Perfect timing: just before Christmas, the market has been gifted with another strong economic number--this time, in the form of November durable goods.
The figure was up 3.5 percent, was far better than the 2.5 percent gain expected, and even orders excluding defense were strong. That indicates capital goods orders are picking up. Because of an expiring research and development (R&D) tax credit, there is some question about whether capital goods orders have been "pulled forward," which would explain the strong rise.
Regardless: this is the third decent number we have had, after November and personal spending were both better than expected.
Yet how to reconcile the strong retail sales numbers with the dismal reports we are hearing from retailers? Ken Perkins at RetailMetrics notes that December same store sales are expected to rise only 2.8 percent. You can dismiss this one, since there are only roughly 20 stores that still report. However, Ken estimates that earnings and revenue growth will rise an "anemic" 1.3 and 1.9 percent respectively.
It seems pretty clear: consumers spent on big-ticket items like cars and autos, and there just wasn't that much more money left over to do a lot more. Not even at 50 percent off.
(Read more: Hey, it'll be cheaper after Christmas!)
Regardless, if you are broad investor in exchange-traded funds (ETFs), you wouldn't notice the difference between investing in autos and investing in retail outlets. The SPDR S&P Retail Index is up 40 percent this year, the First Trust Nasdaq Auto ETF is up 32 percent.
Elsewhere
1) is at 6 year high, and China has finally stabilized after dropping about five percent in the past two weeks. London will close early, but Germany, Switzerland, and Italy are all closed. Trading at the NYSE and NASDAQ will end at 1 PM Eastern.
2) Mortgage applications fell to a 13-year low, dropping for a second week, as interest rates rose following the Federal Reserve's decision to taper stimulus by $10 billion a month. Home purchases requests, a leading indicator of home sales, slid 3.5 percent to its lowest level since February of last year.
3) Who says bonds are a safe investment? It's not quite the end of the year, but look at these returns (ex-dividends) for major bond ETFs year to date, where most of the damage was done in the middle of the year:
Security Percentage decline
14.5 percent
6.9 percent
iShares TIPS 9.2 percent
iShares iBoxx Corporate 9.2 percent
iShares National Muni 6.1 percent
High yield, by contrast, has held up well:
-0.2 percent
3) Hotel chain La Quinta said yesterday it confidentially filed for an initial public offering. The company is backed by private equity giant , which took another hotel operator ---- public less than two weeks ago. The number of shares being offered and a price range have yet to be disclosed.
—By CNBC's Bob Pisani