, including imports and exports, as well as production doesn’t seem to be viewed with much alarm.

Construction activity eased in November, but here too the details are not pointing to a major slowdown.  Private sector construction rose, especially for residential projects.  That was really good news since this segment had been one of the weaker links.  Nonresidential construction was off.  The big drop was in public sector power projects.  That may be reflective of the falling energy costs, though given the long lead times on these activities, it is unclear exactly what is happening.

MARKETS AND FED POLICY IMPLICATIONS: The economy continued to expand nicely at the end of last year but we will have to wait until next Friday to see how many jobs were created and a few more weeks to find out fast GDP grew.  The early signs are that consumers spent money like crazy and manufacturing during the entire quarter was strong.  Most economists expect that we will come down sharply from the 5% mountain that we got to in the third quarter.  It is hard to think we will be anywhere near that number in the fourth quarter.  But I still believe that barring a huge reduction in inventories, growth could once again be near if not above the 3.5% pace we have seen for four of the last five quarters.  That is well above consensus.  Still, for investors to remain exuberant, we need the data to show that the economy is hitting on all cylinders.  Today’s numbers don’t show that, though they also don’t indicate a major slowdown.  As for the Fed, the next FOMC meeting is January 27, 28.  The members will know the December employment numbers but I am unsure how much they will know about fourth quarter growth, which is scheduled to be released on January 30th.  Regardless, the “considerable time” phrase is being replaced by patience and the members have to start indicating what that means.  I guess we will find out then, maybe.

Consumer Sentiment, Economic Indicators, Home Prices

December Consumer Confidence and August Home Prices

KEY DATA: Confidence: 92.6 (up 1.6 points)/National Home Prices (Year-over-Year): 4.6%

IN A NUTSHELL:   “The consumer is smiling and there is every reason to think the era of good feeling will continue next year.”

WHAT IT MEANS:  If 2015 is to be the year of that the consumer makes a comeback, it will have to start with people actually feeling good about things – and they do.  The Conference Board’s Consumer Index rose in December led by a surge in the current conditions measure.  People viewed the labor market more positively with jobs becoming more plentiful.  The perceptions of business conditions also improved.  As a consequence, the Present Conditions Index hit its highest level since February 2008, which was at the start of the Great Recession but well before the banks collapsed.  The only concern in the report was that the outlook for the future faded a touch.  It is hard to understand how the present economy is clearly improving but optimism is not when there have been few factors that have raised concerns about the future.  I guess record stock prices and soaring job gains are problems.  Or maybe it was the election results.  Or more than likely, it was just one month’s numbers.

As for housing, price gains continue to slow.  The latest S&P/Case-Shiller report showed that the deceleration in year-over-year price increases continued in October.  While the monthly change was negative, on a seasonally adjusted basis, the national index continued to post a solid rise.  That holds out hope that we are reaching a bottom on the price appreciation decline.  Nevertheless, it is not looking like we are in for a sharp rise in prices anytime soon.  Looking across the country, none of the twenty metro areas identified posted a double-digit rise from October 2013.  Similarly, none posted a decline over the month, when you look at the seasonally adjusted numbers, so that is something positive to work with.

MARKETS AND FED POLICY IMPLICATIONS: The year is coming to an end and the good news is that people are feeling positive about economic conditions.  All signs point to strong growth in 2015 and while optimism is great, households still need the wherewithal, i.e., income, to follow through on those thoughts.  That is the big unknown entering 2015 and how wage and salary gains play out will determine the strength of the economy.  I believe that job gains will be robust and by spring, labor shortages and with them, higher wage increases, will follow.  That is my wish for the New Year, but as the saying goes, “if wishes were horses, beggars would ride.”  In other words, we shall see.  On that note, let me say:

Have a Happy and Healthy New Year!

Economic Indicators, Existing Home Sales

November Existing Home Sales

KEY DATA: Sales: -6.1%; Year-over-Year: +2.1%; Median Prices (Year-over-Year): +5.0%

IN A NUTSHELL:  “The housing market may still be improving, but it is doing so with two steps forward and one back.”

WHAT IT MEANS:  Is the housing market improving or softening?  If you look at the data, the answer is yes.  After two consecutive nice increases in existing home sales, the market went backward in November.  The sales pace fell to its lowest rate since May.  That is not to say the increase has been steady.  It was hardly that.  Sales rose in June and July, fell in August and then rose once again in September and October.  Hence, the two-steps forward, one-step backward comment.  In November, the declines were in every region.  The largest drops were in the Midwest and West and if anyone knows why sales were off in those areas by about 9%, which is really large, please tell me.  It was not as if the weather was terrible.  In other words, I just don’t get it.  As for prices, they have held in there quite nicely.  After bottoming in June, the year-over-year change in the median price has slowly increased.  That may be due to the sluggish increases in inventories.

MARKETS AND FED POLICY IMPLICATIONS:  It is hard to explain the sharp drop in home demand.  The weather in November was nothing exceptional and mortgage rates were not that far above the fifty year lows.  One explanation is that the supply of homes for sale is relatively limited – and it is – and so buyers are having a difficult time finding suitable options.  That makes sense and a limited supply may restrain home sales for a long time to come, especially when rates rise.  In the future, homeowners will have to decide that a different home at a higher mortgage rate is worth it.  Some may not feel that is the case, especially since the recent extraordinarily low rates will look awfully good compared to more normal mortgage levels.  That said, movers are not facing higher mortgage rates now, so the explanation for near-term supply weakness may be the lack of equity.  If people don’t have enough equity to pull out of their current homes, they may not have the ability to make a move.  That would limit the number of homes for sale and thus sales themselves.  The implication is that the pathway back to a more normal housing market, where what I call the churn or housing turnover helps drive sales, is a long and winding one.  What will investors make of this report?  Well, since any indicator that points to the Fed being “patient”, i.e., that only reinforce the view that the Fed will not tighten anytime soon, can only add to the strength in equity prices we have seen since the FOMC meeting.  Low rates are the markets drug of choice and as long as people believe the Fed will keep mainlining that drug, they will remain euphoric.

Economic Indicators, Federal Reserve Policy, Leading Indicators, Philadelphia Fed Index, Weekly Jobless Claims

FOMC Commentary, November Leading Indicators, December Philadelphia Fed Survey, Jobless Claims

KEY DATA: Leading Indicators: +0.6%/Philadelphia Fed: 24.5 (-16.3 points)/Jobless Claims: 289,000 (down 6,000)

IN A NUTSHELL:   “The Fed may be shifting into “patience” mode, but the economy is continuing to accelerate.”

WHAT THE DATA MEAN: Today’s economic reports showed that the economy continues to improve.  The Conference Board’s Leading Economic Index jumped again in November and it looks like the increases are pointing to a very strong economy going forward.  Looking at a graph of the index, the rise seems to match the 2003-2004 housing bubble economic surge.  Supporting the view that the economy is picking up steam was another fall in weekly jobless claims.  The jump in claims near Thanksgiving seems to have been a one-week wonder and we are back to record lows, when adjusting for the size of the labor force.   As for the Philadelphia Fed’s Business Outlook Survey, a large decline was expected.  This index can be very volatile and the November number was one of the highest on record.  The December level also points to strong growth, especially since orders remain solid. 

FOMC Commentary: Yesterday, the Fed did and didn’t do what I thought they would and should do: Remove the “considerable time” phrase.  Maybe.  It didn’t do it because it repeated it.  But more importantly, the Committee substituted a new comment, “that it can be patient (emphasis added) in beginning to normalize the stance of monetary policy”, and noted that patience and considerable time were similar if not equal.  Getting confused?  No kidding!  The statement seems to be the most tortured attempt at changing the psychology surrounding the timing of tightening I have seen.  I guess that is what happens when you worry more about market reaction than policy clarity.  We know little more now than we did before the meeting and press conference.  So much for better communications.

So, what does patience mean, when it comes to rate hikes?  Chair Yellen said we have a breather for the next two meetings. However, the chart of fed funds rate expectations points to a tightening in 2015, which will likely come at around mid-year.  What would make her lose her patience?  Stronger growth and that is where the data come in.  By the time we get to the April meeting, we will have three more employment reports and GDP numbers for the fourth quarter of 2014 and first quarter 2015.  If the Leading Indicators are pointing to anything it is the string of 3.5% growth rates could be sustained.  If that is the case and the job gains are above 250,000 and the unemployment rate continues to decline, it would be hard to see how wage increases don’t accelerate.  But I am guessing that patience will be tied to compensation and until we actually see large increases in wages, the Fed will continue to dawdle. 

Consumer Price Index, Economic Indicators, Real Earnings

November Consumer Price Index and Real Earnings

KEY DATA: CPI: -0.3%; Energy: -3.8%; Excluding Energy: +0.1%/Real Hourly Earnings: +0.6%; Year-over-Year: 0.8%

IN A NUTSHELL:  “Falling energy costs is a gift that we hope keeps giving.”

WHAT IT MEANS:  The continued decline in oil prices may not be the greatest thing since sliced bread, but it is close.  Yes, some energy-related companies are being hurt and there are a few countries whose economies may slip into recession if prices remain low, but for consumers, it is nothing but great news.  Another sharp drop in energy prices caused the Consumer Price Index to fall in November.  Falling clothing costs helped as well.  And with new vehicle purchases jumping, it is not surprising that more used vehicles are available and their prices are declining.  Still, there were some places where prices seem to be firming.  Medical care expenses, both services and commodities, are beginning to accelerate.  Shelter costs are up, though not that rapidly.  We are also seeing a rise in transportation services and tuition, of course.  Food costs have become better behaved, especially for the critical cakes, cupcakes and cookies category.  One final point needs to be made: Services inflation is running at a moderately high pace, with costs up 2.5% over the year.  This component is over 60% of the index.  The only way inflation to remain contained is for commodity costs to stay low, or as it was in November, actually down.  Any rise in commodities would push consumer costs up above the Fed’s target.

The fall in consumer prices is helping household spending power.  Real hourly earnings jumped in November, but over the year the increase remains below one percent.  That pretty much explains the lethargic nature of consumer spending.

MARKETS AND FED POLICY IMPLICATIONS:  The Fed will be coming out with a statement today and this report should have little impact on the members’ thinking.  Inflation, excluding energy, is still just below the Fed’s 2% target, so there is room to maneuver.  But the Fed is not likely to focus on the restraining impact that declining oil prices has on inflation and instead consider the effects on consumer spending.  Barring a large rise in oil prices next year, households will have a lot more money left in their wallets and if there is any acceleration in wages, consumption could be very strong.  Conditions could be in place to raise rates during the first half of next year.  Whether the FOMC opts to do that is unclear, but the idea that the Fed should set monetary policy based on concerns about energy-impacted economies doesn’t sit well with me.  Indeed, the oil drop can only help Europe and Japan.  Regardless, we will know soon enough what the Committee is thinking so I will leave it at that.

Durable Goods Orders, Economic Indicators, Gross Domestic Product, Income and Spending, New Home Sales

Revised Third Quarter GDP, November Spending, Income, Durable Goods Orders and New Home Sales

KEY DATA: GDP: 5.0% (revised up from 3.9%)/Consumption: +0.6%; Disposable Income; +0.3%/Durable Orders: -0.7%; Private Investment: 0.0%/New Home Sales: -1.6%

IN A NUTSHELL:   “The economy boomed in the summer and while growth may have moderated during the fall, it is still moving forward solidly.”

WHAT IT MEANS:  Lots of numbers today.  Third quarter GDP growth was revised upward to its strongest rate in eleven years.  The revision was powered by a realization that consumers spent a lot more than initially thought.   There was also better business investment activity.  It is nice that both households and businesses spent aggressively during the summer, but will that be sustained?  Maybe not at 5%, but we could easily get another number at or above 3.5%.  Consumer spending surged in November after a solid gain in October.  So much for a weak Black Friday.  The gains were across the board, when you adjust for price changes.  So far this quarter, real consumption is rising at a 3.7% annualized pace and that could come in even higher.  First, people have the money to spend.  Income, adjusted for inflation and taxes, surged in November and wage and salary gains were solid.  People are spending but the savings rate is fairly stable, a sign that households are not getting ahead of themselves.  Second, confidence is rising.  The Thompson Reuters/University of Michigan Consumer Sentiment Index rose sharply in December to its highest level in nearly eight years.  Happy people make for happy shoppers.

The manufacturing sector has helped lead the way but there are questions about how strong it will be going forward.  Durable goods orders fell sharply in November and that was with a pick up in civilian aircraft demand.  The report was mixed.  There was weakness in primary and fabricated metals, computers and defense aircraft.  On the other hand, orders for computers, communications equipment and vehicles were up.  Business capital investment was flat.

Housing has been moderating for a while and that trend seems to be continuing.  New home sales fell, surprisingly, in November.  Prices are rising, but not by much.  Indeed, the 1.4% increase over the year is much less than we are seeing in the existing market.  The Federal Housing Finance Agency’s October increase came in at 5% since October 2013.

MARKETS AND FED POLICY IMPLICATIONS: Patience is a virtue but it could also be an albatross around Janet Yellen’s neck.  (I never worry about mixed metaphors.)  The key to Fed policy is economic and wage growth and boy is it clear the economy has shifted gears.  The consensus for fourth quarter growth has been about 2.5%.  With the large upward revisions to third quarter growth, I am now closer to 3.5%, down from 4%, and the spending numbers support that estimate. While housing may not add much, the real uncertainty is consumers emptying shelves and causing inventories to drop.  That would moderate fourth quarter growth but when warehouses are restocked in the first quarter, activity would accelerate.  Regardless, the economy is in very good shape, probably better than the FOMC realized when it met and when Janet Yellen said she would be patient.  The Fed may want to be patient and err on the side of too much inflation, but the strong job gains are likely to continue and lead to solid wages increases fairly soon.  The FOMC may have to move earlier than most now expect.  Investors should love today’s numbers but once they stop drinking the spiked eggnog, they may realize that strong growth pushes forward the time when the Fed removes the syringe from the markets.  But for now, it is time to celebrate.

Have a Happy and Healthy Holiday!

Economic Indicators, Housing Starts

November Housing Starts and Permits

KEY DATA: Starts: -1.6%; 1-Family: -5.6%; Multi-Family: +6.7%; Permits: -5.2%; 1-Family: -1.2%; Multi-Family: -11%

IN A NUTSHELL:  “The housing sector may not be restraining growth, but it is hardly adding much to it.”

WHAT IT MEANS:  The housing sector is neither too hot nor too cold.  But that doesn’t make it just right.  Activity is improving, but in fits and starts – pardon the pun.  Construction activity eased in November but that came after an upward revision to the October housing starts numbers.  That had come in as a decline but is now put at a modest rise.  The issue in November was single-family construction, which was off sharply.  This component is bouncing around but the trend has been upward, even if it is not a steep slope.  The multi-family number rose sharply, but large changes is usual for this very volatile number.  So far this year, housing starts are up over 8% compared to the first eleven months of 2013, so it is hard to complain about the housing sector.  Looking forward, permit requests were off but again, the multi-family segment drove the rise.  Permits are running only a little above starts for the last two months and that points to minimal gains in construction activity in the coming months.  

MARKETS AND FED POLICY IMPLICATIONS: So far this quarter, starts are up at a little less than 3% annualized pace from the third quarter.  It looks like housing could add to growth again, but unless there is a lot more activity in December, any addition will be relatively modest.  Nevertheless, I will take it.  With oil prices plummeting, there is every reason to expect that consumer spending will be strong this quarter.  Indeed, my forecast calls for another quarter of GDP growth in excess of 3.5%, which would make it five out of the last six.  Yesterday’s November industrial production number was really strong.  So far this quarter, manufacturing output is growing at a robust 4.4% annualized pace and that could rise with any decent increase in December.   Job gains have been strong and we got our first glimpse at solidly rising wages.  Yes, Europe and Japan are worries and some countries are being battered by the low price of oil.  In spite of that, the U.S. economy is on an accelerating growth path that should continue for quite some time.  We don’t need a robust housing market to drive growth.  There are other sectors, including consumer spending and non-energy investing that should be strong enough to keep the economy moving forward solidly.  So why are investors so negative?  Remember, Wall Street and Main Street are so totally disconnected that we cannot go directly from the economic data to market performance.  Declining oil prices may be wonderful for the macro economy but if it hurts certain members of a stock index, then you get a decline.  Ultimately, when it is clear how much additional growth and earnings we will get from an extended period of low energy costs, the markets should reflect that reality.  And that is what I expect the Fed to talk about when the FOMC statement is released tomorrow.