Market News

One of the news headlines above notes the optimism that can be taken from yesterday’s worse-than-expected headline report on US Q1 GDP. Enough said, but I’ll keep going anyway …

‘US consumer confidence jumps in April’ – Perceptions, perceptions and perceptions is all that this seems to be about. Just last week the results of the Conference Board index were interpreted to be not so hot, though an indirect reference was made to a likely inflexion point being reached in the recession.

BLT sandwich lovers everywhere are rejoicing; those lock-limit down in bellies have likely lost their appetites; but it seems, on day three of the swine flu, stock and currency traders have definitely regained theirs.

This is one of those times when we’d like a straight answer; we’re likely not going to get one, though …

Liquidity is the mother’s milk for stocks. Quantitative Easing is providing lots of milk, it seems.

This falls into the category that it ain’t over till it’s over!

The latest results declared by the Conference Board for its Leading Economic Index for the U.S. provides an insight into the health of the US economy. The index declined 0.3% in March, following a 0.2% decrease in February, and a 0.2% decline in January. But, just what are the Conference Board and its Leading Economic Index?

In our Currency Strategist newsletter last week I discussed a growing obsession with the second derivative as it pertains to economics.

Japan reported its first annual trade deficit in 28 years. But today’s Bloomberg headline regarding the release of recent exports numbers from Japan gave us this:

A quick note to start, the US Dollar Index broke above key resistance yesterday like a hot knife through butter. Next target appears to be 8900-9000.

The Aussie is getting hammered this morning on news producer prices unexpectedly fell 0.4% last quarter; consensus estimates were a 0.6% gain.

CB’s whacking Their Currencies Today. The two key central banks in Europe decided to knock their currencies down a few pegs this morning…

Opening up trade was considered a mantra for economic growth and prosperity. The developed world and the IMF advocated this for various nations. It was expected to promote investment and exports such that a large number of economies would benefit.

As the first headline above reveals, China grew at 6.1% in the first quarter. That number is slightly below expectations and it’s lower than Q4 2008 (6.8%).

The risk appetite trade was progressing nicely until news of US deflation hit the wires. Maybe now those so-called analysts who believe inflation is solely about money will finally see the light. Nahhh….

Feel free to start dusting off those champagne bottles now – it’s sounding like we’re going to have something to celebrate this coming New Year’s Eve.

Increasingly it appears China is defying the skeptics (and we have been major skeptics). There is evidence (some may say flimsy but no matter) China’s stimulus is working.

There’s a steady stream of analysts now taking their chance at calling a bottom for stock markets.

It appears that the recent stock rally was more driven by expectations of a hopeful recovery than being based on any real recovery. The inevitable can be expected of any such surreal rally and the stock markets, after a brief positive spell, have been heading down again.

If you have been reading our daily missives you probably know that we’ve dubbed the problems in central and eastern Europe as the Achilles Heel for the euro as these problems can easily be transmitted into big trouble for European banking.