I woke up this morning thinking, “What’s the point?” My thought was that as long as this political lunacy is happening in Washington, the market will not be right. Again, what is the point of even paying attention until the ideological stupidity passes?

Then again, this is what I do, so I will do what I have been doing, which is suggest alternative market perspectives (deviations from the headline news) and point out the positive economic fundamentals, which point to a market going higher, once the blowhards stop blowing.

  • U.S. household spending rose in August as incomes were buoyed by solid wage gains, signs that momentum could be growing in the U.S. economy despite months of harsh government austerity. American families spent 0.3 percent more last month than the month before, which was in line with the median forecast in a Reuters poll.
  • Data released yesterday from Freddie Mac showed that the average rate on a 30-year fixed rate mortgage has dropped to 4.32%. For the previous five consecutive weeks, the figure had been at or above 4.5%.

In the meantime, over the weekend, I found an interesting take on a highly positive economic fundamental.

A New Economic Headwind Coming Down the Road?

The above titles an article that says two things – freight is moving across the US (some 70% of all products are shipped via trucks) and because freight is moving, this will cause an economic problem.

  • The tonnage of truck freight increased by 1.4 percent in the last month, according to the American Trucking Associations, reversing 0.6 percent fall in July. It was the largest pop since May and kept up a forward trend for three of the last four months.
  • The significance of these numbers isn’t the August increase-because July was down after all-but the fact that it has been up in three of the past four months.

The above is just one more sign that the US economy is far from moribund. The market understands this only too well and when the politicos are forced to act appropriately, the market will respond affirmatively. Interestingly, the good news of freight moving is also bad news for the economy, according to an economist with his finger on the pulse of the trucking industry (which only makes him slightly more credible).

  • There may be a shortage of trucks to carry the freight an improving economy produces. That’s the warning from an economist for the trucking group. “We are headed for a capacity problem,” Bob Costello, chief economist for the American Trucking Association, said. “The industry is not adding much capacity today.”
  • On top of that, productivity is down, Costello said. Truckers are having trouble keeping qualified drivers because of competition from construction and energy outfits looking for heavy equipment operators.

Okay, so the trucking industry is having trouble finding qualified drivers because of competition from the construction and energy sectors. Doesn’t this mean a) the construction and energy sectors are doing well, and b) there are jobs to be had in the trucking industry?

I’m sorry, but I don’t see the economic headwind with the fact that the trucking industry is fully utilizing its capacity and it needs to expand. This is a good thing in my mind.

Finally, one more thought on the nonsense in Washington D.C. from one Ezra Klein, a bright guy in the media who usually gives an objective analysis.

  • One way a shutdown makes the passage of a debt limit increase easier is that it can persuade outside actors to come off the sidelines and begin pressuring the Republican Party to cut a deal. One problem in the politics of the fiscal fight so far is that business leaders, Wall Street, voters and even many pundits have been assuming that Republicans and Democrats will argue and carp and complain but work all this out before the government closes down or defaults. A shutdown will prove that comforting notion wrong, and those groups will begin exerting real political pressure to force a resolution before a default happens.

Yup, pressure from the outside (big money) will make these folks sit up and fly right.

Trade in the day; Invest in your life …

Trader Ed