Fed's Beige Books gives reason for cautious optimism

The Fed's Beige Book, which is a summary of economic conditions in each of the Federal Reserve's 12 districts, indicated that economic activity has either stabilized or displayed modest improvements in many sectors since the last report.

"Leading the more positive sector reports among districts were residential real estate and manufacturing, both of which continued a pattern of improvement that emerged over the summer. Reports on consumer spending and nonfinancial services were mixed. Commercial real estate was reported to be one of the weakest sectors."

It is no surprise, in my view, that the Fed is detecting an improvement in manufacturing and in residential real estate given that much of the data out recently are reflecting gains. Consumer spending has been more tenuous, while commercial real estate may be the Achilles heel of the economy.