So, now we have two days of speculation to get through regarding the Fed and our collective future in the market. Just a little bit more and we can get on with life and maybe, just maybe, the breathless media will give up the speculation and get back to the news.
- Yesterday, U.S. shares fell on FT speculation that the taper was drawing near, only for them to recover after reporter Robin Harding cast doubt on his own predictions.
The above is exemplary of how silly the whole Fed debate is, so let’s get back to what I like to look at – reality and the future of the market.
- The United States and Europe account for almost half of the world’s total output and a third of its trade.
The above speaks to one important market consideration – the health of both the US and European economies. Currently, Europe is the weak link in the global chain and the US is doing okay, but both need to get healthier for the market to continue its now long-term rally. The information below suggests that process is underway.
- The United States and European Union launched negotiations on one of the world’s most ambitious free-trade agreements on Monday, promising thousands of jobs and speedier growth on both sides of the Atlantic. Such a plan was first considered three decades ago but knocked down by France in the 1990s. Europe has now managed to get Paris onside, opening the way to a deal that could boost the EU and U.S. economies by more than $100 billion a year each.
The US/Europe trade deal negotiations are on a fast track. Neither country can afford to dink around with the potential as it is. Expect this deal to move forward quickly and expect the market will like it, a lot, when the deal is complete.
Nevertheless, while all that negotiating is going on, business just keeps on going, which speaks to reality, once again.
- Flush with a record number of jet orders, the aerospace industry is gearing its factories to produce at high volume and low cost. More than 35,000 jets worth $4.8 trillion will be sold in the next 20 years, according to Boeing’s forecast.
True, the aerospace industry is building a lot of jets for a lot of money, but the question to ask is: how bad is the long-term economic outlook if $4.8 trillion is projected to change hands over 20 years? That breaks down to $240 billion a year in the aerospace business.
Okay, that is super long term, but you have to admit the projection is staggering, relative to the undercurrent of economic pessimism, which, BTW, is fading as the economic data keeps on rolling in.
- Other data on Tuesday showed an increase in groundbreaking at home construction sites, the latest sign America’s housing market recovery will help counter the drag on the economy this year from government austerity. Builders, who are ramping up construction to meet demand for housing against the backdrop very low inventory, have been complaining about labor shortages and increased material costs.
Complaining about labor shortages? Putting that absurdity aside, along with rising interest rates, building more homes is just what an overheated housing market with low inventory needs. Now, add to that the 2.2 million distressed homes still sitting in the shadows and you have the makings of a more balanced market shaping up. Consider the market opportunity in this arena.
All is not rosy, though, in the near-term future of the market. Just around the corner is a potential disruption that won’t last long, but it might create a bit of havoc for a bit. Maybe, the market will even blow it off, you know, the cry wolf too many times thing, but if the breathless media does what it does so well, than count on the former. Coming in September to a market near you is the upcoming blockbuster debt-ceiling debate. Yup! Here it comes again. America’s politicos on parade, clowns full of sound and fury jumping up and down, yet signifying nothing. I really cannot wait.
- Consumer prices rose in May and a gauge of underlying price pressures showed signs of stabilizing after a long decline, a potential comfort to Federal Reserve policymakers who would like to see stronger inflation.
Is the above good news or bad for the market? I just can’t tell anymore.
Trade in the day; Invest in your life …
