Each morning around 6:30, I start reading. Usually, it takes about three minutes, more or less, before I get the drift of the market news for the day. The rest of my time is spent furthering my understanding of the global economic reality.
- Some Fed Members Fear Monetary Policy Effects
- Obama Proposes $3.77 Trillion Budget to Revive Debt Talks
There will be plenty of talking-head chatter today about the new highs for the Dow and the S&P 500 indices, the Fed, and both the bears and the bulls will add their opinions through the print media and the pundit interviews. None of it will make a difference to the market movement and most of it will add little understanding to the reality of the market. In the end, the only things that ultimately matter are economic and earnings related. All the rest is affective to a degree, sometimes pushing big market moves one way or the other, and usually short-lived.
The market news that really matters is there, but it is available to those who look past the headline news. For example, if you trade commodities, you will know about the collapse in the US corn exports.
- The record collapse in U.S. corn exports and shrinking domestic demand are leaving more grain in silos, spurring a bear market just eight months after drought drove prices to an all-time high.
But, if you don’t trade commodities, and you don’t research the wide gamut of news, you might not come across this information, which is too bad because it is vital to understanding the global economic picture, which is paramount to understanding future market direction. Corn or corn derivative products find their way into myriad processed foods and the regulated push to mix ethanol into gasoline is alive and well. Shrinking corn prices mean lower food and fuel inflation across the board.
If you just check the headlines of the major financial news sources, you would quickly become enlightened about the global news that will help move the market into the green today.
- China recorded a mild trade deficit of $884 million in March as imports surged way ahead of market expectations, growing 14.1 percent year on year, while annual export growth of 10.0 percent were largely in line with forecasts.
If you dig deeper, and you have a broad understanding of Chinese economic policy and goals, you would understand how important the above news is for the long-term market view. The Chinese have had a stated goal of reducing exports and increasing imports for some time and their economic policies reflect this. The plan is working and Asian economics will be better for it (as will global economics), despite what George Soros and others are saying about China these days. Other, more in-touch, folks have a better handle on Asian economics and Asian markets.
- “The global economic recovery is gradually coming through and most of the big systemic risks are behind us,” Daphne Roth, Singapore-based head of Asia equity research at ABN Amro Private Bank, which oversees about $207 billion, said. “The cycle has become more normalized and it will be good for Asia as a whole. Central-bank policy makers have done their part and that’s good for equities.”
I guess the market is blowing off the negative comments from some Fed members and the eulogy for President Obama’s just released budget. I guess the cracks in the ceilings of the Dow and S&P 500 aren’t scaring the market either. Maybe it will take something a bit more concrete to turn the market today.
- The Federal Open Market Committee releases minutes of its March 19-20 meeting at 2 p.m. in Washington.
Trade in the day; Invest in your life …
