The very first thing I want to give you this morning is the very good news that coffee prices should be coming down soon.
- December coffee on Thursday tumbled to a fresh 4-1/2 year low after ICO data showed global September Arabica coffee bean exports of 68.48 million bags, up +2.4% y/y and a sign of ample supplies.
Who doesn’t like their morning cup of Joe and if it is cheaper, well, all the more money to buy a new car, I say.
- Ford reports retail sales rose 15% during the month to mark its best retail October mark since 2004. Sales of the Ford Fusion were red-hot in the eastern region of the U.S., with retail sales up a whopping 77%.
Today’s market action is about …? The above is just one sample the good economic news coming out and the market can’t seem to hold onto its early gains today. Even as the news counters all the recent hilltop screaming, the market just can’t seem to believe, or maybe it is just waiting. Nevertheless, the US economy is shaking off the idiocy in Washington.
- The Chicago Purchasing Managers Index (PMI) for October rose to a reading of 65.9, which was well above the consensus expectations for a reading of 54.5, and higher than last month’s reading of 55.7. The October reading was the highest since March 2011, and represents the biggest monthly increase in over 30 years. The New Orders component leapt to the highest level in nine years.
- The ISM (Institute of Supply Management) Manufacturing index shows that the manufacturing sector of the U.S. economy continued to improve in October. The all-important index, which is a proxy for the state of the manufacturing sector, was reported at 56.4. The reading was above the consensus estimate for a reading of 55.0 and last month’s 56.2.
- The ISM manufacturing new orders index is at a relatively high level, which suggests that manufacturers had a relatively good pipeline of orders going into the October government shut-down.
As well, the market is having trouble believing the global economy is getting better, faster, and with more gusto. Hard to imagine this is so, but, and then again, perhaps the market is just waiting.
- The pace of growth in the Canadian manufacturing sector picked up in October to its strongest level in two and a half years as firms saw greater demand for their products.
- China’s manufacturing sector grew at the fastest pace in 18 months in October.
- The HSBC/Markit PMI for South Korea showed factory activity expanded for the first time in five months and separate data showed the country’s exports in October handily beat expectations to hit a record high of $50.5 billion.
- Factory activity in major exporter Taiwan, key to many global tech supply chains, was running at its fastest pace since March 2012, an HSBC/Markit PMI showed.
- Japan reported on Thursday that its factory activity grew at the fastest pace in more than three years as the Markit/JMMA PMI rose to a seasonally adjusted 54.2.
- Japan Oct vehicle sales climbed +17.3% y/y, the most in 15-months.
Phew! The above list is long and inspiring, to say the least, but the fact is that things can change, and probably will, but the other fact to consider is that along with the above, Europe is turning the corner economically. So what is the market waiting for, if it is indeed waiting?
Well, maybe it is waiting for the economic data to catch up to the current height in the market. Maybe it is waiting for earnings, i.e. valuations to fall in line with the current height of the market. Maybe, the market is waiting for the Fed to decide its policies, or maybe it is waiting for the US politicians to decide if they will throw another wrench into the works come January.
Actually, who knows what the market is waiting for? It doesn’t really matter anymore. The only thing that matters is that coffee is coming down in price because of supply and demand principles. As good as this is, it should also tell us something – the fundamentals are back in play.
Trade in the day; Invest in your life …
