Here we are four days into the week and the market has been down all four days. Since Friday of last week, the DIJA has dropped over 300 points and the S&P has dropped some 26 points. My assessment on Monday missed the mark. The market is not listless; it is correcting.
I hope buying is in the cards for you because this correction will not go on for too long. Once the fear-based sellers leave the playground, the fundamental-based buyers will come to play. The economic data coming out as of late is showing increasing momentum in the US and on a global scale, and that data can be ignored only for so long.
- Initial claims for state unemployment benefits dropped 23,000 to a seasonally adjusted 298,000, declining for a third straight week.
- There was also good news on the US housing market as new home sales posted their largest increase in nearly 33-1/2 years.
The former speaks to an increasing consumer base and the latter bodes well for the US construction industry, which is a large source of jobs for US consumers. And just to the north of the US, just across the border in the land of the aurora borealis, jobs are perking up as a construction boom there lights up the economic picture.
- Construction intentions in Canada roared past expectations in October as permits for residential and non-residential buildings rose sharply from September in another sign of renewed strength in the housing market.
The above is but some of the recent positive data shedding light on increased economic momentum. In the US, consumer confidence, the services sector, manufacturing, exports, and retail sales are all up. Even if the “up” is not good enough for the breathless media and its minion of talking heads, it is good enough to brighten the numbers for US auto sales.
- Auto sales in the nation increased 9% year over year to 1.24 million units in Nov 2013. Sales on a seasonally adjusted rate (SAAR) basis climbed 7.2% from Nov 2012 to 16.4 million vehicles. This is the highest SAAR since Feb 2007.
Somebody in the US is buying all those cars and somebody in China is buying lots of cars as well. Looking at auto sales in China, one sees a boom there too. Ford is making huge gains in that market.
- Ford Motor Co and its local partners in China sold a total 99,157 vehicles on a wholesale basis in November, up 47 percent from a year earlier, the company said on Thursday. That compared with a 55 percent increase in October.
- In the first 11 months of the year, sales by the Dearborn, Michigan-based automaker totaled 840,975 vehicles, up 51 percent from the same period last year.
Go Ford!
Okay, across the Atlantic, the numbers are not nearly as sparkling for auto sales, or for most economic data points, but the dismal grey seen for so long there is giving way to a bit of sun. Britain is reporting higher home sales and increased GDP and Spain, one of the poster-children for economic illness in Europe just received an upgrade from Moody’s.
- Moody’s Investors Service increased Spain’s credit rating outlook to stable from negative amid evidence of a sustained economic rebalancing and improving growth prospects.
Moody’s sees a brightening horizon for Spain, specifically in two of its most vulnerable and related areas – banks and bonds.
- A decrease in market access risks for Spanish sovereign debt and the lower risk of contagion from negative events elsewhere in the euro region than at the time of Moody’s last rating action in October 2012 contributed to the revision. A significant reduction in contingent liabilities for the nation from the Spanish banking sector also spurred the improved outlook.
Remember, a market correcting is simply a marketing consolidating for future growth. It is healthy and expected. If it were anything beyond a correction, we would see it in the economic numbers and we are not. The “taper tantrum” (thank you David Moenning) continues, but “it too shall pass” and when it does, the playground will light up with the energy of bargain buying.
Trade in the day; Invest in your life …
