First off, yesterday’s drop went a bit lower than I imagined it would. It caught me off guard. I tried to play the bottom, but I missed it. Consequently, my buys could have been better. Oh well, I got in at decent pricing. As to the profit, I suspect the market will reverse itself. Maybe today, maybe not, but soon enough. The current fear is unsubstantiated, driven mainly by the need for the market to rebalance. The buyers will come, as the opportunity is too great to pass up.

  • The disappointing monthly jobs report seemed to change the mood of the market as currencies and bonds start to move in a different direction than they were going.

True, the jobs report provided fuel for the sell-off yesterday, but so did the remarks from Mr. Lockhart of the Atlanta Fed. Neither means anything in the near and long term. What does have meaning is the steady flow of meaningful economic data and information that consistently surpasses expectations.   

  • Retail sales rose more than forecast in December as consumers snapped up holiday gifts amid year-end discounting.

What also matters is the perception “out there.” Even though the noise from the breathless media and talking heads points to “bad” news, folks are not buying what they are selling. Both the consumer and small business understand what is really happening because each their lives in the real economy, you know, the one supported by average consumers and average small businesses. Small businesses don’t have departments cranking out numbers for upper echelons to review. Small businesses count how many folks walk through their doors, how many active clients they have, and how many boxes they packed and shipped out that day.   

  • The NFIB Small Business Optimism index improved in December to a reading of 93.9. The level was above the consensus expectations for a reading of 93.5 as well as last month’s level of 92.5.

On a larger scale, the market also likes economic improvement from the big players and there is no bigger player on a dollar basis than the Eurozone. The numbers from that part of the world keep coming in better and better.

  • Eurozone industrial output rebounds. Eurozone industrial production swung to growth of 1.8% on month in November from a drop of 0.8% in October and comfortably topped consensus of +1.4%. On the year, output jumped to 3% from 0.5% and was more than double expectations. The improvement was widespread, with Germany and France enjoying good growth and Ireland surging.

What ultimately matters most to the market are earnings, and they are coming in now. It is too early to tell how the reporting will go, but I suspect the outcome will not be bad. It might even be surprising, starting with the financials this week.

  • JPMorgan Chase & Co reported a better-than-expected adjusted quarterly profit as the biggest U.S. bank kept a lid on costs and set aside less money to cover bad loans.

As I wrote the other day, the banks, like the Eurozone, have been slowly getting healthier. True, JP Morgan tool a huge hit this past quarter from its recent settlement ($2.6 billion), but everything else looked like a big bank healing.

Back to the consumer for a moment … If all goes well with Iran and the surveillance of its nuclear program, sanctions will begin to go away, which means one of the largest oil producers on the planet will be shipping oil again. Given that Iran has suffered serious revenue loss from the curtailment of its oil shipping, it will be eager to get that revenue back, which means OPEC or not, it will ship what it can ship as fast as it can ship it, despite the recent political double talk from Iran’s Oil Minister about cutting OPEC quotas to protect the price.

  • A nuke deal with Iran is raising concerns of an over-supplied oil market. So despite the bad jobs report, oil is looking heavy stimulus or not.

Oil inventories around the globe are already flowing over, so with Iran’s oil coming onto the market, no matter what the quotas become, oil prices will drop, which means, global consumers will be happier.

Finally, an interesting piece of news about Google today made me think about “Big Brother.” Perhaps it is the wording, or maybe it is just the idea that a behemoth corporation is finding its way “deeper” into our homes, but in some way, the news made my neck hair tingle. Keep in mind, the deal below is not just about thermostats and smoke alarms. Nest Labs goes way beyond those two benign home items.

  • Google took its biggest step to go deeper into consumers’ homes, announcing a $3.2 billion deal to buy smart thermostat and smoke alarm-maker Nest Labs.

Trade in the day; Invest in your life …

Trader Ed