Weak Economic Data Persists, Microsoft Surprises Market

Housing starts fell 15.5% to a seasonally adjusted 550,000 annual rate, after dropping 15.1%  in November to 651,000.  November was revised slightly higher from an original 18.9% drop, but seriously, who cares?  When the numbers are falling off of a cliff, does it really matter if the drop is 15% or 18%, the result is still the same: UGLY.  Year over year, housing starts were an astonishing 45% below the level of construction in December 2007.  Building permits decreased 10.7% to a 549,000 rate.  Economists were expecting permits to decline by .8%, so a huge miss in expectations.  As I've stated before, due to the significant supply/demand imbalance in the housing market, builders need to stop building houses for awhile until the housing inventory levels stabilize.  Go build a few bridges or fix an interstate.  Just stop building new houses.

Jobless claims jumped 62,000 to 589,000.  The four-week average of new claims remained unchanged at 519,250.  Speaking of people filing for unemployment, somebody at Microsoft had too much coffee this morning and decided to announce earnings before the opening bell, instead of after.  Microsoft announced it will cut as many as 5,000 jobs over the next 18 months.  Revenue for the quarter ended December 31 was up 2% to $16.63 billion, while earnings slipped to $4.17 billion or 47 cents a share, from year-earlier earnings of $4.71 billion, or 50 cents a share.  Analysts were expecting earnings of 49 cents a share on sales of $17.08 billion.  The company also neglected to offer profit and revenue guidance, citing market volatility.  In other words, much like everyone else, they have absolutely no idea what's going to happen in the coming year and don't even want to hazard a guess.  But just to be on the safe side, they are cutting costs.  Consequently, the stock is getting a beatdown.