The blood flowed in the streets of Asia last night, but in Japan, complete carnage was the order for the day. The Nikkei has lost just about all of its gains in 20113, but even though this irrational panic has wreaked such devastation, don’t count the Nikkei out just yet. There is still plenty of economic data to come out over the next few months, data that might likely show the reemergence of growth and the loss of deflationary pressures.
Speaking of economic data … The US just keeps chugging along with its economy. Retail sales and employment came out better than expected
- Economic data provided support as a rise in U.S. retail sales and a drop in jobless claims suggested the economy was shaking off its recent soft patch.
The data underneath the retail sales spoke to a US economy that is stable and poised for increasing momentum. The data beneath the headlines is that the auto and housing industries are humming along, and that is good, but the numbers also tell of another positive development for the economy – less money spent on gasoline.
- Last month, retail sales rose in most categories, with receipts at auto dealerships rising 1.8 percent – the biggest increase since November – after advancing 0.7 percent the prior month. The increase in sales came despite a 0.2 percent drop in receipts at gasoline stations. Excluding gasoline stations, sales rose 0.6 percent.
Even though gas prices are high, the drop in the amount of gas purchased is the difference in receipts. Americans are simply buying less. The reason is more fuel-efficient cars on the highway, a trend that is only getting stronger.
- After falling dramatically for more than a month, applications for mortgage refinances finally swung to the positive last week, rising 5 percent from the previous week.
So, there is a silver lining to the issue of rising interest rates. Perhaps the uptick in long-term mortgage rates will spur even more activity in the refinance sector, which will mean an even more stable US consumer over the longer term.
Moving across the pond … I know Europe is not a pretty picture economically, but it is getting better there, agonizingly so, but better.
- Industrial Production in the Eurozone was reported at -0.6% for April on a year-over-year basis. This was above the consensus estimates for -1.2%. March’s Production level was revised higher to -1.4% from -1.7%. On a monthly basis, Industrial Production rose by +0.4%, which was above the consensus expectations for -0.2%, but below last month’s growth rate of +0.9%.
The price-action in the market today seems stable, even after the overnight slide in Asian markets and yesterday’s rather volatile turnabout. Could it be that economic fundamentals trump irrational fear about what might be regarding the Fed and QE? Maybe, or it is simply the bears did their damage and then ran away. As always, we will see …
Trade in the day; Invest in your life …
