Some days, I just gotta lot to say. Yes, I am still bored with the current market, but I am getting excited about the market coming soon to a laptop near you.
- It’s days like today and weeks like the past two weeks, though, that can really get irritating. Stocks barely budged on Tuesday, and are basically back to where they closed on July 31st.
See, there are others out there who find this current market boring, but that is not my focus today.
- Retail sales were little changed in July, the worst performance in six months, as car demand slowed and tepid wage growth restrained U.S. consumers.
The retail sales “news” seems not to bother the market this morning, and it shouldn’t. A deeper look at the US consumers’ ability to spend and one can see the number is slightly off and will more than likely change this fall.
- Job openings, a measure of labor demand, increased to a seasonally adjusted 4.67 million in June, the highest level since February 2001.
- Job growth has topped 200,000 in each of the past six months, a stretch last seen in 1997.
Jobs, jobs, and more jobs means more consumer spending to a helpful degree, but the momentum in employment is only one metric that has me excited about the fall market. Here is another that adds just a bit more heat to a rising job market – rising wages.
- The share of unemployed Americans competing for each open job hit a six-year low in June, suggesting a labor market tightening that could give way to faster wage growth.
- Faster wage growth certainly seems in the pipeline. The labor market appears to be hitting a turning point.
And yet, here is still another one I have mentioned before and when in combination with rising wages, it can add a whole lot of heat to both the economy and the market.
- Total retail sales in July likely took a hit from falling gasoline prices, but those lower prices at the pump are likely to give consumers more spending power for back-to-school shopping in August.
Yes, oil prices, even with all of the geopolitical unrest in three of the largest oil-producing regions of the world, are dropping. Come this fall, they should drop even further as demand slips precipitously. Add to this the brewing notion that the global economy is slipping (think IMF) and you have a recipe for a sizeable drop in oil prices come this fall.
- Crude oil took a sharp dip early this morning after the IEA lowered its demand forecast of world oil citing a lower outlook for the global economy.
Gasoline prices down, wages up, and more jobs suggests robust consumer spending is on the way, which suggests the market will have a difficult time ignoring the fundamental improvements, which suggests this fall will be good.
Oh, and I have one more thing that contributes to my excitement about the near-term economic and market future. It is subtle and boring and no one wants to talk about it unless it is bad, as it was in 2009 when Barack Obama became President Obama, but it does impact business and consumer confidence, and it does directly impact the US economy.
- The 2014 US budget gap is projected at about $500 billion, the Congressional Budget Office said on Aug. 7. That compares with $1.4 trillion in 2009 when President Barack Obama took office.
The above is good news, certainly, as it shows the financial health of the US improving, but even more substantive and meaningful is the rate at which the budget deficit is shrinking.
- The U.S. budget deficit so far this fiscal year is 24 percent narrower than it was a year ago as a stronger economy helps revenue advance almost seven times faster than spending, a government report showed.
Now, given that income taxes are the primary source of revenue for the US government, one should take away two things about the stats above. First, the positive numbers about US employment are not a transitory. People have real jobs and are making real money. Second, the shrinking US deficit promises to shrink even further and faster by the end of this year, which is a good thing for everyone, top and bottom.
The market today might be thinking as I am thinking – the near-term future is bright. It seems to be favoring green today with a bit of zeal. As well, one other of my favorite metrics is showing signs of believing in the near-term future. The VIX is back in the low 13 zone and it looks as if it wants to break into the 12 area.
And this with world falling apart …
Trade in the day; invest in your life …
