What a boring day. So few negative headlines makes for a boring day. Hey! I saw the movie “Anchorman 2.” We had a choice between that or “Savings Mr. Banks.” My teenager chose the former. It was funny, but of more interest to me was the underlying premise – major news producers switched from reporting the news to selling the news when the 24-hour news cycle was born. I guess today there is not much to sell.
A weak market seems to be fighting back for the losses from yesterday. I suspect the market is weak because the big money is not committed to 2014 just yet. No, it’s not because the big money players don’t believe in 2014; rather it is because they just haven’t gotten into the game yet. This, of course, gives the bears a fighting chance to get their way, which they did yesterday and, it appears now, today. The DIJA has dropped some 50 points.
Last year was good year for the market in many ways, as I said the other day, but one marker for the present and the future is money flow. When money is flowing into M&A and IPOs, that speaks to a positive investment climate.
- U.S. companies took part in mergers and acquisitions that surpassed $1T in total in 2013.
- The number of IPOs jumped 59% in 2013 to 230 and the amount raised climbed 31% to $62B as companies took advantage of the Fed-fueled banner year for stocks to take the IPO market close to levels seen in 2007.
As well, when money is not flowing into gasoline tanks, this speaks to a more positive consumer spending environment.
- The price of regular gasoline dropped to an average of $3.49 a gallon in 2013 from $3.60 in 2012, the AAA says, making last year the cheapest since 2010. The association reckons pump prices will fall another five cents in 2014 as well.
I reckon that is good news for consumers, the economy, and, by extension, the market. I am not sure cheaper gasoline prices directly correlate to more money spent on cars, but the high price of gas in general is probably a catalyst for consumers to turn in the old “guzzlers” and spend some money on models that get better mileage. For whatever reason, though, consumers did buy cars in 2013.
- December U.S. auto sales slowed a bit from the brisk pace earlier this year, but automakers still were on target to finish 2013 with the best numbers in six years.
The big economic story of 2014 will be jobs – can the improving economy produce enough new jobs to get the GDP past resistance in 3.5 zone?
- Purchasing Managers Index rose to 55.0 last month, beating November’s 54.7 reading and an initial December estimate of 54.4. The index suggests manufacturing jobs are being created at a rate of about 20,000 per month.
Manufacturing jobs have been the bane of US employment for some 30 years now, but in the last decade, the job growth there has been abysmal. That is all part of the transformation I have been writing about. The old is replacing the new. And if the PMI data suggestion is correct, the new manufacturing jobs are coming online and being filled with qualified workers.
The market is hanging on as I close. Will it hold onto green through the finish? I don’t know, and it doesn’t really matter today. When it will matter is when the big money decides it is time to get back to work. Only then can we gauge the true temperament of the market.
One more thing today – think smart phones and the associated verticals.
- Chinese budget smartphone maker Xiaomi plans to sell 40 million handsets in 2014, more than double the number it sold in 2013.
Trade in the day; Invest in your life …
