My guess is that the bulls are doing a three-day ropes course thingamajig somewhere in the outback, far, far away from any news.
- Economy in U.S. Grew 4% in Second Quarter vs. 3% Estimate
- ADP Employment Report Shows Job Growth at 218,000 in July
- Euro zone economic sentiment unexpectedly improved in July despite the deepening crisis between the West and Russia over Ukraine,
How else can I explain the market movement this morning? The above economic news is remarkably good, and those are just the headlines.
- Gains in consumer spending and business investment helped bolster the U.S. economy in the last quarter.
Even the above explanation for the rise in GDP doesn’t quite do the reality justice. In this case, the angel is in the details.
- Consumer spending, the biggest part of the economy, rose 2.5 percent, reflecting the biggest gain in purchases of durable goods such as autos in almost five years.
- Real nonresidential fixed investment increased 5.5 percent in the second quarter, compared with an increase of 1.6 percent in the first.
- Investment in equipment increased 7.0 percent, in contrast to a decrease of 1.0 percent.
- Real exports of goods and services increased 9.5 percent in the second quarter, in contrast to a decrease of 9.2 percent in the first.
- Private businesses increased inventories $93.4 billion in the second quarter, following increases of $35.2 billion in the first quarter and $81.8 billion in the fourth quarter of 2013.
Here is one more obscure but important detail that speaks to the health of the US economy, as most news folks only talked about this when Americans were a) not saving b) not spending, and c) were not seeing their incomes rise.
- Americans saved more in the second quarter. The saving rate increased to 5.3 percent from 4.9 percent in the first quarter as incomes rose, which bodes well for future spending.
So, American consumers spent a whole bunch of money on expensive durable goods and still managed to save money. Oh, and by the way, gas prices are dropping in the middle of summer, the time when everyone and their family is in a car going somewhere.
Yup, the GDP report and the preliminary employment report and all the details inside suggest the second half of 2014 will be strong; yet here we are, the Dow and the S&P are in the red, as is the Wilshire 5000. Then again, the Russell 2000, the NASDAQ, the NASDAQ 100, and the Mid-Cap 400 indices are up solidly. Then still again, the VIX is also up, but, then again one more time, gold is back under $1300.
Truthfully, I am not sure what to make of the market today. One would think with the good economic news and earnings turning out to be better than analysts thought they would be, the market would be pushing higher, but it ain’t, at least not completely.
So, let’s chalk up today’s market movement to that bulls’ rah-rah get-together somewhere far, far away. Because, if they were here, they would certainly be pouncing on the news of today, as it suggests a brighter tomorrow in the market, for sure.
Speaking of a brighter tomorrow … The UK just announced it will allow testing of driverless cars on public roads come this January. I wrote about Google doing this in California just a few weeks ago, and it appears that test, as well as others, is doing just fine.
- In the U.S., California, Nevada and Florida have all approved testing of the vehicles on public roads. In California, Google’s driverless car has clocked more than 300,000 miles.
I can see it now … sleeping all the way to Seattle while my car does the driving.
Trade in the day; invest in your life …
