Economic releases indicated that the U.S. and global economies were neither accelerating nor falling. U.S. and Asian equity markets rose, but some European equity markets were lower on the week. Bond yields were higher, but credit spreads were lower causing government bond markets to fall, but high yield credit markets to rise on the week. Energy commodity prices were higher, but metal prices were lower on the week. The U.S. dollar rose against the Yen and Looney, but fell against the European currencies.

Perspective:

The Comments below include references to the slowing of the U.S. housing markets. The overall economic environment is not stalling-out nor in danger of falling, but has yet to accelerate. This is an environment where the Central Bankers are hesitant to take their foot off the QE accelerator and nowhere near tapping the breaks of monetary policy. Central Bankers’ actions have protected risk takers; equity markets have risen, credit spreads have narrowed, and interest rates have risen only grudgingly. The U.S. economy has shown resilience in the face of a difficult recovery, but has not taken off.

On a personal note, I have seen resilience these past weeks in my 93-year-old mother. She has always been an investor and her interest in investments led me into investment management. She still manages her own portfolio though a discount broker. She lives in an "unassisted living” apartment in Webster Groves, Mo. Three weeks ago she suffered a stroke, could not get out of bed and was taken to a hospital. My sister and I were worried that we would have to put her in a nursing home. My mother's determination to return to her own apartment showed the true grit that we have always admired in her. Her hard work and supportive rehab staff have allowed her to plan to be discharged and go home by Thanksgiving. She has already ordered Thanksgiving meal to be delivered to her apartment.

This Thanksgiving, the Davidson family extends to you and yours the best wishes for all the resilience that you have to be thankful for.

Economic Releases:

Existing Home Sales (green in the chart) were chugging along in October, at 5.12 million, they were -3.2% less than September, but 6.0% more than they were a year ago. New Single Family Sales (blue in the chart) were 421,000 in August, but have not been released for September and October. New construction sales have lagged existing home sales rates of increase in this recovery. Both Existing or New Home Sales remain a fraction of their pre-Great-Recession bubble peaks. In other U.S. housing news, the National Association of Home Builders Index slipped a point to 54 in September. What has caused the recent slowdown in U.S. housing? The Wall Street Journal article, "Hottest Housing Markets Hit Headwinds," "...attribute the current slowdown to rising prices and a jump in mortgage rates..."

Similarly, U.S. Retail Sales lacked recovery-leadership-star-power in October after a flat September. Retail Sales (blue in the chart) rose +0.4%; Core Retail Sales (less autos-red in the chart) rose +0.2% in October.

Other Economic Releases

Weekly Initial Jobless Claims fell to 323,000 in the week of Nov. 16. The four-week average of Claims fell to 338,500; some of the improvement may have been affected by the shortened Veterans Day week. Continuing Claims rose 66,000, but the four-week average of Continuing Claims fell to 2.857, just above this recovery low. The Philadelphia Fed Survey fell 13 points to 6.5 in November. Yet, the Markit Flash Purchasing Managers' Index rose three points to 54.3 in November.

The Markit Flash PMI remained in the expansion zone above 50: The EU Composite fell a point to 51.5; the Manufacturing Index rose two ticks to 51.5 and the Services Index remained at 50.9. Germany's Markti Flash PMI's all rose; the Composite gained over a point to 54.3; Manufacturing gained a point to 52.5; and Services gained two points to 54.5 in November. Germany's Ifo Surveys for Economic Sentiment, current Conditions and Business Expectations also gained in November. The Business Expectations in the German ZEW Survey gained but Current Conditions slipped in November. German third-quarter GDP rose +0.3% from the previous quarter and +0.6% from one year ago. The UK CBI Industrial Trends Survey also gained in November. In contrast, the French Markit Flash PMI's (Composite, Manufacturing and Services) all fell into the contraction zone at 48.5, 47.8 and 48.8 respectively.

The Bank of Japan also met and, as expected, left interest rates and asset purchases unchanged this week as it viewed that its economy was recovering moderately. China's flash PMI for Manufacturing Index slipped a half point to 50.4, but remained in the expansion zone in November.

Equities Markets:

U.S. equity markets rose to new record-closing heights this week. Most European markets were lower, but Asian equity markets were higher on the week. Rising interest rates put downward pressure on the high grade credit market, but narrowing spreads gave the riskier high-yield segment a positive return on the week.

Bond Markets:

Most bond yields rose, but the Swiss, French and Japanese yields fell on the week. Credit spreads narrowed on the week.

Currencies & Commodities:

The U.S. dollar rose against the Yen and Looney, but fell against the European currencies. Energy commodity prices rose, but metals prices fell on the week.

Who is John Davidson?

John W. Davidson, CFA, started writing these Comments more than a decade ago as a personal discipline when he was promoted to from portfolio manager to chief investment officer and CEO.

Most recently, he was the president of PartnerRe Asset Management Corporation, responsible for the management of PartnerRe's invested assets, which grew from $4 billion to $12 billion during his tenure. After joining PartnerRe in the fall of 2001, he hired the staff, built the trading floor and created the infrastructure to manage both fixed income and equity assets internally. He retired from PartnerRe at the end of 2008 and moved to Maine, where he focused on board work.

He has more than 35 years of industry experience, including positions with investment management responsibility for separate institutional accounts, mutual funds, trusts and insurance assets. Prior to joining PartnerRe, he served as president and chief executive officer of two other investment management companies. For various companies he has held positions as chief investment officer, chief economist, head of fixed income and portfolio manager. As a portfolio manager, Davidson managed and traded U.S. Government Securities as well as futures and options on fixed income instruments.

His real world experience is backed by a strong academic foundation, which includes earning a Master of Business Administration in finance and a Master of Arts in mathematics from Boston College, as well as a Bachelor of Arts, cum laude, in economics from Amherst College. He holds the professional designation of chartered financial analyst.

His experiences and credentials have brought him to the public as a television commentator and conference speaker. In addition to his frequent past appearances on CNBC, CNNfn, Bloomberg TV and Yahoo FinanceVision, he appeared as a special guest on Wall $treet Week with Louis Rukeyser. Reuters, Bloomberg and other business press services have quoted his views on the market. He has taught CFA preparation programs, as well as other courses offered by the Stamford and Boston CFA Societies, and the National Graduate Trust Officers' School.

Davidson is a natural leader in both his professional and personal life, having developed those skills early in his career as a naval officer. He spent three years on active duty, which included a year on the rivers of Vietnam, and 24 years in the Naval Reserve, from which he retired as a captain in 1994.

Davidson is treasurer and board member of the Camden Conference. He is also on the investment committee of the Pen Bay Health Foundation. He serves as an independent trustee for mutual funds.

In his leisure time, he is an active sailor, tennis player and skier. With his wife, Barbara, he renovated a 100+-year-old home in Camden, where they enjoy spending time with their two golden retrievers and having visits from their five children. He can be reached at jwdbond@me.com.