Okay, so the market decided it wanted to go up appreciably yesterday. Today it is working on the news from the Fed and the US government and then balancing that against the economic news from Europe and Russia.
- Euro-area services and manufacturing grew less than initially estimated last month, leaving the economy facing near-stagnation as the European Central Bank considers its options on further stimulus.
China also reported several days ago its manufacturing and services shrank again this past month, and that goes along with Europe reporting its manufacturing and services did not get to par, but …
- U.S. economic activity continued to expand in October and November, with lower gasoline prices boosting consumer spending, the Federal Reserve said on Wednesday.
Lower gasoline prices are helping the US consumer, according to the Fed. Imagine that? The US economy is propping up the world and it is showing no sign as of yet that it will falter. Each month seems to support the previous month, and this month is no exception, as job growth exceeded 200,000 again.
- U.S. private companies added workers at a fairly brisk clip in November and the services sector grew strongly, suggesting a slowing global economy is having a limited impact on domestic activity.
A valid question to ask is where are the jobs coming from and is the growth sustainable? One part of the answer lies in the fact the roughly 2/3 of all jobs created in the US come from small businesses.
- Small U.S. businesses added more than 100,000 jobs to their payrolls last month, adding almost half of the total gains notched by the private sector.
Another part of the answer resides in the fact that oil prices keep dropping, which is inspiring, and will continue to inspire, both business owners to hire and consumers to spend, which will inspire business owners to hire. As of now, the oil wars going on show no sign of abating.
- Despite a sharp drop in crude oil prices, drilling activity in shale production districts remained steady, the Beige Book showed.
The question now is will the tightening job market accelerate wage growth. Moody’s Analytics seems to think so.
- At this pace the unemployment rate will drop by half a percentage point per annum. The tightening in the job market will soon prompt acceleration in wage growth.
As I wrote earlier, though, today is a world day, and the other issue out there is Russia and its economic woes.
- Russia’s economic pain worsened as a measure of services dropped to the lowest point since May 2009 and the central bank attempted to stem the ruble’s biggest slide in 16 years.
Russia cannot afford to cut oil production now either, as it too, like Saudi Arabia, has to fight for market share. This well might compel Mr. Putin to back off in the Ukraine, as not only is Russia losing 100-plus billion a year in oil revenue (and more to come as the price keeps dropping), but it is losing another 40-50 billion from the Ukraine inspired sanctions.
- U.S. President Barack Obama said on Wednesday he doubted Russian President Vladimir Putin will change course until politics catch up with the rough economic situation in Russia.
Yes, it is a world day and the market is sayings it sees the world, as well, not too bad. The China, Europe, Russia news is not keeping it from betting on the US and dropping gasoline prices suggest better times ahead.
So, as folks say, “Don’t fight the tape.”
Trade in the day; invest in your life …
