Here we go again, another week of up and down in the market. GM auto sales came in less than expected, as did construction spending, but China’s PMI came in strongly, as did US new home contracts …
- China’s official PMI hit a seven-month high of 50.6 for November, according to a manufacturing survey over the weekend, while an official PMI survey of non-manufacturing sectors ticked up to 55.6 in November, led by construction services.
- Contracts to buy previously owned U.S. homes rose more than expected in October, a sign the housing market recovery advanced into the fourth quarter despite a mammoth storm and concerns over looming tax hikes.
Still, a mixed bag of data, but all that means is there are more dips to find your way into the market. For example, auto sales in general are fantastic. Much like the US housing industry, the US auto industry is coming back strongly, which means you could be looking to that sector for opportunity.
- America’s appetite for new cars and trucks surged to a new high in November as auto sales ran at their fastest pace since early 2008.
The reasons for the surge are clear – consumer confidence is up, jobs are coming back, and the housing industry is in recovery. The latter reason is important, as one support for that is the same support for the auto industry – cheap money.
- With the more banks willing to write auto loans for a wider number of buyers, the terms for auto loans have never been better. Interest rates (for those who don’t qualify for 0 percent) are near historic lows of 3-5 percent. Banks are also writing more auto loans that stretch out at least six years. As a result, the average new car monthly payment of $452 is only slightly higher than a few years ago.
Interestingly, the above points to the financial sector as an opportunity for market players. What I predicted well over a year ago, and what I have been harping on is that banks are returning to their roots. Banks are devolving from exciting trading houses risking the global economy back to boring institutions lending money to build their income streams. Their reincarnation is the single best thing for both the US economy and the global economy and it is an opportunity to find solid investments that pay decent dividends while waiting for the stocks to regain value in line with their increasing revenue streams. Check out this link. http://articles.marketwatch.com/2011-03-18/investing/30702940_1_quarterly-dividend-special-dividend-first-quarter-dividend.
Oh, and one more thing to think about. If you hear anyone predicting a US return to recession in in 2013, smile as you put your money into the market.
- There has been a considerable amount of speculation in the financial press in recent weeks regarding the prospects for a US recession in 2013 based on the fact that the length of the current economic expansion will soon exceed (or has even exceeded depending on the timeframe averaged) the historical average for US economic recoveries.
The fact is that the financial punditry class is not as educated as they should be, given the position they hold as disseminators of information for investors and traders. Be that as it might, look past that and consider the following assessment.
- Presently, the US economy is operating way below its “potential,” and there is massive spare capacity or “slack” in labor and capital resources.
The year coming up will be far from recession. Get ready now to ride the train.
Trade in the day; Invest in your life …
