Yes, I have said it before, but it bears repeating – one economic report does not a trend make. However, when you put that report in context with other things, well, then, maybe it is a sign of things to come.
- German Economy Returns to Growth as France Beats Forecasts
True, we might not have a trend yet for the Eurozone, but what we do have is the possibility the tide might be changing. Put this in context with the trend in positive economic data for the US and you just might have opportunity. If the Eurozone begins an economic comeback, then you might wanna be looking there for investment/trading opportunities.
- American consumers ate out and shopped for clothes in October, enjoying a windfall from cheaper gasoline and prompting a rebound in retail sales heading into the holiday-shopping season.
Interesting, but just this morning, I read a writer who did not believe lower gasoline prices were helping the US consumer, at least not yet.
- I don’t buy the argument that lower energy prices will lead to Christmas shopping spree for American consumers. Christmas is a month and a half away, and fuel prices are just now starting to fall. At this point, it’s too late in the year to make much of a difference.
My guess is that when he reads about this latest economic report, which is, BTW, part of the larger trend in positive US economic data, he will think again about how lower gas prices are affecting the US consumer. As far as gas prices “just now starting to fall …,” that might be true where he lives, but right here on the Central Coast of California, and elsewhere across the US, prices have been dropping steadily since September, all the way from the lofty height of $4. 89 per gallon to today’s price of $3.25 per gallon right here in San Luis Obispo. That, my friends, is a 33% drop in price, hefty by any standard.
- Americans’ views are brightening as a result of lower fuel costs. A gauge of consumers’ perceptions about the world’s largest economy increased last week to the highest level in almost seven years, according to the latest Bloomberg Consumer Comfort Index.
Well, I do give the writer credit. After all, he does recognize there is an “argument” out there that is pushing this notion that as gas prices drop fast and far, the US consumer feels better and feels freer to spend more discretionary income. His only problem is that this “notion” is fast becoming fact.
Yes, it is becoming fact because gasoline prices are coming down far and fast, and they will continue to drop …
- The Energy Information Administration (EIA) added that rising U.S. crude oil production boosted estimated commercial oil inventories by 20.2 million barrels in October, the biggest increase in oil stocks for the month in 12 years and the fourth largest since 1920.
It is also becoming fact because more people are working right now in November than have been in quite some time, a month and a half out from Christmas.
- The job market is gaining traction, with job gains on pace for their best performance since 1999 and the unemployment rate at its lowest in more than six years.
Back to the oil issue, and my “prediction” a couple weeks back that the Dow would be above 18,000 as 2014 closes and the S&P 500 would cross 2050 at the same time. The two are inextricably linked.
Despite what some might think or say, lower gas prices (and coming lower food prices), do make consumers feel better and less money spent on fuel gives them the confidence to spend more money on other things.
And that, my friends, is the key to a market going up longer term. I say longer term because, unless something untoward happens in the world, the oil picture is fast becoming darker for the oil bulls and much brighter for consumers around the globe.
- The market is also getting ready for the possibility of more supply. Libya’s oil fields reportedly are up and running and talk that a deal with Iran that could further lighten or lift sanctions on oil could unleash Iranian oil back into an oversupplied global market.
Okay, so speaking of trends … How about that market? A bit forward, a bit less back is the short-term trend. Even with the good economic news that came out today, the market has finally gone back to taking small bites, chewing thoroughly, and then swallowing carefully. It is comforting to see this careful behavior in a world so driven by fear.
- The controversial government program that funded failed solar company Solyndra, and became a lightning rod in the 2012 presidential election, is officially in the black.
Yup! Back in those dark days of fear, the voices of doom and the hill-top screamers told us the sky would fall when Solyndra went down. Well, the sky is still there and, in fact, there is a rainbow. On one end is oil demand. On the other is building demand for alternative energy.
The arc is clearly bending from oil to alternative energy, which will add to the oil issue I have spent quite a bit of time writing about lately. Where is your money going?
Trade in the day; invest in your life …
