Two words playing in my head this morning are: “As usual.”
First, I believe I can now say about the market, “It is behaving as usual.” It is a bit forward, a bit less back. The excessive volatility is gone, replaced by a gentler form of up and down.
Second, “as usual,” I will bring to the fore information that does not get huge play with the breathless media, information that helps us better understand future market movement.
True, I found the information in the financial media, but it is the first time I have come across such illuminating information regarding the breathless media’s heavily reported notion – US employment is going up, unemployment is going down, but wages are not rising.
- In a paradoxically good development for the U.S. economy, Americans quit their jobs in September at the fastest rate in over six years.
Okay, “So how is this good?” you might ask. Well, please allow me to explain, but first, here is another tidbit from the article that appeared on Reuter’s news service this morning.
- The quits rate fell during the 2007-09 recession and has been slower to recover than other labor market indicators because workers lacked confidence to leave their jobs for greener pastures.
The article goes on to explain the “”quits rate” is one factor that drives wage inflation. Currently, when folks are afraid to leave their job, and the employer knows it, the employer is less likely to offer incentives for the worker to stay. As well, another reason this is good for the market (it goes without saying rising wages are good for the market, right?) is that the Fed keeps tab on this rather obscure metric.
- Federal Reserve Chair Janet Yellen has signaled the quits rate as an indicator she is following on her “dashboard” for assessing progress in the labor market’s recovery.
I might also say “as usual,” oil is in the news. Oil dropping so steadily and so far has a major impact on everything, including inflated food prices, which, BTW, should be coming down soon enough, as soon as the current food inventories are flushed out. Today, though, my look at oil is indirectly related to the cost of goods related to oil.
- Since June, crude oil has declined by 28 percent, pushing the price that oil from new wells in Canada may command below what the expected cost will be to produce it.
Currently, Canada, not OPEC, is the single largest exporter of oil to the US. As we all know, the Keystone Pipeline project has been a political hot potato for some years now. The project has always been about bringing even more Canadian oil to the US for refining. Well, with oil dropping so steadily and so far, the project just might be economically untenable, at least right now anyway.
- Oil sands are among the most expensive sources of oil, costing an average of $75 to $80 a barrel to produce, Norwegian energy-consulting firm Rystad Energy said in June.
WTI crude oil dropped into the $75 dollar zone today and that means the cost of producing Canadian oil-sands oil is right on the edge of non-feasible. So, if the project is cancelled or continues in limbo, this is a signal the powers that reside behind the price of oil believe it will continue to drop for some time. In fact, those powers are speaking out now.
- West Texas Intermediate prices will fall to $70 a barrel by the second quarter of 2015, Goldman Sachs forecast last month.
- The U.S. Energy Information Administration predicted Wednesday that the benchmark price of U.S. crude oil will average $77.75 a barrel next year. That’s down from a previous forecast of close to $95.
Oh, and one more thing about this. The RBOB futures price of gasoline is just about ready to crack $2. If it does that, the next stop is $1.84, the price in August of 2011. More good news for the US consumer, who, BTW, seems to be gathering some momentum as the year goes on.
- Wal-Mart Stores reported a higher-than-expected profit as comparable sales at its U.S. stores rose for the first time in seven quarters.
As usual …
Trade in the day; invest in your life …
