Are we still here? Are we still alive? Is the market tanking? Should I look? Can I bear it? Okay, okay, I will open the door …
- I think is safe to say that the much ballyhooed “sequester” doesn’t seem to matter. Perhaps the saying “fool me once, shame on you but fool me twice, shame on me” applies here. After the three ring circuses we’ve seen over the past couple years on just about any subject relating to Washington, I think the market has learned to just ignore the whole thing until/unless a deadline – meaning an actual, real deadline that would have a meaningful impact – has been missed. And given that the sequester deadline is murky at best; stocks just don’t seem to care. And frankly, neither do I.
David Moenning
The words above eloquently define the reality of the sequestration cuts, and the final sentence seems to reflect the attitude of the market regarding the latest manufactured crisis from the elected officials in Washington.
As I write, it appears the market is disregarding the antics of those same folks, and it might well keep disregarding the fear from Washington until the end of this month when the cuts actually begin to bite. My guess is the game of chicken will go until then and then the political chickens will give in; and if the political chickens don’t give in, not those chickens, but some other chickens will come home to roost. Then the market might see this game a bit differently as the overall economy takes a larger than necessary hit. I suspect more than few Americans will register their opinion on the matter as well. In the meantime, expect more run up and drop down from the market.
- Gas confirmed a major top and we got a wild drop against a backdrop of some historic numbers on U.S. oil production! RBOB fell like a rock as the gas bubble popped and the sellers rocked.
I like the above quote from a Futures magazine article for both its information and its poetic flair. Who says financial writers can’t have artistic sensibilities? Even though the writer drops the poetic flow, the commodity market information in the article is worth considering.
- The Energy Information Administration (EIA) reported that U.S. oil production surged by a whopping 14.6% to the highest level since 1995.
- The EIA revised up U.S. crude oil production for November 2012 from 6.893 million bpd to 7.013 million bpd; marking the first time any U.S. monthly oil output was above 7 million bpd since December 1992. Crude oil production for December 2012 was even higher at 7.030 million bpd.
- The EIA says the U.S. is breaking its addiction to gasoline as U.S. demand fell to the lowest level in 11 years.
If one plays the oil market, especially US oil companies, one has to look at the information above and consider the effect of increasing supply and declining demand on the price in the oil market. As well, one has to consider the effect it will soon have on the retail price of gasoline and what influence that might have on the US consumer. The article lays out one conclusion.
- In the short term, retail price increases are slowing as retailers are still trying to make back some of the money they lost on the way up. The inability to pass on all of the increases on the way up means prices may fall like a feather at first but soon they should fall like a rock.
A softer poetic flair, true, but a reasonable conclusion and given the flow of economic news today, it is a welcome possibility. In fact, if it comes to pass as the article suggests, it will go hand in hand with some important good economic news out there.
- The ISM (Institute of Supply Management) Manufacturing index shows that the manufacturing sector of the U.S. economy continued in expansion mode in February. The all-important index, which is a proxy for the state of the manufacturing sector, was reported at 54.2 in February. The reading was above the consensus estimate for a reading of 52.4 and the best since June 2011.
- The final reading for the University of Michigan’s Consumer Sentiment Index for February was reported at 77.6, which was above the consensus for 76.1 and the preliminary reading of 76.3.
- Chrysler Group LLC said Friday its U.S. sales of 139,015 in February rose 4 percent from 133,521 a year before and were its best February sales in five years.
- China plans major bond market reform to raise the money the ruling Communist Party needs for a 40 trillion yuan ($6.4 trillion) urbanization program to buoy economic growth and close a chasm between the country’s urban rich and rural poor.
Hang in there. The roller coaster ride is scary, but don’t worry, the cars will ultimately stay on the track.
Trade in the day; Invest in your life …
