There is little I can write about yesterday’s market action. A report showed there was the biggest ever jump in durable goods orders and consumer confidence unexpectedly increased.
Commenting upon the former, a huge order for commercial aircraft was the reason for the rise in durable goods. Non-military capital goods and excluding aircraft, orders fell by 0.5% versus a 5.4% gain the month before hence suggesting orders may not be that robust.
Regarding confidence, confidence did rise to the highest level since 2007.
During the past three weeks, the S & P 500 is up about 7% reversing a 4% YTD decline. For the past thirty days, this benchmark is up 1.2%. The rationale for the rally—accommodative monetary policy forever and massive cash balances searching for a more efficient use.
For many this year has been frustrating as the sector rotations have been great. The benchmarks trade to new highs, propelled by one sector and then trade lower, a decline predicated by a different sector only to rally back to its highs under the impetus of yet another.
Some might call this a trader’s delight but the simple fact of the matter frustration is rising given the absence of any definitive trends.
Volume has been anemic at best thus suggesting both the rallies and declines lack conviction.
The only certainty in life is change. I will continue to argue economic growth may consistently surprise on the upside given these massive cash balances, growth that may increase the odds of demand pull inflation via an acceleration of monetary velocity. In my view all that is missing for such acceleration is confidence, confidence primarily in government.
If confidence rises so do the odds of greater monetary velocity and higher stocks prices with conviction, not these whoosy rallies so prevalent thus far this year.
Last night the foreign markets were mixed. London was up 0.09%, Paris down 0.11% and Frankfurt down 0.10%. Japan was up 0.09% and Hang Sang down 0.62%
The Dow should open little changed. The 10-year is up 5/32 to yield 2.38%.
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