“Back To The Future” – I am not sure I understand that movie title. Does it mean that going back to what once was will take you to what will be? If so, and I am making a leap here, can this “concept” be applied to the market?
The market has been showing signs of going back to the days of rising high, falling hard, rising high, and, well, falling hard again. Supposedly, this behavior is happening because the market is afraid of a “Grexit,” you know, Greece leaving the EU because it cannot make a deal with its creditors to stave off bankruptcy.
- Greece says it aims to clinch a deal with its creditors by Sunday, a development that would allow it to receive the desperately needed final installment of its international bailout plan and avoid a default.
Funny how the market reacts to this ongoing saga only when yet another deadline appears and the breathless media picks up that story line again. Another “news” item from the past might be affecting the market as well – oil prices dropping. Like the movie title, I just don’t get it. Why does the market see falling energy prices as negative?
- A record cut to the number of active U.S. drilling rigs and billions of dollars of spending reductions by companies since last year’s price plunge has yet to translate into a slump in barrels produced. The world is pumping about 1.9 million barrels a day more crude than it needs, according to Goldman Sachs Group Inc.
The above lays it out clearly – oil prices are down on the fundamentals, and it could be another six months, at least before the glut is depleted. The market should be rejoicing on this news, as it means the US and global consumer will have more discretionary income to spend.
Consumers don’t care about Greece and the market does. Consumers like cheaper gasoline and it seems the market does not. Basically, consumers are happy and the market is not. Where is the disconnect?
- Consumers may not be spending much, but they seem to be feeling pretty good lately. Thanks to the stronger jobs market, consumer confidence ticked up in May more than economists had predicted.
As far as the consumer not spending much, well, that might be relatively true on the discretionary side, as savings have increased and retail sales are marginally lower, but on the really important side, the side that produces real jobs and spurs retail sales, the US consumer is spending.
- The index of pending home resales climbed 3.4 percent to the highest level in nine years after a revised 1.2 percent gain the prior month, the National Association of Realtors said Thursday in Washington.
And here I am, back to the same old analysis that the market is out of synch with the reality of the US and global economy. Rather it is more interested in fretting about Greece (replacing China as the international boogey man). Okay, so let get me back to the future, or the present if you will, which once was the past (think Dick Tracey), as it amusing in its scope.
- The Apple Watch just got more expensive for one man in Quebec. Jeffrey Macesin of Pincourt tells CTV News that he was pulled over by police for using the Watch while driving.
Okay, so maybe you know what is coming here – does the future hold a “driving while under the influence of the ‘Watch’ law? The Quebec man was fined $120 for his infraction, which he denies, by the way, because he was wearing the Watch, so scanning for music while wearing the Watch is not really going against the existing law that does not allow the use of a computer while driving.
Okay, so now let’s go all the way back to 1980 (and the Millennial phenomenon again), which will bring us to the future, as, like it, don’t like, or remain indifferent, the Millenials are the near-term future, and, it appears, they will become the focus of everything economic, if they are not already.
- The demographic born between 1980 and 2000, also dubbed Generation Y, will become the biggest consumer buying group by 2020, accounting for $1.4 trillion in spending, according to Accenture data.
As the Millenials are spending all that money in the future, I wonder what the market will fear to keep it volatile. The Greece deal will long be resolved and oil will be on its way to its place in history next to whale oil, the energy source it replaced 125 years ago.
Oh yeh, the Fed will still be around and so might Putin, an old man still sending troops and guns to Ukraine’s border to do, what exactly?
Trade in the day; invest in your life …
