On Demand

Retail and Financial Need Your Attention

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About 10 days ago, a friend (who is a mother) and I were discussing the market. I was telling her I believed the market would turn up in the fall. One reason would be the fall shopping season. I told her I was looking for stocks that would benefit from kids going back to school. I gave her examples from the world of clothing. She thought for a moment, and she asked, "How about Chico's?' I checked it out ... In the last 10 days, the stock hit its 52-week high and today it is up 2.4%. My point is that sometimes we can do all the analysis in the world to find trades, but sometimes it is as easy as talking to someone with a finger on the pulse of a market ...

Italian and Spanish short-term bond yields ticked up a bit on low volume, but they are less than half of where they were last week. This speaks to caution as the wait for ECB action continues and we wait for the September 12 ruling from the German Constitutional Court on the legality of the overarching banking authority. Abeyance is a good thing. In the meantime ...

Demand for the euro was supported after German Chancellor Angela Merkel's government backed the European Central Bank's bond-buying plan.

Germany is on board, and that is a good thing because if it were not, well, the deal would be off. The politics of the euro and the Eurozone most likely will bring the other foot draggers on board as well. The unfolding European drama is a nail biter, no doubt, but back in the US, the drama is subdued, but it is there - will the US climb out of its soft patch?

U.S. banks are relaxing their terms on credit cards and lending for autos and commercial real estate, according to a Federal Reserve survey.

The above is good news for the consumer, as well as it is for the economy, which means good news for the market, eventually. It is also good news for the real estate market, which is good news for everybody. On a broader scale though, the news is even better.

While lending standards are tightening at branches of foreign banks, "domestic banks reported that their business had increased due to decreased competition from European banks and that they remain willing to accommodate such additional business," the Fed said.

The lending business is picking up for banks, which is good news for those who think the financial sector is one place to be, as I do, but more than that, the above news speaks to an increase in the money flow, as does the news below.

Commercial and industrial loans at U.S. commercial banks remained at a three-year high of $1.45 trillion for a second week as of July 25, according to Fed data. The gauge of lending has increased for the past eight quarters, the longest streak of gains since the last recession ended in June 2009.

Generally, there are two reasons businesses borrow money. One is they need the cash to get through hard times. Given US big businesses have been profitable for some time now ($2 trillion cash on the books), they are not borrowing for this reason. The other reason is they want to expand. With rates as low as they are, this had to happen eventually. Now, add in corporate bond issuances picking up and you have the makings for a cyclical upturn in the US economy.

Trade in the day; Invest in your life ...

Trader Ed

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About the Author

Hello, I am Trader Ed.  No, not Mister Ed, although at times I feel a bit like a talking horse.  You see, my job is to educate folks about the market, which means talking about (or writing in this case) anything and everything that affects the market.  This means the world is my oyster.  Every day, I read for about an hour or so about the happenings in the world.  Every day, I look for leading indicators that will help me “see the future.”  No, I am not an oracle, nor do I pretend to be, but I do look for macro trends that point in a direction, and I am more than happy to share my “vision” with you.  Keep in mind, though, my vision derives from analyzing the fundamentals of the global economy, as well as looking at current movement in the market.  I shun the doomsayers and I embrace the realists.  I look to the positive without denying the negative.  In short, I paint as realistic a picture of the market as I can.  So, if you have a question in this realm, feel free to ask me.  I will answer you in this column and I will do that to the best of my ability.

Hoping to hear from you.

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