The sharp rise in wages is a two-sided sword.

Core prices continue to rise faster than would be considered comfortable and at the intermediate level they have been surging for the past six months. That is a warning sign.

The pen is mightier than the sword if the sword is very short, and the pen is very sharp

The manufacturing sector ended the year with some decent momentum that should carry it through the first part of the year.

The pull back in housing remains orderly, at least in the existing market. But the red flags are up. Inventories continue to rise and that is a warning that prices cuts could be coming, and soon.

So far, the cracks in the housing market are not that great, but with inventories skyrocketing, that may not last long.