Something is missing from the market and that would be a catalyst to send it strongly on its way to the upside. Retail sales coming in better than expected has done little to take away the gray skies in the market.
- Retail sales rose more than expected in December as Americans shrugged off the threat of higher taxes and bought automobiles and a range of other goods, suggesting momentum in consumer spending as the year ended. The second straight month of gains in core sales suggested consumer spending picked up in the fourth quarter after rising at an annual pace of 1.6 percent in the July through September period.
The memory is so clear in my head of the breathless media saying over and over again how the retail sales for the fourth quarter were simply not up to snuff.
Okay, moving on … Two quarters in a row of increasing retail sales should have a positive effect on earnings. Lower production costs should have an effect on earnings, as well, but will the market respond positively?
- The producer price index dropped 0.2 percent in December, the Labor Department said Tuesday. That follows a decline of 0.8 percent in November.
And with the predicted hyperinflation not materializing, consumers have more money to spend, and they have been doing their part in this regard, but will the market recognize this?
- U.S. wholesale prices fell for the third month in a row last month, pushed down by falling food and gas costs. The drop is the latest evidence inflation is tame.
Given the continuing good economic news, the lack of inflation, the drop in production costs, and the inflow of money from the retail investor mentioned yesterday, it seems to me the market should find some sunshine soon, well, as soon as the politicos in Washington can act like “statespeople” and settle their differences.
Wait! Perhaps my optimism is a bit premature. Perhaps the market is not so sunny because of the manufacturing data that came out today.
- The New York Federal Reserve’s index of manufacturing conditions deteriorated unexpectedly in January, remaining in contraction territory for the sixth consecutive month, official data showed on Tuesday.
Then again, given the recent retail sales data, it just might be the manufacturing cycle will turn to restocking the “shelves.” We will see, but in the meantime, how about some sunshiny news.
- Wal-Mart (WMT) intends to recruit more than 100,000 ex-soldiers in the U.S. over the next five years, CEO Bill Simon is due to announce in a speech to the National Retail Federation conference today.
Hiring veterans on the scale above is a beautiful thing and one can only hope that Wal-Mart’s grand gesture will be a model for all businesses great and small. My feeling is if we as a country send our people off to war, we should take care of them when they return. Thank you, Wal-Mart. You brought some sunshine into my day, at least.
Trade in the day; Invest in your life …
