Yesterday, I was simply fed up with the shenanigans in the US big tent, i.e., Washington D.C. Today, it is not much better, other than the rumor floating about that the party in charge is considering allowing a temporary increase in the debt ceiling with no strings attached.
- The markets right now are betting somebody will blink between now and October 17.
As I have been writing, this will be the case. The real powers behind the throne only have so much patience for losing money and opportunity to make money. And, so we hear from the Heritage Foundation today, one of the big fronts for big folks with big money, end the impasse and do it without conditions.
- The market for corporate borrowing through IOUs expanded to the highest level in eight months as investors turned to alternatives to short-term Treasury bills while a congressional impasse over raising the U.S. debt ceiling threatens to tip the nation into default.
- Corporations sell commercial paper, typically maturing in 270 days or less, to fund everyday activities such as rent and salaries.
The take on the excerpt above is that commercial paper is on the rise because of the government shutdown and the possibility of a debt default. Fewer investors want their money in short-term treasuries. Regardless of the reason, the message I take away is that investors have faith in the corporations in which they are putting their money. Is this not a good sign that the market believes in the future, at least the near-term future?
- Manufacturers have enough business and are squeezing as much as they can out of their current workforce … an expansion of spending on plant and equipment, as well as more hiring, is set to follow. We know there’s a replacement cycle that is kicking in already and at some point will trigger spending.
Once one gets past the craziness, one can see here and there, a settling, a returning to a place of stability. No matter what the breathless media tells us, the world is finding its way back from the dark hole created in 2008.
- The financial clouds that settled over U.S. cities during the 2007-09 recession are lifting, with a survey released on Thursday showing cities’ revenues likely increased in 2013 for the first time in seven years, helping to boost their reserves.
Stability is a good thing, and it is not just in the US stability is taking root. All the way across the Pacific, the leader of China is telling us to expect GDP growth above 7.5% so far this year, which is a far cry from the tenor and tone about China earlier this year.
- General Motors Co. (GM), the largest foreign automaker in China, reported sales growth accelerated in the country last month. Total sales in September climbed 14 percent to 277,647 units, after expanding 11 percent the preceding month.
Increasing cars sales are good for GM, good for China, and good for the global economy. What is happening there is the same thing happening in the US – folks are spending money on big-ticket items.
- Demand for the upscale Cadillac marque surged 74 percent to a record 4,496 vehicles on deliveries of the XTS sedan and SRX crossover.
So, GM car sales are doing well in China, as are Ford’s. This speaks to money flowing, as does increased trade for China with Europe. After the US, China is the European Union’s second-largest trading partner.
- The European Central Bank and the People’s Bank of China agreed to establish a bilateral currency swap line, bolstering access to trade finance in the euro area and strengthening the international use of the yuan. The swap arrangement has been established in the context of rapidly growing bilateral trade and investment between the euro area and China.
Growing trade and growing investment are good, right? Yup, I agree, both are signs of a global economy on a forward track, which means that the current market is up and down on nothing but fear and hope. However, when the fear and hope pass, as in when the politicians grow up, the market will be looking at the fundamentals. Once again, those are looking better and better.
Trade in the day; Invest in your life …
