This is one of those days, ya know, I’ve written about them before … so much to say and so little space to say it. Let me sum up by saying, it appears the wild-eyed wanderers need to seek help. Their last icon of economic and market destruction is fading fast.
- If an article in Monday’s Wall Street Journal is anything to go by, the U.S. Federal Reserve is getting ready to unwind its massive monetary stimulus program. And that prospect is unlikely to be as alarming for financial markets as feared.
The Wall Street Journal is preparing the market to reset its frame on the Fed’s QE policies. If you recall (and why would you not?), the wild-eyed wanderers have been screaming that QE would 1) produce hyperinflation to the point of destruction and 2) cause a market collapse when the Fed stopped the program. Of course, it is all speculation, but this is how the market works – the numero uno media voice of the market tells us to relax, the Fed stopping QE is no big deal. And so it goes, the market just keeps on ticking, and there is more on the way.
- David Tepper says that the Fed actually needed to start tapering off their QE programs if stocks are expected to continue to rise steadily. Tepper calculates that there is about $400 billion looking for a home right now and that the stock market will likely attract its fair share.
To be fair, I selected a famous bull for that quote above, but, hey, he was right back in 2010 when he told us all to get in and stay in the market. Nevertheless, his numbers right or wrong, there is still plenty of money out there that will find its way to the market this year. Oh, and it isn’t just because the WSJ is telling us not to be afraid of QE ending; it is because the US and global economies are turning toward a major growth spurt.
- Sales of building materials and garden equipment supplies rose, posting their largest rise since September, a reflection of the housing market’s recovery. Receipts at clothing stores recorded their biggest increase since February last year. There were also increases in sales at sporting goods, hobby, book, and music stores, and electronics and appliance stores.
- Output at euro zone factories rose much more strongly than expected in March, driven by energy production to show a second consecutive monthly increase and the highest jump in 20 months.
Remember, growth is all about the consumer, so when the consumer is basically ignoring the breathless media in favor of going about life, it is time to acknowledge it will take something big to derail the economy and, thus, the market. The fact that gas prices have stabilized in the US is no small matter either. That extra 50-60 bucks a month can mean a night out or two, if you are frugal.
- Lower oil prices are also helping household finances. The United States imports much of the fuel it consumes. Last month, imported petroleum prices fell 1.9 percent.
- Consumers also spent more at restaurants and bars.
See what I mean about the consumer going about life? Going out to eat and drink translates to less fear and more happiness. Speaking of that, it appears small businesses are happier, as well.
- The National Federation of Independent Business said on Tuesday its gauge of confidence for small U.S. businesses rose in April to its highest in six months.
I’ve been so busy trying to get it all in this piece that I forgot to watch the market. When I last looked, the market was lightly in the green. Just a moment ago, the lines on the DIJA and the S&P 500 looked like a steep ski run at Mammoth Mountain in California. To be clear, the view is from the bottom of the mountain looking up. Myabe it holds, may be not, but it does say something.
Yesterday, when I compared this year in the market to 1995, I did so with just a bit of trepidation. For a moment yesterday, I flashed on the thought I could be wrong, that something out there is lurking in the weeds, something so bad it will alter the existing positive flow. I racked my brain for what that could be, and all I can come up with is that one thing outside the main market flow – a geopolitical occurrence so massively bad it scares the world.
Now that the WSJ is laying to rest the final irrational fear, it is time to accept a reality. All is not great in the US and global economy, but we can rule out a collapse of any kind, market or otherwise. Even if the wild-eyed wanders still scream doom with their weakening voices, the rest of us must ignore them and know that things are still getting better and better.
- Spain sold EUR3.034B of 12-month T-bills at an average yield of just 0.994% Tuesday, the lowest rate in more than three years as borrowing costs continue to fall on investors’ apparently unshakable faith in the ECB’s willingness to backstop Spanish and Italian sovereign debt.
Trade in the day; Invest in your life …
