Thursday, June 12, 2014

Good Morning America, How Are You?

Yesterday was spent trading, and then taking a trip to the "big city".  The "big city" is 3 hours away via 2 lane twisting roads (except for the last 10 miles into the metropolis which is freeway). 

I bought parts for my underground sprinkler; learned how to test the valves to see if they work; and mostly spent a lot of money. 

Have a great day.  Enjoy your food, wine and your family. 

Small Business Outlook

You owners out there are not hiring.  Look at the jobs reports.  This is summer, and unemployment is going up.  Come on get with the program, OK? 

Oh yea, I'm a small business owner, and we have not experienced the kind of sales boom starting summer that we expected.  Therefore, we will not be hiring anyone until at least July.  Last year we had 3 job openings, and we had 1,500 applicants.  Where are the sales?

Summary:  

1.   The stock market took a breather yesterday.  It was choppy, and then closed on S&P 500 exchange inconclusive.  The market is what it is.  I had called for May 9 to be a high, and then a correction into early autumn.  At this point, my call seems prophetic, but 2 days of minor correction in actuality does not confirm May 9 to be a high.  That is why I do not trade on technical analysis, as it is only accurate in hindsight.  I do use it as a descriptive method of the current stock market positions, which is only one set of data to be considered.  Larry Williams, of commodity trading fame, would disagree, and he has actual audited results that show he is very accurate on his technical analysis of the markets and his timing.  So like all investing, success is in probabilities and risk management.

2.   Today, retail sales (a big market mover usually is reported at 8:30 AM EDT (5:30).  Which means it was just released as I write.  Econoday is indicating that retail sales missed expectation.  Econoday's comments dismissed the signals as just a rest after really strong retail sales in March.  There will be a plethora of conflicting analysis of retail sales.  Price this morning went down on the news.  Then price has recovered over 1/2 of the drop.  The price drop was relatively small (in my experience) with this kind of report.  We are in a bull market, and we'll have to wait for the NY opening to really determine what effect the news is going to have on price.

3.   Jobless claims were up.  According to Econoday - let's discount the numbers and point-out the trend still points to improvement. (Of course, that depends on the time frame, and Econoday did not indicate the time frame they were looking at.) Generally, in 2014 the trend is lower, but summer time small business should be hiring improving the employment scene.  This is yet another indication small businesses are not hiring. 

4.   Iraq looks like it is about to fall.  The Kurds have taken cities.  The Sunni fighters have taken Mosul and other cities. The market's reaction . oh hum...  Sadly, the country is being torn apart.  You and I can expect Obama to dither, and then dither some more. Will he even send in a targeted strike?  Against what?  The Turkish embassy in Mosul? Kerry will ineptly do what he has ineptly done before, and then look angry when questioned.  What a freaking foreign affairs disaster since Obama has been President.  Could I have done better?  No, absolutely not, but no USA citizen can be proud of anything at reported to us in Foreign Affairs. 

5.   New Zealand raised interest rates.  Good for you folks.  New Zealand's currency was a big winner overnight.  Overnight, the dollar is down as I write against all other currencies.  Even the Euro is up, after taking a drubbing for several days. 

6.   TidBit for you - As you know by now, the USA first quarter GDP was -1%.  Yes minus...  The Federal Reserve continues to forecast that the US economy will grow 2.8% in real terms the entirety of 2014.  That is a really lofty goal as that would take 3 quarters of 4% growth.   The last time the USA economy grew at 4% or more three quarters in a row was 1983.  Then the retail sales today, suggests that second quarter GDP is not going to be high in the second quarter.  The Baltic Dry Index measures demand for shipping capacity versus the supply of dry bulk carriers.  It seems reasonable to assume that "IF" (big if) economic growth was due for rapid acceleration, that the demand for raw materials would be rising; thereby increasing the cost of shipping.  BDI is actually going down, not up which suggest the global economy is struggling rather than entering a period of accelerating economic growth.  Copper is indicating the same kind of struggle in the global economy.  Any disappointment in actual economic data could lead to a sharp correction in the equity/bond markets.  There is increasing risk of a sharp correction at the economic level.  Will it happen?  Stay tuned, and be sure to take out insurance on long-positions in stocks.  (I did not say sell.  I said take out insurance. )