Two key parts of the US economy are picking up and holding steady, but as we move closer to earnings reports, we should keep our market expectations modest. As of today, 21 companies have reported earnings early, and those companies have met the historic norm of 7%. The early sign is that overall earnings will come down from the loftier 9-10% range, so look for buying opportunities as the market reacts to the downside, if the market reacts to the downside. As I said a few days back, I get a sense the market is becoming more rational about the realities of global economics, geo-politics, and the US economy …
- The Institute for Supply Management’s [ISM] factory index rose to 51.5 last month from 49.6 in August. Readings above 50 show expansion, and the September measure exceeded the most optimistic forecast in a Bloomberg survey.
The above came as a bit of a surprise to many, but not to me. I have been waiting for it, as my understanding of the macro picture has included the reality that the US consumer is not dead. Although a bit selective on smaller-dollar purchases, on the big ones, such as houses and cars, the consumer is shelling out big bucks.
- Sustained strength in motor vehicle sales and a rebound in demand for home construction materials are helping cushion manufacturers from weaker exports and cutbacks in business investment.
The stats below should counter the prevailing sentiment that the US consumer is laying low. Auto sales are still improving and the housing market is forming a stronger uptrend, both presenting opportunity to make your money work for you.
- Chrysler Group LLC, the smallest U.S. automaker, on Tuesday said 142,041 vehicles were sold in September, up 12 percent from 127,336 a year ago, and the most sold in September since 2007.
- Housing starts increased in August, reflecting the strongest pace of single- family projects in more than two years.
Some will claim the ISM report is an anomaly, and, possibly, they are correct, but consider that current signs are the fall and winter shopping season is going well. This tells me that manufacturing will remain steady as shelves deplete, car lots empty, and houses go up. The data below supports my thinking.
The ISM’s new orders measure rose to a four-month high of 52.3 from 47.1. The employment index advanced to 54.7 from an almost three-year low of 51.6 the prior month. The gain from August was the biggest since October 2009. The group’s measures of production, export demand, prices paid and order backlogs also climbed in September …
Sometimes readers send me really tough questions, and sometimes they send me really easy questions, and sometimes they are questions that would make Goldilocks happy.
- Do you know any good websites to find short interest, short ratio, and insider trades?
Why, yes, I do. Check out Yahoo Finance. How’s that for just right.
Trade in the day; Invest in your life …
