What All Eyes Will Be on this Friday

non-farm payrollsAll signs are pointing to continued economic renewal in this country.

We are seeing a strong pickup in retail, as I discussed in my last commentary. We know how successful Black Friday was and now we find out that online sales broke the $1.0-billion level in Cyber Monday, up 16% year-over-year according to Comscore.

The improved retail environment is more impressive given the continued softness in the jobs area and depressed housing prices across the nation.

Yet, with the key non-farm payrolls due out on Friday, traders got an early gift on Wednesday when the private ADP Employment Change report came in at a strong 93,000 new jobs created in November, well above the 58,000 jobs estimate and the highest reading in three years. The October reading was also revised upwards. The reading is generally viewed as a precursor to the non-farm payrolls reading.

All eyes will be on the November non-farm payrolls on Friday, with estimates calling for the creation of 130,000 new jobs, down from 151,000 in October. While the number of jobs may decline, I like the job creation for the second straight month. The unemployment rate is expected to hold at 9.6% and is expected to be high according to the Fed.

We also need to see evidence of stronger housing prices.

The surge in housing prices was a key catalyst in the consumer spending boom leading up to 2008, when homeowners borrowed heavily on their surging home values to spend excessively on travel, renovation, and other big-ticket items.

Unfortunately, this is no longer the case, as home prices have plummeted and homeowners are fighting hard to keep their homes. Foreclosures continue to be extremely high, with some pundits estimating that one out of every home in the country is vulnerable to at least one missed payment on a mortgage.

On the plus side, we have seen some stabilizing in the housing sector, a vast improvement from 2009.

The Case-Shiller 20-city Index fell 0.8% in September after a 0.5% decline in August. The index came in at 147.5, slightly below the August reading. The results indicate some stability in housing, although we need to see prices turn higher.

I view the current economic renewal as slow and steady, and you all know what happened to the hare in the famous fable The Tortoise and the Hare.

The key now is for the debt situation to stabilize in Europe but my concern is the debt crisis in Ireland could have a domino effect and spread to Spain and Portugal. There is even talk that Italy and Belgium may be in some trouble.

If we can contain the debt crisis in Europe and if the U.S. continues to show steady growth, we could see a light at the end of the tunnel.

But then of course, there is the massive U.S. debt and deficit.