The is something of a mystery surrounding market action this week.
Usually, we expect something of a bounce into option expiration, but there are so many forces running contrariwise in this market that it’s worth looking at a list of factors rather than zooming in on one thing or another as a sole cause:
- Deflation is still here, and still very real. Then 10-year Treasury hit 1.78% yesterday and if you look at the maximum zoom-out over the past 50 years, or so, here, you will see we’re getting mighty darn close to the 1.63% level set in 2012.
- Negative interest rates (typical of deflationary depressions) are driving up the cost of cash, noted a recent Financial Times report. Meantime, rates around Europe and heading toward zero for “those still standing.” The Swiss when to a –0.25% rate in mid December to beat the rush.
- The US Velocity of Money calculations refuse to budge significantly off historical lows.
And if this isn’t enough for you, the latest producer print index numbers are just out:
The Producer Price Index for final demand fell 0.3 percent in December, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices decreased 0.2 percent in November and advanced 0.2 percent in October. On an unadjusted basis, the index for final demand increased 1.1 percent in 2014 after rising 1.2 percent in 2013. (See table A.)
In December, the 0.3-percent decline in the final demand index can be traced to a 1.2-percent drop in prices
Not all the news was bad, though. The NY Fed Empire State Manufacturing Survey is just out:
“The January 2015 Empire State Manufacturing Survey indicates that business activity expanded for New York manufacturers. The headline general business conditions index climbed eleven points to 10.0. This month’s survey also showed modest growth in new orders and shipments. Labor market conditions were mixed, with the index for number of employees rising several points to 13.7, while the average workweek index remained negative at -8.4.”
That seems to be all it takes to light off a little buzz on the Street. Oil is up almost 5% and back over $51 on the futures while the Dow is aiming 50 higher.
Has Nirvana arrived (or NiN, lol)? Like my superb technical analyst pal Robin Landry wryly notes: “You still gotta make the waves…”
And no, no market ever goes straight to hell. There are rest stops along the way. Between now and Friday’s close is a fine time to nap.
Boehner Steps Up
Rousing House speech Wednesday makes it clear that the GOP is hearing the public and when comes to a president marking up laws, the administration’s unwillingness to enforce existing laws of the land makes it clear the next couple of years will be contentious.
In a funny way, this may ultimately help the markets since they don’t like change, embrace predictability, and when there’s a fight in Washington, change goes out the window.
Russia Sanctions Work – Or Do They?
The report that the Russian GDP is cratering – amidst reports of political leaders calling for calm and such – is just another example of how Washington’s over-played hand in Ukraine may drive Russia to lash out in other areas. Or, was that the point?
Meantime, SecState John Kerry is off lecturing Bulgaria on how to run its future.
I must be an old reprobate (is there any other kind?) I don’t understand how the administration can administratively wipe out our border with Mexico and then turn around and hold Russia ever more encircled by NATO. Don’tcha think it would be nice to have the same border concerns for the 700 miles of still-open border in places like Texas, New Mexico, and Arizona that we have for Ukraine? Oh wait, silly me.
Thursday grumpies, I suppose. Telling Bulgaria how to behave is just a bit…oh…rich.
Half a Million Kids?
No, that’d be goats. We’re talking cows here But the Wall St. Journal article on a bull that sired 500,000 offspring does put a new benchmark out there, no question about it.
Seems to me that even government would develop a “:low T” complex trying to keep up with this old boy who died a couple of months back. No word on whether he was smiling, or not.
Where’s the DeadHead
A mom has filed a report on her son going missing after heading off to a Grateful Dead concert nearly 20-YEARS ago.